Health reform is now causing job turmoil across the country in three key groups that the White House has depended on for support—local government, school workers and unions.
School districts in states like Pennsylvania, North Carolina, Utah, Nebraska, and Indiana are dropping to part-time status school workers such as teacher aides, administrators, secretaries, bus drivers, gym teachers, coaches and cafeteria workers. Cities or counties in states like California, Indiana, Kansas, Texas, Michigan and Iowa are dropping to part-time status government workers such as librarians, secretaries, administrators, parks and recreation officials and public works officials.
This growing trend comes as three major unions have written to Democratic Congressional leaders Nancy Pelosi and Harry Reid warning that, because health reform is helping to push the work week to below 30 hours, it will “destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”
The federal law forces employers with at least 50 full-time workers to cover at least 60% of health-care costs for employees who work 30 hours or more per week. The law covers schools and state and local governments.
If they don't offer affordable health insurance, schools and local governments could be fined $2,000 to as much as $3,000 per employee annually. The White House delayed the employer mandate for one year so employers can adjust, which the National School Boards Association (NSBA) applauded, as the mandate will hit schools hard.
Nearly three-quarters of government employers provide generous benefits to workers, funded by taxpayers, higher than any other industry, says the Kaiser Family Foundation.
But the quarter that do not are making rapid changes to the work week. To stop the wheels from coming off the school bus, school districts are doing the math, and are figuring out that cutting worker hours down to part-time status, or paying the mandate tax, or dropping part-time coverage is less expensive than offering health insurance benefits. “School districts across the U.S. are grappling to determine how they will respond to the requirement,” says National Insurance Services, a specialist in public sector employee benefits since 1969.
“Even some school districts on Long Island now contemplate putting school workers in the state health exchange to save money, while administrators and superintendents get paid huge six-figure salaries,” says a school administrator in Nassau County who asked to remain anonymous.
On top of that, cities across the nation are discovering that the extra expense from health reform will trigger layoffs and cutbacks in city services like public works, city jails, government workers in nursing homes, parks and libraries if they don’t push government workers down to part-time status (see below). Some plan to hire even more part-time employees to make up for the lost hours, city officials have said.
A record high 28.1 million workers are now part-time, though the recession officially ended four years ago. Since the 2008-09 recession, part-time employment rose by 2.8 million (almost all of the gain was involuntary). Full-time work fell by 9.4 million from 2007 through 2010, the Census Bureau says. During that time, the ratio of part-timers rose to 20%, vs. 13% in 1968, and 17% in 1980. The economy has created just 130,000 full-time positions so far in 2013, versus 557,000 part-time jobs.
The irony is, health reform could fix the soaring pension and retiree health benefits owed by government agencies across the country, as numerous municipalities consider moving to a part-time workforce, analysis shows.
With the help of FOX analyst Mark Rigby, here’s what we found happening across the nation.
Schools throughout Indiana are cutting back the hours of teacher assistants, bus drivers, cafeteria workers and coaches to avoid having to offer them health insurance under the new federal employer mandate.
"We cannot go out and raise the price of our product to assist us covering this. We would have to go to the taxpayers and ask for some type of increase, and I just don't see that happening," said Les Huddle, superintendent of the Lafayette School Corp. This school district has cut the hours for about 600 full-time, non-certified employees in more than 150 schools to part-time status.
Indiana’s Shelbyville Central School System also is cutting back full-time hours of about 100 teacher aides, bus drivers, coaches and substitute teachers.
The Wake County Public School System in North Carolina is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1. The school district figured that, if just a third of these subs got employer health insurance, it would cost it about $5.2 million.
The Southern Lehigh School District in Pennsylvania voted to cut the hours of 51 part-time secretaries, custodians and cafeteria workers to avoid the health care mandate.
"We are always looking to meet our obligations to students, the community, taxpayers, our employees and our staff, and this vote will have a direct impact on some of our employees," South Lehigh School Board President Jeffrey Dimmig told the Lehigh Valley Morning Call, saying he was "troubled" by having to make the move.
In Nebraska, public school districts have been contemplating cutting worker hours to avoid the extra expense of health reform. Attorney Karen Haase who represents roughly 150 school districts in the state, estimates thousands of non-teaching jobs, such as bus drivers, cafeteria cooks, teacher aides, janitors, and administrative workers, may see their hours cut, layoffs and hiring freezes.
