Among franchised businesses, 27 percent report their company has replaced full-time workers with part-time workers and 31 percent have reduced worker hours. Among non-franchised businesses, 12 percent are replacing full-time workers with part-time workers or reducing hours. This is happening now, with more than a year before the mandate goes into effect; and undoubtedly, these numbers will rise as we approach next July's "look back" period for tabulating workers' hours.
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This shift to more part-time workers reflects a specific problem within the ACA — the definition of a full-time worker. The ACA mandates that any business with more than 50 full-time equivalent workers must provide health-care coverage or potentially pay a penalty. Rather than the traditional 40-hour work week definition, the ACA redefined a full-time worker as anyone working 30 or more hours a week, averaged over the course of a month. For many employers already dealing with thin margins, the threat of these extra costs make reducing hours a business necessity — and could be the difference between staying in business or going out of business.
Yet, recent commentary on this issue has highlighted that the impact of this new mandate has not yet been seen in national aggregate data.
In fact, the POS research finds that, while most employers have yet to take steps to reduce hours, the aggregate impact may not be as telling. Instead, the greatest impact will affect businesses hovering near the 50 full-time equivalent employee threshold. Among these businesses, the data are clear.
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Over 50 percent of businesses with 40 to 70 employees report they plan to make personnel decisions to stay below the 50 full-time equivalent worker threshold, including cutting hours and hiring more temporary help. Simply put: More than half of the companies surveyed that should be creating jobs are incurring additional costs and whittling away valuable time and energy to navigate the overly-burdensome provisions within Obamacare. While it's just over a year away, we are already seeing the creation of a part-time economy by companies that would otherwise be leading economic growth.
Fortunately, there is a solution to this problem that does not require a fundamental overhaul of the ACA. We simply need to restore the traditional definition of a full-time worker to 40 hours a week. This change would allow employers to give employees more hours and more pay.
We are encouraged to see a bipartisan effort led by Sens. Joe Donnelly (D-Ind.) and Susan Collins (R-Maine) to restore the traditional definition of a full-time worker and we remain hopeful that other policy makers from both sides of the aisle will consider supporting this practical, common-sense legislation. Just last week, Sens. Donnelly, Collins, Joe Manchin (D-W Va.), and Lisa Murkowski (R-Ak.) sent a letter to the budget-committee leaders asking them to address the Forty Hours is Full-Time Act of 2013 in their budget conference.
This is a reasonable solution to an issue that has drawn a lot of passion from both political parties and represents the type of leadership our economy and the business community desperately need from policy makers in Washington.
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— By Steve Caldeira and Bruce Josten.
Steve Caldeira is the president & CEO of the International Franchise Association; follow the IFA on Twitter @Franchising411. Bruce Josten is the executive vice president for government affairs at the U.S. Chamber of Commerce; follow the Chamber on Twitter @USChamber.