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Good news for the Affordable Care Act in jobs reports

Editor’s Note: We’ve often lamented the persistently high number of involuntary part-time workers as a sign that the economy is not quite where it should be.

According to the most recent unemployment report from the Bureau of Labor Statistics, 6.7 million Americans (and even more when agricultural industries are considered) work part time because they cannot find full-time jobs. Part of the good news in November’s report was that their numbers had fallen by about 200,000.

But there’s another whole category of Americans who choose to work part time; in other words, they work part time for non-economic reasons. Their numbers have actually been increasing. From October to November, there were 297,000 more voluntary part-time workers in the American economy.

To regular Making Sen$e contributor Dean Baker, co-director of the Center for Economic and Policy Research, that increase is a sign that the Affordable Care Act is working — at least in one sense. By giving individuals the opportunity to purchase their own health insurance on exchanges, the law is allowing full-timers who want or need to work less to have that chance; they’re no longer dependent on their employers for coverage. Baker and his colleague Helene Jorgensen documented that trend in a CEPR study earlier this fall, and Baker now explains their research below.

— Simone Pathe, Making Sen$e Editor

A continuing problem in the labor market is that many people who want full-time jobs can only find part-time employment. While the number of people involuntarily working part-time has fallen sharply from its 2010 peak, it is still more than 2 million higher than its pre-recession level.

This problem of involuntary part-time employment has rightly gotten considerable attention, but much less attention has been given to the rise of voluntary part-time employment: people choosing to work less than 35 hours a week. This number has risen by 1.1 million (6.1 percent) from its year-ago level. This is good news, and it is almost certainly a result of the Affordable Care Act (ACA).

The basic story is that most people had been dependent on their job for insurance for themselves and their families. To qualify for insurance most employers required that people worked full-time. This meant that many people who might have preferred to work part-time did not have that option because they needed to work full-time for insurance.

The ACA changed this by allowing workers to get insurance through exchanges. This meant that if people could afford to get by working fewer hours, they could then buy their own insurance on the exchanges. This option is especially important for workers who have a serious health condition or have a family member with a serious health condition. Before the passage of the ACA, the cost of insurance in the individual market would have been prohibitive.

The sharp rise in voluntary part-time employment over the last year seems to indicate that many workers are taking advantage of the opportunity to work fewer hours and get their insurance through the exchanges. My Center for Economic and Policy Research colleague Helene Jorgensen and I did a detailed analysis of the increase in voluntary part-time employment through the first six months of 2014. We found that the sharpest increase in voluntary part-time employment was among young parents (ages 16-35), with a rise of 11.3 percent compared with the same months of 2013.

We took this increase to mean that many parents are using the freedom they get from being able to buy insurance on the exchanges to work shorter hours and spend more time with young children. (The data set doesn’t have the ages of children, so we had to use the ages of the parents as an approximation.)

While it is important that workers have access to full-time jobs if they need them, it is also important that the need for health care insurance not keep them from spending more time with their children. The data to date indicate that the ACA is having this effect. This is an important benefit from the ACA that has not gotten the attention it deserves. The ACA turns out to be a family friendly policy that is allowing families to spend more time together.

Massachusetts began running its own health insurance exchanges in 2006, years before the ACA’s took effect in 2013. Below, watch Paul Solman’s report on the Bay State’s model and how it influenced other exchanges.