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Nailing down the new normal: Walmart, Obamacare, and part-time, low wage America

Posted by Thomas Nephew on December 7th, 2012

Last week the Huffington Post’s Alice Hines reported,

Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy obtained by The Huffington Post.

Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours — something that happens with regularity and at the direction of company managers.

As several experts contacted for the story noted, the story is of a piece with other corporate actions responding to the Affordable Care Act (ACA) with labor cutbacks, such as the Papa John’s, Applebee’s and Olive Garden/Red Lobster announcements (discussed a couple of weeks ago on this blog) that the companies intended to move workers from full-time to part-time status to take advantage of provisions in the ACA.

“Walmart likely thought it didn’t need to offer this part-time coverage anymore with Obamacare,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy at the University of California, Santa Barbara. “This is another example of a tremendous government subsidy to Walmart via its workers.”  [...] 

For Walmart employees, the new system raises the risk that they could lose their health coverage in large part because they have little control over their schedules. Walmart uses an advanced scheduling system to constantly alter workers’ shifts according to store traffic and sales figures.

[...] in recent interviews with The Huffington Post, several workers described their oft-changing schedules as a source of fear that they might earn too little to pay their bills. Many said they have begged managers to assign them additional hours only to see their shifts cut further as new workers were hired.

The new plan detailed in the 2013 “Associate’s Benefits Book” adds another element to that fear: the risk of losing health coverage. According to the plan, part-time workers hired in or after 2011 are now subject to an “Annual Benefits Eligibility Check” each August, during which managers will review the average number of hours per week that workers have logged over the past year.

As Marcy Wheeler (“emptywheel”) pointed out, she had already seen in late 2009 that “incenting s#!t plans” was an advertised feature of the developing health care “reform”, not a bug.  Writing that the proposal was “a Plan to Use Our Taxes to Reward Wal-Mart for Keeping Its Workers in Poverty,” she explained in 2009,

…if Wal-Mart wanted to avoid paying anything for its employees under MaxTax, it could simply make sure that none of them made more than $14,403 a year (they’d have to do this by ensuring their employees worked fewer than 40 hours a week, since this works out to be slightly less than minimum wage). Or, a single mom with two kids could make $24,352–a whopping $11.71 an hour, working full time. That’s more than the average Wal-Mart employee made last year. So long as Wal-Mart made sure its employees applied for Medicaid (something it already does in states where its employees are eligible), it would pay nothing. Nada, zip. Nothing.

The upshot?  Congratulations, America: you’re “subsidizing the gutting of our local economy so that the descendants of Sam [Walton] could continue to get disgustingly rich.” 

Part time employed persons as percent of employed persons, Jan 2002 – Oct 2012. Bureau of Labor Statistics data series LNS12005977, LNS12032194, LNS12000000, http://www.bls.gov/webapps/legacy/cpsatab1.htm, cpsatab8.htm. Data available here.

Employment-Population ratio 2002-2012 (Bureau of Labor Statistics: http://data.bls.gov/timeseries/LNS12300000)


Jeannette Wicks-Lim: The possibility of educating one’s way out of poverty is
getting dim as most new jobs only require a high school education (RealNews).

Corporate profits (red), wages (blue) per GDP, 1947-present. ( FRED St.Louis Fed data series WASCUR, CP, GDP. http://research.stlouisfed.org/)

Meanwhile, more and more Americans are forced to settle for jobs that keep them in poverty.  First, more and more have to settle for part-time work.  I had a look at part-time labor trends over the past 10 years, and the results are sobering. Between January 2002 and October 2012, the economy put about 4 million additional people to work with part-time jobs — well over half of the (inadequate) overall increase  during this time.

Nearly all of those added jobs were taken by workers for economic reasons (red line: slack work, can’t find other work) rather than convenience — more than doubling the number of such workers and raising part time work overall to nearly one in five (19%) of all employed persons.

And while the move to part-time work leveled off after a surge in 2008-2009, the rest of the story is that’s just part of a shift to low-paying, low educational needs jobs.  Yves Smith at “naked capitalism” recently pointed out

While there is still an upper tier of positions that require a college education and in many cases, advanced degrees, the bulk of employment growth in this economy is in badly paid service jobs.

Her source: Jeannette Wicks-Lim, assistant research professor at U.Mass Amherst’s Political Economy Research Institute and author of the recently published “The Working Poor: A Booming Demographic.”* In that paper, Wicks-Lim points out that the Department of Labor reports that about 70% of jobs require a high school degree or less, and that this figure is not expected to change over the next ten years.  She goes on: 

“We can dig a little deeper and compare the top thirty occupations that the Labor Department estimates will have the largest growth between now and 2020 to the top thirty occupations most commonly held by the working poor in 2010.  These occupations broadly overlap: seventeen out of the thirty occupations are the same.

The list includes occupations like elementary school teacher, home health aides, nursing aides, janitors, security guards, waiters/waitresses, and groundskeepers.  But as Wicks-Lim told Paul Jay of RealNews:

The other interesting thing to point out is that a lot of these low wage jobs that are this large share of the workforce, these are jobs that are not going to be, you know, pushed offshore. You can’t replace them easily with machines. So you know, jobs like a childcare worker or a home health aide, these are jobs that need to be done by people within the US border. [...]

These are jobs that have the potential to become better quality jobs. But you do need a stronger labor movement.

Either we raise the minimum wage, we build an economy that provides different, higher paying job mix — or workers take things into their own hands and demand higher wages.

It’s great that workers are beginning to do just that.  The Thanksgiving weekend “Black Friday” actions by Walmart workers and supporters were the next step in organizing and agitating for better wages and — almost as crucially, given the needs of many part time workers to hold multiple jobs — more predictability and control over work schedules.

Workers in and organizers of other classic low wage sectors are following suit.  with the Fast Food “Seven Twenty Five: Not Enough to Survive” campaign in New York City as the prime example.  Labor and social justice reporter  Sarah Jaffe, writing for the Atlantic, points out

Yum! Brands, which runs Pizza Hut, Taco Bell and KFC, saw profits up 45 percent over the last four fiscal years, and McDonald’s saw them up 130 percent. (After Walmart, Yum! Brands and McDonald’s are the second and third-largest low-wage employers in the nation.)

Those aren’t the only companies doing quite well these days.  As Federal Reserve Board data show, corporate profits are at an all time high and wages at an all time low (since 1947) as a percentage of gross domestic product.   There’s more than a little room for sharing more of America’s  economic activity — and that’s not just in the interest of low wage workers, it’s in everyone’s interests  to have a stronger, fairer, more resilient economy.   This time, though, let’s not support half measures that entrench and exacerbate a low wage, unsustainable economy.

=====
* Wicks-Lim bases her poverty definition on the Economic Policy Institute’s “Basic Family Budget,” which averages about 2.4 times the Census Bureau’s official poverty line.  Ms. Wicks-Lim studies the effects of raising the minimum wage; she notes that “There are now over 100 living wage policies in effect. So a rich set of information is developing on how living wage laws work and we need to take the time to evaluate their outcomes. From what I’ve seen so far, the predictions of large disemployment effects from living wage laws have not been borne out. We should look at what has actually happened to understand why.”

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