fedgazette Roundup (2011-2015)

So far, few employers cutting workers to part time in response to Affordable Care Act

Toby Madden | Regional Economist

Published March 20, 2013

Like it or not, the Affordable Care Act will offer an interesting economic experiment on incentives (or punishments, depending on your view) and subsequent business behavior.

Given its requirement that full-time employees receive health insurance, critics of the law, for example, believe many employers will shift to more part-time workers. So far, that appears not to be the case, according to a recent Minneapolis Fed ad hoc poll of more than 200 contacts from around the district (see methodology below).

The survey asked: Has your company or organization shifted to more part-time workers in response to the Affordable Care Act (federal health insurance requirements)?

Only 4 percent said they had shifted to more part-time workers, while another 7 percent said they planned to do so. But 89 percent said they had not made, nor were planning, such a move.

Based on the comments received with the poll, the relatively low change rate could be based on three factors. First, many responding organizations employ fewer than 50 people and are exempt from some provisions of the act. Second, some commented that it is too early to know the effects of the law’s detailed regulations. “We’re just beginning to figure out the impact of the Affordable Health Care Act,” commented a Minnesota respondent. “Once we understand that, we’ll adjust accordingly.” Finally, some businesses do not function well with part-time workers.

Methodology: On March 12, 2013, the Minneapolis Fed invited, via email, about 1,000 Beige Book contacts from around the Ninth District to answer the special question in a web-based survey. By March 13, 205 contacts had filled out the survey. The respondents come from a variety of industries (see table).

Affordable Care Act ad hoc table -- 3-18-13