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Obamacare Unlikely to Create a Nation of Part-Timers

Rick Newman
The Exchange

The latest jobs numbers show that part-time employees are declining as a percentage of the workforce. That wasn’t supposed to happen, according to critics of the Affordable Care Act (a.k.a Obamacare), who argued the health-reform law would create a nation of part-timers as employers attempt to dodge a new requirement to provide insurance for those who work 30 hours a week or more.

The data, so far, show that companies have been doing the opposite: hiring more full-timers and fewer part-timers, as ought to happen in an economy recovering from recession. The numbers only go through September, however, and don’t reflect anything employers have done since Obamacare went into effect on October 1. So companies could still shift to more “29ers” (those working 29 hours or less and not required to be covered by their employers) if the cost of covering full-timers under the new law becomes painfully expensive, as some have predicted.

That seems unlikely to happen, however, on account of demographic shifts and other factors that will continue to create strong incentives for employers to hire full-timers (if they hire at all). “The Affordable Care Act will not affect enough companies to permanently raise the share of part-time employment,” writes Nate Kelley of Moody’s Analytics in a recent analysis. If he’s right, one of the core arguments of Obamacare critics — that the law will kill jobs — will turn out to be hollow, which could ultimately lead to much stronger support for the controversial reforms.

A small percentage of the whole

One reason the ACA seems unlikely to change hiring patterns much on its own is that the percentage of firms subject to major changes under the law is much smaller than the furor over the law would suggest. Firms with fewer than 50 employees aren’t required to offer coverage or do anything different under the law. Of firms with more than 50 employees, Moody’s estimates there are 33,000 of them that don’t currently offer qualifying coverage to their employees, and would therefore have to start providing coverage or pay a penalty. That might sound like a big number, but it’s only 5.5% of the 6 million businesses in the United States.

Plus, some small-business experts say entrepreneurs aren’t as concerned about the harmful effects of Obamacare as the political rhetoric makes it sound. Some critics have predicted that businesses with close to 50 employees will refuse to hire additional workers in order to stay below the threshold, or even fire a few people if necessary to bring headcount below 50.

Doubtful. “That is just not how small-business owners think,” says Brad Smith, CEO of Intuit, which targets many of its tax and financial-planning products at small businesses. “Only a handful, at most, will actually stop growing, just to stay below 50.” On top of that, says Smith, many businesses may find the ACA allows them to take better care of their workers by helping out more with health care costs: “Small business owners want to take care of their employees.”

Other factors will probably cause a greater need for full-time workers. As millions of baby boomers retire in coming years, many companies will need to hire well-educated full-timers dedicated to one employer, just to keep the wheels spinning. Part-timers, by contrast, are less loyal and more likely to jump to a better job if one beckons. It will also be more efficient to hire full-timers as the overall economy moves toward more highly skilled workers able to operate technical equipment and fulfill complex tasks, which requires training that companies don’t want to invest in repeatedly.

That doesn’t mean Obamacare will help create jobs or make employers more likely to hire. In fact, overall hiring could remain depressed for months or years, since we still have a slow-growing economy, and technology has allowed many businesses to increase output with fewer people on staff. As business owners know, there are many factors that affect a decision to hire. Obamacare may end up far down the list.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.