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Tue July 30, 2013
Will Obamacare Mean Fewer Jobs? Depends On Whom You Ask
Originally published on Tue July 30, 2013 5:43 pm
Of all the contentious claims about the Affordable Care Act, few have been more contentious than over the impact it's having on employers.
But is the law really having an impact on the economy?
Not surprisingly, it depends whom you ask.
Opponents of the law point to anecdotes in industries with a lot of low-wage workers, like restaurants.
They also point to employer surveys like one from the International Foundation of Employee Benefit Plans. It found that nearly 1 in 5 small businesses said it was reducing hiring to try to stay under the 50-worker threshold that exempts companies from an ACA requirement that full-time employees be offered health insurance. An additional 16 percent said they planned to adjust hours so fewer workers would be eligible for health insurance.
But now the law's supporters, including the White House, are fighting back.
They're putting out their own data showing that part-time employment is no higher during this economic recovery than during other recent economic recoveries.
That includes people working part time who'd rather be working full time. Those data show that most of the people involuntarily working part time are in that situation owing to state and federal budget cuts, not the health law. They've also pointed out that weekly hours have risen since the health law was passed, including in the restaurant industry.
So who's right?
It's entirely likely that both sides are. One of the White House talking points is that only about 1 percent of the workforce would be impacted by the Affordable Care Act requirements. Those are typically people who don't have health coverage and who work more than 30 hours a week for companies with more than 50 employees.
That's not a big enough group, they point out, to really affect the economy on a macroeconomic level. And it's not.
But 1 percent of the workforce is more than 1 million people, more than enough to make for a lot of anecdotes. There's also the issue that the administration and its allies are looking back at what's happened so far, while opponents are looking mostly forward at what may happen in the future.
Still, there are efforts on Capitol Hill to address one point of contention: The law defines full-time work as more than 30 hours per week, rather than the traditional 40.
Sens. Susan Collins, R-Maine, and Joe Donnelly, D-Ind., have introduced the Forty Hours is Full Time Act of 2013, which they say would "ensure that the definition of full-time employee and full-time equivalent in the ACA is consistent with the traditional full-time 40-hour work week." A similar bill has been introduced in the House.
The prospects for the legislation, however, are not good.
One reason is that Congress is so gridlocked and Republicans are so dug in against the law that even when there is a consensus that something needs to be fixed there is little likelihood of its happening.
And on this issue there's no consensus that changing the definition of a full-time workweek would actually change employers' incentives.
University of Chicago economist Casey Mulligan, writing in the New York Times, suggested that such a change could create its own set of disincentives, with a 39-hour-a-week job with no insurance potentially paying more than a 40-hour-a-week job with employer insurance, because of subsidies available for health insurance in the new health exchanges.
AUDIE CORNISH, HOST:
Of all the contentious claims about the Affordable Care Act, few have been more contentious than the impact it's having on employers. Some employers have said they're cutting workers' hours or they won't do any more hiring because of the health law. And some lawmakers on Capitol Hill say they want to change the law's definition of full-time work to try to address the problem. But how much of an impact is the law really having on employment? As usual, it depends who you talk to.
And so, we're going to talk with NPR's health policy correspondent Julie Rovner to help us sort this out. Hey there, Julie.
JULIE ROVNER, BYLINE: Hey, Audie.
CORNISH: All right. So, first of all, the definition of a full-time worker, what is it officially under the law?
ROVNER: Well, under the health law, full-time is considered 30 or more hours per week. Those are the only people large employers have to provide health insurance to if they want to avoid potential fines. At the same time, only employers with 50 or more workers are subject to the requirements at all.
So a lot of the anecdotes we've been hearing about involve actually cutting worker hours under that 30-hour threshold, or else hiring part-timer workers rather than full-time workers, or trying to stay under that 50-worker limit.
CORNISH: So how widespread is this trend, though?
ROVNER: Well, now that's the question no one seems able to answer. Opponents of the law point to a lot of the anecdotes, of course, and they're pretty easy to find, particularly in industries with a lot of low-wage workers, like restaurants.
They also point to some employer surveys, like one from the International Foundation of Employee Benefit Plans. It found that nearly one-in-five small businesses said they were reducing hiring to try to stay under that 50-worker threshold. And that 16 percent said they planned to adjust hours so fewer workers would be actually eligible for health insurance.
But now the law's supporters are fighting back, including the White House. They're putting out a lot of data showing that overall, part-time employment, including people working part-time who'd rather be working full-time, is no higher during this economic recovery than during any of the most recent economic recoveries. They've also pointed out that weekly hours have risen since the health law was passed, including in the restaurant industry.
CORNISH: So who's right about this? I mean, is there a trend happening or not?
ROVNER: Well, you know, it's entirely likely that both sides are right. One of the White House talking points is that the number of people who could potentially be impacted by these changes is only about one percent of the workforce. Those are basically people who don't have health insurance, they work more than 30 hours and work for companies with more than 50 employees. That's not big enough, they say, to really affect the economy on a macroeconomic level. And clearly it's not.
But one percent of the workforce is more than a million people. That's more than enough to make for a lot of anecdotes.
There's also the issue that the administration and its allies are looking backwards at what's happened so far, and opponents are looking mostly forward at what may happen in the future. And the administration's decision a couple of weeks ago to delay the employer requirements for an additional year is just adding more uncertainty about what might happen.
CORNISH: But, of course, meantime, there is an effort on Capitol Hill to address this idea of what a full-time worker is, right?
ROVNER: That's right, there is. And actually, it's a bipartisan one. Maine Republican Senator Susan Collins and Indiana Democrat Joe Donnelly, who are both moderates, have proposed to change the health law's definition of full-time employee from an average of 30 hours a week to 40 hours. There's a companion House bill with about 100 co-sponsors, although at the moment they're all Republicans.
CORNISH: What is the chance this legislation will actually make it anywhere?
ROVNER: Well, I'd have to say not too good. And there are a couple of reasons. One is that even things about the health law that there's a consensus need to be fixed, Congress is so gridlocked right now, and the Republicans - as we've just heard - are so dug in against it, that really very few small changes are even possible in this environment.
But second, there isn't really a consensus that moving this threshold from 30 to 40 hours would really solve the problem. One economist showed that it would just create its own set of disincentives, like making a 39-hour a week job actually pay more than a 40-hour a week job, that came with employer insurance, because there're subsidies in the health law. And so, actually you could end up having a disincentive to work full-time
So as I like to say so often, when it comes to health care, nothing is really ever what it appears to be.
CORNISH: Julie, thank you so much for talking with us.
ROVNER: Thank you.
CORNISH: That's NPR health policy correspondent Julie Rovner. Transcript provided by NPR, Copyright NPR.