WSJ Economics Blog: ACA Is Not Leading To Part-Time Employment Shift

WSJ: Affordable Care Act Has Not Increased The Number Of Workers In Part-Time Jobs. A post on The Wall Street Journal's Real Time Economics blog pointed out that there is no evidence to support the claim that the ACA is leading to an increase in part-time employment over full-time employment:

If the health law were driving employers to cut employees' hours, the most vulnerable workers would likely be those working just above the 30-hour cutoff. That means the data would show a decline in those working 30 to 34 hours and an increase in those working less than 30 hours.

That isn't what's happening. The share of part-timers who say they usually work between 30 and 34 hours at their main job has been roughly flat over the past three years, at about 28%. (September data aren't yet available.) If anything, it's actually risen in the past year, though the change has been minor. The share working just under 30 hours has indeed risen somewhat, but the share working under 25 hours has fallen -- suggesting that employers are giving part-timers more hours, rather than cutting full-timers' hours back.

Put another way: If the Labor Department used the same definition of “part-time” as the health law, its data would show no increase in part-time work over the past year.

Other data tell a similar story. Average weekly hours -- a measure that comes from companies, rather than workers themselves -- have been flat for the past year, and are near their highest level since the recession. Restaurants, one of the sectors most often cited as likely to shift to part-timers, haven't cut workers' hours over the past year. [The Wall Street Journal, Real Time Economics, 10/22/13]

WSJ Editorial Page Has Repeatedly Pushed The Part-Time Employment Myth

WSJ: There Has Been A “Boom In Part-Time Employment To Avoid The Law's Penalties.” A September 30 editorial claimed that “one consequence” of the health care law “has been a boom in part-time employment to avoid the law's penalties”:

The larger story is that ObamaCare is gradually splitting U.S. health care into a two-tier system. One tier will be insurance that depends on direct government subsidies and controls -- Medicaid, Medicare and the Medicaid Plus of ObamaCare's exchanges. This care will be constrained over time by how much the public is willing to be taxed. 

The other tier will be the 156 million Americans who now have private coverage through their jobs, though ObamaCare is changing that too. One consequence has been a boom in part-time employment to avoid the law's penalties, especially in low-wage and seasonal industries, and larger and more stable employers are also re-evaluating traditional worker benefits.

High and rising health costs long predate ObamaCare, and while they've slowed in recent years -- though still not enough to keep pace with wage growth -- the Affordable Care Act will accelerate them. One reason will be the new taxes on insurers, drug companies and device makers that will be passed on to consumers. [The Wall Street Journal, 9/29/13]

WSJ: "Many Businesses That Must Provide Insurance Or Pay A Penalty Are Shifting To Part-Time Labor." A July 18 editorial claimed that unions opposed the health care law because “many businesses that must provide insurance or pay a penalty are shifting to part-time labor”:

The law “will destroy the very health and wellbeing of our members along with millions of other hardworking Americans,” they note, with some understatement. In 2009, Mr. Hoffa launched what he called “an unprecedented effort” to promote the Obama health program because health costs were “burdening American workers” and “too important for the labor movement to sit on the sidelines.” So much for that.

The first union grievance is that the employer mandate is leading business to hold worker hours below 30 hours a week to comply with the Administration's regulatory definition. Despite the one-year suspension of the mandate, many businesses that must provide insurance or pay a penalty are shifting to part-time labor, and the union chiefs explain that “fewer hours means less pay while also losing our current health benefits.” Nice to know Mr. Hoffa is reading these columns. [The Wall Street Journal, 7/18/13]

WSJ: "Businesses Have Been Scrambling To Insulate Themselves From Higher Labor Costs By Hiring Part-Time Workers." A July 5 editorial claimed that the definition of part-time work in the health care law was causing businesses to hire more part-time workers and decrease working hours:

Meanwhile, the law stipulates that a full-time workweek for the purposes of the mandate is 30 hours, when general business practice is at least 35. The result is that businesses have been scrambling to insulate themselves from higher labor costs by hiring part-time workers, or splitting shifts, or in some industries like fast food even sharing workers. Small firms trying to expand while avoiding the 50-worker trigger have come to be known as 49ers.

The delay will help these and other employers avoid immediately higher costs, which is why the main business lobbies endorsed it. But the decision will continue to dampen overall job creation because businesses know they'll still be whacked in a year. Businesses don't hire workers with the intention of sacking them later. [The Wall Street Journal, 7/4/13]

WSJ Blames ACA For Part-Time “Job Sharing.” A February 23 editorial claimed the ACA is responsible for a trend in employees working part-time jobs at different businesses, calling it “the strange new world of small-business hiring under ObamaCare”:

Here's a trend you'll be reading more about: part-time “job sharing,” not only within firms but across different businesses.

It's already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we've heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy's to log another 20 hours. Other employees take the opposite shifts.

Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more “full-time equivalent workers” to offer health plans to employees who work more than 30 hours a week. (The law says “equivalent” because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don't offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well. [The Wall Street Journal, 2/26/13] 

Experts Agree That ACA Has Not Led To Increased Part-Time Work

NY Times Blog: Federal Reserve Bank Analysis “Absolved The Reform Law As A Cause Of Part-Time Work.” The New York Times' editorial blog Taking Note pointed out that analysis by researchers at the Federal Reserve Bank of San Francisco “largely absolved the reform law as a cause of part-time work”:

As Senator Mitch McConnell of Kentucky, the Republican leader, said on the floor of the Senate recently, “Obamacare is a big reason we're turning into a nation of part-time workers.”

But neither the facts nor logic support that claim. The recession, not the A.C.A., caused the increase in part-time work, which -- besides -- largely occurred before the reform law was enacted.

Two researchers at the Federal Reserve Bank of San Francisco published an analysis in late August that largely absolved the reform law as a cause of part-time work. They showed that part-time work as a share of total employment climbed to 20.3 percent in 1983 in the aftermath of a recession during the Reagan administration, fell to 17 percent during the boom years of the 1990s, and zoomed back up after the severe recession in 2008 and 2009 to reach 19.7 percent in 2010, the year the A.C.A. was enacted. Since then it has trended down very slightly but remains stubbornly high. [The New York Times, Taking Note, 9/27/13]

Jared Bernstein: There Is No Evidence That ACA Has Led To More Part-Time Work. In a post on the New York Times' Economix blog, economist Jared Bernstein pointed out that, despite claims the ACA would increase part-time work, “both involuntary and overall part-time work are slowly declining as a share of all jobs”:

As Paul Van de Water and I pointed out in Politico the other day, if employers were responding to the incentive the way the critics claim, we should see involuntary part-time work growing as a share of total jobs, as workers who want full-time jobs would be stuck with part-time ones. But both involuntary and overall part-time work are slowly declining as a share of all jobs.

Still, it is legitimate to ask whether the slow decline in the share of part-timers is occurring more slowly in this recovery because of the incentive to stay under 50 full-timers. So I built a simple statistical model of the relationship between the share of involuntary part-time work and the unemployment rate. I then ran the model through the first half of 2009, and predicted, using the actual unemployment rate, the shares of involuntary part-time work.

If the law were keeping more than the usual number of full-time workers stuck in part-time jobs, then the predicted trend would be significantly below the actual one. In fact, the two trends hug each other quite tightly, further evidence that part-time employment is much where we would expect it to be at this stage of recovery, given the high level and slow decline in the jobless rate. [The New York Times¸ Economix, 8/22/13]

LA Times: Jobs Data “Puts The Lie To The Popular Conservative Meme That Obamacare Has Transformed America's Workforce Into Part-Timers.” An October 22 article by Los Angeles Times columnist Michael Hiltzik pointed out that new employment data showed that the ACA was not causing an increase in part-time work:

The report's most notable nugget is the change in part-time work. Over the last month the number of workers in part-time jobs for economic reasons -- slack demand, cutbacks in hours -- has remained stable. Over the last year, however, it has fallen by 681,000. Those part-timers also constitute a smaller share of all workers -- 5.5% in September compared to 6% a year earlier.

That puts the lie to the popular conservative meme that Obamacare has transformed America's workforce into part-timers. The idea is that employers wishing to evade the law's requirement that they offer health insurance to employees working more than 30 hours a week will cut their hours to 29 or less. The shorthand about this provided by Sen. Ted Cruz (R-Texas), that one-stop shop for Obamacare disinformation, was “single parents who have been forced into part-time work.” 

Previous employment reports have shown no evidence for that, and the new report undermines the myth further. Moreover, the monthly report defines “part-time” more loosely than the Affordable Care Act -- 35 hours a week or less, compared to the ACA's 30 hours -- which means there's even less evidence for the Obamacare/part-time meme. [Los Angeles Times, 10/22/13]

Baker And Jorgensen: “Data Do Not Indicate” That The ACA Is Affecting Part-Time Employment. In a post for the Roosevelt Institute's Econobytes blog, Center for Economic and Policy Research economists Dean Baker and Helene Jorgensen wrote that labor data “suggests that employers do not appear to be changing hours in large numbers in response to the sanctions in the ACA”:

An analysis of data from the Current Population Survey shows that only a small number (0.6 percent of the workforce) of workers report working just below the 30 hour cutoff in the range of 26-29 hours per week. Furthermore, the number of workers who fall in this category was actually lower in 2013 than in 2012, the year before the sanctions would have applied. This suggests that employers do not appear to be changing hours in large numbers in response to the sanctions in the ACA.

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Reducing average hours of work below 30 per week, could plausibly have an impact on employment patterns, but the data do not indicate that this is happening. [CEPR, 7/24/13]