The ACA and the Shrinking Workweek

Posted on February 12, 2014 by Kathy Hoekstra

America's workweek is shrinking for people who can least afford it - low wage workers

America’s workweek is shrinking for people who can least afford it – low wage workers. And some analysts point to the Affordable Care Act as a big factor.

The law requires every business with 50 or more “full time” employees offer health insurance to these full timers or pay a $2,000 fine per employee.

Here’s the rub: The law defines “full time” as any employee working 30 or more hours per week.

Right from the onset, many of our nation’s CEOs warned of cuts to work hours to avoid those penalties.  

Last summer, the heads of very influential labor unions joined the chorus, saying that unless the law is changed, it will “destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

Now, government numbers show a workweek shift is happening. The chart below shows the shift in total work hours for low-wage and higher earners, with December clocking the shortest workweek on record for lower income workers, while higher earners spend more hours on the job per week:

Investors Business Daily used government data to create the chart. IBD cautions against pointing all blame on the ACA, but says it is safe to say there’s a very likely connection:

“It’s impossible to know how much of the drop relates to ObamaCare, but there’s good reason to suspect a strong connection. The workweek has been getting shorter in many of the same industries where anecdotes have piled up about employers cutting hours to evade the law’s penalties.”

IBD lists several industries that showed a drop in average weekly hours:

  • Supermarkets                            1%
  • Clothing stores                          2%
  • Limited-service restaurants     2.4%
  • Home care providers               3.2%
  • General merchandise stores   4.2%
  • Retail bakeries                        7.2%
  • Home centers                          7.7%

The employer mandate of the ACA and its penalties don’t kick in until for another year or two, but as pointed out by one observer, businesses tend to be proactive when faced with impending government regulation and started making workforce changes back in 2012.

The health care law was sold as a reform to help workers. Instead it forces employers to hurt workers. Without fundamental reform to this fatally flawed law, the American workweek could further widen the above projections, sending them literally “off the charts.”