We suspect Lloyd Blankfein will be receiving a call from The White House (or Treasury) very soon as Goldman Sachs' economists did the unthinkable in the age of political correctness - while investigating the state of under-employment in America, the smartest people in the room found that ObamaCare has led to a rise in involuntary part-time employment, estimating that "a few hundred thousand workers" have been forced to cut hours and has "created disincentives for full-time employment."
Goldman's Jan Hatzius explains that they find mixed evidence to support the theory that the employer mandate under the Affordable Care Act (ACA) has contributed to the elevated level of involuntary part-time work.
Our estimates of the effect by industry do show signs of an effect, particularly among the sectors that had the greatest gaps in required health insurance coverage prior to implementation of the mandate, but the relationship is weak.
It is possible that the level of involuntary part-time workers could be a few hundred thousand higher than it would be otherwise as a result of the mandate, which is a small share of the 6.4 million workers employed part-time involuntarily, but potentially a much larger share of the “underemployment gap”.
Their research into the relative slack in the labor force notes that...
The share of workers who would like to work full-time but are only able to find part-time work for economic reasons has declined much more slowly than the unemployment rate, raising the possibility that structural factors could be keeping the involuntary part-time rate elevated (Exhibit 1). If true, this would suggest that there is currently even less slack remaining in the labor market than we have assumed.
One potential explanation of the structural rise in the ratio of share of part-time to full-time employment is the employer mandate in the Affordable Care Act (ACA).
In principle, the ACA should increase part-time employment as a share of total employment, from both the demand and supply side.
- On the demand side, some employers that do not offer health insurance coverage for full-time employees may seek to avoid penalties by relying on part-time labor instead.
- On the supply side, the ACA potentially creates disincentives for full-time employment, as it increases the implicit tax on marginal low- and middle- income earnings by reducing subsidies as incomes rise. It also loosens the link between employment and health insurance coverage - coverage can now be purchased more easily away from one’s employer - which may allow some who previously worked full-time for the offered health benefits to now work part-time instead. However, these supply-side effects should not be contributing to the elevated level of involuntary part-time work.
As Goldman concludes...
Overall we believe that the evidence suggests that the ACA has at least modestly elevated involuntary part-time employment.
While the effect is hard to quantify given the apparently loose relationship just noted, we would estimate that a few hundred thousand workers might be working part-time involuntarily as a result of the ACA. We reach this estimate by multiplying the difference between the actual and estimated involuntary part-time workers in the five sectors most affected by the ACA mandate by total employment in those sectors. We can reach a similar estimate by dividing the sectors into two groups weighted equally by total employment, and subtracting the difference between actual and estimated involuntary part-time employment in the less-affected group by the difference in the more affected group. These admittedly rough measures fall in the middle of the few academic studies on the topic, and suggest that while the effect of the ACA employer mandate is small compared to the total number of the 6.4 million workers employed part-time for economic reasons, it could constitute a more significant share of the estimated remaining “underemployment gap.”
There goes Blankfein's invite to Hillary's inauguration.