The Good News About Obamacare in the June Jobs Report
Many people touted the 288,000 new jobs the Labor Department reported for June, along with the drop in the unemployment rate to 6.1 percent, as good news. And they were right. For now it appears the economy is creating jobs at a decent pace. We still have a long way to go to get back to full employment, but at least we are now finally moving forward at a faster pace.
However there is another important part of the jobs picture that was largely overlooked. There was a big jump in the number of people who report voluntarily working part-time. This figure is now 830,000 (4.4 percent) above its year ago level.
Before explaining the connection to the Obamacare, it is worth making an important distinction. Many people who work part-time jobs actually want full-time jobs. They take part-time work because this is all they can get. An increase in involuntary part-time work is evidence of weakness in the labor market and it means that many people will be having a very hard time making ends meet.
There was an increase in involuntary part-time in June, but the general direction has been down. Involuntary part-time employment is still far higher than before the recession, but it is down by 640,000 (7.9 percent) from its year ago level.
We know the difference between voluntary and involuntary part-time employment because people tell us. The survey used by the Labor Department asks people if they worked less than 35 hours in the reference week. If the answer is "yes," they are classified as working part-time. The survey then asks whether they worked less than 35 hours in that week because they wanted to work less than full time or because they had no choice. They are only classified as voluntary part-time workers if they tell the survey taker they chose to work less than 35 hours a week.
The issue of voluntary part-time relates to Obamacare because one of the main purposes was to allow people to get insurance outside of employment. For many people, especially those with serious health conditions or family members with serious health conditions, before Obamacare the only way to get insurance was through a job that provided health insurance.
However Obamacare has allowed more than 12 million people to either get insurance through Medicaid or the exchanges. These are people who may previously have felt the need to get a full-time job that provided insurance in order to cover themselves and their families. With Obamacare there is no longer a link between employment and insurance.
These workers will now have an option to work part-time if they would like to spend time with young children, an ill or disabled family member, or would simply like more time to do other things. This is a freedom that workers in every other wealthy country have long enjoyed; now workers in the United States no longer need a full-time job to get health insurance. And the data indicate that many workers are taking advantage of this option.
There is some evidence that Obamacare is having other positive impacts on the labor market. One of the striking developments in the recovery has been the incredibly disproportionate share of jobs that went to older workers. This was likely due in part to the fact that older workers would have an especially hard time paying for insurance in the individual market and therefore were to desperate to get and keep jobs that provided insurance. Obamacare now gives older workers the option to buy more affordable insurance on the exchanges. This may lead many to retire early.
While employment growth for workers over age 55 averaged 4.8 percent annually from 2011-2013, it was down to 2.5 percent in the last year. The gainers from slower employment growth among older workers appear to be young workers who saw employment growth of 2.3 percent in the last year, up from an average of 1.3 percent in the prior two years.
There was also a rise in the share of unemployment attributable to people voluntarily quitting their job. This would be another dividend of Obamacare, as workers would feel more comfortable leaving a job they didn't like if they didn't need it to get health care insurance.
It is still too early to reach any firm conclusions about Obamacare's influence on the labor market, but the evidence to date is positive. For whatever reason, Obama has been reluctant to tout these gains. That is unfortunate; the issue is not just boasting about the success of the law, but making workers aware of the new freedom the law provides.
None of this is to say the Affordable Care Act (ACA) is perfect. Far too much of our health care dollar is wasted on insurers, drug companies, and overpaid doctors. But the ACA is an enormous step forward in providing genuine health care insurance to hundreds of millions of people and the public should recognize and take advantage of this fact.
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This has been reposted from The Huffington Post.
