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Saturday, October 20, 2012 2:05 AM

Mish Obamacare Mailbag: Expect More Part-Time Jobs

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I received a number of interesting emails from readers in response to Prepping for Obamacare, Olive Garden and Red Lobster Cut Workers' Hours; Are Other Companies Doing the same? Tip Sharing Lowers Minimum Wage; Like One, Like All?.

Here is a sampling of emails.

Reader John, Owner of 37 Restaurants Chimes In

Hello Mish,

I own a chain of 37 fast food restaurants. I am doing the same thing as Olive Garden  [going to part-time workers] as are many of my small (50 to 1000 employees) competitors. This ObamaCare tax will continue to cause a large shift in employment figures starting now and continuing for the next several years, decreasing the unemployment rate as each full time employee gets replaced with more than one part time employee.

Reader Kris writes About Whole Foods
Hello Mish,

Thanks for your wonderful data analysis on all my favorite B(L)S topics...

As an anecdotal note to Prepping for Obummer care... Whole Foods also limits their non-management hourly workers to 20 to 29 hours per week. Says so right on any of their existing location employment openings via their online application process.

Thanks and keep up the great debunking work.

Reader Mark (a Medical Doctor) Discusses Obamacare
Hello Mish,

That Obamacare encourages part-time employment is as clear an argument as can be made for separating health care coverage from employment.  There are no advantages to the American public at large of creating a large underclass of uninsured people flooding ER's for expensive and fragmented care providing poor outcomes at high cost.  That is where we will be headed if corporations decide that their workers don't matter.

As an aside, I would expect workers placed in such situations to provide worse service and to degrade the experience of customers in these restaurants (and other businesses) damaging the businesses themselves over time.

Small Business Owners Focus On The Economy

The above anecdotes are via email from Mish readers. Let's now take a look at snips from the Yahoo!Finance article Small Business Owners: Engines of the American Economy

Cham Chun To, Owner of Big Wong take-out restaurant in Manhattan writes ...
Will we be able to handle the additional cost of health insurance for the employees? If we can, we’ll keep doing business; if not, we’ll have to stop. Our employees are self-insured now. Things are going to change in 2014. It’s going to be hard to maintain. It’s another expense, and it’s going to be no easy feat for us. The government can’t handle it, decided to pass the responsibility down. How are we going to handle that? We will lose money, especially when the economy is no good. We haven’t been able to increase the prices on our menu. We used to be able to increase a quarter on our prices every half a year or so. We’ll lose customers if we do that now.
John Pruitt, Owner of The Frameworks (picture framing) in Carrollton Texas writes ...

"I think more than anything else, I'm going to repeat what 90 million people are saying, get rid of Obamacare, or at least most of it."

Sarah McNally Owner of McNally Jackson Books in Manhattan, New York writes ...

"Bring down health care costs. We spend a damn fortune. We offer health care to all employees over 24 hours a week, and their families, common law partners, etc."

Jeff Popp of Mile High Mountaineering Complains About Tariffs ...
The biggest issue that absolutely drives me crazy and makes me want to pull my hair out is how high tariffs and duties are to import backpacks. And I understand that they want to protect American industry, but the fact is there is no American industry for stitched goods anymore. There’s just not, so I really don’t know who they’re protecting. And we’re getting charged — by the time shipping, duties and taxes are included — 24% of each product, is about what it costs. And that’s ridiculously high.

If they lightened up on duties, that would help us a lot. But we haven’t even found a manufacturer that would be capable of making our packs because they’re pretty complex and technical. Any American-made backpacks you find are going to be really simple, usually school-oriented type stuff. And if we did it here they’d be four times the cost. So even with the high duties and tariffs, it’s still way cheaper for us to offshore.

The talent is all over there now. That’s the thing. People always think that offshore goods are always cheaply made and stuff but no, those factories are on it. They do everything in one house; they’re very talented sewers, they know what they’re doing. No one here knows how to sew anymore.
Obama Responsible For Surge in Part-Time Jobs?

On October 9, I asked Is Obamacare Responsible for the Surge in Part-Time Jobs?

Clearly my readers believe that, and judging from Yahhoo!Finance, many others do as well. More importantly, anecdotal evidence suggests that business owners are indeed reacting that way as well.

Mike "Mish" Shedlock

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