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New Study Says ACA Drove a Shift from Full-Time to Part-Time Work
A new study from UC Irvine reveals that the ACA's employer mandate led companies to shift from full-time to part-time staff to avoid higher insurance costs.
Key Points
- A new study from UC Irvine reveals that the Affordable Care Act's employer mandate led companies to shift from full-time to part-time staff to avoid higher insurance costs.
- The research indicates that this strategic shift to a more flexible workforce did not negatively impact firm performance, suggesting it was a successful cost-avoidance measure.
- The findings highlight how businesses adapted to the regulation by altering labor practices, an outcome potentially unforeseen by lawmakers.
A new study from the University of California Irvine reveals that the Affordable Care Act's higher insurance premiums caused companies to strategically reduce full-time staff in favor of part-time and temporary workers, successfully sidestepping mandate costs without hurting firm performance.
Dodging the mandate: The move is a direct response to the ACA's "employer mandate," a rule requiring businesses with 50 or more employees to offer coverage to staff working at least 30 hours a week. The Management Science paper found that by leaning on a workforce that falls below that threshold, companies could get around the mandate's main cost driver.
Performance preserved: That pivot to a more flexible workforce didn't hurt the bottom line. The paper notes there was "no evidence of deterioration in performance" at the companies most exposed to the changes, suggesting the strategy was purely a financial adaptation.
The ironic twist: Ironically, the University of California system itself took the opposite approach for its own unionized employees. Rather than cutting hours, the university absorbed the rising premium costs through wage increases and subsidies, choosing to prioritize talent retention.
The research highlights a classic corporate response to regulation: finding the most efficient path to compliance, which in this case reshaped labor practices in a way lawmakers may not have fully anticipated.
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