Elections Have Consequences

It’s simple, really.  When there is an incentive to save money, there should be no surprise that incentives will drive behavior.  Consider Community College of Allegheny County:

To Community College of Allegheny County’s president, Alex Johnson, cutting hours for some 400 temporary part-time workers to avoid providing health insurance coverage for them under the impending Affordable Health Care Act is purely a cost-saving measure at a time the college faces a funding reduction.

But to some of the employees affected, including 200 adjunct faculty members, the decision smacks of an attempt to circumvent the national health care legislation that goes into effect in January 2014.

“It’s kind of a double whammy for us because we are facing a legal requirement [under the new law] to get health care and if the college is reducing our hours, we don’t have the money to pay for it,” said Adam Davis, an adjunct professor who has taught biology at CCAC since 2005.

Temporary part-time employees received an email notice from Mr. Johnson on Tuesday informing them that the new health care act defines full-time employees as those working 30 hours or more per week.

As a result, the college as of Dec. 31 will reduce temporary part-time employee hours to 25 per week. For adjuncts, the workload limit will be reduced from 12 to 10 credits per semester.

The decision affects only temporary part-time employees and not permanent part-time employees who already are eligible to participate in the college’s health care plan.

My hope is that the folks impacted voted for Obama; you should reap the rewards of the decisions you make.

But that’s not all:

Darden Restaurants Inc. — parent of the Red Lobster, Olive Garden and Capital Grille eateries in Colorado and elsewhere — is cutting back hours of workers at some of its locations in an apparent effort to reduce insurance costs related to the new health-care reform law.

The Orlando, Fla., Sentinel newspaper reports that the Orlando-based company (NYSE: DRI) “has stopped offering full-time schedules to many hourly workers in at least a few” of its locations.

The Sentinel quotes the company as saying it plans to limit employees at some restaurants in four unidentified markets to 28 hours a week. Darden said the move is intended “to help us address the cost implications health care reform will have on our business.”

Under the federal Affordable Care Act, the health-reform law that some call Obamacare, companies with at least 50 employees must provide health insurance, starting in 2014, to all those who work at least 30 hours a week. Those that don’t will pay a penalty.

I suspect that this will play out across America more and more.  As the ramifications of electing Obama continue to see the light of day, more and more we are going to see this reaction by business.  Fewer people hired, higher ratios hired as part time employees, more efforts to drive productivity by more and more automation.

It really is important to understand that there really aren’t solutions; only tradeoffs.

Want healthcare?  Lose jobs.  Sacrifice growth, accept higher unemployment.

If you voted for Obama, this is on you.  This is what you wanted, this is what you explicitly put into motion.

We warned you.

 

7 responses to “Elections Have Consequences

  1. Actually, this will help the Democrats. It will show Corporate America wants to screw the workers, and there will be support to do things to stop them. This actually makes the bosses look bad, not Obama.

    • Actually, this will help the Democrats.

      Scott, people are losing out on hours and jobs and you wanna say that this makes the democrats look good?

      Anyone who was paying attention knew that this was going to happen. It’s not surprising one but. And that thinking people make the calculus that this makes democrats look good is distressing; politics to the highest order.

      It will show Corporate America wants to screw the workers, and there will be support to do things to stop them.

      Corporate America isn’t out to screw anyone; they simply want to make products that people will buy. And the only way they can do that is to remain in business.

      And if there is “support to do things to stop them”, then that is just more regulation that will drive even more bad outcomes based on bad incentives. Soon we’ll be Europe; some think we already are.

      The Western Socialist Democracy isn’t working. It’s easy and feels good to say that we should mandate healthcare. But making it so by law doesn’t change facts. And the facts are that people are driven by incentives and will always look out for their selfish self interests.

      And when the government interferes in that, nothing good happens.

      • You make that argument, Alan. I don’t think it’ll be a political winner. Also, the term “socialist” shows you to be lost in the 20th Century. Those terms as political fight words are obsolete. Say that to someone under 30 and their eyes roll. That’s a main problem for the GOP, they’re still fighting 20th Century ideological battles in a new, pragmatic 21st Century. What hasn’t worked is de-regulation and extremely low taxes on the wealthy – those things caused this crisis. But hey, make that argument, I just don’t think it’ll convince many people.

