Obama Slashes Four Hours Off Definition of “Full-Time” Employment
The BLS Glossary defines full-time workers as “Persons who work 35 hours or more per week”.
For monthly reporting, the BLS defines part-time as “those who worked 1 to 34 hours during the survey reference week”. With that wording, I am not precisely sure where 34.1 or 34.5 hours fit.
Interestingly, the Obamacare mandate says Anyone Who Works 30-Hour Week Is Now ‘Full-Time’
A little-known section in the Obamacare health reform law defines “full-time” work as averaging only 30 hours per week, a definition that will affect some employers who utilize part-time workers to trim the cost of complying with the Obamacare rule that says businesses with 50 or more workers must provide health insurance or pay a fine.
“The term ‘full-time employee’ means, with respect to any month, an employee who is employed on average at least 30 hours of service per week,” section 1513 of the law reads. (Scroll down to section 4, paragraph A.)
If an employer has 50 or more “full-time employees” and does not offer health insurance, it must pay a penalty per employee for each month it does not offer coverage.
Lookback Period Three Months To One Year
The IRS has a publication on Determining Full-Time Status for Purposes of Shared Responsibility for Health Coverage. The key to explaining the recent jump in part-time employment is found in the look-back period.
Under the look-back/stability period safe harbor method, an employer would determine each employee’s full-time status by looking back at a defined period of not less than three but not more than 12 consecutive calendar months, as chosen by the employer (the measurement period), to determine whether during the measurement period the employee averaged at least 30 hours of service per week.
Common sense would dictate employers look back the minimum time (three months), as opposed to a year.
Thus, any employer in his right mind would reduce the hours someone worked from say 34 to something like 25 or 28, just to make sure the average hours worked was under 30.
If a lot of corporations did that, and a lot people had reduced hours, then corporations would have had to hire more workers to keep the same total number of hours.
Indeed there was a massive surge in part-time employment (+582,000) in October that spawned many conspiracy theories.
As noted in September Jobs +114,000; Unemployment Rate 7.8%; Part-Time Workers +582,000; Initial Reaction and Election Impact, the entire .3 percentage point drop in the unemployment rate was based entirely on a surge in part-time employment.
Thus, it’s looking more-and-more likely that Obamacare is a healthy chunk of the explanation.
Acceleration of Trend
Many people emailed me that Obamacare did not start the push to part-time employment. Fair enough, but I never said it did.
However, Obamacare did accelerate the trend. Moreover, it will now reduce the number of hours part-timers work.
The upside is more people will be working, and there is benefit to that even if it does not reflect the true state of unemployment or the economy.
Obamacare Employment Recap
I have written about this issue three times recently. Here is a recap.
- Is Obamacare Responsible for the Surge in Part-Time Jobs?
- Prepping for Obamacare, Olive Garden and Red Lobster Cut Workers’ Hours; Are Other Companies Doing the same?
- Mish Obamacare Mailbag: Expect More Part-Time Jobs
How to Reduce Unemployment
It will be interesting to see if the BLS changes its standard from over 34 hours to 30 hours or more for full-time work.
As an aside, it would be easy enough to reduce unemployment to zero. All the government need do is hire everyone in the country who does not have a job to work one hour per week at minimum wage.
Voilà! We would have “full employment” in a jiffy.
If that seems too radical, the administration can always try dropping the measure of full-time employment to 21 hours while pitching the resultant drop in unemployment as “Good news! Half-time is now full-time.”
Mike “Mish” Shedlock