At the beginning of 2014, there may be millions of full-time workers who transition to part-time status.
The surge in part-timers is expected for two reasons. First, many believe the Affordable Care Act, commonly called the ACA or Obamacare, has resulted in companies cutting employee hours to get around providing health care to employees working more than 30 hours a week.
Under the health-care reform, companies with at least 50 employees are required to provide medical coverage to full-time workers (those working more than 30 hours per week) or face fines that start at $US2,000 per worker not covered.
Second, the ACA will enable part-timers to have access to medical benefits that rival those of full-timers, giving them greater freedom to choose part-time work.
The perk that is usually offered only to full-time employees — affordable health care — will now be offered to part-time employees. As a result, millions of workers who are working full-time may choose to work part-time instead, University of Chicago economics professor Casey Mulligan said in a recent paper published with the National Bureau of Economic Research.
Workers who choose to reduce their own hours may end up faring better financially by paying lower premiums offered to part-timers through government exchanges rather than working a few more hours and
purchasing health care through an employer, said Mulligan.
“Moving from full-time employment to part-time employment will trigger generous assistance with health premiums and out-of-pocket expenses that can offset much of the income lost due to reduced work hours,” said Mulligan. Under the health-care reform, the cost of insurance will be subsidized depending on your income.
In a leaked internal email that was published in The Washington Post, a Trader Joe exec wrote that one employee — a single mum with one child — who makes $US18 per hour and works around 25 hours per week, currently pays $US166.50 per month for her health-care plan purchased through the company. When the ACA plans kick in next year, this employee will be able to purchase an “almost identical” plan for $US69.59 per month, meaning she will save about $US1,175 annually on health care.
Mulligan said the reduced hours will allow workers to have more leisure time and lower work-related costs such as child-care, since working less enables part-timers to spend more time with their children instead of paying for a nanny or day-care service.
Annie Lowrey and John Harwood at The New York Times write that the ACA may also reduce “job lock,” which describes when workers are afraid to quit their jobs or reduce their hours for fear of losing medical coverage.
With more health-care options, workers might have greater freedom in choosing between part-time or full-time work. However, it’s still too soon to tell how an increase in part-time workers might affect companies and the U.S. economy.
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