"Obamacare will eliminate jobs" -- How?

[Esox_Lucius]

@isaiahrobinson

The CBO did find that the healthcare law will reduce jobs in the US by about 0.5% net, but that’s for a different reason: it’s because they found that a lot of people are currently working purely to keep their health insurance. They would rather quit their job and start up their own company, or become a housewife, or write a novel, but they can’t because they would lose their health insurance. The new healthcare law means that people in that situation could quit their job and still be guaranteed health insurance, so the CBO estimates those people will finally leave their jobs, by choice.

The bottom line is the “job-killing” claim is not true.

That didn’t make sense to me. When a worker quits on his own, the job is still there for someone else to fill. So I read your linked article, and it’s a Republican report that claims a .5 percent job loss. The CBO study says there will be some jobs that will have hours reduced, either by the employer or employee, so the CBO doesn’t talk in terms of jobs lost but in reduced hours. The Repuplican report, wrongly, translated that into jobs lost.

But your conclusion is the same: the job-killing claim isn’t true.

[constanze]

@dracoi

I will be sure to let two of my clients know that they are fictional.

Are they saying that the introduction of the new healthcare means they will outsource to China or switch to fully automatic, but before it was worthwhile?

Because that was what the claim was.

Of course, two small business owners claiming this don’t automatically impress me - Joe the Plumber was also a small business owner, but not very knowledgeable about the effects of proposed laws on his financial situation.

I don’t have clients, but I do hear a lot of arguments in bad faith from small business owners about economic effects of laws.

[Really_Not_All_That_Bright]

@Rand_Rover

It will cost jobs in two ways:

1. People tend to reduce spending on something if it costs more (in general). So, make hiring a person cost more and people will tend to hire fewer people.

2. Increasing government spending requires that money be taken out of the economy as taxes, which means less to invest and grow the economy’s, which means fewer jobs.

Sure politifact and others can quibble with the finer points, but those two simple principles are all that is necessary to show that obamacare will tend to increase permanent unemployment.

The concept that taxes are money “taken out of the economy” isn’t a principle. It’s a lie. In any event, that principle cannot apply here because Obamacare doesn’t involve an increase in government spending.

[Quartz]

How much does healthcare currently cost America? $2.5T, per Wiki. The NHS costs approx US$2300 per person (£110B for 60M people), so that’s US$690B for all 300M of you. Let’s round that up to $1T to include the private healthcare schemes we have in the U.K. and cope with unique US factors. Think of all the economic activity all that $1.5T saved could do.

Think about it. $1.5T. You could solve your debt crisis by switching to UHC.

[just_some_guy5]

@constanze

Are they saying that the introduction of the new healthcare means they will outsource to China or switch to fully automatic, but before it was worthwhile?

Because that was what the claim was.

I am rather confused by your line of reasoning on this topic. You don’t acknowledge that incremental domestic labor costs might make international labor or capital investment (e.g., increased automation) relatively more attractive? I can understand some skepticism of the magnitude of any impact, but to flatly declare the very idea that increased prices might reduce demand and / or raise the attractiveness of substitutes is baffling…

[MikeS]

@constanze

This is a false argument. Most manufacturing jobs have either been outsourced to China long ago, or they won’t be because there’s a good reason to keep them here: they already were outsourced and quality found to be better with trained apprentices than with illiterate cheap workers; the operation is too small to be outsourceable; the knowledge shouldn’t be available to the Chinese to copy (they have bought whole factories and not bothered to dismantle them because they only were interested in the blueprints; and many companies who have outsourced complain about the increase in pirate-copies).

I think you underestimate the cost-consciousness of employers in terms of where they choose to put their jobs. A recent article in the Atlantic Monthly examined the situation of manufacturing jobs in the U.S. The case study used is that of an auto-parts manufacturer; “Maddie” is an unskilled worker who runs a laser welder:

Tony [the manager] explains that Maddie has a job for two reasons. First, when it comes to making fuel injectors, the company saves money and minimizes product damage by having both the precision and non-precision work done in the same place. Even if Mexican or Chinese workers could do Maddie’s job more cheaply, shipping fragile, half-finished parts to another country for processing would make no sense. Second, Maddie is cheaper than a machine. It would be easy to buy a robotic arm that could take injector bodies and caps from a tray and place them precisely in a laser welder. Yet Standard would have to invest about $100,000 on the arm and a conveyance machine to bring parts to the welder and send them on to the next station. As is common in factories, Standard invests only in machinery that will earn back its cost within two years. For Tony, it’s simple: Maddie makes less in two years than the machine would cost, so her job is safe—for now. If the robotic machines become a little cheaper, or if demand for fuel injectors goes up and Standard starts running three shifts, then investing in those robots might make sense.

