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We've been hearing about the Affordable Care Act for three years now, but much of it will finally go into effect in about eight months. Among the requirements, businesses with 50 or more full-time employees will have to pay for their workers' health care or pay a penalty. Some businesses are already making personnel changes to save money when the new law takes effect. NPR's Yuki Noguchi reports on one option: shifting full-time workers to part time.
YUKI NOGUCHI, BYLINE: If Duane Davis still got 30 to 40 hours a week of work as he used to, he'd probably still be stocking clothing at the Juicy Couture store in New York City.
DUANE DAVIS: The environment, as far as the people I got along with, was very cool.
NOGUCHI: Davis quit because he couldn't get enough hours. If he'd stayed and worked 30 or more hours a week, he would have been eligible for employer-paid health care starting next year. But, he says, earlier this year, he was told he could work no more than 23 hours.
DAVIS: If we were ever going over that - those hours, they would just tell us to go home, because we were going over the amount of hours that we were given for the week.
NOGUCHI: Did that used to happen?
NOGUCHI: Business wasn't down, according to Davis, and there was plenty to do. But, he says, management seemed eager to shift its roster from majority full-time to majority part-time. Davis has no proof, but he suspects that it's because the company is preparing for the health care law.
DAVIS: It was crazy because I was always trying to understand, like, OK, if you don't have hours to give out to part-time workers, why are you hiring new part-time workers?
NOGUCHI: Juicy Couture's parent company, Fifth & Pacific, didn't respond to requests for comment. [POST-BROADCAST CLARIFICATION: After this story aired, Fifth & Pacific said it does not cap its part-time hours and that it is working to comply with the Affordable Care Act. In an email, a company spokeswoman said hours vary based on business demand.]
But Papa John's pizza chain and Darden Restaurants, which owns Red Lobster and Olive Garden, have publicly stated they may reduce workers' hours to stay under the 30-hour-a-week limit. [POST-BROADCAST CORRECTION: Darden, which owns Red Lobster and Olive Garden, pilot-tested shifting more of its workers to part-time. Following that test, and after considerable backlash, the chain said it would not reduce hours or cut its full-time staffing.]
Rob Wilson, president of Employco, a temp agency, says he sees similar shifts happening across his business.
ROB WILSON: We're seeing it quite a bit. Instead of saying I want one person per 40 hours a week, I'll take two people for 20 hours or 25 hours a week.
NOGUCHI: Wilson says the health care issue is also reshaping his business. He cites an example. A typical temp working full-time makes a gross profit of about $3,000 a year for Employco. But the cost to insure that person would come to $2,900. So now your profit is like $100.
WILSON: 100 bucks, right. That's before you advertise and pay your recruiters and your payroll department. You can't survive on $100, so you really have to pass that cost on.
NOGUCHI: Meaning, he'll have to charge his clients more if they are willing to pay. From Wilson's perspective, this basic math adds up to a big labor market problem.
WILSON: Your underemployed population in America just is going to go up dramatically.
NOGUCHI: But experts say it's not clear that all this is attributable to the health care law. Some say employers have been shifting their workforce more toward part-time for years - especially in retail and hospitality - to increase flexibility and minimize benefit costs. Neil Trautwein is vice president of the National Retail Federation. He says the Affordable Care Act is just one of many cost considerations.
NEIL TRAUTWEIN: The ACA doesn't become the determinative factor, but it does become a factor.
NOGUCHI: Elise Gould is director of health policy research for the liberal Economic Policy Institute. She says it won't impact most workers. But studies show about two million workers could potentially get fewer hours and therefore remain without employer health insurance.
DR. ELISE GOULD: Workforces that are based on part-time work, a lot of those workers already are not eligible. So to the extent that they have some workers that are now working, let's say, 32 hours a week, are they going to move them down? Absolutely. Those are the workers that are most at risk.
NOGUCHI: It's not clear that relying on more part-time workers to avoid health care costs is a financially sound trade-off for employers. Carrie Gleason is executive director of the Retail Action Project, a worker resource center.
CARRIE GLEASON: There are tremendous hidden costs to having a larger part-time workforce.
NOGUCHI: She says scheduling workers will be a bigger headache if they rely more on part-time workers, and there's more turnover, which increases a business's training and customer service costs.
GLEASON: This is a massive growing retail sector. It's one of the few sectors that are actually creating jobs. Yet it's creating this workforce that's really reliant on government support or it's going to the emergency room to get health care.
NOGUCHI: Gleason says if employers get around paying for health care costs, it will simply shift the burden of cost elsewhere. Yuki Noguchi, NPR News, Washington.