Has Obamacare Forced Cuts to Full Time Jobs?

Healthcare, News, Taxes

Many economists agree that one of the direct effects of the Affordable Care Act will be more part-time jobs and reduced hours for American workers. Obamacare will require businesses employing 50 or more workers to offer health insurance or pay a penalty of $2,000 per full-time worker (those working over 30 hours per week). The simple way to get around this penalty is to reduce each employee’s hours, but offset that by hiring more workers. This ultimately could mean less job growth or mainly part-time job growth.

But before you start to worry, the penalty only applies to firms with 50 employees or more. And it only penalizes companies that don’t offer health coverage to full-time workers, which nearly all large firms already do. So to be at risk of having your hours cut, you have to be one of the few workers at a large firm that doesn’t offer coverage. You must also be working over 30 hours a week, and you probably have to have a low wage. For the rare high-wage worker at a firm not providing health insurance, a $2,000 penalty is likely not enough to induce the employer to cut hours.

Will Your Coverage Change?

Many firms are making workers pay more of their health bills. Obamacare includes a tax on generous health plans (starting 2018) which is making some employers reconsider fancy benefits, much to the dismay of unions that fought for such benefits.

At the other extreme, some low-paid workers may want their employers to drop insurance, so they can receive subsidies on the exchanges. Low-paid workers, therefore, may work fewer hours. However, by expanding Medicaid to those with higher incomes, Obamacare does hope to remove a disincentive to work. The argument is that people who might have turned down extra work for fear of losing their Medicaid would now take it. At the end of the day, it may be hard to determine whether a possible drop in American employment has been caused by employers cutting hours or workers choosing to work less (including older people opting to retire earlier).

No one seems to agree on whether jobs and hours will decrease over the coming months, whether cut hours will be forced on workers, or if workers will simply opt to work part time.