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Will ObamaCare End “Job Lock”?

The Affordable Care Act was first and foremost intended to extend health insurance coverage to a broader segment of the population. It has largely succeeded, with the uninsured rate among the non-elderly population falling to 10.7 percent, from more than 18 percent just before the law took effect.

However, it was also hoped that the ACA would end “job lock,” a situation where a worker stays at a job because it’s the only way she can count on getting health insurance for herself or her family. Millions of workers with a serious, pre-existing health condition faced this problem, knowing they’d encounter sky-high rates in the individual market.

As a result, workers stayed at jobs that didn’t fully make use of their skills or give them opportunities for advancement or that, for whatever reason, made them unhappy. The need for insurance also prevented workers from trying to start their own business or taking a part-time job to spend more time with their family.

We are still in the early stages of ACA implementation, and the labor market remains weak from the Great Recession, but there is evidence that the health insurance reform law is mitigating “job lock” and giving workers more freedom. This is most apparent in the substantial rise in voluntary part-time employment. In the first three months of 2016, the number of people voluntarily working part-time was up by more than 1.7 million (10 percent) from the first quarter of 2013, the last year before the exchanges were in place.

To be clear, these are people who say that they are working part-time because they want to work part-time. There are still a large number of people who work part-time because they can’t get full-time jobs, but this number is down by 1.9 million (24 percent) from pre-ACA level.

In other words, the number of people who are stuck working part-time has been dropping rapidly since the ACA came into effect, while the number who choose to work part-time has risen substantially.

The Center for Economic and Policy Research analyzed the rise in part-time employment in the first year after the ACA took effect and found that the increase was largest among young parents. This suggests that many parents are choosing to spend more time with their kids now that they have the option to buy health care insurance on the exchanges.

There is also evidence of an increase in the number of people choosing to start their own business. The number of people who are self-employed at incorporated businesses is up by 7.8 percent from the first quarter of 2013. It’s too early to know if this increase will be sustained (these data are erratic), and it may just be attributable to a strengthening labor market. Alternatively, the rise in self-employment could mean that access to insurance on the exchanges has allowed more workers to feel secure enough in their financial situation to scratch an entrepreneurial itch.

The opponents of the ACA predicted massive job loss and a surge in involuntary part-time employment, as employers forced workers to accept fewer hours to avoid the mandate in the ACA. That has not happened. There is evidence that the ACA is instead giving workers more freedom to find a job that fits their needs. This is a big deal and deserves attention.

This column originally appeared in the Los Angeles Times.

More articles by:

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

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