(Or, Health Insurance Won’t Pay the Rent)
Mickey Kaus and J.D Tuccille separately cover ObamaCare’s impact on workers. Tuccille focuses on Darden Restaurants’ plan to limit the number of hours worked by employees so that they are not considered full-time workers under the health care mandate. As has been noted, this law is expected to fall heaviest on the retail and restaurant industries.
If employees work more than 30 hours per week (seemingly on average, over the course of the entire year), employers will be forced to offer health care coverage to those employees. As Tuccille points out:
This truly sucks if you’re a worker trying to piece together the paychecks needed to live a decent life. Now you have to scramble to pick up another part-time job, and neither will come with much in the way of benefits. OK, the feds will have some health program for you through the government-mandated exchanges, but goodbye vacation time and any other goodies that come from full-time status, such as manageable schedules.
This sucks double for Olive Garden employees (I’m not sure about the others under the Darden umbrella). Within the last couple of years Olive Garden has changed its vacation pay policy. Granted, the company is one of few restaurant chains that offers its employees vacation pay, but they did this as a strategy to maintain low turnover. The company previously offered all part-time and full-time non-managerial employees vacation pay based upon the average number of hours they work through the course of the year. At one year of service, employees received their average weekly wages. After three years, they received twice their average weekly wages. After five years, three weeks worth.
I was grandfathered into this system, so I’m able to work fewer than 30 hours and still receive this benefit. My anniversary is in January and after every anniversary I tell myself that I’m going to quit before the next one, but then when July rolls around I decide to stay because my next anniversary is within sight. So turnover has been limited in at least one instance.
I asked my girlfriend who is a manager at a retail store if her company is doing anything to cope with the mandate, and she said that for the last eight months they’ve limited hourly workers to 28.5 hours per week in order to not risk going over the threshold. I posted on Facebook to rile up some of my co-workers on this and one told me that this is why nobody is scheduled more than five days out of the week. I never noticed because I only ever work five days (on a good week), but many of my co-workers would work every shift they could if management would let them. But management won’t, first because of the higher forced wages for overtime work, and now because of fears of ObamaCare fines. So these people, who don’t really want health care but who have immediate bills to pay, would rather have the hours than the benefits, but more and more employers – or the larger ones at least – are not likely to give them the number of hours they need. Losing a couple hours a week all the way up to ten hours a week translates into lots of lost wages, much more than will be gained by whatever health insurance coverage the worker is provided through Medicaid or forced by “penalty” or by “tax” to avoid purchasing. Catch 22′s and bear traps all around.
In his post, Kaus provides the corrective that the most recent jobs report doesn’t show, contrary to some interpretations, that part-time work is increasing all that much. Perhaps that’s true in this one jobs report, and maybe full-time jobs are on the upswing. But just a priori, for the long run it’s a no-brainer that employers will, all else being equal, attempt to skirt this law by cutting workers from full-time to part-time at this particular threshold. And it’s a pretty low threshold.
As Uwe Reinhardt and other economists have pointed out, employer-based health insurance is a sham. It was instituted during World War II as a response to wage ceilings. Employers couldn’t pay more cash to their workers so they offered benefits as inducements to work. That became entrenched, and the trend has been to place “the right to health care” burden on either employers or the State. Though, overturning that system just creates a vacuum into which the government will step.