Is ACA leading to less hiring?

by on January 19, 2014 at 3:46 pm in Economics, Medicine, Uncategorized | Permalink

There is a new study from West Michigan (pdf), by Leslie A. Muller, Paul Isely, & Adelin Levin, based on questionnaire responses.  I would take this with a grain of salt, but still it is useful information to throw into the pot.  Here is one excerpt:

Many firms have decided however to minimize their exposure to ACA costs by limiting the employees that must be covered. Questions 14a – 14c show that 36 percent of firms are considering (or using) temporary workers, 44 percent are considering or have reduced/limited hiring over the next 12 months, and 51 percent are considering or have already reduced/limited hours so that the employee is considered part-time.

You may find the tables on the last few pages of the paper of interest.  The results are based on fewer than 180 observations and presumably involve some selection bias as well.

The pointer is from W.E. Heasley.

Michael January 19, 2014 at 3:49 pm

Of course the political viewpoint of the respondent will color their response. This study is worthless.

Preston Sturgeon January 19, 2014 at 6:55 pm

The political viewpoint of the respondent may also color their business decisions.

JWatts January 19, 2014 at 7:42 pm

And thus, the study may accurately reflect reality.

Michael January 20, 2014 at 8:02 pm

Hardly. Business decisions are made on a simple p/l calculation. Anyone who makes business decisions based on politics will not stay in business long.

JWatts January 21, 2014 at 10:35 am

How does Fox News fit into your narrative?

Frank Somatra January 19, 2014 at 3:57 pm

A mailed out survey which received a <19% response rate? Not even worth my time reading the results.

Herb January 20, 2014 at 2:03 am

And one wonders if these firms spent more time attending to their business than filling out surveys, maybe they would be the kind of firm where their employees don’t pick up the slack for their lack of business acumen.

I mean, I love how they think they’ll save money on healthcare by hiring temp employees or running short-staffs.

This is not a rational decision these people are making.

prior_approval January 20, 2014 at 2:34 am

Don’t worry – the 81% who didn’t respond are more likely to be competent at running a business.

One could even make a reasonable argument that the people who didn”t respond found the premise of the survey a bit strange, as they make hiring decisions based on something other than their feelings about ACA.

And do remember to correct all those cited numbers down – there is no valid reason to believe that of the 80% companies that did not respond ’51 percent are considering or have already reduced/limited hours so that the employee is considered part-time’. Unless one wants to be a believer, of course.

Jan January 19, 2014 at 4:03 pm

Duh. Laws can only kill jobs, not create them. No increase in hiring health care workers, no jobs in outreach, no health IT professionals are getting work. And this country never saw a trend toward more part time and temporary workers until this monstrosity was made law. Good luck ever working again, America.

Michael January 19, 2014 at 4:09 pm

Laws can’t create jobs? Lawyers and legislators might be able to disagree with that by, you know, existing.

Max Factor January 19, 2014 at 5:40 pm

Don’t forget accountants and compliance folks. Compliance is a booming field but it is definitely an unenjoyable career path.

Careless January 19, 2014 at 5:51 pm

Jan is this site’s most vocal Obamacare supporter, Michael, if you couldn’t detect the thick slathering of sarcasm in her post.

AndrewL January 19, 2014 at 9:43 pm

This is like the broken window fallacy. Sure breaking that shoemaker’s window generate work for all the towns people, but at what cost to the shoemaker? All these laws, compliance, medical billing generated all these jobs but at what costs to the producers?

Not saying that all laws and regulations are bad, but good or bad, they do generate costs for producers/businesses etc. Every singe product out there has all of this stuff factored into the price of it.

Perhaps a doctors visit could cost 20$ insurance or no insurance, if the doctor didn’t have to keep an army of medical billers on staff as well. Again I’m not saying that all the regulations in the medical industry are bad, but they do have a real cost. So it should be no surprise that all this additional laws and regulations would only drive up costs for everyone.

libert January 19, 2014 at 11:38 pm

This. It’s also the reason why when you hear a politician or TV news pundit saying that policy X “kills jobs”, you should mentally translate it to “saves society’s scarce resources”.

nl7 January 19, 2014 at 4:25 pm

Trade-offs shouldn’t be that surprising. It’s either hire less, schedule fewer hours, or cut non-insurance compensation. Or do all three.

Z January 19, 2014 at 5:26 pm

The set of people who know ObumblesCare has put a damper on hiring is roughly equivalent to the set of people who own a business. The set of people who think it is impossible for ObumblesCare to have put a damper on hiring is a subset of people who have never signed the front of a paycheck, including Obumbles himself.

