The ACA Still Hasn’t Crashed the Economy

August 11, 2016

The July jobs report was mostly positive with the unemployment rate holding steady at 4.9 percent and the economy adding 255,000 jobs. While these data points grabbed most of the headlines, other aspects of the Bureau of Labor Statistics report were noteworthy, including job gains spread across sectors and indications that wage growth accelerated. Though there is still room for improvement, the report contradicts horror stories about an American economy on the brink.

Another less discussed aspect of the jobs report that deserves attention is the change in the number of people that work part-time. This is especially relevant when considering the impact of the Affordable Care Act (ACA).

Prior to its adoption, numerous opponents of the Act — also called “Obamacare” — claimed (and still claim) that the program would be a job-killer and lead to large-scale cuts in hours for full-time workers in order to avoid paying for employee healthcare. (The ACA penalizes employers that have over 50  employees and that do not provide healthcare for workers that log greater than 30 hours a week.)

The data show that these claims did not come to pass. While it may be true that there are some cases in which employees’ hours were cut and that employees were involuntarily moved to part-time status, this was not widespread. In fact, despite a slight uptick in July, the overall number of people involuntarily working part-time has fallen sharply since the implementation of the ACA in January of 2014.

On the other hand, the number of people who have voluntarily decided to work part- time is up. This number has continued to climb since reaching a low in January of 2011.

A closer look at this trend reveals a sharp uptick in voluntary part-time employment in the first half of 2014, around the time of implementation of the ACA, and when many people enrolled in the exchanges in March. This number has continued to climb since then. In fact, the number of voluntary part-time employees is now higher than pre-recession levels. This suggests that the ACA has given people the freedom to cut back on hours worked since they can now get healthcare coverage through the ACA exchanges or expanded Medicaid coverage.

Research by my colleagues here at CEPR paints a clearer picture of these voluntary part-timers. In many cases, these are young parents who may want to spend more time with their families. An uptick in older workers between the ages of 55 and 64 working part-time voluntarily may indicate that older workers are taking the opportunity to work part-time and still have health insurance before they are eligible for Medicare. Considered together, the latest data on the decline in involuntary part-time workers and the increase in voluntary part-time workers indicate that the ACA has allowed people the freedom to cut back on hours worked and still have health care, all without crashing the economy.

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