Health Care Law Pushes Employers to Cut Hours
Subscribe today for Free Enterprise Updates
- Latest business trends and best practices
- News about legislation and regulation impacting business
- Business how-to articles from industry experts
- Commentary and interviews with newsmakers in business and politics
As the Patient Protection and Affordable Care Act (PPACA) is implemented, the American workforce slowly becomes a nation of part-timers. The law is discouraging public and private sector employers from hiring full-time workers and pushing them to slash hours for part-time workers to keep them under the magical 30-hours-per-week limit.
Last week, Inside Higher Ed reported that the Community College of Allegheny County would pare back hours for 200 adjunct faculty members and 200 other staff to “avoid paying $6 million in Affordable Care Act-related fees in January 2014.”
College President Alex Johnson announced the plan in an e-mail to faculty and staff members last week. “As you probably know, the Affordable Care Act has redefined full-time employees as those working 30 hours or more per week,” Johnson wrote. “As a result, the college must adjust hours of some temporary part-time employees and adjuncts to comply with the new legislation’s conception of part-time employment.”
Cedar Falls, IA city government is doing the same:
It means 59 permanent part-time employees who now work 32 hours a week will be scheduled for 29 hours per week starting Dec. 1.
Those workers have jobs in the public works and parks departments as well as at the public library.
Most of those workers are seasonal workers.
City officials say they were advised by their health care provider to make the changes now because there will be a look-back period once the law goes into effect.
For years to come, you will hear a lot about the 30-hours-per-week limit.
I explained why this is happening:
Under the health care law, if a company has more than 50 “full time equivalent” workers, a combination of full and part-time employees, but doesn’t offer “affordable” coverage that meets the government’s minimum value standard, the company will have to pay a penalty. This penalty [if triggered] is determined by the number of full-time employees minus 30 full-time employees. So to reiterate a very important point: part-time workers are not part of the penalty formula. The health care law creates a perverse incentive to hire part-time versus full-time workers.
In the case of the Community College of Allegheny County, they will avoid paying $6 million in 2014, and Cedar Falls will save $850,000 per year.
Our economy will not grow stronger when employers have an incentive to cut hours and are discouraged from hiring full-time workers. The employer mandate along with other damaging provisions in the PPACA need to be replaced with health care reforms that reduce costs, increase coverage, and improve quality.