This article first appeared at The McAlvany Intelligence Advisor on Wednesday, August 21st, 2013:
As Obamacare’s implementation draws ever closer, so does the law of unintended consequences. Promoted as a way to provide healthcare coverage for millions of presently uninsured individuals, the real impact is exactly the opposite: companies are hiring part timers to replace full-time workers, resulting in fewer getting coverage rather than more.
What’s especially delicious is that, in the process, Obama has managed to offend the very people he most wanted to reward: his union supporters. The president of the United Food and Commercial Workers Union, Joseph Hansen, wrote:
Wait a year. You’ll see tremendous impact as workers have their hours reduced and their incomes reduced. The facts are already starting to show up.
Indeed they are. Government workers in Pennsylvania, North Carolina, and Indiana are cutting school workers (one of Obama’s strongest supporter sectors, at least up until now) to part-time. In California, Texas, and Michigan, government workers – parks and recreation officials, librarians, and secretaries – are having their hours and benefits (including health insurance) reduced.
Retail establishments are cutting back, as well. The teen apparel chain Forever 21 caught enormous flack over a leaked announcement that they were going to “reclassify” some full-time workers to part-time, defined conveniently as 29.5 hours per week, just under the Obamacare definition of full time workers that require full health insurance coverage.
Walmart’s part-time workers represented just 1 to 2 percent of its workforce a couple of years ago. Now they are approaching 10 percent.
The latest jobs numbers from the Bureau of Labor Statistics show the same thing: the US is turning into a part-time worker economy. Here are the numbers:
In December, 2007, at the start of the Great Recession, there were 121.7 million full-time jobs and 24.8 million part-time jobs.
Today, according to the BLS, there are 117.7 million full-time jobs while part-time jobs have jumped to 27.4 million.
Tyler Durden at Zerohedge looked at the BLS report and concluded that of the nearly one million jobs the economy has created since the first of the year, only 222,000 of them are full time. Three out of four of those million jobs created are part-time jobs.
Staffing firms are seeing the same thing. Said Steven Raz, owner of a staffing firm in New Jersey:
We and other people are hiring part-time because we don’t know what the costs are going to be to hire full-time. We are being cautious.
And this from Darin Hovendick, head of another staffing company:
They have put some of the full-time positions on hold and are hiring part-time employees so they won’t have to pay out the benefits.
When a company moves from full-time people to part-time, however, they still have the same amount of work to do, so they wind up hiring more people. This makes the jobs numbers look good on the surface. Says Phillip Noftsinger, whose company manages the payroll for more than 5,000 small businesses in Roanoke, Virginia:
As organizations and companies reduce the hours of part-time workers, they still have to replace the capacity, so they go out and hire additional part-time workers.
All this uncertainty is slowing the economy, another unintended consequence. From the Federal Reserve Bank of San Francisco comes word that the US unemployment rate is at least 1.3 percent higher than it otherwise would be without the Obamacare mandate – that translates into about 2 million jobs not created: full-time or part-time.
Naturally, the White House is denying any of this. Jason Furman, chairman of Obama’s Council of Economic Advisers, said “We are seeing no systematic evidence that the Affordable Care Act (an Orwellian title if there ever was one) is having an adverse impact on job growth or the number of hours employees are working.”
Within the modern era, examples of unintended consequences abound. There’s the “safety helmet” mandate in Australia that required bicycle helmets for all riders in order to reduce head injuries. But people stopped riding their bikes because wearing helmets wasn’t “cool,” thus negating the health benefits of bike riding.
There’s Prohibition, probably the most glaring historical example of unintended consequences. People didn’t stop drinking. They just found other ways to indulge, creating a criminal element that increased violent crime and made criminals out of businessmen.
There’s the War on Drugs, intended to suppress the illegal drug trade, but which has instead consolidated and strengthened the drug cartels and put millions of Americans in jail.
There’s “blowback” from CIA interference in foreign governments through its covert operations, such as their funding of the Afghan Mujahedeen, which contributed to the rise of Al-Qaeda.
There’s the introduction of rabbits into Australia for food, resulting in an explosion in the population of rabbits to the point where they have now become a major feral pest.
There’s the introduction of Kudzu into southeastern United States as an ornamental plant that would help prevent erosion in earthworks, but has replaced native plants and virtually taken over significant portions of the land.
One could go on: the “Streisand effect,” “rent control,” the “one day without a car” program in Mexico City to reduce pollution, which backfired (sorry), and so on.
Some of the unintended consequences are silly or humorous. Others are much more serious and long-lasting. Some are delicious, such as Obamacare resulting in exactly the opposite of its intentions and offending its supporters along the way.
The Washington Post: Forever 21′s leaked memo