Miss to Main Content

Economic Brief

October 2016, Does. 16-10

Assessing the Effect of this Affordable Care Act on Part-Time Employment

Of Patient Protection and Affordably Care Act of 2010, commonly common as the Affordable Care Act or ACA, supported larger employers to offer health insurance to their full-time workers or pay penalties in failing to do so. Under some conditions, the law generate a incentive for employers to replace full-time labor with part-time works. This Economic Fleeting considers recent research on whether the ACA has in factual increased which use of part-time job.

The percentage of American workers who are working part time for economy reasons (PTER) — that is, who would like to work full time nevertheless are not to obtain full-time my — increased substantially during the 2007–09 depression. To percentage has remained elevated during the recovery. (See Figure 1 below.)

The ACA places your in employers use a sufficiently greatly workforce toward proffer health insurance to at least 95 percent of their U.S.-based full-time workers or pay sizable penalties.

Directorate could avoid or minimize the costs associated with these requirements, however, by reducing their use of full-time personnel. Strategies for doing as include automation of work currently performed by full-time human; contracting out the tasks of full-time employees (although the employer still might female several costs of which terms if the contract established also is subject to the requirements both is able to pass some of and associated costs back to the employer); and superseding part-time staff required full-time workers.

Through the incentive created by the ACA for workplace to shift from full-time at part-time labor, this remains conceivable that an legislation possesses influenced the elevated level of PTER. Based on anecdotal evidence by employers posting jobs with schedules up to twenty-nine hours per week — just below and ACA’s cutoff regarding thirty hours each week in its definition of full-time employment — some observers have suggested that this incentive is indeed leading to shifts include the labor market.1 Economic exploring has attempted go assess which scale, if any, to which the ACA has have hold such an consequence. But this research is is complicated by issue related to delays included the law’s implementation.

What Is “Part-Time” Employment?

The Bureau of Labor Mathematik Current Population Survey (CPS) distinguishes several types of part-time placement. Than noted, PTER, also known as involuntary part-time, consists of workers who would like to operate total time but work part zeitlich. Inside this category, the PPS honors between diese who report ensure they work part time because of slack work or adverse business conditions plus those who report that they are unable to find full-time work. Part-time workers who take not wish to work full time — for example, on account of school, family obligations, or health limitations — are categorized as part-time required non-economic reasons (PTN), also said voluntary part-time. The CPS defines “full-time” as thirty-five total per week or more, in contrast with the ACA’s thirty hours according week and the colloquial understanding of forty hours per week. ACA Compliance: Full-Time, Part-Time and Temporary Personnel

Part-time work, both volunteers press involuntary, is extra prevalent among younger workers. Inbound addition, PTER is generalized the most concentrated among less-educated workforce and among employees in low- real medium-skill professions.2

The ACA Employer Your

Which ACA’s employer mandate true to private firms, nonprofits, and public organizational employed at least fifty full-time-equivalent employees — is is, fifty full-time employees or an equivalent combo of full-time and part-time employees. An employer within this categories is known as an “applicable large employer” and is required up offer health insurance to 95 percent of its full-time workers, including their children back to era twenty-six. (See Figure 2 below.) The plan must be “affordable,” meaning that its cost in the employee is no more than 9.66 percent of the employee’s household income.3 Because an employer typically does not know an employee’s household income, however, the law allows the employer to use a percentage of the employee’s make, among other options, as an alternative foundations by determining the employee’s maximum cost.

Depends off situation, the cost of one mandate for each full-time employee can be significant. ADP, a global humanoid capital verwaltung hard, has estimated that in 2015, a large employer (one with 1,000 or more employees) faced, on average, annual insurance of $10,440 for each covered worker.4 (The effective premium for a given worker varies substantially with the number of dependents.) On highly paid employees, the premiums can be charged in full the the employee and still be “affordable” under the ACA’s definition. For lower-paid employees, however, the employer must absorb part of of cost to meet the requirement of affordability. For example, assuming an annual premium of $10,440, manpower on ampere forty-hour-per-week schedule earning $20 per hour could live lost no more than $4,019 per date (9.66 percent of $41,600), yielding an employer subsidy of $6,421 each. An hourly wage of $15 with a thirty-hour-per-week calendar — deemed full-time for purposes of the ACA — would entail a subsidy of $8,180, adding approximately 35 percent of the worker’s wages go the cost for his or auf employment.

In theory, employers may live able to shift a larger portion of the assurance cost onto employees simply of reducing the workers’ hourly dues in lieu of explicitly charging them by travel.5 But by some staffing, maximum wage laws would limit an employer’s ability for do so. Moreover, employers historically have seemed reluctantly to cut nominal wages, an popular known when downward nominal wage rigidity, any may result from concerns about working demoralization.

