News Story

Economy Inundated With Part-Time Workers

Economists divided on whether Obamacare to blame

Over the last five years, the number of people who wanted full-time jobs but worked part-time has more than doubled, rising to 2.75 million in June 2013 from 1.1 million in January 2008.

That has raised the question of whether employers are hiring more part-timers so they won't have to provide health insurance to people who work 30 hours a week or less, which is the threshold for a full-time worker under the Patient Protection and Affordable Care Act, also known as "Obamacare."

"Obamacare increases the cost of full-time employment," said Cato Institute Senior Fellow Mike Tanner, who has written a book on Obamacare. "It's only logical that some employers would seek to avoid the increased cost by reducing full-time employment and hiring part-time workers instead."

Beginning in 2015, Obamacare requires employers with 50 or more full-time equivalent employees to provide health coverage for all their full-time employees or pay an annual penalty ranging between $2,000 and $3,000 per employee.

Obamacare’s definition of a full-time equivalent job is 30 or more hours per week during an average month. It is based on the prior 12 months of work.

One economist and some think tank scholars point to the increased number of part-time workers being more of a sign of a slow recovery than having anything to do with the new health care law.

"When we see that the number of involuntary part-time workers more than doubled, that's yet one more indication of the severity of the damage caused by the financial crisis," said Michigan State University Economics Professor Charles Ballard, in an email. "The fact that the number of involuntary part-timers is essentially unchanged from Sept 2011 to June 2013 indicates that, despite continuing gains in overall employment, the labor market is still not nearly as strong as most of us would like it to be."

The number of part-time workers seeking full-time work peaked at 2.76 million in Sept. 2011, according to the U.S. Bureau of Labor Statistics.

Alan Barber, spokesman for the Center for Economic Policy and Research, pointed to part-time employment increasing from 2008 to 2009 before Obamacare passed. Barber said that part-time employment for the first four months of 2013 was lower than it was for the first four months of 2012.

"All together, there seems to be very little evidence that the ACA has led to a big increase in part-time workers over full-time workers," he said.

Elise Gould, director of health policy research at the Economic Policy Institute, a left-leaning think tank, said the spike in part-timer workers wasn't attributable to Obamacare.

She said when President Barack Obama pushed off the employer mandate that it provide insurance for full-time employees to 2015, it meant that the basis for hours worked when determining full-time workers wouldn't start until 2014.

"If there was a response, you wouldn't be seeing it now," Gould said. "There is no rational reason for employers to be cutting work hours for a mandate that doesn't take place for another year and a half."

For an employer with 35 full-time workers (30 hours a week or more) and 20 part-timers (24 hours per week, 96 hours per month), those 20 part-time jobs are the equivalent of 16 full-time jobs. So the employer in the example would have 51 full-time equivalent workers, according to CPEhr, a human resources consulting firm in Los Angeles.


See also:

Michigan Capitol Confidential Obamacare Coverage