Let’s see how this works. According to White House adviser Phil Schilliro, the job-killing aspects of ObamaCare cannot be real if we’ve added jobs since the bill was passed in March 2010. He told a Kaiser Family Health group that the addition of eight million jobs since proves that the CBO doesn’t know what it’s talking about when it comes to disincentives. No, really:
“You can’t say the Affordable Care Act has killed job growth,” Schiliro told an audience at a Kaiser Family Foundation presentation Wednesday. “In the 46 months since it passed, over 8 million jobs have been created… No one would say the Affordable Care Act created those jobs, but you can’t say the ACA has killed job growth.”
Schiliro’s comparison presumes that were Obamacare damaging at all, it would have stopped job growth entirely — including any recovery from the financial crisis in late 2008.
The Bureau of Labor Statistics estimates that the financial crash and resulting recession lost the U.S. economy 8.8 million jobs.
The Congressional Budget Office issued a report concluding that the equivalent of 2.3 million jobs would be lost because Obamacare’s structure incentivizes less work with more taxpayer subsidies.
Progressives ripped conservatives for taking the CBO out of context in this report, but Schilliro goes one step beyond that to take the CBO, job statistics, and population growth out of context.
Let’s start with the obvious. The CBO score on ObamaCare focuses mainly on the future effects of its implementation, and not of its impact in the theoretical stage. The “46 months since it passed” is a complete non-sequitur to that report. The CBO projects that there will be 2.5 million fewer job-equivalents in the economy net as a direct result of ObamaCare implementation, including the unilateral and arbitrary changes being made over the last year.
Next, let’s unpack the comparison itself. Schilliro is almost correct in the number of jobs created since March 2010, at least in the Establishment survey; we’ve added 7.688 million jobs in those 46 months. However, that only comes to 167,130 a month, which barely keeps pace with population growth. Furthermore, we had just lost the same amount of jobs over the previous two years, and any decent economic recovery should have put that number back to work in a much shorter time frame. Instead, since the passage of ObamaCare, this is what’s happened to the workforce participation rate:
That number has been declining rapidly during the entire “recovery,” and especially after ObamaCare’s passage. This may be more correlative than causative — we’ll get back to that in a moment — but there is no good job-creation news to associate with ObamaCare, no matter what Schilliro thinks.
On top of this, now we have the CBO report on a key component of Obamanomics these days — the minimum-wage hike. This policy would wipe out another 500,000 jobs from the economy that would otherwise exist, not over a decade but by the end of 2016. This would make the above problem even worse, and lock more entry-level workers out of the economy. What did the White House argue in defense of this policy? I address that in my column this week for The Fiscal Times, as it perfectly encapsulates Obamanomics:
Furman, however, gave the private sector some words of wisdom in how businesses can ignore a massive increase in labor costs. In a conference call from the White House on Tuesday, he told businesses that hiking the wage “increases motivation,” which would offer “overall benefits for productivity.”
Therefore, Furman advises businesses that they have other options. “The other margins on which firms can adjust — for example, reduced profits — mean that there is substantial literature that has found little or no employment impact on the minimum wage,” Furman told reporters.
This is one of the most revealing statements made by this administration about its economic policy and its worldview. Their vision of an American economy is not one in which wealth gets created in a dynamic environment and creates jobs and opportunities that in turn create more wealth, jobs, and opportunities. This White House sees the economy as a static, zero-sum game in which investors and business owners simply should be told to accept “reduced profits” while government shapes the markets to their own purposes. …
Wages have stalled in the economy, but it’s not from the stasis in the minimum wage, which was last increased in 2009. It comes from economic, regulatory, and tax policies that tell investors that they should expect less return on their capital and penalize them for expansion. If minimum-wage increases solved the wage-stagnation problem, the 2007-9 increases should have worked. Instead, it constricted the labor markets for the people with the most need and contributed to entry-level job lockout.
In order to drive real wages and buying power up, we need policies that incentivize both investors and workers, rather than celebrating disincentives. We need to stop penalizing investment and increasing the costs of labor, rather than attempt to tell people how wonderful higher labor costs and expanded regulatory burdens will be for their businesses. We will end stagnation when we stop embracing it as the ideal.
Nate Beeler has an excellent editorial cartoon today in the Columbus Dispatch addressing the White House response to its failures:
Be sure to check out Nate’s blog for more of his excellent work.
Update: For accuracy, I changed “2.5 million jobs” to “2.5 million job-equivalents in the economy.”
Update: Tony Benvin also noted the zero-sum, static thinking of Obamanomics at the American Thinker last December.