The ACA and Part-time Work

JUST prior to the recently published jobs report, the national GOP posted a press release on its website arguing, in part, that the ACA is pushing the economy into a part-time economy.  It’s an oft stated argument by the GOP and its members.  For instance, Maine Senator Susan Collins co-sponsored legislation that would change the definition of full-time work under the ACA, currently 30 hours a week, to 40 hours a week.  She and her co-sponsor, Democrat Joe Donnelly, penned an opinion piece in the WSJ last year in which they state that the rise in part-time employment is due to the ACA:

In Lafayette, Ind., a school district cut the hours of 200 support staff to no more than 29 per week. In Bangor, Maine, the school system is preparing to track and cap the number of hours worked by substitute teachers to ensure that they don’t work more than 29 hours a week. Elsewhere, in Portland, Maine, a small business reduced a part-time employee’s hours from 35 to 29.

We are hearing reports like this from across the country. Why is this happening?

It’s happening because under the Affordable Care Act a “full-time employee” is defined as anyone working an average of 30 hours a week, rather than the traditionally accepted 40-hour work week. Employers with more than 50 full-time employees or full-time equivalents will be required to provide their employees with health insurance or potentially face a financial penalty, essentially a fine.

This rule is causing a growing number of employers to cut the hours of their workers, and according to one study by the UC Berkeley Labor Center, at least 2.3 million workers are at risk. This provision of the health law is not in the best interests of the country, and it needs to change.

On Friday, the BLS reported that while employment in June was up some 288,000 jobs, part-time work was up 799,000, and full-time work was down 523,000 from May.  This, of course, will likely be fodder for some to argue that the ACA is driving part-time work.

However, the problem with this narrative is that the soft labor market is, largely, not the result of the ACA, and instead is weak demand across the economy.  Yes, there is certainly some dis-employment effects of the ACA, but the picture painted above is a little distorted for three reasons.

First, as to the UC-Berkeley Labor Center report noted by Collins and Donnelly in their WSJ piece.  The last paragraph from the report gives some context to the 2.3 million workers:

The 2.3 million workers identified as at greatest risk for work hour reduction represent 1.8 percent of the United States workforce. This is consistent with the research on the impact of Hawaii’s health care law on work hours. Hawaii requires firms to provide health insurance to employees working 20 hours a week or more, so the cost to employers for full-time workers are much greater in Hawaii than under the ACA, while the hour threshold is lower. Buchmueller, DiNardo and Valetta (2011) found a 1.4 percentage point increase in the share of employees working less than 20 hours a week as a result of the law.  In Massachusetts, where the employer penalty is smaller than in the ACA ($295 per year), there was no evidence of a disproportionate shift towards part-time work compared to the rest of the nation.

This is not to minimize the negative impacts of the ACA, but it does put the 2.3 million figure in proper context.  Potential dis-employment of 2.3 million is not as grave a problem when discussing a labor force of over 150,000,000.

Second, often the discussion of part-time work fails to note that overall part-time employment figures are ambiguous indicators.  Part-time employment is broken up into two sub-categories; part-time work for economic reasons (also called involuntary), and part-time work for non-economic reasons (also called voluntary).  During economic downturns when businesses are cutting back on hours or are hiring part-time instead of full-time employees, involuntary part-time work tends to rises.  Conversely, voluntary part-time work, where people choose to work part-time because of other obligations (taking care of a family member, secondary or tertiary household earner, etc.), tends to rise as the economy improves.  One cannot simply point to a rise in total part-time work as indication of weak economic conditions, the ACA, etc.

If the ACA were having a negative impact on the labor market in terms of increasing part-time work, it would be in involuntary part-time work.  Here are the trends for voluntary and involuntary part-time work:

And as a share of total employment:

While involuntary part-time work remains above pre-recession levels, it is trending downward, and those trends do not support the argument that the ACA is necessarily driving part-time work in the manner suggested by the GOP.

However, involuntary part-time employment is further broken down; slack business conditions and could only find-part-time work.  While the overall number of involuntary part-time workers might be on the decline, upward trends in one of these two sub-categories might suggest the ACA is in fact having  Following the passage of the ACA, many stories have been told of businesses cutting hours to get their employees under the 30 hour a week threshold.  If this were an economy wide phenomena, then we should see a rise in involuntary part-time work due to slack business conditions.  Conversely, if businesses, in response to the health care law, hired part-time workers in lieu of full-time, then we should see a rise in involuntary part-time workers because they could only find part-time work.  However, in both case we aren’t seeing increases:

And as a share of total employment:


Lastly, part-time employment spiked during the recession, and looking alone at last month’s jobs report would likely lead one to believe that part-time work is still rising.  However:


And as a share of total employment:


While there are still problems in the labor market, including involuntary part-time work, there is nothing to suggest that the ACA is as pervasive a problem as some suggest.

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John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.