Study: Obamacare Costing 66,000 Jobs in Illinois

Hours slashed as health care law takes effect

A cashier works at a Marshalls in Chicago / AP
October 4, 2013

The president’s health care law is driving down employment in his home state, according to a recent report.

Employers in Illinois are cutting worker hours to avoid costly penalties from Obamacare’s employer mandate, where employees in the lowest wage sectors are the hardest hit.

The Illinois Policy Institute studied the three employment sectors -- retail, food, and merchandise-- whose average hours were closest to 30 hours per week prior to the Affordable Care Act.

The institute found that all three have now dipped below 30 hours per week, the threshold for a full-time worker under the law. Average hours for these sectors had remained steadily above 30 before Obamacare was enacted.

"Since 2011, Illinois has lost the equivalent of about 66,000 jobs in these sectors through reduced work hours – more than the number of jobs added in all sectors over the past year," the study said.

"As Obamacare is implemented, Americans are seeing it fail on the important goals of health care access and affordability," said Naomi Lopez Bauman, director of health policy at the institute and author of the report.

"But this labor data from the president's very own home state shows that not only will Obamacare fail to deliver its health insurance goals, it also threatens to cause further damage to Illinois' already-fragile economy," she said. "Advocates of Obamacare should be prepared to answer the question: How many lost jobs and lost hours are too many?"

According to the study, the loss in hours equates to 66,000 retail, food, and merchandise jobs since 2011.  These sectors are the lowest-paid jobs in Illinois, and account for one-fifth of the state’s total employment.

Each of these sectors had above 30 hour work weeks on average prior to the health care law: retail trade (30.7), food and beverage (31.5), and general merchandise (31.5).

The average workweek in all three sectors is now part-time. In 2013, retail dipped to 29.1 hours; food to 29.7; and merchandise to 27.8. The biggest drop was merchandise at 11.7 percent.

Losing an average of 1.6 hours amounts to the loss of thousands of jobs. Though the retail sector has added about 13,000 jobs since 2011, those jobs are now only at 29.7 hours per week. The cut amounts to lost work of roughly 10,000 employees.

A 3.7 hour drop in the merchandise sector is equivalent to the work of 20,000 jobs. In food and beverage sectors, 1.8 hours lost represents the work of about 36,000 workers.

Employers are reducing hours in anticipation of the employer mandate in Obamacare, which was set to start in 2014 but was delayed by the administration an additional year.

Under the law, businesses with more than 50 full-time employees must provide approved health care insurance to their workers or face hefty fines.

For example, Illinois Valley Community College (IVCC) announced earlier this year that as a result of Obamacare they must cut all of their workers to part-time status.

"In a presentation on the Affordable Care Act, controller Pat Berry said if just one employee averaging more than 30 hours per week is not offered health insurance, IVCC's penalty could be more than $500,000," a report said. "Accordingly, the college is limiting all part-time employees to a maximum 29 hours per week."

The study argues that the health care law is having a negative effect on an already unstable economy in Illinois, which has the second highest unemployment rate in the nation at 9.2 percent.

"Illinois is in the midst of a decades long struggle to overcome numerous challenges ranging from corruption, high unemployment, underfunded pensions and high taxes," the study said. "At a time when the state can’t afford any additional obstacles, recent data provide support to the claim that employers have been cutting employee hours to avoid the costliest aspects of Obamacare since it was signed into law."