Obamacare And The Economy
Ira Stoll writes at reason:
The clearest explanation of the effect of Obamacare on employment that I have seen recently comes in a paper by a professor of economics at the University of Chicago, Casey B. Mulligan, recently released by the National Bureau of Economic Research. He writes that the Affordable Care Act, along with other expansions in safety net programs, has created "a massive 17 percent reduction in the reward to working." As a result, he says, "it is unlikely that labor market activity will return even near to its pre-recession levels as long as the ACA's work disincentives remain in place."Much of the discussion about the effect of Obamacare on the job market has focused on the behavior of employers. One of Professor Mulligan's contributions is to consider the incentive effect on employees, or would-be employees.
He offers the example of a person comparing a 29-hour-a-week job without employer-sponsored health insurance with a 40-hour-a-week job that includes employer-sponsored health insurance. Given the subsidies that the federal government provides for health insurance under Obamacare, the person ends up with more money, and the same amount of health insurance, by taking the part-time job.
"Moving from-full-time employment to part-time employment can trigger generous assistance with health insurance and out-of-pocket expenses that can offset much of the income lost to reduced work hours," he writes. "Under the ACA, it will not be extraordinary for people to be able to have more disposable income from a part-time position than from a full-time one."
As Professor Mulligan's paper puts it, Obamacare's provisions combined "raise marginal tax rates in 2015 by 10 percentage points of total compensation, on average, for about half of the nonelderly adult population and zero percentage points for the rest." Professor Mulligan describes the results as "startling," which may be understating it.
Now, one might object that these calculations are so complex that no American who is not a TurboTax programmer or a certified public accountant, or both, will be able to figure them out clearly enough to make a decision on whether to work full-time or part-time based on them. Perhaps. But families making decisions about, say, whether a spouse goes to work full time or stays home with the children have a way of being surprisingly sophisticated about such matters.
Not to worry! We'll sell your grandchildren to China to pay off the interest on the national debt.
Look at what is happening at UPS. They're cutting health insurance for employed spouses that can get coverage. But it is only happening to the non-union employees.
I wonder what will happen to the union employees insurance once the new contract is being negotiated?
Jim P. at September 3, 2013 6:39 AM
"They're cutting health insurance for employed spouses that can get coverage. "
When I worked at Boeing, they had an insurance surcharge that you had to pay if your spouse was employed but declined insurance at their employment. If your spouse was unemployed, or was employed at a job that did not offer insurance, no surcharge. I personally knew several employees whose spouses quit working in part because of this calculation.
Cousin Dave at September 3, 2013 7:34 AM
The people don't need to be sophisticated to figure this out. They just need; themselves, friends, and neighbors to go through it, and notice the difference or lack of it.
My neighbor just got bumped from part time to full time, we thought he would be rolling in the money, but it didn't change anything. A different neighbor goes from full time to part time, and doesn't notice a difference. Hmmmm
Joe J at September 3, 2013 8:50 AM
A former employer of mine had a similar system to what Cousin Dave describes. In my case, I believe the employer had to provide some money towards, not just a plan that someone could sign up for and pay for all by their self.
The Former Banker at September 3, 2013 8:53 AM
But... but... but...
...SYRIA!
Radwaste at September 3, 2013 8:56 AM
"We'll sell your grandchildren to China..."
Nah, we're already well into the great-grand-children by now.
bkmale at September 3, 2013 10:31 AM
This is what happens when you elect a guy who has never hired anyone, fired anyone, managed anyone, or made a payroll in his life to be the person in charge of your economy.
Demanding candidates have at least some experience managing an enterprise (CEO, corporate president, high-raking military commander, governor, etc.) is important, nay, vital in choosing a president.
In addition, a candidate should have a political philosophy - that is, a guiding viewpoint on the role of government in a country's socio-economic affairs - including limitations on that power and role.
Prior to being elected president, Obama had never run anything in his life, not even a lemonade stand. In addition, he has no real political philosophy other than he now wants the power to do whatever he wants to do, but thought Bush should have .
Biden has no experience running anything but his mouth. His political philosophy is similarly non-existent.
Romney had boatloads of experience running things (successfully, too), but he had no political philosophy (other than that he wanted to be elected president).
Paul Ryan had a political philosophy, but no experience running anything.
Conan the Grammarian at September 3, 2013 12:14 PM
Romney had boatloads of experience running things (successfully, too), but he had no political philosophy (other than that he wanted to be elected president).
Paul Ryan had a political philosophy, but no experience running anything.
Posted by: Conan the Grammarian at September 3, 2013 12:14 PM
Yes, and Sarah Palin had both a philosophy (quite libertarian) and experience, but without a D in front of your name, all those qualifications are meaningless.
Isab at September 3, 2013 2:24 PM
One of the big things Obamacare has done is essentially stopped small businesses from expanding. If you have 49 employees, you're certainly not going to hire #50, as it kicks in a whole nest of new rules to abide by. If you can't grow from 49 to 60 or 70 in one shot, it's not going to happen - you can't afford it.
Also, all my part time people got totally screwed over by this due to the 30 hours a week is full time bullshit. Guess what? They all are under 29 hours a week now, and will stay that way. I can't afford the $72,000 it would cost to offer them all health care.
Going forward, I think you are going to see a lot of employers only cover employees, and start ramping everyone down to part time work.
This is not the solution we need. At all.
Daghain at September 3, 2013 7:14 PM
"This is not the solution we need. At all."
This is.
Pass it on.
Radwaste at September 4, 2013 2:27 AM
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