Tag Archives: Obamacare

It’s Not What Employers Are Doing, But What They Can Do, That Matters

A few days ago, Buzzfeed reported that Staples, the large office supply chain, had stepped up its enforcement of a cap on hours worked for part-time employees. Despite the company’s unconvincing claim* that the policy is longstanding, it appears that Staples implemented the 25-hour-per-week cap in January of 2014 “to skirt impending rules requiring companies to provide health insurance” to employees who work at least 30 hours a week.

Staples' original memo to store managers, as published by Buzzfeed.

Staples’ original memo to store managers, as published by Buzzfeed.

Staples’ decision will undoubtedly renew arguments that the Affordable Care Act’s (ACA’s) employer mandate – the provision that requires companies with more than 50 full-time workers to insure employees who work at least 30 hours each week – has led to harmful effects on work. These arguments, like parallel narratives about minimum wage laws and paid sick leave ordinances, are largely inaccurate, and advocates of evidence-based, power-balancing policy are absolutely right to debunk them.

However, we cede too much when, as is often the case, we default to a defensive stance. “Yes, the negative incentive is there, but the data show such effects to be small or non-existent” should not be the full scope of our response.

Instead, it’s imperative that we change the nature of these conversations. As Thomas Pynchon astutely observed: “If they can get you asking the wrong questions, they don’t have to worry about answers.”

Opponents of an employer mandate, minimum wage, and paid sick leave want people to focus on what employers will do in response to each policy’s enactment. The more relevant question, however, is about what employers can do.

First, it’s important to remember that businesses can deduct employer-provided benefits from their tax bills, and that the employer contribution to health benefits is widely viewed as coming out of worker salaries. Providing employees with health coverage, decent wages, and paid sick leave costs less money than a lot of people think, though it’s certainly more expensive than offering meager wages and no benefits.

More importantly, providing such benefits is the right thing to do. And it is undeniable that a typical business, when confronted with the prospect of labor cost increases, has numerous options. The business can explore ways to improve its productivity. It can raise its prices. It can reduce the salaries of affluent executives, or maybe make a little bit less in profits.**

In the most recent quarter for which financial information is available, August through October of 2014, Staples made $216 million in after-tax profits. Their CEO, Ronald Sargeant, made over $10 million in total compensation in 2013, while other top executives raked in well over $2 million apiece. Barack Obama didn’t have those numbers when he was asked about Staples’ policy a few days ago, but his suspicion “that [Staples] could well afford to treat their workers favorably and give them some basic financial security” was clearly right on the money. The ACA didn’t make Staples cut its employees’ part-time hours; instead, Staples management consciously chose to prioritize a fifth car or third house for a few wealthy individuals over its part-time workers’ ability to put food on the table. Other large companies, from Starbucks to McDonald’s to Walmart, make similar callous choices on a range of issues all the time.

There are two ways to address this problem. The main mechanism currently at our disposal is to loudly call such decision-making what it is – greedy and unethical – and vote with our dollars for companies that treat their workers fairly. Opponents of labor standards focus on what businesses will do rather than what they can do in part because we let them avoid moral reckoning. We won’t win everyone over, but we must not underestimate the power that moral authority has to shape behavior.

The second mechanism is policy that addresses firms’ decision-making. Some recent legislative proposals, in fact, like Congressman Chris Van Hollen’s CEO-Employee Fairness Act, have the potential to begin to wade into these sorts of waters. If we’re worried that companies will choose to lay people off in response to a minimum wage increase, for example, we could raise taxes on the executives of companies that make this choice.

No matter the policy outcomes, it’s essential that we ask the right questions in these debates. It’s worthwhile and important to document the evidence that policies like the employer mandate, minimum wage, and paid sick leave have minimal consequences on work. But it’s also essential to point out that any consequences these policies do have aren’t inevitable.

*As Buzzfeed’s original coverage explained, Staples claims that their part-time hours policy has been in effect for over ten years, and that the memo Buzzfeed obtained only “reiterated the policy.” Yet the memo contained phrases like, “Beginning with the week ending 1/4/2014,” and “Staples is implementing a policy.” A Staples spokesperson did not respond to follow-up questions about the memo’s language.

