Under ObamaCare, companies of more than 50 workers who do not provide health-insurance coverage have to pay significant fines, although not nearly as costly as the insurance itself. That alone might have employers bailing out of the health-insurance market, but the Orlando Sentinel reports that at least one company is testing a way to avoid both costs. Employers do not have to provide health-insurance coverage to part-time workers under ObamaCare as long as they work less than 30 hours a week, and one restaurant company has begun experimenting with changing over entire staffs to part-time work to avoid the ObamaCare mandates and fines (via Instapundit):
In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-based Darden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses.
Darden said the test is taking place in “a select number” of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it. …
Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.
If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace — for insurance.
This is the problem with massive government interventions into markets. They create perverse incentives, and force participants in markets to look for alternatives to the massive costs of those interventions. This is one example. Businesses usually prefer stable labor pools, and full-time status and reasonable benefits usually help provide that kind of stability. As a hiring manager for years, I can tell you from personal experience that managing a part-time staff creates its own costs and headaches, much of which won’t be felt in the home office of a multiple-location entity like Darden.
However, the costs may not outweigh the savings any longer derived from dumping benefits for workers — and that’s doubly true in a bad job market for workers. There aren’t too many competitive pressures at the moment to keep Darden and other companies from pursuing this strategy. It has the benefit of boosting employment numbers, but only among those involuntarily working part time … which, as Mickey Kaus points out, is exactly what the September jobs report showed.
If this turns out to be the trend, what happens then? Reason predicts that we’ll see even more government intervention to cut off those perverse incentives … which will result in even more perverse incentives:
Of course, politicians will, no doubt, scramble to fix this insidious outcome not of the legislation they passed, but of the errors of the uncaring private sector. And that legislation will, certainly, have no more unintended consequences.
In the meantime, the ObamaCare-driven transformation of America into Part Timer Nation will end up making the lives of workers more miserable rather than less so:
This truly sucks if you’re a worker trying to piece together the paychecks needed to live a decent life. Now you have to scramble to pick up another part-time job, and neither will come with much in the way of benefits. OK, the feds will have some health program for you through the government-mandated exchanges, but goodbye vacation time and any other goodies that come from full-time status, such as manageable schedules.
Having had that experience as a hiring manager, I’m not certain that a move to part-time staffs will succeed for businesses, but it’s going to be mighty tempting for them to at least try it out. Don’t be surprised to see this expand over the next two years or so, especially in the service industries.