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CEO of Carl's Jr. says 'Obamacare has caused millions of full-time jobs to become part-time'
Critics of the Affordable Care Act, President Barack Obama’s health care law, have assembled a long list of complaints about the law. One provision that’s getting increasing scrutiny these days is the penalty on employers who don’t provide their workers with health insurance.
For workers who are on the job at least 30 hours per week, companies must offer health coverage or be hit with a financial penalty. The Obama administration twice delayed enforcement of this requirement, but it finally took effect this month for companies with at least 100 workers, and it is set to start next year for companies with between 50 and 99 workers. (The rule will not apply to small businesses with fewer than 50 workers.)
Some Republicans have urged changing the rule so the cutoff is 40 hours a week, rather than 30. The House has passed a bill to do that; it’s now heading to the Senate, though the White House has pledged to veto it.
A reader asked us to check out a Jan. 13 column on this topic in the Wall Street Journal. It was written by Andy Puzder, the chief executive officer of CKE Restaurants, which is the parent company of Carl’s Jr. and Hardee’s. In the column, Puzder explained his company’s thought process about whether and how it should provide health coverage to its employees.
Puzder’s column makes clear that he’s no fan of the Affordable Care Act, particularly the employer mandate:
"So what does Obamacare’s 30-hour rule accomplish? Some would argue that it does a lot, pointing to the previously uninsured who now have employer-sponsored health insurance. In our company, that would be 2 percent of total employees and 6 percent of eligible employees.
"For results like that, Obamacare has caused millions of full-time jobs to become part-time, imposed a tax on lower-income workers who cannot afford it, forced millions of people out of insurance they liked, restricted access to doctors for millions of others, and created an enormous bureaucracy that discourages our doctors and nurses while suppressing health-care system innovation."
Here, we’ll take a look at just one of these claims -- that "Obamacare has caused millions of full-time jobs to become part-time."
The bottom line, we found, is that there isn’t enough data to state a number with any specificity. Suggesting that it’s "millions," as Puzder did, is speculative -- something he acknowledged to PolitiFact. At the same time, the number of people experiencing a cut in hours isn’t trivial, with informed estimates putting it into the low hundreds of thousands of people.
When we reached out to Puzder, he sent us a detailed response. (We’ve posted the full text of it here, but we’ll excerpt it in this article.)
Puzder acknowledged that "there is no definitive data available" on the question. That said, "there is also nothing definitive to the contrary of which I am aware," he added.
Puzder noted -- and other economists agree -- that employment data from the Bureau of Labor Statistics is imperfect for answering this question. The BLS threshold in hours per week for "full-time" employment is different than it is for the Affordable Care Act. In addition, BLS counts someone who works two 20-hour-a-week part time jobs as one full-time worker. Both of these factors complicate any calculations using BLS data.
The available evidence is also murky for another reason: It’s impossible to tell whether any changes actually stem from the Affordable Care Act, as opposed to the labor-market dynamics of the recovery to the Great Recession.
However, Puzder provided some anecdotal evidence from his own sector -- restaurant chains -- that suggests a plausible case for "millions."
Many restaurant chains, he noted, are operated as franchises. In his own company’s case, 230 franchisees own 73 percent of the company’s 2,920 restaurants in the United States; the company itself owns the rest. While the parent company employs about 20,000 people, its domestic franchisees employ many more -- about 55,000. And industry leaders like McDonalds and Burger King have more franchises and franchise employees.
The disparate nature of franchise ownership makes it difficult to calculate the number of workers who may have had their hours cut. Based on his own experience at his company and the conversations he’s had with other industry CEOs, Puzder thinks it’s reasonable (but, he acknowledges, unscientific) to assume that 20 percent to 25 percent of their operational employees have had their hours cut to under 30 per week due to the employer mandate.
And if that’s the case, the math adds up quickly. The International Franchise Association counted nearly 8.1 million employees in 2012, working at 750,000 franchise establishments. If these franchise employers lowered the hours of 20 percent of these employees, that would equal 1.6 million employees. Adjusting the hours for 15 percent would impact 1.2 million. And this number doesn’t include employees of the parent company; nor does it include the employees of retail companies that do not franchise.
Puzder also referenced a data set being compiled by Jed Graham, a journalist with Investor’s Business Daily. (Editorially, Graham’s publication has argued firmly against the Affordable Care Act, but several of the economists we checked with said Graham’s information is valuable.) When we accessed Graham’s database in January 2015, he had documented just over 450 employers that had made cuts to work hours or staffing levels as a result of Obamacare.
However, this list by itself doesn’t get to "millions," and because it has been compiled anecdotally rather than using scientific sampling, it can’t simply be scaled up to estimate a national figure. (We’ll also note that a full 81 percent of the employers that made cuts documented by his list are government entities; the share of private companies, which were the the focus of Puzder’s op-ed, accounted for just 19 percent of his list.)
What all this means is that it’s easy build a scenario in which "millions" of workers could see their hours cut. But neither Puzder nor our own research has produced incontrovertible evidence that it has actually happened.
What the data shows
That said, it’s likely that the law is having some impact on part-time hours, albeit a smaller one than "millions."
• One study -- authored by Bowen Garrett of the Urban Institute and Robert Kaestner of the University of Illinois and published by the Robert Wood Johnson Foundation -- found a modest (0.6 percentage-point) increase in the share of employees working part-time during the first seven months of 2014 compared to what would typically be expected based on previous economic recoveries.
However, the authors attributed this finding to the dynamics of the recovery from the Great Recession, rather than to the Affordable Care Act. Ultimately, they found little change during the run-up to the implementation of the employer mandate -- an indication that the provision wasn’t having a big effect on pushing workers involuntarily into part-time work.
• Another study, by Helene Jorgensen and Dean Baker of the liberal Center for Economic and Policy Research, did find a "small rise" in the share of employees working 25 to 29 hours a week during the first half of 2013 -- but this bump came at the expense of those working fewer than 25 hours a week, not at the expense of those working 30 or more hours a week. That’s not the dynamic one would expect if Obamacare was pushing employers to cut hours.
• Neither of the previous two studies offered hard estimates of how many workers saw their hours cut. But one analysis did -- one written by Ben Casselman, the chief economics writer at the website fivethirtyeight.com.
When Casselman looked at the data, he found that the proportion of part-time workers working just below 30 hours a week had been rising for about two years, while the share working just over 30 hours was falling. That’s consistent with the trend Puzder pointed to. Here’s a chart that accompanied his story:
Overall, Casselman concluded that "the health law has likely led a few hundred thousand workers to see their hours cut or capped. That’s small in the context of an economy with 150 million workers. But it isn’t a minor issue for those workers. Most of them are among the economy’s most vulnerable: low-wage, part-time workers who likely have few other options."
Several economists we checked with said Casselman’s estimate of "a few hundred thousand" was more plausible than Puzder’s "millions."
"I think we can safely say that at this point it's clearly not ‘millions,’ because that size shift would be noticeable in the aggregate data," said Tara Sinclair, a George Washington University economist. " ‘A few hundred thousand’ seems a lot more plausible."
It’s worth noting that Casselman’s "a few hundred thousand" and Puzder’s "millions" are not apples-to-apples figures.
Casselman included employees who were already working part-time when their hours were cut, not just those who (as Puzder wrote) saw their full-time jobs shrink to part-time jobs. So Casselman’s figure may actually overstate the number of employees who saw their jobs specifically shift from full-time to part-time. That makes it even harder to reach the "millions" threshold.
Finally, several of the economists told us that focusing only on the negative aspects of Obamacare-inspired changes in working hours painted an incomplete picture. While it’s true that the law hurts employees who would like to work longer hours, the law also aids unemployed workers who are only too happy to work in newly created part-time jobs, as well as older workers who would like to retire but haven’t yet reached Medicare age and individuals who prefer part-time work and no longer have to take full-time jobs in order to secure health insurance.
Indeed, the law makes it easier for Americans to start businesses on their own, since they are able to leave jobs where they work for someone else and still be able to secure affordable health care for themselves and their families. And it may be having that effect: Baker noticed that during the final quarter of 2014, the number of self-employed Americans rose by a whopping 400,000 compared to the previous year’s fourth quarter. Those 400,000 jobs are not counted in the widely reported BLS job-creation numbers, which only survey companies with payrolls.
Puzder said that "Obamacare has caused millions of full-time jobs to become part-time."
The statistics, in this case, are inadequate to either prove or disprove that "millions" of Americans have seen their job go from full-time to part-time due to the law. That number is possible, but unsupported. That said, there’s evidence suggesting that hundreds of thousands of workers may have seen their hours cut as the law’s impact began to be felt. That’s not "millions," but it’s not insignificant either. On balance, we rate the claim Half True.
Andy Puzder, "Shunning ObamaCare" (Wall Street Journal op-ed), Jan. 13, 2015
Robert Wood Johnson Foundation, "Little Evidence of the ACA Increasing Part-Time Work So Far," September 2014
Center for Economic and Policy Research, "The Affordable Care Act: A Family-Friendly Policy," September 2014
Fivethirtyeight.com, "Yes, Some Companies Are Cutting Hours In Response To ‘Obamacare,' " Jan. 13, 2015
Center for Economic and Policy Research, "Unemployment Rate Edges Down to 5.6 Percent, but Wages Stagnate," Jan. 9, 2015
Center for Economic and Policy Research, "The Numbers Are In: Obamacare Increased Percentage of People Working 26-29 Hours a Week," Aug. 26, 2013
Investor's Business Daily, "ObamaCare Employer Mandate: A List Of Cuts To Work Hours, Jobs," Sept. 5, 2014
Cleveland Plain Dealer, "Obamacare not forcing workers into part-time employment, analyses find," Sept. 16, 2014
Huffington Post, "No, Obamacare Isn't Turning America Into A Part-Time Economy," March 7, 2014
Interview with Ben Casselman, chief economics writer at fivethirtyeight.com, Jan. 14, 2014
Email interview with Dean Baker, economist with the Center for Economic and Policy Research, Jan. 14, 2015
Email interview with Tara Sinclair, economist with George Washington University, Jan. 15, 2015
Email interview with Gary Burtless, senior fellow with the Brookings Institution, Jan. 14, 2015
Email interview with Robert Kaestner, economist at the University of Illinois-Chicago, Jan. 14, 2015
Email interview with Andy Puzder, chief executive officer of CKE Restaurants, Jan. 19, 2015
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CEO of Carl's Jr. says 'Obamacare has caused millions of full-time jobs to become part-time'
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