ObamaCare, the Job Destroyer
posted at 9:26 am on July 22, 2011 by Howard Portnoy
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President Obama said last week that the public is not paying close attention to the debt crisis, adding:
They shouldn’t. They’re worrying about their family, they’re worrying about their jobs, they’re worrying about their neighborhood. They’ve got a lot of other things on their plate. We’re paid to worry about it.
The tenor of his comment was typically condescending (the masses are too stupid to know what’s going on in the government), but his observation is right for a change. Several recent polls show that Americans are more concerned about jobs—or, more precisely, the lack thereof—than they are about raising the debt limit.
And justifiably so. Bureau of Labor Statistics data reveal that the percentage of Americans who are employed has decreased since the since the official end of the recession in June 2009. Moreover, Americans receiving paychecks are now earning less than they were during the recession.
It’s a curious development, to be sure. An analysis by James Sherk of the Heritage Foundation suggests that the main cause of the slowdown is a piece of legislation the president affixed his signature to. No, it’s not the $8 billion package. The culprit, rather, is ObamaCare, which was signed into law on March 23, 2010. (h/t Jeffrey Anderson, Weekly Standard)
Sherk identifies three ways in which the health care reform law has stultified hiring:
- Businesses with fewer than 50 workers have a strong incentive to maintain this size, which allows them to avoid the mandate to provide government-approved health coverage or face a penalty;
- Businesses with more than 50 workers will see their costs for health coverage rise—they must purchase more expensive government-approved insurance or pay a penalty; and
- Employers face considerable uncertainty about what constitutes qualifying health coverage and what it will cost. They also do not know what the health care market or their health care costs will look like in four years. This makes planning for the future difficult.
In support of the last bullet point, Sherk cites a recent survey in which 33% of business owners said that the health care law was either their greatest or second-greatest obstacle to new hiring. He also quotes Dennis Lockhart, President of the Federal Reserve Bank of Atlanta, as claiming:
In addition to slow and uncertain revenue growth, contacts in this recovery are frequently citing a number of other factors that are impeding hiring. Prominent among these is the lack of clarity about the cost implications of the recent health care legislation. We’ve frequently heard strong comments to the effect of ‘my company won’t hire a single additional worker until we know what health insurance costs are going to be.’
One might optimistically paraphrase Nancy Pelosi and say companies won’t know how the law impacts business until it takes full effect in 2014. In the meantime, that’s cold comfort to the 14 million Americans out of work.
As August 2 draws closer and the prospects for a compromise between the House and the White House grow dimmer, maybe this would be a good time for the president to share the sacrifice he is calling on legislators to make. Shelving the health care law would cut $2 trillion from the deficit. Is the president willing to do his part to keep the nation from defaulting on its debt?
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Obama was not being condescending, he was telling us exactly what Obamacare and all his other economic maneuvers are designed to do – create Chaos.
Creating a constant state of anxiety and uncertainty is an important tool to manipulate the public. We are all supposed to be so distracted by this that he & his handlers can go about their business unobstructed by us.
“They shouldn’t” be paying close attention to the debt ceiling issue because we are all supposed to be too stressed out to do so. A chaotic life makes the person living it unable to deal with higher order problems like the debt ceiling.
batterup on July 22, 2011 at 10:20 AM
1. it’s ‘culprit’.
2. it’s nonsense.
sesquipedalian on July 22, 2011 at 12:14 PM
Thank you. It’s called a typo.
If your information comes from Matthew Yglesias, how could it possibly be wrong? (Actually, I’ll beat you to it and note that the stat comes from the Federal Reserve Bank of St. Louis, which means we have a standoff, since Sherk cites a spokesman for Federal Reserve Bank of Atlanta.)
Howard Portnoy on July 22, 2011 at 12:30 PM
No cuz he’s teh Won. He don’t have to give up a single thing./
AH_C on July 22, 2011 at 12:43 PM
A major local business owner has cut his employees to just under 50 in the past month or so. Has no plans to expand. Will rep[lace solely those current employees as they leave to maintain the under 50 number. Obamacare mandates have come up often in recent conversations.
