ACA Impact on Hours Worked: Employer Opinion Surveys

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Impact on Employment/Economy >> ACA Impact on Hours Worked: >> Employer Opinion Surveys (last updated: 8.21.16)

Survey Results

U.S. Chamber of Commerce

A Chamber of Commerce survey of 1,304 Small Business Executives (defined as executive level position in a company with fewer than 500 employees and annual revenue less than $25 M) conducted June 21-July 8, 2013 found that 17% reported that they will be impacted by the employer mandate. Of these 17%:

• 27% say they will cut hours to reduce full time employees;
• 23% plan to replace full time employees (30 hours per week or more) with part-time workers;
• These percentages cannot be added since respondents were asked to select to “Please select all that apply.”

Federal Reserve Bank Surveys

2016

• Fed Survey: Obamacare Causing Companies to Cut Jobs. “Many companies are cutting jobs in response to rising health care costs spurred by the Affordable Care Act, according to a new survey by the Federal Reserve Bank of New York. Roughly one-fifth of service sector and manufacturing company executives said they are reducing the number of workers in response to provisions in the healthcare law, according to the Empire State Manufacturing Survey and the Business Leaders Survey… According to the New York Fed’s survey, executives said they expected healthcare costs to rise a median 8.5% this year, and another 10% next year, according to the survey. They cited higher insurance premiums, higher prescription drug costs, and the ACA as factors.” (Wall Street Journal, 8.16.16)
• One in Five Manufacturers in NY Cutting Jobs Due to Obamacare. “The number of manufacturers who said they were cutting jobs totaled 20.9 percent. Nearly a third of New York manufacturers said they would increase prices they charge on their customers due to Obamacare. Almost 13 percent said they would increase the proportion of employees working part-time. The survey asked service sector firms the same questions and found that 16.8 percent of them would cut workers, 21.4 percent would raise prices due to Obamacare, and 15 percent said they would increase the proportion of employees working part-time. ‘About 60 percent of respondents to the surveys said they are making at least some changes to their health care plans in response to the Affordable Care Act,’ the New York Fed stated. ‘The most frequently cited adjustments were raising deductibles, boosting co-pays, and increasing out-of-pocket maximums.’” (Free Beacon, 8.18.16)

2013

• New York FRB. A survey by the New York FRB of manufacturers in the state found that 6.5% plan to shift from full time to part-time workers in response to the mandate. Newsweek’s Robert Samuelson reports that in the same survey 5.4 percent said they already had substituted some part-time for full-time workers and that ”a survey by the Philadelphia Federal Reserve produced a similar response.”
• Philadelphia FRB. A parallel factory survey by the Philadelphia FRB had similar results: 8.3%.
• Minneapolis FRB. “A recent survey from the Federal Reserve Bank of Minneapolis found that 4 percent of companies it surveyed had moved to a larger, part-time workforce in response to the Affordable Care Act.”
• Many in the NY and Philadelphia surveys also reportedly planned to outsource work.

These surveys were from a single industry in a single state, so it is difficult to extrapolate. But they are roughly consistent with the Chamber survey (17% x 23% =3.9%).

Other Surveys

• Mercer (2012). “Mercer, a human-relations-consulting firm that regularly queries public and private entities, found that 12 percent of employers in a survey last year planned to cut staff hours to avoid a jump in costs under the new rules.“
• Gallup (June 2013). A poll commissioned by Littler Mendelson, which specializes in employment law, interviewed 603 owners whose businesses have under $20 million in annual sales. According to CNBC “almost one-fifth—19 percent— answered “yes” when asked if they had “reduced the number of employees you have in your business as a specific result of the Affordable Care Act.”

Translating Survey Results

47.1% of private sector workers are employed in firms with fewer than 500 employees; 28.7% are employed in firms with less than 50 workers. 18.6% are in firms with 25 to 99 employees, which presumably are the employers most likely to be affected by the mandate (which is consistent with the 17% reported above). There are 504,000 firms in this size category employing a total of 20 million workers; hence the average firm in this size category employs 39.7 workers.

• Using the Chamber survey’s 17% figure (representing 18.4 million workers), roughly 5 million are in firms whose CEOs intend to cut hours to comply with the ACA and 4.2 million are in firms where some FT employees will be replaced with PT workers.
• Assuming at least 1 worker would be affected in this 17% of firms, these figures imply a minimum of 106,000 workers would see their hours cut and 125,000 would have their jobs replaced with PT workers. If one assumes that 10 workers per firm would be affected by the proposed changes–i.e., roughly 1/4 of the workforce at each firm–then the number of impacted workers would exceed 2 million.