On Tuesday, January 28, Hoover research fellow Lanhee J. Chen testified before the US House of Representatives Committee on Ways and Means, discussing the negative effects the Affordable Care Act (ACA) will have on labor and the economy. Chen argues that, although the ACA has many flaws, the most controversial and economically distorted is the law’s definition of a “full-time employee” within the employers’ mandate to provide health insurance to their employees. According to the law, a full-time employee is a person who works on average thirty or more hours per week, causing employers to reduce the number of hours worked by employees who are near the thirty- hour threshold. According to Chen’s research, workers near the thirty-hour threshold are disproportionately female, have no college degree, are young, and are from lower- income brackets. Therefore, the reduced hours worked will particularly affect workers who can least afford the cutback. Chen also argues that the complexity of the law, coupled with the considerable economic incentives to track and cut employees hours, raises the cost of doing business, ultimately depressing job creation. An example is the decreasing members of staff in schools and universities, which limits the educational opportunities available for students at every level.
For more detail and an explanation of the data behind Chen’s arguments, watch the webcast of his testimony (Chen begins at 46:50), or read his testimony.
