Is Obamacare Driving Hiring?

Takeaway: Here's our hypothesis why that just might be the case.

Is Obabmacare Driving Hiring?


Financials sector head Josh Steiner addressed this question in a note to institutions earlier this week. Here’s an excerpt from that note. Steiner writes:

 

“Why is the labor market showing accelerating improvement? One hypothesis we've been considering is the Affordable Care Act (ACA) impact on low-wage, high employment industries like restaurants, hotels, etc. Under ACA, i.e., Obamacare, employers with 50+ employees must provide healthcare to employees who work 30 hours or more per week. Part-time (those under 30 hours) and temp workers are exempted from the requirement. Industries like restaurants and hotels, that employ huge numbers of relatively low-wage earners, would see their costs rise materially under ACA. Not surprisingly, many employers are quietly seeking to sidestep ACA by cutting workers to sub-30 hours and offsetting the lost hours by hiring additional part-time and temp workers.

 

Anecdotally, we've been reading a lot of articles about temp agencies seeing significantly higher demand of late. We ran across one that quoted an analyst at another firm saying that when Massachusetts implemented its universal healthcare plan, growth in hiring of temp workers in the state ran at six times the national average.

 

One thing to consider is that companies are treading very cautiously here from a public relations standpoint. No employer wants to be seen as intentionally seeking to sidestep ACA requirements. So much of this is going on under the radar. As counterintuitive as it may seem, we think ACA is actually creating jobs in significant numbers, while simultaneously reducing many workers from full-time (40 hrs+) to part-time (sub 30).”

 


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