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Obamacare and American Jobs: An Unfinished Story

The Left claims that recent data says Obamacare hasn’t put Americans out of work. Not so fast.

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Obamacare’s effects on the already-struggling American job market have, for obvious reasons, been a contentious issue, and supporters of the health care law were quick to declare victory last week when the latest job numbers came out.  Time Magazine’s Kate Pickert, for example, on Monday wrote “Obamacare Hasn’t Put Americans Out of Work” and supported her bold conclusion with several datapoints from the September Jobs report, including that “for the second straight month, the number of part-time jobs reported by the Bureau of Labor Statistics fell,” and that in “September, 691,000 full-time jobs were added to the economy while 594,000 part-time jobs went away.”

Pickert’s article (and a few others like it) then rippled through an elated liberal Twittersphere, even made their way to White House Press Secretary Jay Carney, who boldly declared that (as reported by a squealing Tommy Christopher) “the jobs data from this past September disproves” that Obamacare is “causing increases in part-time workers.”

Yet all of these reports on the death of a supposed right-wing talking point suffer from two serious flaws.  First and most obviously, they uniformly ignore the Obama administration’s July delay of the employer mandate – i.e., the single biggest driver of any predicted shift to part-time work!  Prior to the mandate’s delay, a somewhat-troubling trend did appear to be emerging in the US labor market.  For example, part-time jobs accounted for a frightening 97% of the job growth through the first half of 2013, and the typically-calm ratio of new part-time workers to new full-time workers had “exploded” over the same period.  (Plenty more on these trends is available here).  And we saw hundreds of reports of individual employers shortening workweeks and dumping employees on to state and federal exchanges.  Yes, these are just anecdotes, but as one kinda-famous Nobel economist recently explained in one of my favorite blog posts of the year, “the plural of anecdote is data.”  Indeed it is.

So when the mandate was in force during the first half of the year, broad changes in the US labor market appeared to be materializing; and when the mandate was delayed, those trends seemingly disappeared.  Correlation doesn’t mean causation, of course, but you’d think that this important correlation warranted at least passing mention in any of the reports on the September jobs numbers’ “miraculous” improvement.  Missing this important factor is akin to losing weight through an intense diet and exercise routine; then declaring the routine a failure when you cut out the exercise part and started gaining the weight back.  No right-thinking person would ever do that, but plenty of “smart” folks just did the same thing with the Obamacare- jobs reports.  Such hackery is unsurprising coming from the White House information minister press secretary and his biggest fanboi Tommy, but it’s just sad coming from supposed journalists like Ms. Pickert.

As if this little oversight weren’t bad enough, it also turns out that the White House and its cheerleaders have failed to parse the latest jobs data correctly – something that IBD’s Jed Graham deftly did last Thursday.  After reiterating the liberal punditocracy’s new consensus, Graham explains that, even in the September jobs report, Obamacare appears to be seriously harming low-wage workers (i.e., the millions making less than $14.50 an hour).  For these folks, that supposedly rosy September jobs report ain’t so rosy: “the workweek is back near the 27.4-hour record low seen at the depth of the recession in 2009,” and both hours and wages for certain industries – such as baking, leisure and hospitality, lodging and retail – are getting hit especially hard.  Thus, by looking only at only the forest of aggregate US labor data, Pickert, Carney, Christopher and others have failed to see the troubled trees in the low-wage labor market.

A possible divergence between low-wage and higher-wage workers after the mandate delay actually makes a lot of sense and has some academic support (short sample here): it’s typically easier economically and psychologically to downsize low-wage workers than higher-wage workers because the latter are (again, typically) more difficult to train, replace or rearrange, and work more closely to the business-owners and managers who’d be downsizing them.  So assuming the academic literature holds, employers would be expected to delay the pain of reducing higher-wage workers’ hours much longer than the hours of lower-wage workers.  As such, it wouldn’t be surprising at all to see low-wage workers be the first to feel Obamacare’s pinch and continue to do so in 2013 even though the employer mandate has now been delayed.  If this is correct, we’ll likely have to wait until next year to see if higher-wage workers start sharing in their low-wage brethren’s misery.

It’s important to remember, of course, that the limited scope of Obamacare’s employer mandate (applying only to companies with more than 50 employees that don’t offer coverage to full-time workers) means that, contrary to some scary Republican claims, the mandate will never singlehandely turn America into a “part-time nation”.  Nevertheless, the mandate’s delay had made it impossible at this stage to know just how many American workers will be forced to accept fewer hours and smaller paychecks, and Graham’s analysis makes clear that, even now, those who can least afford such cuts are the ones feeling them.  Maybe, as some pundits callously assert, “only” a half a million US workers will end up feeling the mandate’s pain (others see much higher numbers), but that’s a far cry from the confident “none” claimed by the White House and its friends.

And given the law’s, ahem, other problems, it’s about 500,000 too many.

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The views expressed herein are Scott Lincicome’s alone and do not necessarily represent the views of his employer, White & Case, LLP.