Could the ACA Actually Reduce Unemployment?

The New York Times examined claims by Republicans that the Affordable Care Act is "job-killing" and is forcing many employers to convert full-time workers to part-time workers. Republicans point to the greater number of part-time jobs being created as their proof. However, as any economist will tell you (even Greg Mankiw!), this is pretty disingenuous as the trend in part-time job creation following this recession is right in line with the historical trend in part-time job creation following all of the other recessions.

Of course, in fairness to Republicans, the ACA does create a very large disincentive for firms with over 50 employees to have full-time workers in place of part-time workers. Whether or not this disincentive outweighs the benefits a firm gains from having full-time employees remains to be seen. My guess is that firms with over 50 employees that do not currently provide health insurance are concentrated in sectors that overwhelmingly rely on part-time employees anyway. If this is true, we really won't see a significant negative effect in full-time employment.

But let's imagine for a moment that we live in a world where the Republicans are right. In low-skill industries across the country, employers convert full-time employees to part-time employees. What happens? The immediate effect is that these firms then go out and hire more people to work the hours that their former full-time employees were working. Yes, the former full-time employees would be unhappy, but new part-time employees would be very happy. In this scenario, the ACA acts as an incentive for firms to enact a work-sharing program. Work-sharing has been used to great effect in Germany to keep unemployment lower and is actually one of the proposed solutions for unemployment from the American Enterprise Institute, a conservative think tank. This would also mesh well with one of the conservative arguments against raising the minimum wage: that the unemployed should not be discriminated against in favor of the employed.

There are other positive effects that the ACA could have on unemployment as well. Older workers that want to retire before 65 but don't do so out of fear of losing health insurance will be able to retire, opening up jobs to younger workers. People that keep jobs that they don't want because they want to keep their health insurance will leave their jobs, opening up jobs for other workers. Maybe they'll go work at a small business that they couldn't work at before due to lack of health insurance benefits. Or maybe they'll start their own company and create even more jobs.

But let's be realistic. The most probable case is that the number of large firms that currently do not provide health insurance and have a large number full-time employees is small; the number of people whom want to retire but can't because of lack of health insurance is small; the number of people whom want to quit their job but can't because of lack of health insurance is small. Overall, the ACA won't have a huge impact on employment. But if it does, it might be a better impact than Republicans think.