Adversaries of the Affordable Care Act have for quite some time warned that the law will encumber small businesses and other employers. Furthermore, the law’s adversaries have predicted that employers will translate this encumbrance into either lay-offs or reduced work hours.
A University of Chicago’s economics professor, Casey B. Mulligan, is arguing, however, that employers might not necessarily be the only ones who can benefit from reduced work hours in the Obamacare economy — their employees can too. And Mr. Mulligan makes a compelling argument.
The Affordable Care Act promises to subsidize health expenses for non-elderly families whose income is between 100-400% of the federal poverty line, which amounts to about half of U.S. non-elderly families. Yet these subsidies are only available for families who do not have health insurance covered by their employer. Indeed, employers will be required to offer health insurance to all of their full-time employees under Obamacare. But if employees can receive healthcare subsidies from the federal government — with treatment akin to that which they would receive from their full-time employers — then it might behoove them to just work part-time.
And because employers will likely deduct the cost of health insurance premiums from their employee's monetary salary, the overall income of a full-time employee will be about the same as that of a part-time employee.
It is undoubtedly more appealing to earn roughly the same salary and health benefits for fewer hours of work than more. Obamacare will inadvertently make this option realistic. As Mr. Mulligan warns: "Shifts from full-time to part-time work will be remarkably more attractive for employers and employees than they used to be, and taxpayers will be picking up the tab."
Below is a chart that Mr. Mulligan constructed to illustrate this point: