The Obama Administration’s decision to delay for a year the penalty that employers (in firms of 50 or more employees) must pay if they don’t provide health insurance to their workers shines a light on a problem that may be even more profound than getting health coverage for every American: that is, the decline of the American job.
The employer mandate was designed for an economy in which American workers were employed in what had been normal jobs. In firms of 50 or more, all workers who put in at least 30 hours a week were either to receive coverage from the firm or else the firm would have to pay the government a $2,000 yearly penalty.
Problem is, fewer and fewer workers are putting in 30 hours a week. To begin with, labor-force participation is at its lowest level since women increased their work-force participation in the 1970s. It has declined even during the past four years of so-called recovery. The past four years have also seen a rise in the percentage of workers who are part-timers, who currently constitute 19 percent of the work force. Full-time work has been declining for nearly half-a-century. In 1966, the average workweek was 38.7 hours. Today, it’s 34.5.
One reason for that decline is the economy’s shift away from manufacturing, where the average workweek is 40.8 hours, to services, where it is only 33.4 hours. In the two fastest growing sectors of the economy, it’s even lower than that: 31.6 hours in retail and 26.1 in leisure and hospitality (that is, hotels and restaurants).
What this means is that the percentage of workers whom employers would be required to cover (or pay a fine for not covering) is in long-term, secular decline. There’s anecdotal evidence—the weakest kind of evidence, I know, but the only kind we currently have—that a number of employers were going to accelerate that trend by cutting workers’ weekly hours beneath 30 to avoid the cost of insurance or the cost of the penalty. The Los Angeles Times reported that colleges were cutting back the hours of part-time professors, and that the city of Long Beach was limiting the weekly hours of part-timers to 27. At the direction of Republican Governor Bob McDonnell, the state of Virginia issued a new directive restricting part-timers’ hours to 29-per-week.
Most of the affected workers should be able to buy health insurance—in many cases, with hefty federal subsidies—on the new health exchanges, which are still scheduled to take effect next January 1st. But some undeterminable but still considerable number of them would have had their hours and thus their pay cut if the employer mandate had come into effect then as well.
The deeper problem, however, is that hours have been declining well before universal health insurance was a gleam in President Obama’s eye, and will continue to decline in any case. A saner nation would decouple health insurance from employment and just provide it across the board, but that’s not, alas, the American way. The establishment of health exchanges means that more and more Americans will be able to purchase such decoupled coverage, which is surely a step forward. With the share of involuntary part-timers and temp workers continuing to rise, however, more and more Americans will need subsidized health insurance, and subsidized food purchases and rent and who know what else? Delinking health coverage from jobs is long overdue. What to do about the jobs themselves remains not only an unsolved conundrum, but one that’s almost entirely unaddressed.