The Biggest Economic Story of 2013: Disappearance of full-time jobs with benefits

by 1389 on November 29, 2012

in "Obamacare", "The Great Recession", 1389 (blog admin), Barack Hussein Obama, government regulation, unemployment

Coyote Blog has the story:

Smiley under falling anvil

Sorry, but it is not the fiscal cliff. It is the complete shift in the US labor model, at least in the service sector, due to Obamacare.

Here is what I am doing for the rest of the year — working with every manager in my company so that as of January 1, 2013, none of our employees are working more than 28 hours a week. I think most readers know the reason — we have got to get our company under 50 full time employees or else I am facing a bill from Obamacare in 2014 that will be several times larger than my annual profit. I love my workers. They make me a success. But most of my competitors are small businesses that are exempt from the Obamacare hammer. To compete, I must make sure my company is exempt as well. This means that our 400+ full time employees will have to be less than 50 in 2013, so that when the Feds look at me at the start of 2014, I am exempt. We will have more employees working fewer hours, with more training costs, but the Obamacare bill looks like about $800,000 a year for us, at least, and I am pretty sure the cost of more training will be less than that.

This will be unpopular but tolerable to most of my employees. The vast majority of them are retired and our company is merely an excuse to stay busy, work outdoors, and get a little extra money.

But this is going to be an ENORMOUS change in the rest of the service sector. I have talked to a lot of owners of restaurants and restaurant chains, and the 40-hour work week is a thing of the past in that business. One of my employees said that in Hawaii, it was all the hotel employees could talk about. Many chains are working on mutli-team systems where two teams of people working part-time replace the former group of full-time employees. 2013 is going to see a lot of people (who are not paid very well to begin with) getting their hours and pay cut by 25%. At the same time that they are required, likely for the first time since many are relatively young, to purchase health insurance.

It will be interesting to see what solutions emerge. My bet is that it will become standard for people in the service sector to work two different jobs for 20-25 hours each with two different companies. This will be a pain for them, but allow them to keep their income up. The hard part may be coordinating shifts between companies. For example, a company that divides their shifts into mon-tue-wed vs. thu-fri-sat cannot share employees with one who divides their shifts between morning and afternoon. If given time, I would guess that just as the mon-fri workweek emerged as a standard, companies may adopt standard ways of dividing up the work weeks for part-timers, making it easier for schedules to mesh.

Problem is, many types of employers can’t set up their shifts so that they dovetail with the staff coverage needs of other employers in the area. Employers need coverage during peak hours; for retailers, that’s the mid-morning through afternoon shift. Furthermore, because of demand shifts, retailers schedule more employees in some weeks than in others. That makes it impractical to give each part-time employee a fixed schedule every week so that they can devote their off hours to another employer.

It’ll be a whole lot of ugly, and you can take THAT to the bank.

Graph: High- and mid-wage jobs vanish

Also see:


{ 1 comment… read it below or add one }

Leave a Comment

{ 1 trackback }

Previous post:

Next post: