Skip to comments.Is ObamaCare Slowing the Economy?
Posted on 06/02/2012 4:53:40 AM PDT by Kaslin
Everyone knows that ObamaCare will discourage employment. Everyone who stops and thinks that is.
Yesterday's job report was genuinely awful. Here is a congressional hearing on why ObamaCare is making things worse.
By mandating that employers buy expensive health insurance for their employees, the new health reform law will raise the cost of labor and make it more expensive than otherwise to hire new workers. Plus, the law forces employees to have this expensive fringe benefit, even if they would prefer a less costly health plan in exchange for higher wages.
To make matters worse, the health plan that employers will be required to buy will not be viewed by employees as a valuable benefit if they can get the same coverage at highly subsidized rates in the newly created health insurance exchanges. A family with an annual income just over of $30,000, for example, will be able to obtain insurance whose cost is nearly $15,000 for a premium of only about $950. Government (the taxpayers) in this case will be subsidizing 94% of the real cost. If the employer provides that same insurance, there is no new government subsidy (except for very small enterprises) and the benefit is about 50% of the worker's wage!
Of course, the mandate to buy will not kick in until 2014. But is it possible that the law is already affecting employer hiring decisions? There is evidence to back up that supposition. It comes to us courtesy of University of Chicago economist Casey Mulligan, writing at The New York Times economics blog.
What do employers do in a downturn? Their first response to a slump in the demand for their products tends to be to reduce the hours of work for their employees. If the problem continues, or gets worse, they lay workers off. We've seen both responses in the recession we have been experiencing. From pre-recession levels, the number of hours worked by those with jobs fell by 2% nationwide. The fraction of the population that has a job fell by 7%.
But here is what's really interesting. The number of hours worked by those with jobs has now returned to its pre-recession level. Looking at this statistic alone, you would think that the economy has fully recovered. On the other hand, the percent of the adult population that has a job is continuing to bottom out. Looking at this statistic alone, you would think that we are still in a recession and that there has been no recovery at all!
What explains this complete dichotomy in the labor market? Mulligan offers ObamaCare as a possible explanation. Here's why.
Although the health insurance mandate makes labor more expensive, it's one-health-plan, one-worker. The cost of health insurance is independent of the number of hours worked. So if an employer increases production by increasing the number of hours each worker works, there is no additional health care cost. On the other hand, if the employer hires additional workers, he must purchase expensive health insurance for each one of them.
The new health law, then, encourages businesses to expand by increasing the number of hours worked rather than by increasing the number of employees.
But isn't there some chance that the mandate to purchase insurance will be struck down by the Supreme Court this month? There is indeed. But this isn't necessarily helping the unemployed find jobs.
In my column last week, I pointed out that this recovery is one of the slowest on record. In fact, of the past eleven recessions, recovery from this one is the worst. Moreover, a major reason for the slow recovery is uncertainty. A new index that measures public policy uncertainty has been created by economists at Stanford University and the University of Chicago and it tracks back for almost 40 years. Unfortunately, the index has been at its highest levels ever during the years of the Obama presidency.
In fact, the uncertainty surrounding what ObamaCare will do (and whether it will come into existence at all) may have more negative impact on the labor market than the law itself.
ObamaCARE = RomneyCARE = Socialized Medicine
GOPe and DNC BOTH support all of the above. ALL.
No question about it.
No business can expand or grow with this undefined health care issue hanging overhead.
Obamacare got how many GOP votes?
Obamacare and the expiration of Bush Taxes have businesses no spending nor consumers.
Exactly right; no question about it. My business will not expand or grow with this undefined health care issue hanging overhead.
Is ObamaCare Slowing the Economy?
Does a bear take an Obama in the woods?
As a retired business man I can tell you the thing we fear(ed) the most was uncertainty. Economic uncertainty in particular.
Most business owners I know are hunkered way down hoping and praying for the best.
This will not be getting any better any time soon.
No one wants to talk about it, Trump illudes to it at times that everyone is waiting this socialist ****ard out so we can get back to being America. The whole business cycle is on hold just waiting for when Comrade Zero is gone, and his draconian legislation.
That is my impression too
So all that has to Happen to get Obama reelected is for the Supreme Court to Throw out Obamacare and the Marxist will get reelected because the Economy will Explode just before the election
ROFL. Beat me to it. Great minds and all that.
Obama's war on fossil fuels is also creating huge economic uncertainty, probably as large as Obamacare. Nobody knows where their energy bills are going to be a year or two from now with the shutdown of so many conventional generating stations and the prevention of Keystone construction. So business can not only not predict their labor costs, they cannot predict their energy costs. Ergo, no hiring.
Note that at NO TIME during the Obama regime has economic uncertainty gone below the level post-9/11! This is what you get when you turn government over to communists.
Obama (who hates America) wants to enslave the entire working class. By striking down Obamacare, the Supreme Court can free us all from slavery.
It can indeed
I used to think at first this administration is simply in a cocoon or bubble that did not let in any other information that falls outside of their radical ideology
There is so much information on why we are in the place we are economically out there to look at and so many people saying the same thing...one must conclude they are purposely tearing down our economy and standard of living.... To what ends is beyond me .... They must understand at some time Americans will not allow this to continue
We are not like Europe.....
There is no way the debt limit raise was a spike that big. Bigger tha the 2008 collapse? Bigger than wars? Bigger than 9/11? BS
Slowing the economy? You judge.
NOAA closed the red snapper fishery from North Carolina to Key West three years ago. Since then the so called “best available science” it was based upon has been proven to be bogus. This information has repeatedly been presented to the responsible NOAA officials from the Director of NOAA, Dr. Jane Lubchenco on down.
They refuse to acknowledge it and the closure continues.
In New England, NOAA fishery policy has created an another “Economic Disaster” resulting in a sizeable portion of the fleet tied to the dock.
Results: 84% of American seafood is imported while we export over $11 billion annually to China, Vietnam and other countries in the trade deficit.
They are not just slowing the economy they are killing it on all fronts.
What amazes me is how the Aztecs knew about obamacare when they predicted "the end of the world".
The private sector business world, at least.
Even if it doesn’t take effect until 2014, business owners are being forced to see each new hire as a potential $1000/month additional stone around their necks in 18 months, in an economy where many are barely making payroll. The risk isn’t worth it in most cases.