Gene Epstein explains in the latest issue of Barron’s why the 2010 federal health care reform law could push more people out of full-time jobs and into part-time work.
MOST FULL-TIME WORKERS get medical-insurance benefits in their pay package; most part-time workers do not. But early next year, under the Affordable Care Act, part-timers will be eligible for medical benefits that rival those of full-timers. And as a direct result, predicts University of Chicago economics professor Casey Mulligan, ACA will create a new set of incentives that will boost the share of workers employed part-time, probably by quite a lot.
Last week, I considered a different set of ACA-induced incentives favoring part-time work. Under rules that have recently been delayed until 2015, Obamacare will require businesses with 50 employees or more to provide medical insurance for full-timers, but will not require it when employees work less than 30 hours a week. Whether or not employers are already creating part-time jobs in lieu of full-time to anticipate this rule, it is bound to have a noticeable influence once it does take effect in 2015.
The incentives analyzed by Mulligan will apply in 2014, operating initially on sellers of labor (employees) rather than on the buyers (employers). But as happens in all markets, the buyers will soon feel the effects, as well. Millions of people who might have seen advantages in working full-time will seek part-time work instead. Businesses are likely to respond by accommodating that preference—especially when their own incentives to create part-time work become effective in 2015.
As Mulligan explains, “Moving from full-time employment to part-time employment will trigger generous assistance with health premiums and out-of-pocket expenses that can offset much of the income lost due to reduced work hours.” Since medical care is expensive, it’s not surprising that, according to his estimates, the “generous” package suddenly bestowed on part-time workers will amount to as much as $17,300 a year, once all parts are included. True, most part-time workers might not realize that the medical benefits suddenly available are worth that much. But we all are used to categorizing paycheck jobs as “with benefits” or “without benefits”; and when the benefits are clearly quite generous, part-time jobs are bound to look noticeably more attractive.
