The Agenda

The 30-Hours-Per-Week Job Hurdle

The surest way for Americans to avoid poverty is to work full-time. As Jed Graham of Investor’s Business Daily explains, however, the Affordable Care Act includes a powerful incentive for employers to reduce the work hours of their employees below a 30-hour threshold:

Employers who offer health coverage that is deemed either too pricey or too skimpy will owe $3,000 for each full-time, 30-hour-per-week, worker who taps ObamaCare subsidies.

Because the $3,000 fine is nondeductible, it’s equal to $5,000 in deductible wages for a profit-making firm facing a 40% combined federal and state tax rate.

Graham points out that this $5,000 annual cost of an employee working 30 hours a week, divided over 52 weeks, means his 30th hour of work will cost the employer $96.15 each week (this will be reduced if he works more than 30 hours). He continues:

The 31-hour, 32-hour, 33-hour and 34-hour workweeks also may become relatively rare.

For example, ObamaCare could tack on as much as $48 per hour for a worker clocking 31 hours, or two hours beyond ObamaCare’s care-free threshold of 29 hours per week.

Yet, even for those clocking 40 hours, the incremental cost of ObamaCare of $8.74 per hour beyond the 29th hour of work could effectively add 55% to a $16/hour wage.

In industries with low profit margins that employ less-skilled, low-wage workers, there will likely be a great deal of pressure to reduce employment levels or work hours or both.


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