Jan 10, 2014 - 2:45pm

Does Obamacare Impact Jobs?

Sometimes when people don’t like the truth, they deny its existence. Take note, Obamacare supporters.

In his recent State of American Business speech, U.S. Chamber President and CEO Tom Donohue stated that,  “Employers are concerned about the negative impacts of Obamacare…Many firms are stopping new hires and cutting workers’ hours because of the law’s mandates.’’

In her response to Donohue’s remark, Washington Post columnist Melinda Henneberger wrote that the “data so far don’t bear that out.”

Where to start?

In a report released in November, the Chamber and the International Franchise Association found that businesses have already cut full-time jobs, despite the one-year delay of the employer mandate. According to the survey, 31% of franchise and 12% of non-franchise businesses report that they have already reduced worker hours because of the impending law, more than a full year before the employer mandate goes into effect. Additionally, 27% of franchise and 12% of non-franchise businesses report that they have already replaced full-time workers with part-time employees because of the law.

If Henneberger and others aren’t satisfied with that piece of research, there is plenty to choose from.

The Bureau of Labor Statistics reported this past summer that there was an increase in part-time work and the number of “split jobs”:

In April, those employed part-time for economic reasons increased by 278,000 to 7.9 million, largely offsetting a decrease in March. Obama's detractors are convinced that number will only increase dramatically in the coming months as employers look to split jobs…

"Because employers with fewer than 50 employees or full-time equivalent employees will not be subject to the possibility of this fine," said Daniel Schwarcz, an associate professor at the University of Minnesota Law School who specializes in insurance law, "some employers may be inclined to keep their number of employees below 50."

Investor’s Business Daily took notice, and asked, “What’s the deal with all these part-time workers?”

Even as the number of people working has grown by 2.2 million, or 1.6%, over the past year, the number clocking 30 to 34 hours a week has shrunk.

In the second quarter, the number of workers putting in 30 to 34 hours at their primary job fell by a monthly average of 146,500, or 1.4%, from a year earlier.

By comparison, the number working 25-29 hours per week in their primary job rose by 119,000, or 2.7%.

This oddity has an obvious explanation: ObamaCare's employer mandate applies only to full-time workers, which the law defines as 30 hours per week.

A CFO study in December found a growing collapse in the job market amidst Obamacare implementation:

As a response to the Affordable Care Act (ACA), which requires businesses with 50 or more employees to purchase insurance, many Chief Financial Officers say they are considering reducing their employment because of Obamacare, according to a new poll by Duke University’s Fuqua School of Business and CFO Magazine.

The survey found that 40 percent of CFOs are beginning to decrease their employees’ number of weekly hours to below the threshold of 30 hours. In addition, nearly half (48 percent) of CFOs are making plans to reduce their workforce, while 20 percent say they might hire fewer workers next year. Another 10 percent of CFOs might lay off staff members.

The Q4 Wells Fargo/Gallup Small Business Index Survey also found that Obamacare causes more firing than hiring for small businesses, according to Mark Vitner, senior economist at Wells Fargo:

“Some of the headlines are resonating – they’re hearing about the problems with ObamaCare and how it will impact their businesses and customers,” says Vitner, who says many small businesses are already telling him their health insurance premiums have increase substantially.

In the fourth quarter, 11% of owners surveyed said ObamaCare was the biggest challenge they were facing, up three points from the previous quarter. Government was seen as the greatest challenge by 11% as well; that figure jumped eight points.

Still unconvinced that Obamacare is having a chilling effect on jobs?  It seems no sector or geographical area is immune.

  • “The Obamacare economy: 35 part-time jobs for every new full-time job” (Atlanta Journal-Constitution, 8/5/13)
  • “ObamaCare Spurs Shift Away From 30-34-Hour Workweek” (Investor’s Business Daily, 8/5/13)
  • “ObamaCare Dropping Full-Timers at Schools, Local Governments” (Fox Business, 7/31/13)
  • “Health-care law is tied to new caps on work hours for part-timers” (The Washington Post, 7/23/13)
  • “Brevard cuts some workers’ part-time hours to avoid Obamacare rules” (Florida Today, 7/23/13)
  • “ObamaCare forces Trig’s to limit workers’ hours” (WJFW News, 7/24/13)
  • “University of Alabama to cap student work hours due to Affordable Care Act mandates” (AL.com, 7/23/13)
  • “Small businesses to cut hours and workers due to Obama healthcare law, survey says” (Los Angeles Times, 7/19/13)
  • “Maryland Employers Cutting Hours Due to Obamacare” (Free Beacon, 7/18/13)
  • “St. Pete College, HCC cut adjuncts’ hours over health care” (Tampa Tribune, 7/14/13) 
More Articles On: 

About the Author

About the Author

Sheryll Poe is a former senior writer at the U.S. Chamber, who covered public policies affecting businesses including the three "T's" - transportation, trade and taxes.