The new CBO Report further underscores a point we have been making for several years—Obamacare hurts employment growth in many ways:
- CBO concludes that the equivalent of nearly 2.5 million jobs will not be filled because if you earn too much, you lose your healthcare subsidies. This is a clear barrier to social mobility—if you are poor, it may not pay to succeed in the workplace.
- At the other end of the income spectrum, higher marginal tax rates will cause some affluent people subject to new Obamacare taxes to work less and/or retire early.
- Some small businesses will stay “under the limit” of 50 workers—a serious blow to business development and job formation.
- Labor-intensive businesses are holding workers to less than 30 hours per week to avoid providing health insurance. Virtually all of the victims are low-income workers–including the short order cook who complained to Obama in a recent Q&A that his hours had been cut.
- Because it requires many firms to provide “better” coverage than they now offer, Obamacare raises labor costs and encourages firms to substitute cheap capital for increasingly costly labor.
Strangely, these points continue to elude many Wall Street economists as well as BSE’s (Big Shot Economists) such as Larry “Secular Stagnation” Summers. Or maybe it is not so strange because economists working for big firms and universities have no firsthand experience with Obamacare. Nor do they want firsthand experience; elite universities all have “grandfathered” healthcare plans that give faculty and staff more choice and higher quality care than Obamacare affords. Obamacare for thee but not for me. How hypocritical.
A New Barrier to Social Mobility
The bigger question is: How should the Republican Party position itself with respect to ObamaCare? I think it needs to characterize ObamaCare as a huge barrier to social mobility for poor and middle class workers. This scheme damages both sides of the labor market, simultaneously reducing incentives for Americans to work and for employers to hire. (No wonder the employment population ratio has not improved at all since 2009.) As such, Obamacare increases economic and social inequality in a way that really matters – people in the lower and lower middle classes are having a harder and harder time getting a well paid job that moves them into the middle class and perhaps eventually much higher. (This is far far more important than a rise in the Gini Coefficient of Inequality caused by Bill Gates, Eric Schmidt or other super-rich folks getting even richer, which has no negative impact on the middle class.) One little-known aspect of this story is that Obamacare does not directly affect large corporations that self-insure; it only directly impacts smaller firms that do not self-insure. So Obamacare is the quintessence of elitist crony capitalism.
Republicans need candidates who can go beyond weak one-liners (“Where are the jobs?”) to a lucid and compelling explanation of how Obamacare destroys economic opportunity and social mobility. The CBO expose of 2.5 million lost jobs provides a great proof-point for that argument. But it does need to be fleshed out in a complete and compelling explanation, not just a bullet point. To be sure, Republicans are starting to do that. Senator Roy Blunt’s response to Obama’s dreary State of the Union Address was very effective, as was a recent speech by Senator Ted Cruz, discussed in my November 1, 2013 post.
Copyright Thomas Doerflinger 2014. All Rights Reserved.
