Some employers, both large and small, have announced plans to limit their part-time workers to 29 hours a week specifically so they can avoid paying for health care for employees working 30+ hours a week, as required by the Affordable Care Act, a.k.a. Obamacare. Under the law, most of which takes effect in 2014, large employers are exempted from contributing anything towards healthcare costs of employees who work fewer than 30 hours a week. For full-time workers, companies must offer affordable insurance or face steep fines. Employers seeking to avoid this responsibility could impose a 29-hour ceiling on workers, and many are doing just that.
Three years after the passage of Barack Obama’s signature healthcare law, labor advocates are warning that it could have the unforeseen consequence of harming some of the very low-wage employees it seeks to aid. The legislation’s incentive scheme, they say, could cause a shift toward part-time work that extends beyond companies like Papa John’s and Darden Restaurants, which last year publicized their plans to cut employee hours to avoid costs under the new law.
Other large businesses have announced plans to raise the prices of their burgers or widgets to recover the health care costs. There has been blowback, but probably not nearly enough, since the likes of Wendy’s, Darden (Olive Garden, Red Lobster), Taco Bell, etc. already make huge profits and pay minimum (or less for waitstaff) wages. Darden Restaurants tried reducing full-time staffing at some of its restaurants last fall, but after a lot of negative publicity, the chain said it would not change its staffing in 2014. At Whole Foods, workers who put in 30 hours a week already get full health benefits, but the company may consider reducing the number of those employees because the proposed rules include more expensive benefit requirements. So workers just scraping by in minimum-wage jobs will see their pay reduced even more. In a very real way, these workers are taking another pay hit so that more well paid full-time employees can get company-provided health insurance benefits.
Many of you will remember that my daughter is a teacher whose writings I’ve posted here occasionally. But she is not a contracted teacher with her own classroom, she is a full-time “instructional assistant” who teaches technology to every student in her elementary school. Each child in the school attends several “specials” in the course of a week, and my daughter teaches one of the specials. This scheme is supposed to help make up for the elimination of valuable enrichment programs such as art, music and gym in cash-strapped school systems all over the country. As an instructional assistant, my daughter is paid a smaller, hourly wage, and has very limited personal and sick days compared to a contract teacher, and no health benefits, even though she has the same workload as a regular classroom teacher, and instructs every student in the school each week. She also works with children who need extra help to keep up with their assignments, as part of an intervention program. She is a full-time teacher in every sense of the word.
But my daughter and her colleagues were just informed that her school system may reduce the hours of certain classes of employees to 29 hours per week to avoid providing health care benefits. They also propose to limit substitute classroom teachers to four days per week, as another way to avoid incurring the health care costs. The letter from the superintendent spells out the problem, and it is very real:
We currently pay approximately 1,700 employees–1,000 of which are benefit eligible, 700 of which are not benefit eligible. If hours are not reduced, [the school system] could incur an annual expenditure of $4,952/Single Plan, and $13,278/Family Plan for each employee working over thirty (30) hours per week, which could result in increased insurance costs and PPACA fines to the School Corporation in the amount of $1,000,000 – $2,600,000 annually.
I have no sympathy whatsoever for Wendy’s or Taco Bell and their desire to wiggle out of providing health insurance benefits to their underpaid workers, but what is an already cash-strapped public school system to do? They’re too large to get any exclusions offered to small businesses, and too large to qualify for subsidies. It’s not just MY family; this situation will be replicated all over the country, in schools that already are eliminating programs just to be able to continue to provide the basics. A lot of school systems use part time workers not only as support staff, but for instruction of children.
This is one way that the Affordable Care Act, whatever its good points — and there ARE some — will disadvantage not only low-paid workers in retail companies who will see their pay even further reduced, but also our public school children, as the schools are forced to make even more cuts. It is unlikely that in a 29-hour week, the “specials” teachers will be able to instruct all of the students every week.
I don’t have an answer. It is a problem I hadn’t even considered until it touched my own family. I wonder how many more surprises are in store for us as the ACA rolls out? This is a provision that could be tweaked, and some states have begun to draft legislation to address the problem. The Republican legislators who want nothing more than to see the ACA fail, are unlikely to cooperate in a fix. So we are between the proverbial rock and hard place, I fear.