In March 2011, CBO director Doug Elmendorf offered written testimony to Congress that included the following projections about the Affordable Care Act (ACA): “If the legislation did not affect the average number of hours worked per employed person, CBO projects that it would reduce household employment in 2021 by about 800,000. However, because the legislation will probably affect average hours worked among those employed, the effect on employment will be somewhat different.”
How different? Well, in February 2014, CBO reported that its revised model of ObamaCare’s labor-market impact suggested that the law would reduce total U.S. work hours by the equivalent of about 2.3 million full-time workers in 2021, and roughly 2.5 million full-time workers in 2024. CBO arrived at the new estimates after it “incorporated into its analysis additional channels through which the ACA will affect labor supply, reviewed new research about those effects, and revised upward its estimates of the responsiveness of labor supply to changes in tax rates.”
In other words, the new estimates reflect research showing that, through provisions such as its sliding-scale insurance subsidies and its huge Medicaid expansion, ObamaCare dramatically increases many people’s effective marginal tax rates, and thereby discourages work.
It’s probably safe to say that no single outside economist had more to do with the new estimates than University of Chicago scholar Casey Mulligan. “The CBO works in mysterious ways,” noted Joseph Rago of the Wall Street Journal, “but its commentary and a footnote suggest that two National Bureau of Economic Research papers Mr. Mulligan published last August were ‘roughly’ the most important drivers of this revision to its model. In short, the CBO has pulled this economist’s arguments and analysis from the fringes to center of the health-care debate.”
Now Mulligan is warning that certain ACA provisions “could drive the percentage of women working only part time back to what it was 40 years ago.” As he explains:
“The first provision is the ACA’s penalty on large employers who do not offer health insurance to their full-time employees, beginning next year and going into full effect in 2016. The second relates to the eligibility rules for the law’s new health insurance assistance that began this year.
“The ACA imposes a penalty on large employers (generally those with 50 or more workers) who fail to provide health insurance for each of their full-time employees — defined by the ACA as those working 30 hours a week or more. Because part-time employees do not count toward the penalty, the provision induces employers to reduce more of their workers to 29 hours a week or less — a group now being referred to as the ‘29ers.’
“Compounding this effect is a disincentive on the employees themselves. The penalty does not apply to businesses that offer coverage to their full-time employees. But their full-time employees are finding that they are not eligible for the ACA’s new assistance with insurance premiums and deductibles because the law requires them to join their employer’s plan (or a plan offered by a family member’s employer).
“Part-time employees are not restricted in this way, except in the increasingly rare instances that they too are offered coverage by their employer. As a result of its exclusive access to the law’s new health insurance assistance, part-time employment becomes comparatively more desirable to workers, or at least less undesirable, than it was in the past.
“Both of these employment disincentives are worth thousands of dollars per year and, in some cases, more than a thousand dollars per month. Both will lead to less full-time work, and even less productivity per hour of work that is performed. This is because some positions are vastly more efficient when worked full-time, and the new employment disincentives will not be enough to change that.
“Nevertheless, a number of positions have traditionally been 30-to-39-hour jobs, and those who occupy these jobs typically will have less trouble adapting to a 29-hour schedule that avoids the employer penalty or allows the worker to get the ACA’s new assistance. Women are at least twice as likely as men to be in those positions, which means they are twice as likely to be 29ers once the new health law goes into full effect.”
To read the entirety of Mulligan’s new report on ObamaCare and part-time work, go here.