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View Diary: CBO: Really, GOP, we didn't say Obamacare would kill 2.5 million jobs (86 comments)

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  •  BINGO! (11+ / 0-)

    It puts 2.5 million job equivalents into the new employment pool. With so many people hungry for work, that should be a selling point for supporters, right?

    If I ran this circus, things would be DIFFERENT!

    by CwV on Mon Feb 10, 2014 at 01:36:11 PM PST

    [ Parent ]

    •  Wrong. The CBO is predicting a net reduction in (1+ / 2-)
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      hours worked.  Those jobs will not be filled.

      The reason for this is pretty simple.  Obamacare significantly increases marginal effective tax rates (including benefit reductions) for some people.  This is the combination of increases in taxes and reductions in benefits.

      The simplest way to understand this is to imagine a simple case - a person making $10.00 an hour who works 1,000 hours per year, gets benefits worth $10,000 / year, which decrease $.50 for each extra $1.00 he earns, and who pays a marginal tax rate of 10%.

      If he works an extra hour, he does not get an extra $10.  He gets an extra $4.  I think we can all see why he might not be motivated to increase his hours per year to 1100 and might even drop them down to 900.

      Now imagine you change that benefits decrease from $.50 / $1.00 earned to $.75 / $1.00 earned.  Now he only gets an extra $1.50 if he works an extra hour.  You can see how he is even less likely now to work more hours and more likely to work fewer hours.  That is the impact of Obamacare that the CBO is reporting on.

      I don't think people cutting back work because their effective marginal tax rate / benefit reduction rate is so high that they lose most of the benefit from making more money is a good thing.

      This also has other even more insidious impacts.  In the example above, the work disincentive is mostly eliminated once the worker's income is too high to get benefits.  So this discourages the poor from working more but not the rich. Great way to prevent income mobility, right?

      •  False (6+ / 0-)

        These people stop working because they no longer need to work in order to pay for or get health insurance.

        The people who stop working do not receive a cash benefit in their bank account for the insurance subsidy so they will absolutely forgo income (by stopping work) or decrease their income (by reducing hours worked) because they're no longer constrained by health insurance in the amount of work they need to do.

        The only reason they would change the amount of work they do is because the major reason they are working in the first place is to acquire health insurance. Either by working to earn money to pay for the premium, or working at a job that provides health insurance through a group plan that they would otherwise be unable to get on their own, probably because of a pre-existing condition they themselves or a family member have.

        Again, we know this because the premium subsidy is not paid directly to the person, it goes to the insurance company. Therefore, since these people choose to stop working due to the premium support provisions of the ACA we can assume that the majority of these people are working simply so they can acquire or afford health insurance.

        In other words, these people are no longer suffering from "Job Lock."
        This doesn't "discourag[es] the poor from working more" because the very poor can get Medicaid already, before the ACA.

        [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

        by rabel on Mon Feb 10, 2014 at 04:05:44 PM PST

        [ Parent ]

        •  Idiotic (0+ / 0-)

          Just because someone is only working because of health insurance doesn't mean her employer hired her so that he could give her health insurance!  He's hired her because he needs someone to do the work and that need should persist after she's gone.  Her hours will be replaced by someone else!

          Only an economist or a Democratic consultant could take something this simple and screw it up with statistics and turn a plus into a minus.  Can't anyone here play this game?

          sTiVo's rule: Just because YOU "wouldn't put it past 'em" doesn't prove that THEY did it.

          by stivo on Tue Feb 11, 2014 at 04:06:51 AM PST

          [ Parent ]

          •  However, there are now fewer people willing (0+ / 0-)

            to do this work, since some people are cutting back hours or dropping out of the work force.

            Simple supply and demand then comes into play.

            Supply of labor has decreased, price will increase, and demand at the new price will be less than before.

            At the margins, some McDonalds franchises will increase their salaries by $.10 / hour and start closing half an hour earlier.

        •  No. You don't understand how this works (0+ / 0-)

          Let's say Joe currently works 1500 hours per year at $10.00 / hour and is also eligible for public assistance.  At his current income he loses $.50 in public assistance for each additional $1.00 he earns and he also pays SS tax at 7.5%.  Therefore, if he works an additional hour he gets $4.25 in additional final income.  If he cuts back one hour he loses $4.25.  

          Now you enact Obamacare.  Let's say that Joe now has a subsidy for buying now required health insurance, but he loses $.25 in subsidy for each additional dollar of income.  So now, if he works an additional hour he gets $1.75 in final income, whereas if he works an hour less he loses only $1.75 in final income.

