Courtesy of John Mauldin, I read an interesting piece by Rich Yamarone at Bloomberg that does a good job of explaining how weak payroll reports should be viewed as an anticipated symptom of Obamacare.
Under the health care law, if an employee works more than 30 hours per week an employer has to offer coverage. So when you parse through the jobs data and see that the biggest increases have come in the retail and hospitality sectors, suddenly it makes sense. A restaurant chain has a lot of employees and does not want to incur that insurance expense – so they reduce weekly hours to less than 30 per employee, and make up for it by hiring more people, while still saving on the bottom line because they fall within the ACA exemption. Simultaneously, without these new low-paying jobs, the payroll reports would look a lot more dismal.
Basically, don’t misconstrue the “strong” job growth.