…

Nearly every manufacturing company in the U.S. … regularly, carefully stud[ies] its products to see if they could be made more cheaply in a lower-wage country. The calculation constantly changes, because the world changes. Sometimes that’s bad news for American industrial workers, other times it’s good news. Workers in China and Poland and Mexico, for example, have become more highly skilled, and their factories are now able to produce more-precise goods than they could a decade ago. But at the same time, the wages of those workers have risen, as have shipping costs. Unrest in northern Mexico or an oil-price spike caused by trouble in the Middle East can encourage manufacturers to keep production lines in the United States. The development of increasingly complex machinery can do the same: because expensive machines are more likely to pay off when they can be counted on to run 24 hours a day, every day, the availability of steady electricity, for instance, is essential.

The point being made here is that unskilled manufacturing jobs do still exist in the U.S., and that there’s a constant cost-benefit analysis being done to figure out whether to keep them in the U.S, move them elsewhere, or automate them. Whether the PPACA’s requirements will actually affect this calculus significantly or not is debatable, but you can’t claim that everything that could be outsourced or automated already has been.

[njtt]

@WhyNot

I’m not even sure this is true. There seem to be an awful lot of people working for the VA health system (which is as close to government sponsored single-payer system as we have at the moment.) I haven’t seen any evidence that there are fewer than a private hospital - in fact the VA seems to be staffed with more superfluous people, to be honest.

Go look at any country that actually has universal, single payer health care and get back to me, huh? :rolleyes: (And when you are doing your comparisons, remember to take account of all the bureaucrats working for the insurance companies, as well as for the hospitals and government).

[Rand_Rover]

@Really_Not_All_That_Bright

The concept that taxes are money “taken out of the economy” isn’t a principle. It’s a lie.

:rolleyes:

In any event, that principle cannot apply here because Obamacare doesn’t involve an increase in government spending.

Cite?

[John_Bredin]

[quote=“Rand_Rover, post:28, topic:613845”]

:rolleyes:
What are you rolling your eyes at? Taxes used to pay a civil servant are then spent by the civil servant in the economy, in precisely the same manner as a private-sector employee. They don’t disappear into an iron box never to be seen again.

And contrary to your implicit presumption, civil servants generally provide some benefit in exchange for that pay – soldiers fight, school teachers teach, policemen patrol and arrest suspected criminals, firemen extinguish fires, prison guards keep prisoners inside prison, etc… And the last time I looked, roads and airports (and subways, despite the stance of certain members of the U.S. House of Representatives) don’t cease being an infrastructure investment that help people and goods move around just because the hated gubmint owns them.

[Voyager]

@Quartz

How much does healthcare currently cost America? $2.5T, per Wiki. The NHS costs approx US$2300 per person (£110B for 60M people), so that’s US$690B for all 300M of you. Let’s round that up to $1T to include the private healthcare schemes we have in the U.K. and cope with unique US factors. Think of all the economic activity all that $1.5T saved could do.

Think about it. $1.5T. You could solve your debt crisis by switching to UHC.

C’mon, you heard Rand. That $2300 per person is no longer in your economy. No one gets paid it, no one spends it. I suppose you guys must burn it, which explains why London is so foggy.

[Rand_Rover]

@John_Bredin

What are you rolling your eyes at? Taxes used to pay a civil servant are then spent by the civil servant in the economy, in precisely the same manner as a private-sector employee. They don’t disappear into an iron box never to be seen again.

And contrary to your implicit presumption, civil servants generally provide some benefit in exchange for that pay – soldiers fight, school teachers teach, policemen patrol and arrest suspected criminals, firemen extinguish fires, prison guards keep prisoners inside prison, etc… And the last time I looked, roads and airports (and subways, despite the stance of certain members of the U.S. House of Representatives) don’t cease being an infrastructure investment that help people and goods move around just because the hated gubmint owns them.

You aren’t thinking about this correctly, probably caused by my poor choice of phrasing–saying “taken out of the economy” may have been misleading. The point remains that if a company makes $100 of net profit, then there are certain investments that it can make that it would not be able to make if it only makes $80 of net profit. Those foregone investments could have created jobs. So, increasing taxes (i.e., reducing a business’s net profits) reduces jobs by reducing the opportunity for investment).

[Voyager]

@Rand_Rover

You aren’t thinking about this correctly, probably caused by my poor choice of phrasing–saying “taken out of the economy” may have been misleading. The point remains that if a company makes $100 of net profit, then there are certain investments that it can make that it would not be able to make if it only makes $80 of net profit. Those foregone investments could have created jobs. So, increasing taxes (i.e., reducing a business’s net profits) reduces jobs by reducing the opportunity for investment).

