Providing for Consideration of H.R. 3, Keystone XL Pipeline Act, and Providing for Consideration of H.R. 30, Save American Workers Act of 2015by Representative Joe Courtney
Posted on 2015-01-08
COURTNEY. Madam Speaker, I rise in opposition to the rule and
both underlying bills, particularly the misnamed Save American Workers
I would like to just cite very quickly from the Congressional Research Service, which is one of the gems of quality, neutral, nonpartisan analysis for this body, which took a look at this bill and said very clearly: Changing the cutoff from 30 hours per week to 40 hours per week would not eliminate the incentive for employers to shift more workers to part-time status and could actually provide a greater incentive for firms not to offer health insurance to their employees.
In theory, changing the definition of a full-time worker to 40 hours a week would shift, not eliminate, the incentive for employers to reduce workers' hours. Additionally, more employers could be inclined to shift more workers to ``part- time'' status under a 40-hour definition because the disruption to their workforce is smaller from 40 to 39 hours per week than 40 to 29 hours per week.
I will submit this report for the Record.
Change the Definition of ``Full-Time'' to 40 Hours Per Week Multiple bills introduced in the 113th Congress propose changing ACA's definition of ``full-time'' from 30 hours per week to 40 hours per week. Proponents of this revision argue that the current, 30-hour per-week definition is unusually low compared with ``traditional standards'' of a full-time worker in many industries, thus increasing employer's calculations and compliance costs. In addition, proponents of the revision argue that the 30-hour definition encourages employers to reduce the number of hours allotted to each worker (thereby reducing their pay) in order to reduce the number of ``full-time'' workers and reduce their compliance costs with ACA (or the size of their employer penalty, because the penalty is only based on full-time workers). Note, as discussed below, that the incentive for firms paying the penalty could be eliminated by imposing the penalty to apply to FTEs.
As shown in Table 3, 2012 Census data indicates that the majority (67.8%) of workers usually work 40 hours or more per week. The average work week for people who typically work ``full time'' is 42.5 hours per week--more than the 30-hour definition of an ``FTE'' in ACA. However, the data in Table 3 does not provide much behavioral insight into the responses of firms to ACA, as they were collected prior to the initial measurement period for ACA's employer penalty that began in January 2013.
TABLE 3. PERSONS AT WORK, BY AVERAGE HOURS WORKED PER WEEK, 2012 ------------------------------------------------------------------------ Distribution of workers Hours of work across all industries ------------------------------------------------------------------------ 1 to 14........................................ 5.0% 15 to 29....................................... 12.5% 30 to 34....................................... 7.6% 35 to 39....................................... 7.1% 40............................................. 42.8% 41+............................................ 25.0% Average Hours, Total at Work................... 38.5 hours Average Hours, Persons Who Usually Work ``Full 42.5 hours Time'' a......................................
------------------------------------------------------------------------ Source: U.S. Census Bureau, 2012 Current Population Survey, ``Household Data--Annual Averages--19. Persons at work in agricultural and nonagricultural industries by hours of work,'' http://www.bls.gov/cps/ cpsaat19.htm.
a The Census Bureau defines a ``full-time worker'' as someone working 35 hours or more per week.
Several employer surveys indicate that most respondents are not reducing their employees' hours in response to ACA's definition of a full-time worker. According to a 2013 survey conducted by the International Foundation of Employee Benefits Plans, a non-profit foundation, 16% of the 966 employers surveyed said they have adjusted or plan to adjust hours so that fewer employees qualify for full-time. According to a 2012 survey of 1,203 employers conducted by Mercer, a global business consulting firm, 68% of survey respondents indicated that they will begin offering health coverage to all employees working 30 or more hours per week. Other surveys with fewer respondents support these findings.
