Obamacare hasn't caused a shift to part-time work...yet

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There has been considerable controversy in recent months about whether the Affordable Care Act is causing employers to shift towards a part-time workforce. For example, in a recent television interview on NBC's "Meet the Press," television journalist Maria Bartiromo suggested that as a result of Obamacare, we are becoming "something of a part-time employment country." In addition, a recent article in Forbes points to anecdotal evidence that a number of employers, including restaurants and universities, have been replacing full-time workers with part-time ones. This shift towards part-time work is occurring, they argue, because the ACA requires large employers to offer health insurance to full-time workers (defined as those who put in 30 hours a week or more) starting in 2015.

But this anecdotal evidence isn't borne out in the data for the labor force as a whole. In fact, there's very little evidence to suggest that ACA has led to an increase in part-time work thus far. However, research on a state-level employer insurance mandate suggests that it could well have such an effect in the future.

The graph below shows the fraction of all employees who were working part time (35 hours per week or less) in September of each year since 2009. Because some individuals work part time by choice, we've focused only on those working part time for economic reasons, or involuntarily.

As Obamacare's defenders have repeatedly pointed out, this number has actually fallen steadily since the passage of the law. But that is not very informative because the trend in part-time work simply tells us that the labor market has been recovering; it tells us nothing about the impact of ACA. To determine the impact of ACA, we need to figure out whether the share of part-time workers is higher or lower than it would have been in the absence of the health care law.

 

Unfortunately, that's hard to determine. But there are a few ways we can try to tease this information out of the data. First, we might expect Obamacare to have a larger impact in states where fewer individuals had employer-sponsored coverage to begin with. In these states, there are likely to be more employers who must come into compliance with ACA's employer mandate for full-time employees. These employers may have a greater incentive to shift towards a part-time workforce to avoid the mandate. Second, one state – Hawaii – has had an employer health insurance mandate that dates back to the 1970s. Hawaii's mandate covers workers who put in 20 or more hours per week, a stricter standard than the ACA's 30 hours. Thus, we would expect the ACA to have less of an impact on employment in Hawaii compared to the rest of the country.

The graph below on the left shows the trend in part-time work for the 26 states which had the highest rates of employer-sponsored coverage in 2009, and for the other 24 states plus D.C. The fraction of individuals employed part-time for economic reasons has declined by similar amounts in both groups of states. In other words, we do not see a smaller decline in part-time work in states with low coverage after the ACA was signed into law. The graph on the right below shows the trend in part time work for Hawaii versus the remaining states plus D.C. Again, there's no evidence that part time work has fallen by a smaller amount in the non-Hawaii states after ACA was passed.

 

These two exercises suggest that the ACA defenders may have a valid point: There is really not much evidence that the health care law has had an effect on the share of part-time workers.

On the other hand, this does not mean that Obamacare will not have an impact on part-time work in the future. Firms often need time to adjust their workforce, and the employer mandate does not kick in until 2015. A 2011 study by economists at the University of Michigan and the Federal Reserve Bank of San Francisco compared trends in part-time work for Hawaii versus the rest of the country and found that Hawaii's employer mandate is in fact associated with a shift towards part-time work in that state.

Both supporters and opponents of the ACA have tended to interpret the data on part-time work in the light that's most favorable to their own position. But the truth is murkier than either side is willing to admit. The bottom line is that while the ACA may cause a shift towards part-time work at some point in the future, this trend is not reflected in the data yet.

Aparna Mathur and Sita Slavov are resident scholars in economic policy studies at the American Enterprise Institute.

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About the Author

 

Aparna
Mathur
  • Aparna Mathur is an economist who writes about taxes and wages. She has been a consultant to the World Bank and has taught economics at the University of Maryland. Her work ranges from research on carbon taxes and the impact of state health insurance mandates on small firms to labor market outcomes. Her research on corporate taxation includes the widely discussed coauthored 2006 "Wages and Taxes" paper, which explored the link between corporate taxes and manufacturing wages.
  • Phone: 202-828-6026
    Email: amathur@aei.org
  • Assistant Info

    Name: Hao Fu
    Phone: 202-862-5214
    Email: hao.fu@aei.org

 

Sita Nataraj
Slavov
  • Economist Sita Nataraj Slavov specializes in public finance issues dealing with retirement and the economics of aging. Her recent work has focused on whether retiree health insurance encourages early retirement, the impact of widowhood on out-of-pocket medical expenses among the elderly and the optimal time to claim Social Security. Before joining AEI, Slavov taught a variety of economic courses at Occidental College: game theory, public finance, behavioral economics and econometrics. She has also served as a senior economist specializing in public finance issues at the White House's Council of Economic Advisers. Her work at AEI will focus on Social Security and retirement issues.


    Click here to view CV


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  • Phone: 202-862-7161
    Email: sita.slavov@aei.org
  • Assistant Info

    Name: Brittany Pineros
    Phone: 202-862-5926
    Email: brittany.pineros@aei.org

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