Economic Intelligence (U.S. News & World Report), October 4, 2013
The U.S. government is now "shut down" thanks in large part to yet another attempt to put the brakes on the Affordable Care Act, or ACA. Yet this week, the law's health care exchanges went on line, promising affordable insurance coverage for millions of Americans with pre-existing conditions or jobs that did not previously offer a health plan and to millions of the unemployed. Nevertheless, a steady stream of untruths about the law continues to pop up in newspapers, blogs and Facebook feeds.
One of these tropes is that the ACA is causing employers to cut back on hours for full-time employees so that they will not have to provide coverage (under the ACA, companies with more than 49 employees are required to offer health insurance coverage to those employees working 30 or more hours a week or face penalties). Typically, the evidence for the cutbacks in hours is that someone knows someone else whose hours were cut earlier this year in anticipation of the law taking effect. Many pundits have been even lazier, just stating that employers are cutting back hours without citing concrete examples.
The reality, though, is that there is no widespread trend of employers cutting their workers back to just under 30 hours because of the ACA. In July, my colleagues Dean Baker and Helene Jorgensen analyzed recent data from the Current Population Survey. They found that only 0.64 percent of the workforce was working between 26 and 29 hours a week in the first half of 2013. This number is only slightly higher than it was for the first half of 2012 (0.61 percent).
In other words, there is no evidence of a widespread trend of employers reducing hours to avoid providing coverage. That sentiment was recently echoed by Moody's Mark Zandi, who said of the supposed trend, "I was expecting to see it. I was looking for it and it's not there."
The basic story is that, yes, there are a small number of firms that have cut down on the number of full-time employees recently. And yes, over time, the 30-hour cutoff could have some effect on hours as employers adjust to the law and new businesses open. Of course, some companies may go the opposite route and move part-time workers to full time, as was recently the case at Walt Disney World.
Regardless, the promulgation of the idea that the ACA will transform the U.S. workforce into a part-time workforce and negatively impact employment in the United States is dead wrong.
Alan Barber is the domestic communications director of the Center for Economic and Policy Research.