Las Vegas Review-Journal Falls For The Myth That Obamacare Hurts Jobs

The Las Vegas Review-Journal claimed the Affordable Care Act (ACA) is hurting employment by forcing businesses to shift workers to part-time to avoid offering health insurance.  However, substantial evidence proves that the ACA is not having any widespread impact on employment patterns.

In a November 25 article, the Review-Journal claimed the large service industry of Nevada would be hit hard by the health care law's mandate to count employees working more than 30 hours a week as full time -- the threshold for which employers must begin offering health insurance benefits to employees -- because it will give employers an incentive to cut worker hours to avoid offering health insurance:

So local businesses and unions alike want to know: What's another tweak or two?

They've set their sights on proposed federal laws that would change an Obamacare provision on who gets health insurance through work. The rule says employees who work more than 30 hours a week qualify as full-time, and employers have to offer them insurance or risk fines of $2,000 to $3,000 per worker. The rule applies to any company with more than 50 full-time-equivalent workers.

The threshold is causing unintended consequences as employers cut hours to drop workers below the 30-hour threshold.

That could be a huge issue in Las Vegas, with its high share of hourly service jobs in hospitality and restaurants, said Shaun O'Brien, assistant policy director for health and retirement for big labor group AFL-CIO. And with average weekly hours worked coming in at 33.7 in August, according to local research firm Applied Analysis, plenty of locals hover close enough to the threshold to cross it.

The article quoted Randi Thompson, the Nevada state director of the National Federation of Independent Business (NFIB), to bolster the claim that the ACA will force employers to cut hours. However, as the Georgetown Center on Health Insurance Reforms (CHIR) reported, Thompson's own organization conducted a survey that concluded the opposite. According to the survey by NFIB, only 13 percent of small businesses surveyed would cut employees or employee hours as a result of the law. Furthermore, the survey found that these decisions to “reduce employee hours seem strongly tied to profitability rather than ACA.”

In support reduction in hours argument, the article referenced a survey sponsored by the Chamber of Commerce that found that franchised businesses have “already cut hours more than a year before the employer mandate.” However this survey was conducted by Pulse Opinion Strategies, a known Republican polling firm and, according to an NFIB researcher, still doesn't prove the ACA is creating a part-time workforce:

The numbers contrast with a survey released two weeks ago by the National Federation of Independent Business finding that only 13 percent of 921 small companies plan to cut hours. The NFIB, like the [International Franchise Association] and the Chamber [of Commerce], thinks people working less than 40 hours shouldn't count as “full-time.” But the group admitted that its numbers don't show Obamacare creating a part-time workforce. Many of those planning to cut hours were too small to be subject to the mandate, anyway. “If they cut or were cutting, it's almost assuredly due to the profitability rather than the ACA for those people,” NFIB researcher William Dennis said.

These findings have been backed up by economists as well. In his analysis of the ACA's effect on weekly hours, economist Dean Baker explains that while some employers may reduce hours to avoid providing coverage to employees, “the number is too small to show up in the data.” Furthermore, few work near the 30-hour full-time cutoff:

An analysis of data from the Current Population Survey shows that only a small number (0.6 percent of the workforce) of workers report working just below the 30 hour cutoff in the range of 26-29 hours per week. Furthermore, the number of workers who fall in this category was actually lower in 2013 than in 2012, the year before the sanctions would have applied. This suggests that employers do not appear to be changing hours in large numbers in response to the sanctions in the ACA.

The Center on Budget and Policy Priorities further explains that the number of involuntary part-time workers has decreased since the implementation of the ACA, instead of expanding as the perpetrators of the myth would lead one to believe:

A more rigorous test examines the recent trend in 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 in the way critics claim, we'd expect the share of involuntary part-timers to be growing.  Instead, as shown in Figure 1, it is down about one percentage point from its peak.

Nor do the employment data provide any evidence that employers have cut workers' hours below 30 hours a week to avoid the requirement to provide health insurance.  During the first half of this year, the share of workers putting in 30 or more hours a week actually rose to 80.7 percent from 80.2 percent in the comparable part of 2012.  Although the increase is small, it refutes the claim that shortening of the workweek is widespread.