off the charts

Raising Health Reform Threshold to 40 Hours Would Make Shift to Part-Time Work More Likely

Some business groups continue to push to increase the threshold for full-time work under health reform from 30 to 40 hours a week, the New York Times reports.  But that would be a mistake. Health reform requires employers with at least 50 full-time-equivalent workers to offer health coverage to full-time employees or pay a penalty.  Critics claim the requirement is prompting employers to shift some employees to part-time work.  As the Wall Street Journal reports, however, recent data provide scant evidence of such a shift. Look at the share of involuntary part-timers — workers who’d rather have full-time jobs but can’t find them.  If health reform’s employer mandate were distorting hiring practices as critics claim, we’d expect the share of involuntary part-timers to be growing.  Instead, as the first figure below shows, it’s down by about a percentage point from its post-recession peak.  My colleague Jared Bernstein finds that this pattern is just what we would expect at this stage of recovery, given the high level and slow decline in the unemployment rate.
The fact is that it’s too early to know how health reform will ultimately affect the amount of part-time work.  But there’s every reason to expect the impact to be small as a share of total employment, as we recently explained. One thing we do know is that raising the cutoff for the employer mandate from 30 to 40 hours a week would make a shift towards part-time employment much more likely — not less so.  Ken Jacobs, chair of the University of California’s Center for Labor Research, says, “While we can expect some employers to cut workers’ hours as a result of the current law, the number would explode if the [proposal to increase the threshold] was adopted.” Only about 8 percent of employees work 30 to 34 hours a week (at or modestly above health reform’s 30-hour threshold), as the second figure shows, but 43 percent of employees work 40 hours a week and would be vulnerable if the threshold rose to 40 hours.  Another few percent of employees work 41 to 44 hours a week.  Thus, more than five times as many workers would be at risk of having their hours reduced if the standard for full-time work went from 30 to 40 hours.