The surge in part-time hiring is beginning to catch the attention of some in the media. Reuters reported on the phenomenon yesterday and explained that there are a couple different reasons for it — ObamaCare’s employer mandate and an economy that has yet to fully recover from a recession that officially ended in four years ago:
Faltering economic growth at home and abroad and concern that President Barack Obama’s signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say.
Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services.
Obamacare appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment.
Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees, according to the staffing and payroll executives.
The White House has emphatically denied any connection between the surge in part-time hiring and ObamaCare. After the June jobs report showed part-time hiring in record numbers, White House Press Secretary Jay Carney said that the “broader data here does not reflect that assertion,” though he conceded that he didn’t have a “specific response” to explain the numbers.
July’s jobs report showed the trend continuing, with 174,000 part-time jobs created compared to 92,000 full-time jobs. The economy has created an average of 104,428 part-time jobs per month compared to a dismal 31,714 full-time jobs.
As noted, Reuters also pointed to the economy as reason that many employers are hiring fewer full-time workers and the report notes that hiring may return as things improve. But economic growth is still tepid. Forbes noted back in April that economic growth has averaged less than 1% per year since 2008, which is a sobering reminder of how poorly the economy has functioned in the last five years.
And though the economy grew by 2.4% in 2011 and 2.2% in 2012, it has seen sub-2% growth in the first two quarters of 2013, including the absolutely anemic 1.7% GDP growth in the second quarter of this year.
Yes, things may get better as the economy picks up the pace, but most business owners are asking when that will happen after years of being told that the economy is recovering. Many are still not feeling it. Even when the economy does begin to recover at a better pace, many businesses — if not most — will still try to avoid ObamaCare’s employer mandate by hiring part-time workers or cutting hours.