**It’s possible, though I’ve never seen a study to prove it, that some businesses actually can’t afford to adequately compensate their workers, that they’re barely squeaking by as is with low executive salaries, non-existent profits, and the highest level of productivity they can possibly attain. To the extent these businesses exist – and I’m skeptical that many of them do – it’s worth asking whether a business’s right to keep its doors open should trump its workers’ right to make enough to provide for their families. I don’t believe it should.

Note: A version of this post appeared in The Huffington Post on February 16.

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The Shutdown: Blame Republicans but Watch the Democrats

I wrote an email to my political mailing list on August 21, 2011 entitled “Does the White House have Power?”  At that time, many mainstream Democrats insisted that Barack Obama was an innocent victim of an intransigent Congress, that he ardently supported progressive priorities like a public health care option and higher taxes on wealthy Americans but had little leverage to make those ideas a reality.

Glenn Greenwald thoroughly debunked that claim on several occasions, as my email at that time documented.  I revisit this issue now because the current government shutdown is yet another proof point that the White House has power.  Both the Democratic Party as a whole and Barack Obama specifically exercise that power when they care about policy outcomes.

House Democrats just initiated a procedural motion called a discharge petition to try and end the shutdown without compromising on Obamacare.  The strategy pursued by the White House and Democratic congresspeople during the current Obamacare debate has been not to appease, but to message, over and over again, that fringe Republicans are to blame for the shutdown – Republican demands are unreasonable and unpopular.  Though many journalists predictably pretend that Democrats and Republicans are equally to blame for the shutdown, the majority of Americans recognize the Republicans are at fault.  Obama’s appropriate response to the current Republican demands illustrates that he at the very least could have taken similar action during the original health care debate in the first few years of his presidency and during the “fiscal cliff” debate at the end of 2012.  Instead, as Paul Krugman wrote at the beginning of this year, “he gave every indication of being more or less desperate to cut a deal.”

If Republicans had followed through on their threats in those debates, there would have been some suffering, no doubt.  But there’s suffering because of the current shutdown, and while it’s regrettable, we sometimes may have to stomach short-term loss for long-term gain.  In the current debate, the Democrats are suggesting implementation of Obamacare, a plan originally conceived by Congressional Republicans and the Heritage Foundation in the early 1990s and loved by the insurance industry, is worth this short-term suffering.  And it may be – my dad, who helps lower-income people gain access to health care, likes to remind me that Obamacare should improve the lives of millions of people, which is no small matter.  If that’s your mindset, though, you probably should have supported the Republican plan in the 1990s and you should also probably give George W. Bush and Republicans in Congress some credit for Medicare Part D, which, like the Affordable Care Act, expanded coverage to people who didn’t previously have it while enriching private industry.

Whatever your thoughts about Obamacare, make no mistake about this fact: the White House has power.  Obamacare in its current form is exactly what Obama and the Democrats desired.  By their own admission, the Obama Administration didn’t want a single-payer health care plan that would benefit more Americans to become a reality.  Despite his rhetoric to the contrary, Obama worked hard to keep the public option out of the Affordable Care Act.  He pressured progressives like Dennis Kucinich to adopt a more conservative bill while journalists insisted, when Ben Nelson and Joe Lieberman were holding up a better bill, that Obama was powerless to influence congresspeople.  In addition, Obama never really wanted higher taxes on the wealthy or prosecutions of white-collar criminals who torpedoed the economy; he’s extremely cozy with moneyed interests.  If he actually believed in the progressive ideals to which he pays lip service, we would have seen a lot more of his current messaging a long time ago.

As Greenwald wrote in the summer of 2011, “[t]he critique of Obama isn’t that he tries but fails to achieve certain progressive outcomes and his omnipotence should ensure success.  Nobody believes he’s omnipotent.  The critique is that he doesn’t try, doesn’t use the weapons at his disposal: the ones he wields when he actually cares about something (such as the ones he uses to ensure ongoing war funding — or, even more convincing, see the first indented paragraph here).”  None of the Democrats’ or Obama’s behavior diminishes the Republicans’ responsibility for the shutdown.  But I hope watching the shutdown saga unfold is instructive for people who over the past five years have repeatedly excused the Democratic Party’s poor policy outcomes as the products of a weak office.

Update: The deal the Democrats eventually got provides further evidence that Obama could have done much, much more during the early years of his presidency.

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