Has further plans to make cuts. On paper, as far as the White House and the IRS are concerned he is a millionaire…but takes home about $70k a year in personal income. One of those small businesses that are gonna take even more hits as the Obama Administration seeks to raise taxes on the “rich” i.e., those making more than $250k.
coldwarrior on July 22, 2011 at 12:51 PM
the problem’s not with the data. it’s the way heritage and you interpret it.
also, too.
sesquipedalian on July 22, 2011 at 1:09 PM
I can attest to the truth of this. I’ve been interviewing with large and small firms, and I thought that perhaps by saying up front that I didn’t need health insurance would give me an edge by letting employers know I would not be as expensive as the next person to hire. All of them have told me whatever I want doesn’t matter, the new law is going to require them to cover me anyway, and they aren’t very happy about it.
rockmom on July 22, 2011 at 1:19 PM
Actually, not one of the objections to the Heritage graph at the left-wing sites is logical or definitive.
The Yglesias counter-graph doesn’t contradict Heritage’s at all. The reason is that it’s not showing the same thing. The Heritage graph shows a break in the rate of growth. The graph Yglesias puts up shows the trend in total jobs — which Heritage’s analysis agrees right up front has been on the increase. That there is a positive rate of growth means there is growth; everyone agrees on that.
None of Yglesias, ThinkProgress, or any other sites I’ve seen has even attempted to demonstrate that the rate of growth didn’t stall after April 2010. Merely showing an increase in the total number of US jobs doesn’t demonstrate that. They don’t address the drop at the “break” at all; they merely imply that the increase in total jobs since April 2010 means there was no “break.” But the total-jobs graph doesn’t say that. What it actually shows is that total jobs were climbing more steeply more steeply before Obamacare passed than afterward, and that the total net climb since the trough has been 2 million jobs.
Sherk’s point is that without Obamacare, net job creation — the rate, not the absolute number — would likely have leveled off at a much higher rate. (That in turn would have led to a total-job increase of more than 2 million in the same period, and probably significantly more.) The rate of job creation has always been unusually high coming out of a recession. This analysis done earlier in 2011 has some useful figures.
It provides some useful perspective as well, demonstrating that the rate of job creation has been on a very slight but noticeable downward trend over time for the last 30 years. This is no doubt due to a variety of factors, from the effects of automation to the increasing cost of employing Americans (and doing business here, period), due to our level of regulation. But the analysis suggests two things; first, that we wouldn’t in any case expect to see the same level of job creation we had after the 1981-2 recession; but second, that even with this caveat, job creation in the current recovery has basically fallen off a cliff.
I doubt that Obamacare is the single explanation of why, but given the increased cost it imposes on businesses per employee, its very nature is to discourage hiring and jeopardize retention.
J.E. Dyer on July 22, 2011 at 2:18 PM
a quick glance at the “total-jobs” chart makes the whole proposition ridiculous. the brief spurt of growth in early 2010 was not going to last; in fact, it would have broken historical records had it done so. blaming obamacare because few months of anomalous job growth did not become a long-term trend is either stupid or deceptive.
sesquipedalian on July 22, 2011 at 2:50 PM
I wonder what the total is ALONG with the bondholders that got robbed…
golfmann on July 22, 2011 at 2:58 PM
The company I work for is going to shut down an office of 50 people as the direct result of Obamacare.
That’s nearly 10% of the company. That’s an assload of people to lose their jobs in a couple of months. They’ll spend months looking for work because no one is hiring….
mjk on July 22, 2011 at 8:26 PM
Saw that one too, and it doesn’t refute Sherk either. It merely agrees that there was a drop-off in the rate of job growth and says that was to be expected.
But the drop-off was abrupt and by around 90%. In any data sample, that argues an event of some kind, and not just natural attrition.
Sherk supposes for his analysis that the event was Obamacare. A scientifc quibble with his approach might be that he identified the event first, and then went looking for a correlation, rather than happening across the drop-off that argued for the existence of an event. Scientific analysis actually operates that way all the time, but a non-partisan perspective would find it worthy of at least a footnote, if not an asterisk.
All that said, no one has actually refuted Sherk’s finding, or even come close to critiquing it directly.
J.E. Dyer on July 22, 2011 at 8:59 PM
J.E., I appreciate what you are saying, but it wasted breath. There are those who “believe” and will continue to do so to the bitter end.
Look at this side-splitter if you need proof.
Howard Portnoy on July 22, 2011 at 9:11 PM
I know, HP, I know. One doesn’t always have time to point out that the “counterarguments” aren’t actually arguments, but yesterday I did. Who knows, maybe one person who went through the comments will benefit from having that pointed out.
(“Reluctant partisan” indeed. Hilarious.)
J.E. Dyer on July 23, 2011 at 1:26 PM