          It is very rational for Joe to sit down and ask himself if he would not be happier working less, given the much smaller amount of money he is keeping from each additional hour of work with the new subsidy.

          Notice that it is completely irrelevant whether or not Joe was getting insurance before Obamacare.  His changed incentives remain the same.  It is also irrelevant whether or not the premium subsidy is paid directly to Joe.  I have no idea why you think that would matter.

          •  Thinking too hard (0+ / 0-)

            I get what you're trying to say (although your numbers above don't agree with themselves) but it's even easier than that.

            Because the subsidy is not paid directly to Joe Worker that means that when he decides to cut back hours or stop working altogether he loses the entirety of the income he was making. You're calculating the subsidy as part of his income and from a strictly double-entry accounting system perspective you are correct.

            But Joe isn't a spreadsheet and since he's deciding to lose cash income in exchange for working less while still receiving health insurance it stands to reason that the main reason Joe is working is so that he can acquire health insurance. The only thing that is relevant here is that Joe could not get insurance prior to Obamacare but now he can.

            I'd sure like to see an actual case of someone making the decision as you outline above. That is, coldly crunching the numbers and deciding not to receive the income they get from working additional hours (be it $4.25 or $1.75) or quitting their job entirely and not receiving any income... because of the subsidy? The only reason the subsidy has any bearing on their decision is if they are in a "job lock" situation and could not get insurance coverage that they desperately need.

            The stories of this are starting to flood in. Many people work menial jobs simply so they can acquire health insurance on their employer's group plan (which cannot deny coverage due to pre-existing conditions) so that they can get coverage for their spouse who has a pre-existing condition in which private coverage would be too expensive or unavailable.

            Do you think those people are running the numbers like you're punching in above? Heck no, they can't wait to quit their job.

            [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

            by rabel on Tue Feb 11, 2014 at 06:24:34 AM PST

            [ Parent ]

      •  So, every time someone cuts back voluntarily (4+ / 0-)
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        on their hours, or leaves a job, their employer doesn't replace them?

        The business owner throws up his/her hands and simply resigns to the shrinkage in their workforce?

        How long do you suppose this will go on?

        And how many business owners do you think are so stupid they won't hire new workers to cover the hours necessary to keep their business successful, and to expand it where possible?

        New workers are clearly the answer, new jobs, more flexibility for workers, higher wages - what's not to like?

        Progress. What a concept.

        Mistakes are the portals of discovery. - James Joyce

        by Beastly Fool on Mon Feb 10, 2014 at 04:07:22 PM PST

        [ Parent ]

        •  No, the CBO report says this: (3+ / 0-)
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          CBO anticipates that the unemployment rate will
          remain high for the next few years. If changes in
          incentives lead some workers to reduce the amount
          of hours they want to work or to leave the labor
          force altogether, many unemployed workers will be
          available to take those jobs—so the effect on overall
          employment of reductions in labor supply will be
          greatly dampened.

          The expanded federal subsidies for health insurance
          will stimulate demand for goods and services, and that
          effect will mostly occur over the next few years. That
          increase in demand will induce some employers to hire
          more workers or to increase their employees’ hours
          during that period.

          Seems to me that since labor supply outstrips demand right now, and has for a painfully long time, reducing supply can only be a good thing.  Should have a positive impact on wages, too, which is much needed!  Basic supply and demand, right?
        •  Because the same incentives apply to a whole (0+ / 0-)

          segment of the population that fills these jobs.

          So, every time someone cuts back voluntarily on their hours, or leaves a job, their employer doesn't replace them?

          The business owner throws up his/her hands and simply resigns to the shrinkage in their workforce?

          Assuming that these are low wage jobs primarily filled by low wage workers, then yes.  The same change in incentives caused by the difference in marginal after tax after benefits income applies to the vast majority of workers who would apply for these jobs.

          Another way to look at this is to compare with a minimum wage increase.

          A 100% tax on income below $15.00 per hour would obviously be the equivalent of setting the minimum wage to $15.00 per hour and would have a negative impact on employment - a lot of low wage businesses would either close, reduce their size, or find ways to automate.  

          Now, let's say that instead of a 100% tax you do a 50% tax.  You would still get some employment at under $15.00 per hour, but presumably less.  There would be a negative impact on employment, but not as large as in the first case.  The jobs would not just go to other workers because all workers at that wage level would be equally affected.  Companies would either have to increase their salaries or use less low wage labor.

          This is roughly the equivalent of the impact of the Obamacare subsidies.

      •  Pass me whatever you're smoking! (0+ / 0-)

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