States Cutting Employee Hours to Avoid Obamacare Costs

States Cutting Employee Hours to Avoid Obamacare Costs

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by Joel B. Pollak 9 Feb 2013 315 post a comment

The costs of Obamacare are not just hitting businesses this year--they are also hitting the government, and public employees as well. Virginia, for example, is about to limit part-time employees to 29 hours per week in order to avoid triggering Obamacare’s requirement that employers provide health insurance to those working 30 hours per week or more. The state cannot afford the $110 million annual cost of insurance.

Elsewhere, public institutions are taking similar steps to limit part-time work. In Ohio, Youngstown State University recently announced a 29-hour-per-week part-time limit, and placed employees on notice that they would be fired if they worked more than the maximum. Other public universities are doing the same across the nation, just as their private-sector counterparts are limiting part-time hours to avoid the Obamacare rule.
In addition to limiting part-time hours, many institutions--public and private--are moving employees from full-time to part-time status to avoid Obamacare requirements. Doing so means facing the ire of left-wing institutions such as John Podesta’s Think Progress, which recently castigated a Wendy’s franchise for cutting employees’ hours. Yet there is little most businesses can do--they are merely responding to incentives written into law.
As the economic reality of Obamacare begins to bite, Democrats are uneasy with the legislation they forced through Congress in 2010, and which survived at the Supreme Court only because Chief Justice John Roberts saw fit to rewrite it. At a recent retreat for House Democrats, former President Bill Clinton advised his party to lead the way in pushing for changes to Obamacare, so they could “[p]rove that we were right to do it.”
Most of Obamacare’s provisions only begin taking effect this year and next. The law was written that way intentionally so as to minimize the negative effect on President Obama’s re-election chances. With former Massachusetts governor Mitt Romney as the Republican nominee, Obamacare was effectively taken off the table as an election issue, since Romney had passed his own version, complete with individual mandates.
Yet the sluggish economy, which many voters in 2012 still blamed on George W. Bush, is now fully Obama’s responsibility. The president’s second term has already begun with bad economic news: an economic contraction of 0.1%, and a rise in unemployment of 0.1% as well. The mainstream media would still prefer to discuss marginal issues such as climate change, yet millions of ordinary Americans are feeling the economic pinch.
That is especially the case since the end of the payroll tax holiday--an effective tax hike on working Americans that the media largely ignored during the battle over top marginal tax rates during the “fiscal cliff” negotiations. The shift to part-time work, and the limits to part-time hours, that both private and public employees will feel nationwide could also result in political backlash. Small business owners are also feeling pressure to limit employee numbers to avoid the extra health insurance costs imposed by Obamacare.
Rather than dealing with the problem of uninsured part-time workers separately, the legislation overhauls the nation’s entire health insurance system--a system in which 85 percent of Americans were covered, and 80-90 percent were happy with their insurance. The economic cost is certain; the political cost somewhat less so--but neither is positive.