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Christian Tharp, CMT

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Product Performance

Is Obamacare Affecting Full vs. Part-Time Employment?

Is Obamacare affecting the hiring of full-time vs. part-time workers? Are employers reducing full-time employees down to part-time employees to avoid having to give coverage or pay a fine? According to some analysts and CEO’s, the answer is yes.

However, for every retailer that claims to be reducing hours, there’s a Walt Disney (NYSE: DIS) that’s offering full-time work to part-timers. For every Republican that says the world is doomed, there’s a Democrat that debates it.

What’s the truth? Is there a skyrocketing increase in part-time employees like the US has never seen? Take a look at the following charts and decide for yourself, and keep in mind, the Affordable Care Act (Obamacare) was passed in 2010.

Has the number of part-time employed increased? Yes, just as the number has been increasing since 2000, way before Obamacare. There does not seem to have been a noticeable increase since 2010. Take note, the number of full-time employed has increased as well.

Has the average number of hours declined? Yes, as they have been for quite some time, having nothing to do with Obamacare. As you can see, average weekly hours usually dive during recessions and then commonly rebound, just as they have in the current US recovery. In fact, the average number of hours has actually increased since the passage of Obamacare.

Has there been a shift in full vs. part-time employees? Due to “The Great Recession”? Yes. Since the passage of Obamacare? Yes, but it appears that the trend is towards full-time, not part-time.

What about a rise part-time employees, but for economic reasons? Absolutely. You will notice again that part-time employment due to economic reasons spikes in all recessions and then declines a bit, just like after the recent US recession. The rise correlates with the unemployed.

You can also see that the overall trend has been up for quite a while, having nothing to do with Obamacare, and has actually declined since its passage. Increases in part-time employment suggest a weakening in demand for labor, and specifically, those with less skills and education.

So, do the above charts mean that Obamacare has, and will have, zero effect on employment? No. Of course there will be an effect. The question is, how much?

Studies have shown that some industries are more sensitive than others. It is difficult to know how much of it is correlated to Obamacare, but home centers, general merchandise stores, some retail industries and several other low-wage industries have seen a decline in average weekly hours.

In a survey conducted by the International Foundation of Employee Benefit Plans, the following statistics were observed:

Results showed that there would not be a severe decline in continuing coverage.

Results also showed that some employers will reduce hiring and hours.

However, studies by the UC Berkeley Labor Center based on the Current Population Study, and Buchmueller TA, DiNardo J, and Valletta RG. (The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor), came to the following conclusion:

“2.3 million US workers identified as at greatest risk for work hour reduction represent 1.8 percent of the United States workforce. This is consistent with the research on the impact of Hawaii’s health care law on work hours. Hawaii requires firms to provide health insurance to employees working 20 hours a week or more, so the cost to employers for full-time workers are much greater in Hawaii than under the ACA, while the hour threshold is lower. Buchmueller, DiNardo and Valetta (2011) found a 1.4 percentage point increase in the share of employees working less than 20 hours a week as a result of the law.In Massachusetts, where the employer penalty is smaller than in the ACA ($295 per year), there was no evidence of a disproportionate shift towards part-time work compared to the rest of the nation”

In conclusion, it may simply be too early to tell. However, for now, the data does not seem to support the anti-Obamacare crowd’s claims that the sky is falling, and that it is falling due to Obamacare. The data seems to support the fact that there has been a decline in hours worked, full-time employees and an increase in part-time work, all of which dates back to effects of The Great Recession and beyond.

Tags: Affordable Care Act Barack Obama

Posted in: Education News Politics Econ #s Economics General