Written by Steven Hansen
I am no lover of Obamacare but remain unconvinced a decline in the average work week is underway due to that as the primary cause.
A recent post stated:
Anyone who insists ObamaCare employer penalties aren’t having a meaningful impact on work hours simply hasn’t looked closely at the evidence. In a private economy with 114 million workers clocking 34.4 hours a week on average, it’s easy to miss important changes. What feels like a wave to modest-wage workers getting hit may appear to be a mere ripple from an altitude of 40,000 feet.
There was some serious cherry-picking of data to produce the above charts – and most came from the retail sector. Here a broader view:
Figure 2 – Average Weekly Hours Sample
The 40,000 foot chart shows that the average weekly hours never returned to the levels prior to the Great Recession:
Figure 3 – Average Weekly Hours
Here is the same data showing the change year-over-year – do you see an obvious trend decline in working hours since 2010 – long before Obamacare would have been affecting working hours.
Figure 4 – Year-over-Year Change of Average Weekly Hours
If one can argue the economy is bad (and this is my argument), then the decline in average weekly hours would be attributable to this cause. It is extremely unlikely that Obamacare is a positive for weekly hours worked – but there is no indication it is the driving dynamic currently in play.
The economy sucks (a technical term). Business is unsure about tomorrow and is not investing in people or machinery – and capacity utilization is at historical lows for non-recessionary periods. This paints a nasty picture of an economy in “recovery”.
Figure 5 – Capacity Utilization
Other Economic News this Week:
The Econintersect economic forecast for August 2013 again declined, and sees the economy barely expanding. The concern is that consumers are spending a historically high amount of their income, and several non-financial indicators are struggling or flat.
The ECRI WLI growth index value has been weakly in positive territory for over four months – but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.
Current ECRI WLI Growth Index
Initial unemployment claims rose from 320,000 (reported last week) to 336,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate.
The real gauge – the 4 week moving average – improved from 332,000 (reported last week) to 330,500. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.
Weekly Initial Unemployment Claims – 4 Week Average – Seasonally Adjusted – 2011 (red line), 2012 (green line), 2013 (blue line)
Bankruptcies this Week: Cengage Learning, Personal Communications Devices, OnCure Holdings, Florida Gaming
Data released this week which contained economically intuitive components (forward looking) were:
- Rail movements growth trend is currently accelerating.
- There are some forward looking trends in the CFNAI which improved.
All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.