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Mangling the Facts on Obamacare’s Impact

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-This article was originally published at National Review Online.

Since the arrival of Obamacare, before and after its rough passage into law, thousands of pundits and ordinary citizens have debated what impact its regulations and mandates will have on employers, and thus on employees. On Thursday, March 21, the Huffington Post published an article arguing that only a tiny minority of companies will need to cut employee hours in order to avoid certain costs of Obamacare. “All those companies threatening to cut workers’ hours as a result of Obamacare are actually an exception to the rule, according to a recent survey from the Minneapolis Federal Reserve,” HuffPo wrote, adding:

Nearly 90 percent of employers don’t plan to shift full-time workers to part-time status as a result of President Obama’s health care reform law, the study found. . . . In the wake of the law, some health care experts worried that companies would shift some of their employees to part-time status — or 30 hours per week or less — in order to avoid covering them. Though the survey notes that businesses may change their mind once they realize the full effects of Obamacare, it seems companies cutting (or threatening to cut) workers’ hours are more outliers than the norm.

The article was prominently displayed throughout Friday and received more than 700 Facebook shares, more than 80 Tweets, and almost 1,900 comments — but it misses important context and key facts.

The piece claims that “nearly 90 percent of employers don’t plan to shift full-time workers to part-time status as a result of President Obama’s health care reform law.” However, the study the piece cites — conducted by the Federal Reserve Bank of Minneapolis — does not support HuffPo’s reassuring conclusion.

First, the survey was not based on a representative national sample. Instead, it used information from 205 “contacts” from around the Ninth District of the Federal Reserve. Overlooking this, as HuffPo did, is misleading.

Second, the survey was not conducted scientifically. From the study:

Methodology: On March 12, 2013, the Minneapolis Fed invited, via email, about 1,000 Beige Book contacts from around the Ninth District to answer the special question in a web-based survey. By March 13, 205 contacts had filled out the survey. The respondents come from a variety of industries (see table).

Further, the survey failed to ask businesses if they planned to modify their staffing in ways other than switching to part-time labor, perhaps by downsizing the numberof employees instead of their hours worked, by outsourcing, by selling to a larger competitor that can afford Obamacare’s increased costs, or by hiring new staff to navigate Obamacare’s regulations and mandates, perhaps a lawyer or an accountant.

Third, the survey itself issues caveats that the Huffington Post totally ignores:

Based on the comments received with the poll, the relatively low change rate could be based on three factors. First, many responding organizations employ fewer than 50 people and are exempt from some provisions of the act. Second, some commented that it is too early to know the effects of the law’s detailed regulations. . . . Finally, some businesses do not function well with part-time workers.

In addition, the survey’s use of the phrase “the relatively low change rate,” when it comes to how employers will react to Obamacare, is confounding. The survey (and HuffPo, in the way it reported the survey) is essentially asserting that the change rate owing to Obamacare would be “relatively low” if 10 percent of employers shifted to using more part-time workers.

That’s ridiculous. Let’s assume for the moment that this holds true for the entire nation. It would indeed be a big deal if 10 percent of America’s businesses suddenly cut back workers’ hours. And it is likely that smaller businesses, so crucial to our economy, will be the ones cutting back on full-time employees. These are the places that may have more than 50 employees but that don’t have enough resources to absorb the costs of Obamacare, and that are unlikely to have received any of the 1,231 insurance waivers given out under the law (the average number of employees in each company given a waiver is over 3,300). As a result, Obamacare may very well be responsible for the further corporatization of America.

So, in sum, the Huffington Post article neglects to mention that the survey represents only a small number of businesses in the upper Midwest, that it was not scientific, and that it came with at least three major caveats.