it tends to do every few months or so, the right-wing commentariat erupted this week with reports that the Affordable Care Act is “forcing hundreds of thousands of people into part-time work.”
In various forms, the assertion was trumpeted by the Daily Caller,Zero Hedge, RedState and Fox News, among other sites. All cited a research note by Goldman Sachs economist Alec Phillips, but most did so by quoting an article about Phillips’ report published in the conservative Washington Examiner, which therefore can be regarded as Patient Zero in this particular outbreak. Anyway, my conservative correspondents quickly filled up my in-box with links to the Examiner article.
I’ve found that it’s always wise to check the original paper when sites like these are echoing each other. That’s especially so when the claim that Obamacare has created a nation of part-timers has been heard so often, without evidence.
You won’t be surprised to learn that the Goldman Sachs paper doesn’t say what they say it does. The Examiner, to be charitable, vastly overstated Phillips’ conclusions and ignored the fact that involuntary part-time employment has been falling while total employment has been rising. Some of the others then exaggerated what the Examiner wrote, as in a game of telephone or a prairie fire.
"We find mixed evidence to support the theory that the employer mandate ... has contributed to the elevated level of involuntary part-time work."— Alec Phillips, Goldman Sachs
Let’s take a look.
Here’s how the Examiner put it: “Obamacare is forcing hundreds of thousands of people into part-time work, according to a new analysis from the bank Goldman Sachs.
“In a research note sent out Wednesday, bank economist Alec Phillips concluded that ‘the evidence suggests that the [Affordable Care Act] has at least modestly elevated involuntary part-time employment.’ He wrote that a ‘few hundred thousand’ workers may have had their hours cut or been forced to take part-time jobs because of the law.
But here’s what Phillips actually wrote:
“We find mixed evidence to support the theory that the employer mandate under the Affordable Care Act (ACA) has contributed to the elevated level of involuntary part-time work.” He estimated that a few hundred thousand workers might be working part-time involuntarily as a result of the ACA, but acknowledged that “the effect is hard to quantify.”
In his nuanced presentation, Phillips didn’t find that involuntary part-time employment — that’s what happens when people want to work full-time but can only find part-time work — has risen. (More than three-quarters of all part-timers do so voluntarily.) He found, instead, that while the share of part-time work in the entire labor force has come down since the recession, it hasn’t fallen as fast as expected.
One reason for that, he speculates, is that the employer mandate may be leading some industries still to rely more than expected on part-timers. Chiefly, this phenomenon is found in retailing and food service, Phillips found. And what sets those sectors apart is that they had a high percentage of uninsured workers, including full-timers, before the ACA. That’s a sign that they always were resistant to providing employees with health benefits, and fewer have changed their spots compared to other sectors. It appears that there’s some elevation of part-time work over what would be expected in sectors that had the highest percentage of uninsured workers,” Phillips observes, “but the relationship is weak.”
He thinks it’s “unlikely that firms which previously provided coverage voluntarily would now shift workers to part-time to get out of paying those same benefits.” In other words, what’s happening isn’t that employers are cutting hours to evade the employer mandate — they’re failing to shift more workers to full-time work.
There could be many reasons for that, Phillips observes, including general employment trends over the last 20 years. Changes in the industries themselves, especially retail, could have something to do with it too.
Overall, the Bureau of Labor Statistics finds that involuntary part-time employment has been falling ever since the end of the recession, including since the ACA’s enactment in 2010. (See chart below.) While the level ticked up in March and May, the May figures show that among non-farm industries, there are still 119,000 fewer involuntary part-time workers than there were in May 2015 and 787,000 fewer than two years ago. Total non-farm employment, meanwhile, has risen by 4.2 million in two years.
So what’s the meaning of these trends? Phillips points out that it’s possible that the influence of the ACA has led to a “few hundred thousand” more involuntary part-time workers than there would be absent the act, but notes that’s a small percentage of the 6.4 million involuntary workers in the country (if “a few” means 300,000, for example, that’s 4.3%). As a share of total employment, which was 140 million in May, it’s minuscule.
That’s cold comfort to anyone locked out of the full-time job market, but on the other hand the ACA has brought insurance to some 20 million Americans who didn’t have it before, and it’s a safe bet that most of them are glad they have it.
A close look at the Goldman Sachs research note gives the lie to the Examiner’s assertion that “Obamacare is forcing hundreds of thousands of people into part-time work.” Phillips didn’t write anything that categorical. He wrote that there might be an effect, that it might be that size, and there might be other reasons for the persistence of part-time work. The right wing took that ball and ran with it, fumbling all the way.