Policies That Discourage Full-Time Work

New York Times ^ | January 8, 2014 | Casey Mulligan

[reaganaut1]

The payroll tax holiday was an important factor helping the workweek recover after the recession, but the holiday is over and new public policies are pushing in the other direction.

Full-time positions pay more than part-time positions, even on an hourly basis. Part-time positions require less time away from family, schooling, etc., which makes the choice of full-time versus part-time work a trade-off between income received and the amount of the time commitment.

A higher income tax or payroll tax rate tilts the balance toward part-time work because it reduces an important benefit of full-time work: extra income to spend. A lower rate does the opposite.

You might say that work schedules are set by employers, and that workers have no say in the matter. But that ignores the fact that employers compete for employees, which is why many employers spend resources to offer health coverage, flexible scheduling and other fringe benefits that employees find attractive.

Historically, employers have responded to high income tax rates by creating part-time positions, especially when large numbers of potential employers were facing those rates.

For many years, the Social Security earnings limit reduced the reward to full-time work among elderly people, because a large part of their Social Security benefits were withheld when beneficiaries earned more than the limit. As a result of the income tax implicit in the Social Security rules, many businesses created part-time positions that were attractive to older workers because their earnings stayed below the limit, and many accepted them.

Between 2007 and 2010, expansions of the food stamp program, known as SNAP, made part-time work increasingly attractive for those who would face the program’s income limit if working full time.

[reaganaut1]

There is a graph at the site showing how "Statutory Marginal Labor Income Tax Rates" are increasing due to Obamacare, including its employer mandate. Mulligan is one of the few NYT commentators worth reading.

[envisio]

Why work when you can join Obama’s loyal base and have everything handed to you and have a better quality of life than those who have to wake up every morning and dredge to work.
Everything is FREEEEEE!!!

[Rich21IE]

Its a very interesting read.