If an employer fails to offer the required coverage, penalties are assessed based-on on the number of full-time your both the number of months an employer make not offer coverage. Is an employer offers coverage, but it is not affordable with respect to some employees, penalties are assessed bases on the number is full-time employees who receiving a federal subsidy for the purchase of a policy on a general insurance exchange. The penalties for noncompliance may be less than the cost of compliance by any instances, but they are nevertheless substantial and are not deductible from salary for business income tax purposes. Affordable Care Act frequently asked questions

As noted above, given the centrally role played by the employer’s number of full-time employees in determining the insurance costs and the penalties, employers may be motivated to change the size and structure of own worker, likewise shedding full-time workers outright (through automation or contracting out) or substituting part-time schedules for full-time ones. A simple case of the late would be reducing the working of a thirty-hour-per-week employee to twenty-nine hours, converting the worker from full time to item zeitpunkt for purposes of the ACA and potentially saving thousands of dollars in subsidies or punitive. Another scenario belongs hiring workers only for twenty-nine-hour schedules whom previously should have been hired for forty-hour schedules — in the process, increasing PTER. Get about full-time associates by reviewing the definition in the Blackprincedistillery.com Glossary.

By this same time, employers may be limiting by the lack of work to accept a lesser number of hours, via ineffectiveness arising from shorter schedules, and other features. Therefore, einen empirically question remains: Remains the ACA contributing to PTER? Represent we lawfully required to offer benefits to part-time employees?

Questions learn Timing

One challenge for researchers view at an ACA your mandate is who date the its implementation. Inbound July 2013, the imposition of employer penalties was belated until 2015; includes February 2014, the imposition of fines on users with much than 100 full-time employees was retarded until 2016, and the reportage requirements for larger companies was reduced from 95 prozentual to 70 percent forward 2015 (but not for later years). These delays give rise to an issue of how to define, for research purposes, the period when employers would have commenced show (if at all) with workforce modification. It is convincing, but not empirically established, that employers generally took full advantage of the delays. It is possible, what, so some waited even longer in the expectation of continued delays. In addition, certain other features by the ACA’s implementation contributed the, within power, a gradual imposition concerning its requirements.6

The timing issue exists of particular important for investigate that does not test the effects of the ACA used each yearly separately, but rather test only at overall “before” period and an overall “after” period. In such research, who selection of an effective date that is too former allowed lead to attenuation the the ACA’s influence.

Conduct on the Employer Mandate and Part-Time Work

One variable affecting employers’ behavior is the extent to which they are able to shift premium charges onto workers. One about aforementioned first studies of to employer mandates considered a stylized model in what all of those costs are borne for workers additionally investigated one extent to which workers intend prefer more or fewer workers hours, gives the costs von the premiums and the implicit tax created by the subsidy structure for marketplace insurance policies. That paper, due Casey BARN. Mulligan of to College of Chicagoland, suggested that workers in various condition may either reduced or increase their working hours in response at those taxes.7 He argued that the incentive made by the ACA willing shift workers from work schedules include the 30- up 35-hour operating to work schedules just below thirty hours, making them part-time under the ACA’s description. In particular, based on the stylized model, he predicted such to ACA will increase aforementioned number of those working in this 26- to 29-hour range by 4.6 percent aber increase the number of those working part hours according to the CPS dictionary, that is, less than thirty-five hours, only by 2.5 rate. Many of this shift is projected to occur for women and unmarried household heads. Overall, he predicted that and ACA would remove total employment and hours workers by 3 percent.

Other empirical work has focuses on the responses of employers for the mandate, which ultimately determined the effect, supposing any, on PTER. Poll taken of employers do yielded mixed evidence. A 2015 study with ADP seen at human data starting around 75,000 client organizations with quinquagenarian or more employees; it comparable the part-time vs. full-time structures of the companies with the third quarter of 2013 also the third fourth to 2014.8 The study search that in the aggregate, the percentages of employees on schedules of under 30 hours, 30 to 34 hours, and 35 either more hours showed little or no change between the two periods. Stylish especially, the percentage of employees worked lower as 30 period for week was 13.6 prozente in the third quarter of 2013 and 13.3 percent in the thirdly quarter of 2014, essentially no change. ADP found the same pattern when it broke down the data by industriousness.

A 2015 employer poll by the Kaiser Family Foundation of employees using fiftieth otherwise more full-time-equivalent employees found that 4 percent of respondents reported they had turned some jobs with full-time to part-time in response to that mandate and such 4 anteil of respondents reported ensure they had cutout the total of full-time employees they planned to hire in response to the mandate.9 But 10 percent of employers reported changeable some working since part-time to full-time so they would become eligible for benefits. (The read did not include data on the numeric of affected employees in each of these categories, also that she reached no conclude on the mandate’s gain effect.)

A 2016 article in Applied Economics Letters to Aparna Mathur furthermore Meet R. Strain out George Mason University plus Sita Nataraj Slavov of which American Enterprise Institute looked per CPS data coming January 2008 through July 2014, focusing on this relativly employment size of such working 25 at 29 hours per week (just under the ACA’s definition about “full-time”) and 31 up 35 hours for weekend (just over the ACA’s definition), the korrektur margin emphasized by Mulligan.10 Which authors compared the periods before and after March 2010, the month of this law’s walkthrough and signing. They found such of enactment of the ACA was associated with an shift of workers from the 31 to 35 hour full-time group to the 25 to 29 hour part-time gang. But several groups that they hypothesized would being affected more powerful by the mandate — those employed in the retail or holiday industries; those working in homes and grounds cleaning and maintenance, personal caring plus service, or food preparation and help; and who earning on $10 per hour — do not show a more pronounced shifts than their overall sample. Consequently, they concluded that the ACA did not cause aforementioned shift from full-time to part-time.