Between 1,000 and 1,200 of teacher aides, substitute teachers, administrators, cafeteria workers, bus drivers, and security officers and other workers in the Granite School District outside Salt Lake City, Utah, will see their part-time hours reduced due to the costs of health reform.
Virginia Gov. Bob McDonnell recently said he would limit state part-time employees to a 29-hour maximum work schedule to save the state $61 million to $110 million per year. That includes schools.
Virginia’s Chesterfield County Public Schools and the Chesterfield County government have set 28 hours as the maximum work week for school and other government workers who are not full-time. A school district memo says “this legislation has the potential for serious financial implications for the school division.”
The memo is blunt on how the new law redefines work hours. “The Affordable Care Act redefines full-time employees from people working 40 hours a week to people working 30 hours a week,” it says. “Failure to comply with health-care reform requirements would result in severe penalties — potentially millions of dollars.” The memo says the move will avoid extra costs of about $14 million.
Complaints from school workers about the new law are rolling in. “This healthcare reform is going to make me pay higher preminums (sic). It will make the schools pay more & cut jobs, & programs,” said one complainant on the American Federation of Teachers’ website.
Already, colleges and universities have been cutting back hours of adjunct professors. Youngstown State University in eastern Ohio will limit the hours of non-union part-time employees like these professors to 29 hours a week or less to make sure that the university is not required to provide them with health insurance coverage under the new law.
Part-time professors at Piedmont Virginia Community College and other community colleges in the state could see their hours cut because of Virginia's response to the new federal health reform law, officials said.
Some 200 adjunct faculty members at Community College of Allegheny County in Pennsylvania will see their hours cut so the school can avoid paying for their health insurance coverage. "While it is of course the college’s preference to provide coverage to these positions, there simply are not funds available to do so," David Hoovler, executive assistant to the president of CCAC, has said. Another 200 additional part-time employees, such as administrators, computer, seasonal and other positions, will be limited to working 25 hours per week.
And the Haysville school district outside Wichita, Kansas, now says part-time employees who work fewer than 30 hours will no longer receive health benefits they used to get.
Officials in Floyd County, Ind., recently announced plans to drop the hours of part-time government workers to below 30 hours a week from 34 because of health-reform mandates.
Butler County outside Wichita, Kansas, now classifies part-time municipal workers as those who work fewer than 30 hours a week.
Long Beach, Calif., is restricting most of its 1,600 part-time employees to on average fewer than 27 hours a week. City executives warn that without the move, their budget would soar $2 million due to higher health benefit costs. The city calculated that the federal penalty for dropping coverage completely for its 4,100 full-time employees would have been about $8 million, so instead, it’s opting to cut the hours.
"I understand there are costs to healthcare reform, but it is surely not the intent of the law for employees to lose hours," part-timer Tara Sievers, an outreach coordinator at a nature center in Long Beach, is quoted as saying.
The city of Plano, Texas, says it will cut the hours of up to 70 employees who work 30 hours, but currently don’t get health insurance. Offering coverage would have cost about $1 million.
Dearborn, Michigan, is cutting the number of hours for its part-time and seasonal employees to no more than an average of 28 hours per week. Mayor John B. O'Reilly, Jr. said the policy was drafted due to changes in the federal government's definition of a "part-time" employee.
City officials in Cedar Falls, Iowa, also say they're being proactive by cutting hours of part-time workers starting Dec. 1. That means 59 part-time employees who now work 32 hours a week in public works public libraries and the parks department, will be scheduled for 29 hours per week starting Dec. 1.
The trend in school and government workers getting hours cut comes as the number of unions opposed to health reform grows. The list includes: The United Food and Commercial Workers International Union; International Brotherhood of Teamsters; International Brotherhood of Electrical Workers; International Union of Operating Engineers; United Union of Roofers, Waterproofers and Allied Workers; Sheet Metal Workers International Association; UNITE HERE; and Laborers International Union of North America.
Union leaders James Hoffa of the International Brotherhood of Teamsters, Joseph Hansen of The United Food and Commercial Workers International Union and D. Taylor of UNITE-HERE recently sent a letter to Reid and Pelosi warning: “The law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly,” adding, “the law as it stands will hurt millions of Americans including the members of our respective unions.”
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007.
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.