GOP Talking Point Goes Down In Flames: Obamacare NOT Harming Workers


Contrary to Republican claims of job losses, there are indications that Obamacare will create a jobs boom in health care services and related industries. Image @ SwordAtTheReady

Contrary to Republican claims of job losses, there are indications that Obamacare will create a jobs boom in health care services and related industries. Image @ SwordAtTheReady

When Nancy Pelosi passed the gavel to John Boehner at the start of the 112th Congress in January 2011, the new Republican majority immediately went to work. Their top priority? Repealing “Obamacare.” On January 19, 2011 the House of Representatives voted to repeal the Affordable Care Act (aka Obamacare) for the first of 37 times. While the bill was destined to go nowhere, thanks to a Democratic controlled Senate and the fact that President Obama still held the veto pen, Republicans seemed to think it was necessary to make their point. And make it again. And again. And again.

The votes to repeal Obamacare have all been accompanied by the usual Republican faux concern for average Americans. While there are different reasons provided to explain why Obamacare needs to be repealed depending on which House member steps in front of the microphone, one claim has been repeated by most of the GOP congresspersons who have spoken about it: Obamacare will cause a loss of jobs. In fact, to drive this point home, the first bill they voted on was even called “Repealing the Job Killing Health Care Law Act.”

In recent months, however, Republicans and some of their allies in the business community have been trying a slightly different tactic to frighten workers into thinking that Obamacare could cost them their jobs. They are now claiming that the law is causing employers to reduce workers’ hours in order to get around the provision that requires companies with 50 or more employees to provide health care coverage to all full-time employees (full-time is defined as 30 or more hours per week). This claim first came to prominence during last fall’s presidential campaign, when the CEO’s of Papa John’s Pizza, Applebee’s, Denny’s, and others claimed that the health care law would force them to cut back on the hours their employees worked.

Once again reality has taken over from the Republicans, as a new study finds that only a small minority of businesses affected have made any significant changes in the number of hours their employees work. According to a 2012 report by the Kaiser Family Foundation, 98 percent of large firms (those that employ 200 or more workers), and 94 percent of medium-sized firms (those with 50 to 199 employees) offer health care coverage to their employees. It is counterintuitive to believe that any company that offered health coverage when it was not required would drop that coverage or reduce employee hours to avoid the requirement that they provide coverage now, although this is another claim prominent in Republican conversations. That leaves, according to Think Progressonly about 10,000 companies that would be affected by the mandate to provide insurance to full-time employees that are not currently doing so.

A new report from the Center For Economic and Policy Research (CEPR) looks at two claims made by Republican politicians and some corporate heads: that firms are deliberately keeping their workforce below the 50 employee threshold where they would be required to offer health coverage or face a penalty, and that firms are reducing employee hours below the minimum of the 30 hours per week that would require the company to offer health coverage to those employees. The CEPR report observes:

…most of these firms [those with 50 or more employees] would already be providing health care insurance for their employees and therefore need not be concerned about the sanctions in the ACA. If some number of firms actually are limiting or reducing employment to stay below the 50 worker cutoff then the impact would be too small to be noticed in the economy as a whole.

In other words, while there may be some mid-sized companies that attempt to reduce their workforce to stay below the 50 employee threshold, they are so few in number that the economic impact is negligible. In regard to the claim that businesses have reduced or plan to reduce employee hours, the CEPR report says:

The alternative course of evading ACA penalties, reducing average hours of work below 30 per week, could at least plausibly have an impact on employment patterns. In fact, several large employers have claimed that they would deliberately keep workers’ hours below 30 hours per week in order to avoid having them count toward the number for whom they would have a $2,000 penalty.

Fortunately, it is possible to test whether employers are actually reducing hours below the 30-hour threshold. The Current Population Survey (CPS) provides monthly data on workers usual weekly hours. We used the CPS to compare the first four months of 2013 with the first four months of 2012. We looked at the numbers and percent of workers who reported working 26-29 hours a week. We considered this range a reasonable cutoff for an ACA effect. Presumably if an employer would have a worker put in more than 30 hours a week in the absence of ACA penalties, they would require a worker to put in close to, but less than, 30 hours in order to avoid the penalties.

The results of the CEPR analysis are as follows:

  • Only about 0.6 percent of the U.S. workforce typically works between 26 and 29 hours per week. The report also observes that some workers choose to work less than full-time; more than two-thirds of part-time workers say they chose to work part-time.
  • The number of workers who worked between 26 and 29 hours per week declined slightly in the first four months of 2013 compared to 2012. While the change is statistically insignificant, it is not what should be expected from a law forecast to be a “job killer.”

Keep in mind that before the Obama administration decided earlier this month to delay the employer mandate for a year, employment numbers for 2013 would have been the basis for determining penalties to be assessed in 2014. Since employers had no idea in early 2013 that they would be given an extra year before penalties begin, it could be expected that there would be a significant increase in part-time workers in the first part of this year. As CEPR discovered, that did not happen, and another Republican anti-Obamacare talking point goes up in smoke.

Contrary to Republican claims of job losses, there are indications that Obamacare will create a jobs boom in health care services and related industries.