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Thursday, April 25, 2013

Unemployment, Full-Time vs. Part-Time Work, ObamaCare and the Law of Unintended Consequences

We need more jobs in the U.S. We also need more full time jobs. And we need more high paying jobs such as those that would be provided if President Obama finally approved the Keystone XL Pipeline's construction, as an example.

To be more precise, we need government not to continue to discourage new investment and related hiring in the private sector in a failed effort to increase payrolls through such things as minimum wage hikes and newly enacted legislation like ObamaCare.

Some Chicago fast food workers went on strike for higher wages yesterday. See Chicago fast food, retail workers strike today. What the striking employees may not realize is that ObamaCare's enactment will make it even harder for workers like them to secure full-time employment, let along higher wages.

It seems like the law of unintended consequences is alive and well in America, and that government knows best attempts to make things better for American workers is actually and unfortunately accomplishing the opposite. Meanwhile, we blame the employers while refusing to pay higher prices for what they're selling.

Here's my question. Where will the money come from to employ more people and pay them higher wages, if not from a stronger and more successful private sector?

Part-Time Work Becomes Full-Time Wait for Better Job has the story:

"The American economy has generated 30 straight months of job growth. But for millions of people looking for more work and greater income, that improvement provides little solace.

In March, 7.6 million Americans who want more hours were stuck in part-time jobs, about the same as a year earlier and three million more than there were when the recession began at the end of 2007.

These almost invisible underemployed workers do not count toward the standard jobless rate of 7.6 percent. A broader measure, which includes the involuntary part-timers as well as people who want to work but have stopped looking, stands at 13.8 percent.
“There’s nothing inherently wrong with people taking part-time jobs if they want them,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “The problem is that people are accepting part-time pay because they have no other choice.”
Even for those who have been able to take advantage of the better job market, the opportunities have not been good. Since the economy began to recover almost four years ago, hiring has been concentrated in relatively low-wage service sectors, like retailing, home health care, and food preparation, and in contingent jobs at temporary-hiring companies. For example, nearly one out of every 13 jobs is at a restaurant, bar or other food-service establishment, a record high.
Household incomes have been stagnant throughout the recovery, and actually fell in the latest report, according to Sentier Research. As a result, economists and policy makers have been expressing concerns about not only the pace of hiring but the quality of new jobs as well. . . . 
Part-time work rose rapidly in the recession and early parts of the recovery, and it has not let up much. Today, 19.1 percent of workers say they usually work part time, defined as fewer than 35 hours a week, versus 16.9 percent when the recession started.
Essentially all of the gains in part-time employment have been among people who are reluctantly working fewer hours because of slack business conditions for their employer or an inability to find a full-time job. . . . 
Holding a part-time job when a full-time one is desired is frustrating for workers, and not only because fewer hours means less income. Like temp workers, part-timers are also less likely to get benefits and are more likely to be stuck with unpredictable schedules that make it hard to plan for child care, transportation or even a second part-time job. . . . 
Part-timers also generally earn less per hour than their full-time counterparts.
There are multiple reasons for an increased reliance on part-timers, primarily continuing low demand and uncertainty about the economy. . . .
Paul Dales, senior United States economist for Capital Economics, said, “There is another reason to believe that part-time employment will stay higher for longer, namely the incentives to employ part-time workers created by Obama’s health care reforms.”
Starting in 2014, employers that had an average of at least 50 full-time employees in the previous calendar year will have to provide health insurance or face penalties. Some companies and franchise locations, like Darden Restaurants, which operates brands like Red Lobster and Olive Garden, suggested last year that they might seek to limit full-time staff to avoid activating this mandate.
Confusion about the law and its requirements abounds, and even some small businesses that will not be affected may be changing their behavior because of it.
“Operators can’t be as casual about workers’ total hours as they could before because there are fines and penalties and costs associated with it,” said Scott DeFife, executive vice president for policy and government affairs for the National Restaurant Association. “You can’t accidentally let them become full time without a specific purpose.”
There may be other cost and efficiency pressures for employers to shift more of their workers into part-time jobs, independent of either public policy or the business cycle.
Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania, said it was much easier to fit workers’ schedules to fill longer hours of operation and meet the ups-and-downs of customer demand if they were part time.
“Trying to efficiently schedule full-time workers in McDonald’s shifts requires some real brain power, some sophisticated math or software scheduling to make that work,” Professor Cappelli said. “If on the other hand you can do it with part-time workers, it’s a piece of cake.”"
Summing Up
The law of unintended consequences is alive and well with the enactment of ObamaCare and will further work to the detriment of employees seeking full-time steady employment and an accompnaying package of "fringe" benefits.
The facts are simple. The more expensive it is to hire full time workers, the more part-time workers there will be.

And in today's slow growing economy and lousy employment environment, there are plenty of people for employers to choose from when hiring.
Thus, in the uncertain economy that exists today, high unemployment and the enactment of ObamaCare both make it likely that companies will continue to hire part-time workers, especially in jobs where customer traffic fluctuates and work schedules can be arranged to accommodate fluctuating and uncertain consumer demand.
All in all, our U.S. unemployment situation is bad and won't see much improvement the rest of this year. The introduction of ObamaCare won't make things any better for employees seeking full-time work.

That's for sure.
Thanks. Bob.

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