Thursday, August 1, 2013

An Obamacare defense by people who don't understand the concept of "evidence"

Marilyn Tavennar
Today at a meeting of the House Energy and Commerce Committee, the head of the Center for Medicare & Medicaid Services--one Marilyn Tavenner--informed the committee members that businesses are not cutting hours of employees in order to avoid requirements of the Patient Protection and Affordable Care Act (Obamacare). She allowed that there could be "isolated incidents" of this happening (hour-cutting), but that it was nowhere close to being a common thing.

For those unfamiliar with this issue, the situation is simple: the legislation mandates that businesses employing fifty or more full-time workers must offer an employer-sponsored health insurance plan. It also dictates that employees working thirty or more hours per week are considered to be full-time employees. So, a reasonable choice for some businesses--in response to being forced into the added expense of a health insurance plan (or having to pay a per employees penalty)--is to cut back the hours of enough employees in order to avoid the requirement. As I said, simple stuff. And make no mistake, this is happening and it will continue to happen. A number of companies have already come forward to admit to such behavior.

It's an easy thing to process, to understand. Such behavior has always characterized decisions of management, particularly for retail businesses. Ages ago, when I was young and working for a grocery chain, the full-time/part-time ratio was always carefully monitored because company policy provided benefits for full-time employees and such benefits cost money. Because there was a high turnover rate in employees, the company could not afford--financially--to maintain profitability if the ratio was too high (more full-time). So, as a manager, one of my duties was to keep part-time employees part-time, by not exceeding an average of thirty hours per week per quarter. This worked for both employer and employee is such industries, because those employees who wanted full-time work and the benefits that went with it had to earn it, they had to prove themselves. Those employees who were half-assed about their work had no hope in this regard (at least when I was in charge). And that was fair (it still is), in my opinion.

But despite the logical, practical, and empirical certainty of this happening (hour-cutting in response to Obamacare), there are still those who want to argue that it won't. This piece at ThinkProgress cites a study by CEPR (a progressive and of course biased think-tank) that purports to show very few companies making such choices. I don't need to read it all to know it's nonsense. Here's the money quote from the study's conclusion that proves it's nonsense:
While there may certainly be instances of individual employers carrying through with threats to reduce their employees’ hours to below 30 to avoid the sanctions in the ACA, the numbers are too small to show up in the data.
Of course the numbers are going to be "too small" to show up in a survey! Why? Because the hour-cutting won't be of employees across the board, it will be targeted to keep the number of full-time employees below the magic number of fifty. Thus, at a given company, the number of employees who have their hours cut could be only a handful. Hell, it could be just one person, who maybe was averaging thirty-two hours a week and thus only needs to lose forty hours a quarter (thirteen weeks). And such cuts need not show up every single week. In the above example, the employee could theoretically work those same thirty-two hours for the next (assuming this is the beginning of a quarter) ten weeks, then work only eighteen hours for the next three weeks. Problem solved, consequences averted. These are the kind of calculations being made. To not understand this reality is to be ignorant of the way businesses operate.

But beyond that, Tavenner's comments also demonstrate how what constitutes "evidence" for this administration and its defenders changes, based on the politics of the moment. Again, Tavenner claims there are only "isolated incidents" of businesses cutting hours. And again, the CEPR study claims the changes are "too small" to be significant. Let's time-travel back to late February and early March of this year, when the political world was in the grip of Sequester-talk.

In February, Secretary of Education Arne Duncan declared that because of the Sequester:
...There are literally teachers now who are getting pink slips, who are getting notices that they can’t come back this fall.
Remember that? Duncan suggested this was a widespread occurrence--claiming as many as 40,000 teachers would lose their jobs--but when later pressed for actual examples, he came up with only one school district, but had to allow that potential job losses there--amounting to four or five teachers--might have nothing to do with the Sequester. Still, he stuck by his claim, insisting that the Sequester was causing something to happen, based on speculation and--apparently--a single incident. Compare this logic to that employed by Tavennar. Examples of businesses cutting hours are "isolated incidents" for her, but one example of teachers possible losing jobs--even if not because of the Sequester--was evidence for the larger generalization made by Duncan.

And in March, President Obama declared that some Capitol Hill staff were absolutely getting a pay cut because of the Sequester:
Starting tomorrow, everybody here, all the folks who are cleaning the floors at the Capitol -- now that Congress has left, somebody is going to be vacuuming and cleaning those floors and throwing out the garbage -- they're going to have less pay. The janitors, the security guards, they just got a pay cut, and they've got to figure out how to manage that. That’s real.
The fact-checkers in the media had a filed day with this, especially after the people in charge of such jobs put out memos declaring that the President was more or less talking nonsense. But the Administration refused to back down, ultimately trying to defend the President's words by arguing that even if there was no actual pay cut, there would still probably be losses in overtime pay. Kessler at WaPo describes how this went down:
A White House official noted at first that the memo does refer to “further reducing overtime.” Technically, that could mean some janitors might see less pay, but it’s unclear how many actually earn overtime. Under the reasonable person test, a possible reduction in overtime appears a bit different from “just got a pay cut.”  
The White House thought our position was unreasonable. “Folks who are getting paid hourly aren’t breaking up their paycheck to say, well, technically this portion of my paycheck came from my overtime pay, so I’m not going to actually count that towards my income,” an official said. “They rely on that overtime and they pay their bills with that income. So, we disagree with this ‘reasonable person test.’”
Now as it turns out, the overtime losses amounted to possibly as much as eight dollars a month. Possibly. That's a pretty small number to use to make such a huge generalization, isn't it? One might even say it's "too small" to be significant, like the findings of CEPR with regard to the extent of hour-cutting by businesses. Again, the comparison demonstrates a complete one-eighty, with regard to what constitutes evidence and how it is used. And again--as I have explained--all of the data is not yet in with regard to the hour-cutting in response to Obamacare (making the CEPR study moot), though it was in with regard to Obama's claim.

These aren't just examples of double standards and faulty analysis, they're examples of the selective use of information and an irresponsible approach to the concept of evidence for the purposes of selling fear-mongering narratives, of outright lying to the American people. I'd be outraged, but no one would listen.

Cheers, all.

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