If the government makes $100 in taxes it might be able to make certain investments - like in education, roads and bridges, which it couldn’t make if it made $80 in taxes.
Sure the government could piss it away, but so can the business. And if you doubt that one word - dot.coms.

[PrettyVacant]

Isn’t the Illinois congressman implicitly acknowledging the current system is more expensive?

I mwean… who pays for these now jobs that won’t be needed?

[TimeWinder]

@Rand_Rover

So, increasing taxes (i.e., reducing a business’s net profits) reduces jobs by reducing the opportunity for investment).

100% true. The proof of this is the last twelve years, during which taxes have been lowered to ridiculously low levels, historically speaking. This has had the effect of almost completely eliminating unemployment because of all the jobs that were created.

[raspberry_hunter]

raises hand My company’s health-care costs went up dramatically in the last year. To be perfectly fair, this was not all due to Obamacare, but it was certainly a large component-- the prices quoted by all the insurance companies they were looking at went up by a lot because of the extra coverage it’s mandating.

Specifically because of these costs (I’ve seen the breakdown of the budget, and healthcare was where the problem was – we’ve cut costs everywhere else), we have not been hiring any new full-time workers though we’d originally been planning to. (And yes, that means the rest of us are working longer hours – that’s where the jobs are absorbed.)

ETA: Although I am not necessarily a proponent of single-payer health care, it’s true that it wouldn’t have this particular issue – but that’s not what Obamacare is.

[degan]

@Wheelz

An Illinois congressman is currently running campaign ads saying that if he’s re-elected he will work to repeal Obamacare, because it it costing Americans jobs. But how can this be true? We still need doctors and other healthcare professionals, obviously. The actual insurance is handled by existing private firms, so no loss there. In fact, if more people end up being insured, wouldn’t that mean more jobs, not fewer?

This is in GQ because I’m not interested in debating the merits or failings of what some call Obamacare. I’m just curious about this claim of job loss. It may be inevitable that the thread will get moved, but for now, just the facts please.

If you make it more expensive to employ someone, you will discourage hiring.

[isaiahrobinson]

@Voyager

I don’t get this. You accurately summarized what was in the link, but people leaving the job market does not eliminate jobs, especially in a time of labor surplus. These people would not be counted as unemployed, and their jobs would be backfilled by the unemployed. The guy starting his own company would create a net increase in the number of jobs, and the housewife would cause a decrease in the unemployment rate by leaving the labor force. So, all good.

The figures the Republicans cited were using to claim the healthcare law “kills jobs” concluded not that the law would increase the unemployment rate, but that it would reduce the labor supply by 0.5%. I shouldn’t have mentioned the guy starting his own company because that’s still a job, but when the woman leaves her job to become a housewife, that decreases the labor supply.

[isaiahrobinson]

@Rand_Rover

It will cost jobs in two ways:

1. People tend to reduce spending on something if it costs more (in general). So, make hiring a person cost more and people will tend to hire fewer people.

2. Increasing government spending requires that money be taken out of the economy as taxes, which means less to invest and grow the economy’s, which means fewer jobs.

Sure politifact and others can quibble with the finer points, but those two simple principles are all that is necessary to show that obamacare will tend to increase permanent unemployment.

The studies Politifact cited don’t “quibble with the finer points”, they quibble with your entire point: they find the new healthcare law will not increase permanent unemployment. And they very much take into account your points about the extra costs to businesses and the increase in government spending. The conclusion is the same. If you’re saying otherwise you need to provide a cite for it.

[Martin_Hyde]

At $1.00 per pound I’m able to sell 500 pounds of apples a month.

The government decides to start charging an excise tax of .25 a pound on apples. To keep it familiar with an American audience, let's assume the .25/lb excise tax is levied as a “sales tax” that increases the flat sale price of the apples by $.25/lb.

So now I’m essentially selling apples at 1.25/lb (of which I have to collect and transmit to the government .25/lb.) At $1.25/lb I’m only able to sell 300 lb of apples per month. That means I’m buying 200 lb of apples per month less from the orchard.

Replace apples with any other good or service and it should demonstrate why it is absolute undeniable fact that increasing the cost of something decrease the demand for that same product and thus decreases the volume of that product (or service) being traded/bought assuming it isn’t perfectly inelastic or something.

