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“Save American Workers Act” Would Put More Workers at Risk

The House Ways and Means Committee plans to mark up tomorrow the “Save American Workers Act,” a bill to raise the threshold for full-time work under health reform from 30 to 40 hours a week.  As we have previously explained, however, this move would exacerbate the very problem that the bill’s sponsors hope to solve — that health reform may lead to more part-time work.

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.

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.

We do know, however, that raising the threshold for full-time work from 30 to 40 hours a week would make a shift toward 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.”  New York University’s Sherry Glied and Claudia Solis-Roman find that “increasing the threshold would not only subject a much larger proportion of workers to having their hours cut, but would also increase the federal costs of health reform.”

Only about 8 percent of employees work 30 to 34 hours a week (at or modestly above health reform’s 30-hour threshold), but 43 percent of employees work 40 hours a week and would be vulnerable if the threshold rose to 40 hours (see chart).  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.