Max Factor January 19, 2014 at 5:42 pm

Obumbles? I expect better than that from the Z man! What is this – Yahoo?

JWatts January 19, 2014 at 9:25 pm

It’s really unnecessary to pile onto Obamacare, the results speak for themselves and furthermore I doubt that the set of people who think Obamacare has put a damper on hiring is equivalent to the set of business owners. I suspect the number is substantially higher.

Z January 20, 2014 at 8:31 am

I would like to think that, but I see no evidence of it.

Yancey Ward January 19, 2014 at 9:37 pm

For a company, what about the ACA would cause you to increase headcount more than you would have otherwise?

VTProf January 20, 2014 at 8:59 am

Agreed on the small & self-selected sample. And, erm, 95% of businesses wtih > 50 employees ALREADY offer insurance, and so would be minimally affected by ObamaCare. So either this survey sampled heavily in the remaining 5%… or lots of business owners are relatively conservative, and love to whack ObamaCare in a survey, but have no intention of really changning their hiring patterns. Or they’re collossally mis-informed about key aspects of their own businesses, which kind of hurts a lot of libertarian arguments.

Marie January 20, 2014 at 11:34 am

95% of all businesses with over 50 employees? There’s your lies, damned lies, and statistics for you!

What percentage of businesses with 51 to 200 employees already provides health insurance?

The Other Jim January 20, 2014 at 10:16 am

Obama has made it significantly more expensive to hire people. This will necessarily dampen hiring.

Am I typing too fast? Should I slow down when explaining these complex realities of the world?

ant1900 January 20, 2014 at 10:41 am

As an attorney in the employee benefits area, companies that are close to 50 employees are absolutely taking a close look at how the rules apply to part time workers, independent contractors, etc. Obviously overall business considerations dominate the decisions but employers want to know the rules and what they can do on the margins.

More sophisticated tactics include restructuring companies so that you do essentially the same business but conducted through multiple entities, with fewer employees at each entity. There are certainly rules against trying to game things at the entity level (so called “controlled group” rules), but the controlled group rules are generally bright line and there are ways to split into multiple entities and stay out of controlled group status. The amount of attorney time going into that sort of planning is massive, although it cooled off then the employer mandate was delayed. Once it is back, this type of planning will return.

Steve January 21, 2014 at 6:37 am

Absolutely – I spun key management into a separate entity they own – It now employees the people who would never qualify for subsidies. The operating company employees those who would but doesn’t offer them insurance (and now has less than 50 employees). This allows us to split benefits in a way that never would have been done in the past. The lower paid workers are losing some benefits but they will gain it back and then some in government subsidies. Plus we gave them bonuses equal to most of what we would have contributed to insurance in the past (put into retirement accounts to maximize the governments payments toward health care). They are paying less for insurance and getting more for retirement. They don’t see why – but they were thrilled.

VTProf January 20, 2014 at 12:09 pm

Yes, Other Jim, you should slow way down and explain why requiring 100% of large businesses to do something that 95% of large businesses already do makes it “significantly more expensive to hire people”.

According to a prof at Wharton (not exactly far-left): “You’ve got 5.7 million firms in the U.S.,” says Wharton’s Mark Duggan, who served as the top health economist at White House’s Council of Economic Advisers from 2009 to 2010. “Only 210,000 have more than 50 employees. So 96 percent of firms aren’t affected. Then if you look among those firms with 50 or more employees, something on the order of 95 percent offer health insurance. So it’s basically 10,000 or so employers who have more than 50 employees and don’t offer coverage.” Those companies probably employ around one percent of American workers.

ant1900 January 20, 2014 at 12:28 pm

This is ignoring the fact that any company under 50 employees can one day becomes a 50+ employee firm. Maybe only 210,000 firms have 50 employees. But how many have 40-49? Or fewer than 40 but are swiftly growing? According to Duggan these firms are not “affected” by the mandate, which strains common sense.

ant1900 January 20, 2014 at 12:40 pm

I pulled some SBA data (Google “SBA firm size data”).

Over 10m employees at 237,000 firms have 30 to 74 employees. These are the business that would care most about the 50 employee threshold of the mandate. There are 60,000 firms just in the 40-49 employee window. These are not insignificant businesses, with average payrolls of $2 million per year.

What you cite from Duggan has it backwards. We care about how many firms are under 50 employees, because each new hire puts them closer to the mandate. That’s 5.5 million firms.

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