Effects of the Affordable Care Act on Part-Time Employment: Early Evidence

The Affordable Care Act (ACA) requires employers with at least 50 full-time-equivalent employees to offer “affordable” health insurance to employees working 30 or more hours per week. If employers do not comply with the mandate, they may face substantial financial penalties. Employers can circumvent the mandate by reducing employees’ weekly hours below the 30-hour threshold, although only certain industries are likely to make widespread use of this tactic: those where short-hours part-time work is a feasible staffing strategy and where many employees work more than 30 hours but had not previously been offered health insurance. Using monthly CPS data, we examine the effects of the ACA on short-hours, part-time and involuntary part-time employment. Our empirical strategy uses Hawaii, which has had a more stringent employer health insurance mandate than that of the ACA for several decades, as a control group. We estimate difference-in-differences models and conservatively infer statistical significance based on the results of 50 placebo tests for the 49 other states and the District of Columbia. Our causal estimates indicate that the ACA increased low-hours, involuntary part-time employment by 500,000 to 700,000 workers in retail, accommodations, and food services, the industries in which employers are most likely to reduce hours if they choose to circumvent the mandate.