The ObamaCare-Induced Shift to Part-Time Work By David Henderson

UPDATE BELOW:

The title of this post is the same as the title of a post I wrote in January 2013. Why do I use the same title? Because of this statement from Brad DeLong:

I mean, some employers are going to drop hours below 30 a week once the employer pay-or-play hits. But we won’t see that until the February 2015 employment report, and there is no reason for employers to start that eighteen months in advance. It isn’t there in the data. And nothing would lead anybody to expect that it would be visible in the data right now.

It’s a reasonable problem for Brad to pose. And it turns out that there is an explanation for why employers would be adjusting this year rather than waiting.

I explained in January why there is a reason to see a shift to part-time employment now. Here are the relevant passages that I quoted from a January Wall Street Journal news story:

Even though the rule doesn’t go into effect until early 2014, a business could be subject to the so-called employer mandate if, during 2013, it averages 50 or more full-time equivalent employees, according to recently released regulations from the Treasury Department and the Internal Revenue Service.

And:

Many small-business owners haven’t yet realized that the way they structure their firm in 2013 could determine their status under the law in a year’s time. The government issued the little-noticed regulatory guidance on Dec. 28. Ms. Turley says she wasn’t aware of the rules until a Journal reporter informed her. To avoid the health-care law’s penalties, many employers are considering hiring only part-time employees or deliberately curbing growth so that they have no need to hire.

Of course, in early July, Obama unilaterally, without legal authority, delayed the employer mandate until January 1, 2015. But that means that from January 2013 to July 2013, when a Treasury official announced the change, employers who were paying attention thought that they had to shift to part-time employment this year. I don’t know if Obama adjusted the rules so that the baseline becomes calendar year 2014 instead of 2013. But even if he did, that gives employers less than 6 months in which not to worry about having too many full-time employees.

That’s the answer to Brad’s assertion.

HT to Mark Thoma.

UPDATE:

See Megan McArdle’s two comments below. Because she follows this issue more closely and carefully than I, the probability that she is more correct than me is very high.