Is the ACA a Jobs Killer?

Opponents of the Affordable Care Act (ACA) of 2010 have claimed the bill is having a negative impact on employment. In doing so, they argue that the sanctions to be applied under the bill to firms who do not provide insurance to their full-time workers are causing employers to change their hiring patterns. One claim is that firms will keep their number of employees under 50 so that the sanctions do not apply to them. Opponents of the bill also claim that employers are cutting workers' hours to just under 30 hours a week to avoid penalties. A new issue brief from the Center for Economic and Policy Research (CEPR) finds that only 0.6 percent of workers are working just below the 30-hour cutoff and this number was actually lower in the first four months of 2013, when it was thought the sanctions would apply, than the first four months of 2012. (The penalties were scheduled to apply to employers in 2014 based on 2013 employment patterns; however the Obama administration announced earlier this month that the penalties would not be imposed until 2015.)

"There really is no evidence that the ACA has had any noticeable impact on employment growth," said Dean Baker, Co-Director of CEPR and an author of the report. "Most firms with over 50 employees already provide health insurance to their employees and the number of employees working just under 30 hours a week actually decreased from 2012 to 2013, the opposite of what would be expected if the bill truly were a jobs killer."

The brief, "The Affordable Care Act: A Hidden Jobs Killer?" by economists Baker and Helene Jorgensen, reviews data from the Current Population Survey (CPS) on hours worked to assess the impact of the ACA on employer hiring patterns.

Opponents to the bill claim that passage of the ACA shares much of the blame for the slow pace of employment growth from 2010 to 2013 as employees opted not to hire additional workers if it meant they would have to provide health insurance once they passed the 50-employee threshold. However the employer penalties were not to be applied until 2014, based on 2013 employment levels. If employers of firms near the 50-worker cutoff needed to hire additional workers to meet demand, there is no reason why they could not have done so and then reduce the number of workers as the ACA deadline approached.

Employers could also evade ACA penalties by cutting worker hours to just under 30 hours per week to reduce the total number of full time workers. However, when the authors examined the CPS data on the number of workers working 26-29 hours in 2012 and 2013, they found that the total number of these workers had actually gone down in 2013. Furthermore, a full two-thirds of workers working less than full time do so by choice. Applied to workers who work 26-29 hours, this means that just 0.2 percent of the labor force works this number of hours as a result of their employer's decision. While there may be some employers who make a show of cutting worker hours to just below the 30-hour threshold, this is clearly not a widespread phenomenon affecting large numbers of workers.