        • You make that argument, Alan.

          Pino 😉

          Also, the term “socialist” shows you to be lost in the 20th Century.

          No, I think that I agree with ya. First, the word doesn’t mean what it used to mean. It’s like the term “racist.” No one really knows what that means anymore either.

          Those terms as political fight words are obsolete. Say that to someone under 30 and their eyes roll. That’s a main problem for the GOP, they’re still fighting 20th Century ideological battles in a new, pragmatic 21st Century.

          However, that does not mean that there is an ideology that explicitly says to “take from the rich and distribute to the poor.” And that ideology needs a name and needs to be confronted.

          What hasn’t worked is de-regulation and extremely low taxes on the wealthy – those things caused this crisis.

          We’re seeing the impact of regulation now. Fewer companies hiring fewer people. Productivity through the roof as folks figure out how to get the same work done just with fewer people.

          Further, the crisis was caused by regulations. Those regulations that required banks loan money to people who had no hope of paying that loan back in order to push home ownership levels higher and higher.

          I know that you’re going to claim foul and repeat your theory that it was caused by banks selling those bad loans in packages, but I think your missing the point that those packages could have been predicted; incentives matter ad the government set up bad incentives.

          Further, all you have to do is look to the East and consider Europe. More regulation with worse results.

          Remember, there are no solutions, only trade offs.

  2. The banks did not get their incentives from government regulations. Trying to blame the crisis on the government is objectively wrong. It was due to powerful actors (banks) manipulating the market for short term gain. Derivative trade was UNREGULATED. Even efforts to make banks report how much they were doing were stymied. Brooksley Borne famously tried to put in modest regulations and she was shot down: http://www.pbs.org/wgbh/pages/frontline/warning/

    The incentives did not come from government, the problem was that without government regulations the powerful banks had an incentive to set up bad loans and sell them as unregulated securities. There was no government incentive to do so. In fact, the banks cut out Fannie and Freddie because their loan standards were too strict, they actually wanted loans that could be paid back. The big investment banks didn’t care because they thought they were passing on risk to investors. Seriously, how can you say the government caused this? Have you read the myriad of books written about the subject? Have you investigated it? I have, I dug into this from the start to figure out what happened (in part because I wanted to explain it to students). That’s why I get so frustrated when claims that “it was the government’s fault” are thrown out without support. I think you’re grabbing an ideologically convenient but objectively wrong claim because it fits what you want to believe. Dig in, read – The Big Short by Michael Lewis, All the Devils are Here (which is thorough in its critique of the government as well) by Nocera and McLean. The End of Wall Street by Lowenstein. House of Cards (can’t recall the author) about Bear Stearns. This was a Wall Street inside job, helped by a fawning media (esp. CNBC) and lack of government regulation. Without regulations, the powerful can rig the game — and here they did.

    • The incentives did not come from government, the problem was that without government regulations the powerful banks had an incentive to set up bad loans and sell them as unregulated securities.

      Sorry Scott, on this one, you are just wrong.

      • I challenge you to prove your point. I’ve given you books, cites, I’ve explained it. You are making a claim YOU CANNOT DEFEND. It is indefensible to blame government incentives rather than de-regulation for the crisis. You have no case, no evidence and no argument. Asserting what your ideology wants to be true is very weak. And all you have is an unsubstantiated and discredited assertion.

        It really gets my goat when I’ve studied a subject intently with a desire to know exactly what happened, read and researched, and then someone asserts something clearly wrong without being willing to back it up. This isn’t a matter of opinion, this is well documented objective fact.

        Please, read some of what I suggest above. Look into what happened, what derivatives trade was all about, how the big banks operated, how de-regulation opened the doors for these scandalous deals. I defy you to show me where these ‘government incentives’ were.

        If you want to blame government, the one place you could make a case is for the federal reserve board and Greenspan’s policy of cheap credit. In credit-driven bubble is made possible by the fact money could so easily be borrowed. But that’s it – and even with cheap credit a proper regulatory system could have prevented this.

Leave a Reply

Your email address will not be published. Required fields are marked *