In addition to surveys (which could or could not be representative of the firms that could be affected by the employer penalty), some researchers have conducted empirical analysis of broad, public-use data. A 2013 study conducted by the U.C. Berkeley Labor Center estimated that approximately 2.3 million workers in firms with 100 or more employees (representing 3.1% of all workers) were most vulnerable to a reduction in their payroll hours from above 30 hours per week to below 30 hours per week. These workers were mostly concentrated in the restaurant industry. In contrast, a 2013 study conducted by Helen Jorgensen and Dean Baker of the Center for Economic and Policy Research (CEPR) found that less than 1% of all workers in 2013 fall just below ACA's full-time threshold (26-29 hours per week). Jorgensen and Baker's study uses more recent data and is probably a more reliable study to forecast future conditions. Unlike the U.C. Berkeley Labor Center's study, Jorgensen and Baker's study likely captured any initial employers' responses to shifting workers below the 30 hour per week cutoff because, according to ACA, the baseline measurement period for measuring a firm's FTE employees begins in 2013. Also, Jorgensen and Baker's study better captures more recent improvements in the labor market; there are likely to be more ``underemployed'' workers (working under 40 hours) in the older data because the macroeconomy was in an earlier stage of recovery.
Changing the cutoff from 30 hours per week to 40 hours per week would not eliminate the incentive for employers to shift more workers to part-time status, and could actually provide a greater incentive for firms not to offer health insurance to their employees. In theory, changing the definition of a full-time worker to 40 hours per week would shift, not eliminate, the incentive for employers to reduce workers' hours. Additionally, more employers could be inclined to shift more workers to ``part-time'' status (in terms of the ACA) under a 40-hour definition, because the disruption to their workforce is smaller from 40 to 39 hours than 40 to 29 hours. If the incentive to retain their workers on full-time status is diminished, then fewer firms could be compelled by the employer penalty to offer health care coverage relative to current law. As shown in Table 3, more workers are also clustered around the 40-hour per-week threshold than the 30- hour threshold.
Mr. COURTNEY. Madam Speaker, I had an amendment, which is being shut off today, which I think actually really addresses the problem. Under the structure of the employer mandate that came out of the Senate, when an employer goes from 49 to 50 employees, the employer is taxed for 20 employees. Again, that is a cliff. There is just no denying that fact.
When the House passed the Affordable Care Act, we had a smooth, gradual, incremental increase based on payroll which, again, did not create a cliff.
[[Page H119]] My amendment would simply say that the exempt number of employees before the tax kicked in would be raised from 30 to 49, so that when an additional employee was hired above the 50 threshold, there would be a tax, there still would be an incentive, but there would not be a cliff.
Unbelievably, the committee just totally refused to allow this amendment to be considered. It was a strike-everything substitute amendment because the underlying bill does not accomplish the ends that its sponsors claim--and the CRS has verified that--but in fact, the Small Business Majority, which represents a large contingent of small employers across the country, endorsed my amendment.
Madam Speaker, sadly, under this rule--which, again, just completely shuts off any ability for Members to do their job, represent their district, come up with ideas that are well-founded in independent analysis--we are not going to have that opportunity.
I will submit a copy of the amendment which is not going to be discussed and the statement of support from the Small Business Majority in the Record.
Amendment in the Nature of a Substitute to H.R. ___ Offered by Mr. Courtney of Connecticut Strike all after the enacting clause and insert the following: SECTION 1. SHORT TITLE.
This Act may be cited as the ``Eliminate the Small Employer Tax Cliff Act''.
SEC. 2. INCREASE IN REDUCTION IN DETERMINING APPLICATION OF EMPLOYER SIZE TO ASSESSABLE PENALTIES.
(a) In General.--Clause (i) of section 4980H(c)(2)(D) of the Internal Revenue Code of 1986 is amended by striking ``30'' and inserting ``49''.
(b) Effective Date.--The amendment made by subsection (a) shall apply to months beginning after December 31, 2013.
SEC. 3. BUDGETARY EFFECTS.
The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
Amend the title so as to read: ``A bill to amend the Internal Revenue Code of 1986 to increase the reduction in determining the application of employer size to assessable penalties under the employer mandate.''.
____ [From Small Business Majority] Statement of Support for the Eliminate the Small Employer Tax Cliff Act (Statement from John Arensmeyer, Founder & CEO of Small Business Majority) Small Business Majority supports Congressman Courtney's amendment to increase the cliff of the employer penalty in the Affordable Care Act from 30 to 49 employees because it will provide small business owners with more flexibility and can relieve some of the burden on those few who have more than 50 employees but do not provide health insurance.
Ninety-six percent of businesses in this country have fewer than 50 employees. For larger businesses with more than 50 employees, 96% already offer insurance. Only the 4% of larger employers that do not offer health insurance are impacted by the penalty.
However, the Congressman's amendment will mean fewer small business owners with more than 50 employees will have to pay a penalty if they do not offer insurance.