The CBO projects that [ObamaCare] will reduce the supply of labor, not the availability of jobs. There’s a big difference. In fact, it suggests that aggregate demand for labor (that is, the number of jobs) will increase, not decrease; but that many workers or would-be workers will be prompted by the ACA to leave the labor force, many of them voluntarily.
As economist Dean Baker points out, this is, in fact, a beneficial effect of the law, and a sign that it will achieve an important goal. It helps “older workers with serious health conditions who are working now because this is the only way to get health insurance. And (one for the family-values crowd) many young mothers who return to work earlier than they would like because they need health insurance. This is a huge plus.”
Oh my God, say opponents of the ACA, here is the government encouraging sloth! That’s true only if you wish to take away the choices the law gives that 64-year-old or to those parents looking for more time to care for their children. Many on the right love family values until they are taken seriously enough to involve giving parents/workers more control over their lives.
And it’s sometimes an economic benefit when some share of the labor force reduces hours or stops working altogether. At a time of elevated unemployment, others will take their place. The CBO was careful to underscore — the CBO is always careful — that “if some people seek to work less, other applicants will be readily available to fill those positions and the overall effect on employment will be muted.”
What the truth might be, and what few politicians would dare say, is there might simply be some value in lower economic growth…
Initially, says one expert, there will be benefits in the fact that there is plenty of slack in the labor market. The combination of many unemployed Americans and many people finding jobs just to get insurance means that if a few people cut back their hours, there will be more hours for the people who want them. In and of itself, that theoretically means people will be much happier, says Ken Jacobs, chair of the Labor Center at the University of California-Berkeley, though that effect would dissipate as the job market improves.
“GDP growth isn’t a good in and of itself,” he says. “The question here is what’s going to create the most happiness for the greatest numbers of people. Being in a situation where people have to work full time or 40 hours a week at a job that may not be the best match for them because that is the only way to get health insurance is not the way you create the greatest happiness for the greatest number of people.”
Already, based on the work of Gluskin Sheff economist David Rosenberg, there is evidence that much of the recent drop in the labor participation rate down to 1970s-levels is being driven by the availability — and the potential abuse — of welfare programs that disincentivize work…
I can’t say I blame some people for making this choice. And many are, given the parabolic growth we’ve seen in the number of people collecting disability and food stamp benefits over the last few years.
According to a presentation by Gary Alexander, Pennsylvania’s secretary of public welfare, a single mom is better off earning a gross income of $29,000 and applying for welfare benefits (including children’s health insurance, child care and housing subsidies) that would give her a total of $57,327. If she worked hard and earned a gross income of $69,000, her after-tax take home pay will be just $57,045.
Why then, would she take that extra shift at work or apply for a promotion? Especially since these numbers don’t account for the additional health care subsidies available under ObamaCare.
Here is how I would frame the issue: There are specific classes of people who plainly benefit, in fairly uncomplicated ways, from benefits that provide an incentive to work less, or leave a job outright. The obvious examples are the ones that liberals keep invoking: Parents of young children (for whom the family-friendly tax overhaul that conservative reformers like to tout would presumably have a similar effect), and people with a disability or chronic medical condition that makes work a simple misery.
But there also lots of people who emphatically do not benefit from being given an incentive to either detach from the workforce or (if they’re already unemployed or underemployed) remain detached rather than taking a lower-paying job. And given the current economic landscape, especially — in which persistently high unemployment coexists with a growing population of workers too discouraged to even look for work — the size and scope of a work-discouraging effect matters a great deal: The bigger the effect, the more likely that the people dropping out aren’t just, say, parents cutting hours to spend more time at home while the other spouse works full time, but people we should want to be attached to the workforce, for their own long-term good and the good of the economy as well.
Which is why it’s appropriate that the new C.B.O. projection of 2 million to 2.5 million job-equivalents disappearing has inspired more disquiet and debate than the old projection of 500,000-900,000 … because it’s a sign, however provisional, that the costs of Obamacare’s workforce effects might exceed the benefits. I don’t see liberals reckoning seriously with that possibility, and I think they really should.
In 2024, spending on Social Security, Medicare, Medicaid and the Obamacare health insurance exchange subsidies will absorb two-thirds of the $4.9 trillion in revenue the CBO expects the federal government to collect. Add in the rest of mandatory spending and interest payments on the debt, and 96 percent of tax revenues will already be spoken for before Congress allocates money to pay for defense, veteran’s benefits, education, transportation, the court system, international affairs and other budget items…
In short, the CBO is portraying a future in which a smaller proportion of workers in a relatively weaker economy will be expected to subsidize an increasing number of government beneficiaries. And Obamacare is making matters even worse.
With one hand, according to the CBO, Obamacare will spend $2 trillion over the next decade on expanding Medicaid and subsidizing individuals to purchase health insurance. With the other hand, its subsidies will discourage the economic equivalent of 2.5 million individuals from working.
