Trend is Toward Less Hours, Not More Jobs
Ronald Lazof is a Job Creators Alliance member, Managing Director at Prism Advisors, LLC, and former President and CEO of Behr Processing.
First let me offer congratulations to the 165,000 families who’s personal unemployment rate went from 100 to zero percent last month – always a joyous event both in terms of economics as well as self-worth and esteem.
Unfortunately, it is widely estimated that the minimum average monthly number of new entries to the labor market, plus needed rehires to maintain both work force participation levels and reduce underemployment and unemployment numbers, is 250,000! (U6 is currently in excess of 22,000,000 Americans, with the civilian work force increasing by 210,000 for the month)
Additionally, the percentage of those employed to our total population has now shrunk to an all time low of 56.8 percent. This is a different number than the civilian work force participation rate – the ratio of those in the work force to those that are employed and unemployed and still looking for work – which is now at 63.3 percent. Of the 165,000 jobs added, 176,000 were in the private sector. (This is also a cause for celebration, as it means government employment shrunk by 11,000.)
Let’s look closer at one segment of the employment numbers: the food and beverage industry, sometimes denominated as the leisure and hospitality. We were told that included in the 165,000 new jobs were 39,000 jobs in this sector – that is clearly a good thing. We were also told that included within new jobs were 278,000 involuntary part-time and 163,000 voluntary part-time or temporary jobs, for a total of 441,000 new part-time jobs which means that the reciprocal 276,000 full-time jobs were lost – clearly not a good thing.
During the past year involuntary part-time employment – less than 32 hours weekly – increased by 222,000 jobs. Another factor to consider is that the average work hours continued to fall and is now down to 34.4 hours.
If we put this information together with the number of total jobs existent in the food and beverage sector, we can easily make an explanatory supposition that this increase is related causally to Obama-care. We know that employers in general are acting to arrange their affairs to comply or avoid the necessity to comply with the mandatory coverage and penalty provisions. This naturally leads to reduced hours and additional part time employee head-counts at the remarkable ratio of 3 to 1.
In other words, if an employer has 21 employees capable of part time scheduling and had previously had them working 40 hours, they could now provide the same hourly coverage with 28 employees working 30 hours per week.
There are 14 million employees in the food and beverage sector today. If only 50 percent of those jobs were capable of part-time scheduling and only 50 percent of the employers capable of scheduling those employees were to make this calculation and take the above action, this would result in the “manufacture” of 1,112,000 additional “jobs” (all of them part-time) and the loss of 3,500,000 fulltime jobs. This would result in changing the “Job Report Top Line Unemployment Rate” from 7.6 to 6.8 percent without doing our economy any good at all!
Perhaps that is the real intention of ObamaCare: if we can just (a) encourage more employers to make their employees part-time and (b) encourage more former employees to leave the work force we can (c) drive the Unemployment Rate down and at least claim to have a fully recovered economy.
Washington must tap the experience of America’s small business owners to help get us out of this mess – they know how to create jobs. Instead, we’re just getting “fun with numbers.”