Skip to content

Major Employment Disincentives – Now we know ‘What’s really in it’…


( – A new study on the Affordable Care Act, or Obamacare, produced by the Mercatus Center at George Mason University shows that the health care law penalizes Americans who work full-time, will reduce the number of full-time workers, and rewards those who work less.

“The ACA’s employment taxes create strong incentives to work less,” the study, The Affordable Care Act and the New Economics of Part-Time Work, states. “The health subsidies’ structure will put millions in a position in which working part-time (29 hours or fewer, as defined by the ACA) will yield more disposable income than working their normal full-time schedule.”

The study’s introduction states: “Starting this year, the United States’ working population will face three major employment disincentives resulting from the very benefits the Affordable Care Act (ACA) provides: (1) an explicit tax on full-time work, (2) an implicit tax on full-time work for those who are ineligible for the ACA’s health insurance subsidies, and (3) an implicit tax that links the amount of available subsidies to workers’ incomes.”

The introduction further says that the study “advances the understanding of how much these ACA taxes will reduce overall employment, and why. It concludes that the reduction will be nearly double that projected by previous analyses. Labor markets ultimately will reduce weekly employment per person by about 3 percent—translating to roughly 4 million fewer full-time-equivalent workers.”

“Much of the ACA’s tax effect resembles unemployment insurance: both encourage layoffs and discourage people from returning to work,” reads the report. “The ACA’s overall impact on employment, however, will arguably be larger than that of any single piece of legislation since World War II.”

Under the heading “Distorting the Workweek,” the study explains that the ACA is essentially a tax on employment.

“The ACA imposes a $2,000 penalty for each full-time employee imposed on large employers (generally those with 50 or more workers) that do not offer health insurance,” reads the report. “Due to this penalty’s unfavorable tax treatment, it is effectively a $3,000 employment tax and can be expected to reduce full-time employment.”

The study compares two hypothetical workers to illustrate its point:

“Each worker represents the same hourly cost to the employer, but one works full- time (in this case, 40 hours per week) and one part-time (29 hours per week). In addition to salary, the full-time worker receives a partial employer subsidy for health insurance.

See Also

Obamacare’s Mysterious Missing Billions

Where is the administration getting the money to fund these Obamacare programs?
“Congress is looking into the funding for several Obamacare programs for which no money has been directly appropriated.”

Report: Obama administration installs ‘new regulation every two hours and 24 minutes’
In April, a Mercatus Center study discovered that federal, state and municipal regulations have cost the U.S. economy $4 trillion.

Leave a Comment

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s