Says Obamacare’s Definition of Full-time as 30 Hours is Causing Thousands of Low-wage Workers to Lose Hours and Income
Washington, D.C., January 22 – U.S. Senator Lamar Alexander (R-Tenn.), chairman of the Senate health committee, today said the Senate should change the Obamacare definition of full-time from 30 hours to 40 and give “as many as 2.6 million workers a pay raise.”
“Many businesses can’t afford Obamacare’s mandate and must reduce their number of full-time employees. The result of all this is that thousands of workers are getting a pay cut. Their work schedules are being reduced to 29 hours a week and below. This is not enough money for these workers to earn a living.”
Alexander’s full prepared remarks are below:
Let me start by telling some stories of what’s happening in Tennessee:
In Murfreesboro, Tennessee, Middle Tennessee State University has started limiting hours for part-time workers. This means students can no longer accept multiple on-campus work assignments. And graduate assistants might have to wait tables instead of picking up extra on-campus grant-funded research projects that would better further their careers.
From its headquarters in Knoxville, Regal Entertainment Group, the nation’s largest movie theatre chain, announced last year that it was cutting employee hours from 40 to below 30 in order to comply with Obamacare. According to a news report, “One Regal theatre manager [said] the move has sparked a wave of resignations from full-time managers who have seen their hours cut by 25 percent or more.”
In Johnson City, Pam Cox, the director of finance for Johnson City Public Schools, told a local news outlet about a year ago that her district will have to hire more people to work fewer hours. She said, “It’ll be challenging to find people and it’ll also hurt the employees because where they’ve been able to work as much as they wanted in these types of positions with no benefits attached to it now we’re going to be saying, ‘we can’t let you work…even though you want to and you’re good at your job, we can’t give you the hours, give you the pay, because we can’t afford to give you the insurance.”
So why are these things happening in Tennessee—and in every other state across the nation?
Obamacare requires businesses with 50 or more full-time employees to provide health insurance to those employees or pay a penalty at tax time. That penalty is $2,000 for each employee whom the government says should have been covered by an employer plan and $3,000 for every employee who receives a subsidy in the exchange.
The law, passed without any Republican support, defined full-time as an employee who works more than 30 hours a week. It is a strange definition—one that sounds more like France than the United States.
The average American between the ages of 25-49 works 8.8 hours per day, or 44 hours per week, according to the American Time of Use Survey published by the Bureau of Labor Statistics.
The Obamacare definition of full-time is nearly one-third lower.
Many businesses can’t afford Obamacare’s mandate and must reduce their number of full-time employees.
The result of all this is that thousands of workers are getting a pay cut. Their work schedules are being reduced to 29 hours a week and below.
This is not enough money for these workers to earn a living. Many must take second jobs.
A Hoover Institution study found the 30-hour definition puts 2.6 million working-age Americans with a median income under $14,333 for individuals and $30,000 for families at risk of losing jobs and hours. The study found:
89 percent of those affected don’t have a college degree
60 percent are between the ages of 19 and 34
63 percent of those most at risk of lost hours are women, of which half have a high school diploma or less.
These are Americans who are often working one of their first jobs, trying to work their way up the economic ladder. You have to start with a lower-paying job, a job that doesn’t require as many skills, and hope that someday your hard work will lead to a higher-paying one.
Many of these Americans are working in service industries, such as hospitality, retail and restaurants. But the Obamacare provision is affecting all kinds of employers.
In September 2014, Investor’s Business Daily reported that at least 451 employers, county governments, public schools, community colleges and universities across the country have laid off staff or reduced employee work hours to comply with the new Obamacare definition of full time.
Our public schools can’t charge higher prices to cover these mandates. They have to cut services like special education, coaches and bus drivers.
Three surveys published by Federal Reserve Banks in August found employers are increasing their proportion of part-time workers.
The Federal Reserve Banks of New York and Philadelphia specifically asked manufacturers what changes they had made because of Obamacare, and in both cities, nearly 1 in 5 respondents reported that they had increased their proportion of part-time workers.
The Federal Reserve Bank of Atlanta also surveyed businesses about changes in part-time employment and found that 25 percent of respondents currently have a higher share of part-time workers primarily because “full-time employee compensation costs have increased relative to those of part time employees.” More troubling is that 31 percent of respondents believe they will have more part-time workers 2 years from now.
There is bipartisan support for repealing this provision. This bill has 34 cosponsors—mostly Republicans, including every Republican member of this committee—but Senator Donnelly and Senator Manchin of West Virginia, also a Democrat, support it.
Republicans have talked a lot about wanting to repair the damage of Obamacare. We have also talked about wanting to get results.
This bipartisan bill should be an important step to doing both.
In fact, this reminds me of why so many of us like being on this committee—because the issues we work on affect so many Americans.
When we talk about fixing No Child Left Behind, we’re talking about 50 million children in 100,000 public schools.
When we talk about making it simpler to apply for a Pell Grant to go to college, we’re talking about simplifying a form that 20 million families fill out each year.
When we talk about modernizing the Food and Drug Administration and making it easier for Americans to access lifesaving drugs, we’re talking about something that affects nearly every American.
But today we are focused on 2.6 million Americans who are mostly low-income and at risk of losing jobs and hours.
I look forward to hearing what our witnesses have to say.