By hiring more part-time workers and cutting the hours of full-timers, many businesses in low-wage industries are trying to alleviate the impact of new health law requirements that took effect beginning January 1st 2015.
As companies prepare for an expanded health care mandate in 2016, these strategies can have an impact on job growth, which had accelerated substantially in 2014.
According to a survey by a top small-business trade group, the Affordable Care Act (ACA) has already hurt the profits of small businesses forcing them to reduce or postpone investment, withhold raises or trim other types of benefits.
Effective for 2015, if a business employs at least 100 full-time workers (or full-time equivalents, including part-time workers) they must offer, under the health care law, health benefits to at least 70 percent of those working at least 30 hours a week.
Those companies must provide insurance to 95% of their workers, and firms with 50 to 99 employees must offer coverage as well by January 1, 2016.
With ninety-four percent of businesses employing at least 100 workers and 55% of all firms already offering health benefits to at least some employees, some firms are still taking steps to avoid the mandate.
Because health insurance represents an outsize share of their total employee costs, businesses in low-wage sectors, such as restaurants, retail and warehousing, are feeling bigger effects. Many of those businesses with fewer than 100 employees have, in recent months, hired more part-timers and those with at least 100 are reducing the hours of existing staff.
Labor Department figures show that the strategies have not had a noticeable impact in the labor market so far. Monthly job growth averaged 240,000 in 2014, up from 194,000 in 2013 and full-time employment has increased at about twice the rate of part-time payrolls.