Posted on 07/26/2014 4:46:17 AM PDT by Kaslin
Why is our recovery from the Great Recession so sluggish and so slow?
Economists are increasingly focusing on Barack Obama’s signature legislative accomplishment: the Affordable Care Act, popularly known as ObamaCare. Although generally thought of as a measure to insure the uninsured, health reform is affecting the entire labor market in negative ways.
As I wrote previously, the employer mandate to provide health insurance will cost almost $6 an hour for family coverage. This health minimum wage (on top of the money minimum wage) raises the cost of labor and will almost certainly discourage hiring.
There are two ways that employers can get around it: stay small and employ part-time rather than full-time employees.
The employer mandate, which kicks in in about a year and a half, doesn’t apply to firms with fewer than 50 employees. Suppose an employer has 49 low-wage workers. Because these workers can get highly subsidized health insurance in the (ObamaCare) exchange, they don’t want health insurance from the employer. They would rather have the cash equivalent in the form of higher wages. Now suppose the employer hires one more worker. Not providing health insurance at this point subjects the employer to a $2,000 fine for each employee.
Bottom line: hiring one more worker will cost this firm $100,000.
The mandate also doesn’t apply to employees who work fewer than 30 hours per week. To continue with the above example, if instead of hiring a 50th full time worker, the employer hired two part-time workers he would avoid the requirement to provide health insurance or pay $100,000 in fines.
For firms that have already exceeded the 50 worker threshold, every time they reduce the hours of an employee below 30 they avoid the requirement to provide costly health insurance or pay a $2,000 fine. Moreover, the economic incentive to work fewer hours affects employees as well as their employers. University of Chicago economist Casey Mulligan estimates that there are about 4 million workers who would be better off switching to part-time work. Once they reduce their hours, they are no longer eligible for their employer’s health plan. After that, they are entitled to generous subsidies in the health insurance exchange. And the subsidies in the exchange are greater than the lost wages.
Writing in the Wall Street Journal the other day, Mort Zuckerman said:
Most people will have the impression that the 288,000 jobs created last month were full-time. Not so…. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28 million….
There is another way in which ObamaCare discourages work. For low-income families, the federal government is paying more than 90% of the cost of health insurance purchased in the exchanges. But that subsidy drops quickly as income rises and disappears completely at four times the poverty level ($46,680 for an individual and $95,400) for a family of four).
So when people earn higher incomes, they not only pay higher income and payroll taxes, they also lose subsidy dollars as well. In fact, because of peculiar quirks in the formula, a family can lose $10,000 or more in subsidies by earning just one more dollar of income.
When loss of health insurance subsides is added to income and payroll tax rates the net effect is quite high – even for the average family. In fact, Casey Mulligan estimates that ObamaCare imposes the third largest increase in marginal tax rates in the past 70 years, lowering the return from working by 10%. As Harvard economics professor Greg Mankiw explains, that implies a long term loss to the economy on the order of 5% of GDP – or more than $800 billion a year at current prices. That’s about four times the size of the direct ObamaCare spending.
This indirect cost to the economy equals more than $8,000 per household per year.
Obama has single-handedly brought this country to its ruin. Open borders and Obamacare have robbed this nation of its ecomomy. Obama has done it all. Obama has achieved his goal of bringing this nation down.
Sequestration already cost my job and essentially wiped out the market for my skills. Obama has fundamentally transformed America into a Soviet disaster.
I can sleep well at night in my homeless shelter knowing this...
/ sarcasm
Disclaimer: I am not in a homeless shelter... just slowly going broke because my health insurance premiums went up $2,000 a year and my wifes hours were cut to just over part time...
Redoing my household budget today to see where else I can cut to make ends meet...
Well, he said that was what he was going to do. He never tried to hide it.
America could survive a Barack Obama, but it could not survive a citizenry that would elect him.
No matter what it costs, the American people still believe in the concept. Look at the primaries thus far, defenders of Obamacare have been particularly successful.
Your experience is not that of the Obama supporters though, and they are still hopeful about what Orrin G. Hatch’s friend EMK was always calling “the dream goes on.”
My husband lost his job directly due to BOcare. And while he’s got a few odd jobs, he still hasn’t been ale to replace to job he lost. Lean times at the Kitty house
Thanks, BO for helping us out of the middle class and into poverty.
>> Obama has single-handedly brought this country to its ruin.
There were many complicit dirtbags in Congress voted into power by idiots thanks to the deviants in Media. Plus, Obama has the pen in his left hand, and the phone in his right.
I keep reminding people of that when the dems complain at work. I tell them to go to YouTube and look up his videos. It’s all the in the open. Unfortunately, few cared at the time. Some even thought it was a good thing. That was until they were impacted.
As our HR Dept rolled out the benefits changes, they stated clearly that the 17% increase on our premiums were directly due to Obamacare. Some were I’m such disbelief that they looked physically I’ll.
And they still don't care or continue to be ignorant of the fact that when the vile POS stated that he was "going to fundamentally transform the U.S.". What else would the jug-eared Marxist POS mean but "transform" the country into a third world craphole, and yet he continues unabated and without any political opposition from the limp-wristed Repukelicans.
That, and Obama’s election (2008), have already done so, twice...
Corporate squishiness from that point on has been pegging the meter...You’d think they’d be a little more resistant...But noooooooo...
My job now is to try and take care of myself (health wise) as best I can, so I can stick around long enough to be a real big pain in the arse to the clear and present danger in this country...
My reward for this is not here on this earth...So, I’m good with it...
;-)
I don’t know if I would necessarily say that. I know there are plenty of quotes to prove this was what he was going to do. In my state, during his first campaign, if you were a dumb voter and only saw commercials, you would have assumed he was pro-American.
So “economists” have just discovered that adding huge non-productive costs by fiat results in less of an activity? God forbid someone applies this radical new idea to government overall. It might endanger the high tax rates, excessive regulation, and coerced redistribution that impede economic enterprise.
Pelosi lost the House because of Obamacare.
The rats would have lost the Senate if every rat had been up for reelection.
Twenty-eight states joined the lawsuit against Obamacare.
If pubbies cannot find the courage to denounce and demand repeal of the most harmful legislation in American history, there is zero chance they'll make other reforms necessary to restore our republic.
Obama garnered most of the votes of “low information voters”, who are also more likely to hold jobs that require highly skilled workers. ObamaCare gives employers strong incentives to limit every position possible to part time status, and this means that at the lower-skilled level, as many jobs as possible will be shifted from full time to part time, with no “benefits”.
People who only can qualify for these jobs will find that there are few if any full time jobs. They will be forced to work multiple part time jobs, and forced to work more than 40 hours a week and will have less net pay because they will have to pay for higher commute costs and their own health insurance.
The poor are thus doubly exploited by the elite liberals they voted for.
Everything about Obama costs jobs and increases debt.
It won’t cost me my job, just my income. I’ll still be working,just not for pay....
A sitting POTUS deliberately killing jobs without remorse or regret, and only for the purpose
of advancing the party Socialism/Agendas.
You get that America? You Dems voted this man into office, TWICE!
The uniformed aka idiot voters will never get it
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