Affordable Care Act / Economy

America’s Employment Status: Where are the Hours Going?

When asked about how an industry is recovering from a recession, you would probably point to wages or the number of newly hired employees. Would you think to look at the number of hours employees are working? The average weekly hours across industries has varied widely since the Great Recession.

Let’s first look at the low-wage industries, which include Leisure & Hospitality and Retail Trade. The average number of hours worked per week in the Retail Trade industry increased following the recession; however, this number has begun to decrease again beginning in 2012. At the same time, the average weekly hours worked in the Leisure & Hospitality industry seems to have increased slightly in the past year. It is important to note nonetheless that although the average weekly hours have increased in this industry, they have yet to pass the 29 hour mark. The graph below uses data from the Bureau of Labor Statistics to show the change in average weekly hours in both the Leisure & Hospitality and the Retail Trade industries.


It is also interesting to look at the Education and Health Services industry. Unlike the weekly hours of most mid-wage industries, which have increased since in the Great Recession, this industry has remained consistently low since 2008. There are many possible explanations for this variation.

It is possible that this industry was hit harder by the recession and has yet to make its recovery. However, studies have shown that this industry actually fared better than most, being the only industry to actually increase jobs during both the recession and recovery. Another explanation could be that the threat of a new Affordable Care Act (ACA) regulation is keeping employers from increasing the hours of their employees. The graph below displays the percent change in weekly hours since December 2007 of the Education and Health Services industry as well as the other mid-wage industries, using data from the Bureau of Labor Statistics.


With the Great Recession behind us, we look to ACA regulation as an explanation for most recent changes in average weekly hours. The common belief has typically been that if you work forty hours per week you are working full-time. Regardless, that notion changed with recent ACA regulations. The ACA states that an employee who works at least thirty hours per week is considered full-time, and as of January 1, 2015 any employer with fifty or more full-time employees must provide affordable health coverage. This insurance must provide a minimum level of coverage to full-time employees and their dependents. Any employer with fifty full-time employees who does not provide affordable health insurance will be charged a penalty fine.

This new requirement has left countless Americans concerned about the loss of hours. Employers may cut back their part-time employees’ hours from 30-39 down to only 29 as a way to avoid providing health insurance. This may explain the decrease in hours in both the Education & Health Services industry and the Retail Trade industry.

The ACA full-time regulation has sparked many debates on the Hill regarding ways to save employees from having their hours, and subsequently their earnings, reduced. Earlier this month, the Save American Workers Act, which would amend the ACA definition of full-time to be forty hours instead of thirty, was passed by the House of Representatives. Many believe that this change in definition will allow part-time employees to continue working their regular hours. Only time will tell how the current regulation and the possible amendment will impact average weekly hours across the various industries.


Veritum dies aperit by John Harvey is licensed under Creative Commons