Get Ready for the 29 Hour Work Week

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A friend of mine, who works for a credit union, recently applied for a job in a bank. The interview went well, but the position she was offered was not a full-time one like the job she now holds, but part-time. A 29 hour work week was the most they could offer, with little promise of the position converting to full-time in the foreseeable future.

29 hours – how did they come up with that number – and why is it so specific at that???

Actually, there is a very specific reason for that very specific number of hours. It’s the Patient Protection and Affordable Care Act – abbreviated PPACA, but better known as Obamacare.

Get Ready for the 29 Hour Work Week
Get Ready for the 29 Hour Work Week
Under the law, which takes full effect on January 1, 2014, employers with 50 or more employees will be required to provide health insurance for any employee who averages at least 30 hours per week in a calendar month.

Many employers offer health insurance to their full-time staff, and a few offer it to part-timers as well. But the law will remove that discretion and require benefits for employees working 30 or more hours per week. In addition, under the law health insurance plans are very likely to become more expensive due to a battery of expanded coverage mandates.

Rest assured that employers are fighting back at the law in their own way. And as burdens nearly always find their way to the lowest common denominator, it will be the employees who will bear the brunt of the changes.

Look for work week reductions – to less than 30 hours – to be one very significant and common response.

Is this the end of the 40 hour work week?

PPACA could spell the end of the 40 hour work week for many millions of employees. The only way that employers will be able to reduce their health care costs under the law will be to reduce the number of people covered under their plans.

This isn’t to say that all employees will be removed from full-time work status. There are many jobs require that at least 40 hours to complete and those will remain. But those coveted full-time jobs – with full health insurance coverage – will probably be increasingly reserved for key employees and managers.

Get ready for permanent under-employment

The shift from full-time, fully benefited jobs to part-time jobs with no benefits will mean that the ranks of the under-employed will explode. A person who is under-employed is one who works part-time but wants a full-time job. With millions of jobs converting to part-time, there simply will be no full-time jobs for people who want or need them. By definition then, millions of people will move from employment to under-employment in an incredibly short space of time.

That shapes up to be a gloomy scenario. If it’s tough to make a living on a full-time paycheck, it will be worse if you’re forced to take a part-time position. And equally damaging, you will lose your employer-sponsored health insurance coverage too.

Upshot: The unemployment problem could go away in a hurry

There is at least something of a silver lining in this development. The work that needs to be done in any organization will not decrease as a result of Obamacare. What will change is scheduling – there’s likely to be more employees in each organization, though each will be working substantially fewer hours.

That should translate into an increase in the number of jobs available. Complete unemployment could disappear very quickly. Everyone may not have a full-time job, but there will be plenty of part-time jobs for anyone who wants one.

Upshot #2: Part-time jobs may start paying higher wages

As the number of part-time jobs expands, there’ll be upward pressure on wages. It’s possible that the entire perception of part-time jobs may change in the future. Part-time jobs may pay hourly wages comparable to full-time jobs, or even higher to compensate for the reduction in hours. We’re already seeing a similar situation today with contract employment. Employers are paying higher hourly wages in recognition of the fact that they are not paying for typical employee expenses, one of which is health insurance.

In addition, as more jobs are filled by part-timers, the type of jobs will become more important. Today we mostly think of part-time work as being restaurant-, retail-, and hospitality-related jobs that pay minimum wage or slightly higher. But soon enough, we may see a flood of part-time jobs in fields such as accounting, engineering, nursing, teaching and other professions.

The shift could be a bad news/good news scenario. We need to wait and see how it plays out.

An excellent personal strategy: a part-time job, a side business and a private health plan

My suspicion is that more people are going to be affected by the work week shift than is commonly thought. Not only will it save employers on health insurance costs, but it will also accelerate the recent trend toward cost-cutting by reducing employee payrolls. We all need to have a strategy to deal with the change, and here’s my suggestion…

If your work week is going to be reduced from 40 hours to something less than 30, then you’ll have some extra time on your hands. That will be an excellent time to start a side business. Not only will the business allow you to make more money, but it will also give you two income sources – the business plus your part-time job. It will also give you the opportunity to “find your niche” and to eventually create your own full-time venture.

And since the 29 hour work week is mostly a move by employers to eliminate providing health insurance, you might also get your own health plan. Under Obamacare, insurance companies will not be permitted to either turn you down for pre-existing conditions, or to charge you more as a result. And since you’ll have a side business, you can deduct the premiums from your income, much like a business expense. Your employer may no longer be subsidizing your health insurance plan, but the US government will.

We can moan about the changes coming – or we can be proactive and move forward in a positive way. A part-time job, plus a side business and a private health insurance plan may be the wave of the future.

What are your thoughts about a reduced work week sweeping the job market as a result of PPACA?

( Photo by Unlisted Sightings )

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