Wednesday, October 10, 2012

Unintended consequences

Well, now, who could have predicted this?
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.

"I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week," said Matthew Snook, partner with human-resources consulting company Mercer.

Darden said its goal at the test restaurants is to keep employees at 28 hours a week.
The article (read it here) goes on to say that this may lead to different problems, such as less-qualified workers and high turnover.  But if the restaurant industry decides they can afford to deal with training and turnover issues more so than with expensive health-care costs, there's nothing anyone can do about it.

It used to be that a part-time job was anything less than 40 hours per week, but because of the miracle of government-mandated health care, "part-time" will now mean less than 30.  Most employers will probably take a leaf from Darden's book and schedule workers for 25 to 28 hours per week to avoid situations where accidental overtime suddenly triggers a federal healthcare mandate for any employee.

Who loses in this situation?  Well, let's see:

1. Employees.  The few full-time workers will be under amazing pressure to keep things running, while the dozens of part-time workers will face dwindling wages, scheduling challenges, and a continued lack of health insurance.  With even less money earned per week, how are they supposed to get medical care?  With odd, random schedules how can they even get a second job?  Is the goal here to get everybody on Medicaid?

2. Customers.  There's nothing like hearing, halfway through your meal, that your server has worked his/her 28 hours for the week and therefore another server will be taking care of you--the one who already has six tables with more people coming in.  The rapid turnover of part-time workers will mean more training time and less experience from the employees, and in an age when dropping $50 or more on dinner out for a family is already not a good economic choice, how many people are going to want to keep doing so when the dining experience isn't going to be worth anywhere near that much money?

3. Businesses.  I know it's popular to cast all business owners as Ebenezer Scrooges with no concern for their employees, but the problem restaurants (chain or other) or other small, service-oriented businesses are going to face is that they simply can't afford to pay for health insurance for every employee who works more than 30 hours per week (and, again, I can't understand why the number of hours was set at 30--does anyone know?).  Cutting hours to the point where only a handful of employees are actually full-time may be the only thing these companies can do, but in the long run, if having fewer well-trained, long-term employees means not being able to do business as well as they could in the past, companies may have even more difficult decisions ahead of them.  And what if the federal government, having started on this path, starts requiring health insurance for any employee regardless of the number of hours worked per week?  Some say that can't happen, but I wouldn't bet on it.

The problem with the unintended consequences of liberal government mandates is that they often hurt the worst the people they were trying to help the most.


bearing said...

If I had to guess, I would say that the thirty hours came about like this:

FIRST GOVERNMENT OFFICIAL: Let's make it so if a big boss won't buy health insurance for a full-time worker, he'll have to pay a fine!

SECOND GOVERNMENT OFFICIAL: Good idea! But... Wait! Lots of times when we have made rules for full-time workers in the past, bosses just tried hard to schedule people for 39 hours a week so they wouldn't trigger the regulations!

FIRST GOVERNMENT OFFICIAL: Those devious employers! Hm..... I KNOW! Let's redefine 'full time' to mean 30 hours a week! That way, when they try to get around the regulation by scheduling people for 39 hours a week, first they'll be all like, "Mwa ha ha," but then they'll be all like, "Curses! Foiled again!"

SECOND GOVERNMENT OFFICIAL: Isn't it great to know that we're the good guys?

beadgirl said...

This sort of action on the part of businesses cannot be blamed on the Affordable Care Act, because businesses have been doing it for years. My (very large, wealthy) employer stopped hiring full-time employees in my field years and years ago, so that it would not have to pay health care. my husband's former employer declared him not an employee so that they no longer had to subsidize our health insurance, leaving us to pay the massive, massive premiums for years (they also cut his salary repeatedly during those years. fun!).

These sorts of shenanigans, along with the inevitable conflict over whether employers must pay for hearth care items that they are morally opposed to, and the existence that widows (or widowers) who lose their spouses' insurance but are too young or not quite poor enough for Medicaid and Medicare, are some of the many reasons why I think we need to jettison the idea of employer-based health care.

beadgirl said...

Haha, not hearth care, health care!

Tony said...

Look on the bright side! They'll need 1/3 more people to do the same work, so if we use the administrations method of calculating the unemployment rate, it will drop to about 5.1% :)

LarryD said...

Who says this is an unintended consequence? It's a feature, not a bug.

federoff11 said...

That was my comment, too.... this is a FEATURE, not a bug.

Turmarion said...

That's why a public-option plan would have been better.

The problem with the unintended consequences of liberal government mandates....

Remember, FWIW, that policies of conservative governments (even if they are policies of inaction) have unintended consequences, too.

Rebecca in ID said...

I hear you Red, I really enjoy Simcha's articles but when I read the comments, I sometimes feel as though I'm in the Twilight Zone or something. I really do understand if someone might not prefer her style; there are other people whose style I do not prefer, and I just, well, read the stuff I prefer. I really would like to see continued intelligent discussion below the original post, but that so rarely happens. It seems that what makes it impossible are not only the loony hateful responses or the vitriolic "fraternal correction" responses, but even more so, the ream of responses to the loony/nasty responses. Someone says something like "you're so not like the Blessed Virgin Mary, Simcha" and then eight other people have to demand why Simcha is a not like the Blessed Virgin Mary, who does that person think they are, etc., and the whole thing goes downhill. It is a bummer.