Obamacare, Massively Changing Microeconomic Incentives in the Macroeconmy

Obamacare is causing a massive shift in the way every American interfaces with the economy, their job, and eventually will affect how they interface with their family.

Wall Street Journal columnist/economist Steven Moore noticed that as well.  There are no full time jobs because expectation theory is causing companies to change their hiring behavior.  Moore writes,

 “Firms are just very reluctant to hire full-time workers,” Mr. Funk says. “So they are taking on more temporary help, which is what we do.” ObamaCare imposes new mandates and penalties on companies with more than 50 full-time employees—and even those working 30 hours a week are considered full-time.

He quickly adds: “The problem isn’t just ObamaCare, though. It’s the entire regulatory assault on employers coming out of Washington—everything from the EEOC”—the Equal Employment Opportunity Commission hits companies hard when employees claim age, race or sex discrimination—”to the Dodd-Frank monstrosity. Employers are living in a state of fear.”

Mr. Funk predicts that the temporary-employment industry could nearly double its share of the U.S. workforce, to about 4%, after ObamaCare fully takes effect. That’s good for him, but awful for America.

The American workforce is being forced to shift from last century model of lifetime employment to the gig economy because of government programs and regulations.

Not only does this have effects on the American worker psyche, but it has underlying ripple effects on all kinds of traditional businesses.  If you don’t have a permanent job, you don’t need an office.

Commercial real estate vacancy rates have improved somewhat.  But, in the recent Wells Fargo report they confirmed what Moore was writing about.

We are somewhat concerned that the pace of asset-price inflation has produced a sense that the underlying fundamentals have improved more than they actually have. While nonfarm employment growth improved during first the few months of 2013, the quality of jobs remains heavily skewed toward lower paying professions, which is weighing on income growth and consumer spending. The wealth effect from rising stock prices has helped offset some of this weakness but the benefits have largely been limited to higher-end merchants. Many middlemarket retailers and grocers are struggling and some further consolidation appears to be on the way. Competition from online retailers, discount stores and club stores is also pressuring traditional retailers, leading many to close underperforming stores and reduce space needs.

Vacancy rates fell another 10 bps in the first quarter and now stand at 17 percent.
Absorption and completions stand at historically low levels leaving the market relatively stagnant. While there has been some improvement in the labor market, it has not been strong enough to turn the dial up on the office market.

Headline employment numbers improve, but it’s not due to economic activity.  Government policy, and Federal Reserve policy have put a stranglehold on business expansion.  We are transitioning from an economy that took risk, to one that plays it safe.

The ranks of independent workers are growing.  Pass any coffee shop, and you will see people anchoring themselves into space to drink coffee and pound on their computer.  Many of them are working.

This trickles down into your family.  Not having a permanent job makes it tougher for families to take risk.  They change their behavior.  They might not try to create businesses, and become passive.  Just looking for the next gig to get money in to afford to live.

They may get hooked on government benefits.  They will have trouble building wealth, unless one of their gigs hits it big.  High unemployment, or unstable employment debilitates families.

Recently, I have seen a huge rise in different businesses to meet the coming demand.  Nextspace, Shiftgig, and Desktime are all businesses that will capitalize on this nascent trend.  

They provide a physical/virtual support group for unattached workers.  That’s a group that is rapidly growing, not contracting.

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