Gerard Russo,
Sang-Hyop Lee, Rui Wang, and Thamana Lekprichakul,
University of Hawaii at Manoa

Abstract

This paper examines the distribution of private-sector employees by hours worked per week with a view to understanding the impact of Hawaii's employer mandate, which requires private-sector employers to provide health insurance to their full-time workers. Using the Current Population Survey, we estimate the probability density of workers by hours worked per week at the main job for Hawaii and the U.S. as a whole. Hawaii exhibits a distribution with modestly more part-time workers precisely at the twenty-hour regulatory demarcation. The effect is most pronounced for low-wage workers and workers without employer-sponsored insurance, while the effect is undetectable for high-wage workers and workers with insurance from their employer. The results are consistent with the economic notion that favorable tax-treatment induces employment-based coverage. For high-wage workers, marginal tax-rates are higher and insurance premiums represent a smaller proportion of total compensation. Therefore, the regulation is most likely to be non-binding for this segment of the labor market. For the low-wage segment, mandatory coverage adds appreciably to the cost of labor leading to avoidance of the 20-hour rule.