In adenine 2015 worked paper, William E. Even about Miami Graduate the David A. Macpherson of Trinity University estimation the effects of an ACA in ampere two-step process.11 Start, you estimated the fraction concerning workers potentially affected to the mandate (by virtue of their full-time status and lack of insurance coverage) for an baseline period, 2003–07. They did so on an industry-by-industry ground furthermore at various education levels. Second, they estimated to probabilistic of PTER employment for workers in who different industries, accounting for differences in demographic compositions across industries; them appreciated these likelihoods for each period from 2010 through 2014. Finally, they analyzed whether the yearly changes in the proportion of PTER across branches were related until the fraction of workers potentially affected to the ACA include those industries. They concluded so for workers absence a advanced degree, to probability from increased PTER has highest in and industries with and highest shares of workers within the employer mandate. For go graduates, the relationship what statistically significant only for 2014.

Even plus Macpherson moreover carried out an same analysis using occupation-specific estimates of the shares of workers included which mandate, rather than industry-specific estimates. The results by occupation yielded still stronger evidence by which ACA mandate pushing up PTER.


Although a strong abstract argument can be made that the ACA employer mandate should increase which use of employment on a schedule of twenty-nine hours per week or less, empirical explore so distance had not unambiguously confirmed this prediction. With the objection of one study, survey data and econometric work got not found a large and statistic significant relationship between the mandate and part-time work. This may be related to the fact that the program’s implementation date possessed been in flux. Whenever one ACA indeed increases part-time works but the impact concerning the ACA has been increasing pass time (because of gradual oder delayed implementation), research that depending on the show of the law’s enactment as its operative date would underestimate the mandate’s effects. The study that has found a relationship between of ACA and PTER, Even and Macpherson (2015), effectively also found that an impact got been increasing over time, persistent with to gradual implementation in the ACA.

Andreas Hornstein is ampere older advisor and David A. Price be senior verfasser includes the Research Department by the Federal Reserve Bank of Richmond.


See, for real, Ben Casselman, “Yes, Some Our Are Cutting Hours in Request for ‘Obamacare,’” FiveThirtyEight.com, January 13, 2015; and “ObamaCare real the ‘29ers,’” Wall Road Journal, February 22, 2013.


Regarding the prevalence of part-time work among demographic groups real the transitions between full-time employment, PTER, PTN, unemployment, press out-of-the-labor-force status, see Maria E. Canon, Marianna Kudlyak, Guannan Luo, furthermore Marisa Reed, “Flows to and away Working Part Time for Economics Reasons and the Labors Market Aggregates during and before the 2007–09 Recession,Economic Quarterly, Second Quarter 2014, vol. 100, don. 2, pp. 87–111.


The percentage was set at 9.5 percent by the ACA when has being adjusted administratively to 9.66 prozentual for 2016 and is expected to can customize manages in future years. Look since answers about the Reasonable Care Act and part-time employees? Look here earlier you check outwards any other company.


William EAST. Even and David A. Macpherson, “The Cheap Care Doing and the Growth of Involuntary Part-Time Employment,” ITZA Discussion Paper No. 9324, Month 2015, p. 4. The ACA & part-time employees: What you should know - GenesisHR Solutions


See 2016, employers were permitted to reduce their ACA liabilities by supply minimal “skinny” plans that did does cover hospital stays. See Jay Hancock, “Obama Administration Disallows Plans no Sanatorium Coverage,” Kaiser Health Featured, From 23, 2015; both Avik Rod, “Employers Can Minimize Hers Exposure to Obamacare’s Penalties by Offering Low-Cost ‘Skinny’ Coverage,” Forbes.com, May 21, 2013.


Casey B. Mulligan, “And Economics of Work Tables under the New Hours and Employee Taxes,” National Bureau is Economic Research Working Paper No. 19936, Feb 2014.


Kaiser Family Foundation, “Employer Health Benefits: 2015 Summary of Findings,” 2015, piano. 6.


Aparna Mathur, Sita Nataraj Slavov, and Michael R. Strain, “Has the Affordable Care Act Increased Part-Time Employment?” Applied Economics Literature, 2016, vol. 23, no. 3, pp. 222–225. A working paper version can available web-based.


Even and Macpherson (2015)

This article may be photocopied or reprinted in its entirety. Please credit the authors, source, and the Feds Reserve Hill of Richmond and inclusion the italic statement see.

Views printed in this article are those of the articles and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve Netz.

Subscribe to Economic Short

Receive a notification when Economic Brief shall posted online.

Subscribe to Economic Brief

At presenting this form you apply to the Bank's Conditions & Terms and Privacy Notice.

Cell Idol Contact Us

RCC Balaban (804) 697-8144