House minority leader Nancy Pelosi says the CBO report vindicates Obamacare, because “this was one of the goals: to give people life, a healthy life, liberty to pursue their happiness. And that liberty is to not be job-locked, but to follow their passion.” Pelosi is particularly invested in this view. She’s been mocked for years now for her repeated claims that Obamacare is an entrepreneurial bill because it would let Americans quit their jobs to, among other things, “write poetry.”…
[A]ccording to the CBO, not every lost hour of work is the amateur poet’s gain. Yes, Obamacare lets people keep their health insurance even if they quit their jobs to master iambic pentameter. But the law also raises the implicit marginal tax on people looking for work; the more you earn, the fewer subsides you get. Thus, for many people, the costs of taking on more or better work will exceed the gains. So at least some people won’t feel liberated so much as trapped…
Hopefully voters will look for ways to liberate these Democrats from the curse of job-lock come November.
The larger betrayal, Mr. Mulligan argues, is that the same economists now praising the great shrinking workforce used to claim that ObamaCare would expand the labor market.
He points to a 2011 letter organized by Harvard’s David Cutler and the University of Chicago’s Harold Pollack, signed by dozens of left-leaning economists including Nobel laureates, stating “our strong conclusion” that ObamaCare will strengthen the economy and create 250,000 to 400,000 jobs annually. (Mr. Cutler has since qualified and walked back some of his claims.)
“Why didn’t they say, no, we didn’t mean the labor market’s going to get bigger. We mean it’s going to get smaller in a good way,” Mr. Mulligan wonders. “I’m unhappy with that, to be honest, as an American, as an economist. Those kind of conclusions are tarnishing the field of economics, which is a great, maybe the greatest, field. They’re sure not making it look good by doing stuff like that.”
Every man and woman sitting idle because there is no work to be had — or because idleness literally pays better — is a potential poultry farmer gathering no eggs, somebody who could be growing roses or baking bread or proofreading romance novels. Say’s Law — that we produce in order to consume — is not a mere economic abstraction, and scarcity is not the product of economists’ imagination. They are features of the real world — they are physical facts. Every barrier that politicians put in the way of dealing with scarcity through free exchange and the division of labor — every tax, rule, and regulation — not only separates a worker from a paycheck but, more important, separates a worker from work, from the process of production and experimentation that enables us to, among other things, eat, and live in houses, and read J. K. Rowling books to our children.
Pope Francis is right to worry about the economics of “exclusion,” but he is wrong — and destructively wrong — about the instruments of that exclusion. The diversity of human interests, human desires, and human abilities is in effect infinite, and so too, therefore, are the uses of labor and opportunities for employment. Surely there are many paths to a “right livelihood” waiting to be discovered. And yet there sits official Washington, along with its supramarginal gyrus in the media, trying to figure out how to “create jobs” like an ape doing one of those monochromatic jigsaw puzzles with half the pieces missing, desperately working at “manipulating the world in order to get what we want from it,” forcing together pieces that do not fit.
And that is the perverse price of politics: that there are so few jobs to be had when there is so much work to be done.
Work is a virtue that should be reflexively encouraged. It is the means by which standards of living are grown, human potential is reached, individual lives are focused, positive and negative instincts are channeled, resources are utilized most efficiently, and, above all, by which dignity remains intact. It is the best antidote to personal and national ossification and sclerosis, and the primary means by which our present material comfort was achieved. It is the driving force behind improvement, both real and imagined, in the nation’s mainstream culture. Whatever the ideal role of government in contriving work or wages for those who are without them, we should all presumably be able to agree that if we are going to have an intrusive state, it should be doing precisely the opposite of encouraging people to limit their involvement in work.. (Prudence dictates that I couch this asseveration with a disclaimer: No, I do not consider it the role of government to force people to work against their will, nor to support them if they choose not to. But that is a decidedly different question from whether it should do more to enable them not to work.)…
Progressives who are scratching their heads and asking themselves why conservatives who are “pro-business” and who have long wished to decouple health insurance and employment aren’t thrilled at recent developments might do well to heed their own advice. “George W. Bush,” Barry Switzer one quipped, “was born on third base and thought he hit a triple.” The implication of the joke: How you get somewhere matters. They are right, and so, herewith let it be resolved: Being forced to buy products is not the same thing as choosing to; leaving work because Uncle Sam is helping you out on the side is not the same thing as electing to leave without assistance; and winning the fruits of success without the hard work that has traditionally served as a prerequisite is no victory at all. We deserve government that recognizes these truths. Will we get it? Time will tell.
DOMENECH: I think the real question Chris for you is, how many jobs are too many jobs? How few jobs are too few jobs. Its one of these situations where I think, in terms of the evaluation that the American people are going to make for themselves, my own perspective is, I’d rather have that family working more hours, because it’s going to increase their income over the course of time. It’s going to lead to better outcomes for their family. The perspective on the other side is, well, they’re working fewer hours, but they’re going to have health insurance, they’re going to have Obamacare there for them. And I think that that’s a question of what kind of economy do you want? Do you want one where people are working more hours for themselves and their families? Or do you want one where some people are going to be working more hours to pay for the subsidies, and some people are going to be working fewer hours but they’ll have health care?