In my scenario as the apple merchant I’ve gone from making $500 gross a month to making 300 gross a month. So in reality with the supply/demand numbers I gave above what would most likely happen is in response to the new .25/lb excise tax I’d lower my sale price to say, $.75/lb. That way my customers are still buying them for essentially $1/lb and I’m still moving 500 lb of apples a month (and grossing $375/mo since $125/mo would go to the government.) So obviously in my scenario I could continue moving as many apples, but at decreased profit for myself. So obviously there is a little bit of nuance, generally a deadweight loss from a tax refers to the loss of volume in transactions that happens at the existing price point from a tax. In actual practice the tax will probably cause a shift in pricing to minimize the negative impact of the tax (but you cannot eliminate it.)

None of this says that Obamacare will kill jobs, this just says that “in a vacuum” so to speak, in a single commodities market, a tax on that commodity will impose a deadweight loss that decreases either the volume of the commodity being traded or the total revenue available in that market. Both a decrease in trading volume or of revenue can very obviously lead to decreased hiring in that sector.

You can argue that Obamacare will not kill jobs without attacking the basic economic principles outlined above, mainly because the reason Obamacare isn’t going to kill jobs doesn’t contradict the above economics.

The primary reason Obamacare will not kill jobs is the final form of Obamacare is fairly toothless in comparison to earlier forms, and some of the most condemnatory studies done on the job impact of Obamacare are based on earlier forms of the bill and not the final form.

It stands to reason the most likely employees to lose their jobs due to an employer mandate are very low income employees. The reason for this is that very low income employees are often employed in very low-margin businesses that would be hard pressed to absorb health insurance costs. Additionally, these businesses typically do not offer health insurance currently, so the current business model doesn’t factor in that cost so any change in that regard is going to change how that business operates.

However, the actual facts of Obamacare mean not as much will change even for low income employers as one might at first think. Firstly, if you work 30 hours or less your employer does not have to provide you with health insurance under Obamacare. What this means of course is that many employers will simply set up shifts to make sure you can’t ever get more than 30 hours so they never have to give you health insurance. (Wal-Mart corporation has provided health insurance to low income employees for years, but the hitch was you had to work either 36 or 40 hours–I can’t remember which, to be eligible. In practice Wal-Mart made it very difficult to get enough hours in to be eligible for the corporate health insurance so aside from management types most Wal-Mart employees didn’t actually get to have the company’s health insurance.)

Another exemption from the employer mandate is the 50 employee thing, which means many small businesses are exempt from the employer mandate because they do not have more than 50 employees. Since many low income workers work for small businesses (like fast food franchises, typically incorporated as their own business, won’t generally employ 50+ people) or they are students or other people who work very much part time (and thus work under 30 hours) it is actually the rare employer of low income workers who is going to be hit by the employer mandate.

It seems that most of the employers of low income workers who will be hit by the mandate (essentially large corporations with large numbers of full time, low paid employees) actually already provide some level of health insurance, so they can generally modify their plan that is offered to comply with the Obamacare requirements with minimal cost changes for the company.

Finally, the penalty for the companies who don’t meet the exemptions to just not offer health insurance is only $2,000/year per employee, so that is essentially the upper limit of how much extra cost per year a company could face.

So in summation, Obamacare isn’t going to be a significant job killer because it isn’t going to significantly alter the situation for most employees, because:

-Generally higher income employees already have very good health insurance that complies with Obamacare’s requirements. Generally these plans have only required minor tweaking to be brought in line with Obamacare requirements. Most companies in this situation have already implemented Obamacare compliant plans. So the employers of this type of employee won’t see a marginal cost increase.
-Lower income employees are often employed by companies with fewer than 50 employees, who are thus exempt from the employer mandate.
-Lower income employees are often part-time workers who work fewer than 30 hours per week, and their employer is not required to provide them insurance under Obamacare.
-Most of the large corporations employing large numbers of low income employees already had health insurance plans of some sort (typically not as good as for higher income employees) so the marginal cost of modifying those plans to be compliant with Obamacare, while not zero, aren’t enough to represent a major job killer.
-The penalty for not giving insurance is $2,000/employee per year, so for the small number of employers who have employees who they are now mandated to insure, they can probably just pay this fee instead of tackling the problem of paying for insurance.

[dracoi]

@MikeS

The point being made here is that unskilled manufacturing jobs do still exist in the U.S., and that there’s a constant cost-benefit analysis being done to figure out whether to keep them in the U.S, move them elsewhere, or automate them. Whether the PPACA’s requirements will actually affect this calculus significantly or not is debatable, but you can’t claim that everything that could be outsourced or automated already has been.

This is exactly it.

I don’t believe the claims that Obamacare - by itself - will be a major deciding factor for the remaining manufacturers to change what they do. However, hundreds of small factors (including things like state minimum wage and state unemployment) can have a cumulative effect to discourage domestic employment.

It’s a little like the straw that broke the camel’s back. Sure, each individual straw was not sufficient to kill the camel. But thousands of them together can do the job.