The evidence is in: the ACA costs jobs

Published on Thursday, 28 August 2014 22:31 - Written by

No need for prognostication, prediction or dire warnings anymore. Studies by Federal Reserve Banks and surveys completed by businesses themselves are clear: the Affordable Care Act is depressing job creation.

“Three Federal Reserve Banks — in Philadelphia, New York and Atlanta — have released business surveys that confirm what many of us have been predicting,” reports John Goodman in Forbes. “The new health law is discouraging a significant number of firms from hiring and is also pushing workers into part-time, rather than full-time jobs.”

Here’s how the Philly Fed explains it:

“In special questions this month, firms were asked qualitative questions about the effects of the Affordable Care Act (ACA) and how, if at all, they are making changes to their employment and compensation, including benefits (see Special Questions),” the Fed reported. “Over 18 percent of the firms indicated that the number of workers they employ was lower because of the ACA; 3 percent indicated higher levels.”

The same percentage (18) of firms said they were hiring more part-timers because of the law. And most firms (52 percent) reported changing their health insurance plans (increasing the premiums and deductibles) because of the law.

The New York Fed reported similar findings.

“More than one third of manufacturers say the Obamacare is increasing costs ‘a lot’ this year and more than half say the health law will increase costs a lot next year,” Goodman says. “Among New York business leaders, more than one in four say Obamacare is increasing costs a lot this year and more than one third predict substantial cost increases next year.”

Economists have long warned that the Affordable Care Act will hurt job creation. Turns out, they were right.

“Why is ObamaCare so costly to the economy?” Goodman asked in a June column. “As is now well known, ObamaCare is anti-job from the get-go. It imposes a health minimum wage (in addition to the money minimum wage) that can reach almost $6 an hour for family coverage. It encourages companies to stay small, because below 50 employees, the employer mandate doesn’t apply. It encourages employers to reduce the amount of hours employees can work because below 30 hours a week, the employer mandate doesn’t apply.”

Even when the Obama administration tries to soften the blow from the Affordable Care Act, it inadvertently further discourages job creation, because of unpredictability. If businesses don’t know what provisions will be enforced and what won’t, they’re not going to risk taking on new employees they might not be able to afford in a year’s time.

The Affordable Care Act goes a long way to explain our jobless recovery, but Goodman acknowledges that other factors are at work, too.

We’ve gone overboard on occupational licensing, making it harder for companies to fill positions with workers the government thinks are qualified.

Another factor is a decrease in entrepreneurship. Fewer small businesses are being created, largely because of an uncertain economy and regulatory environment.

But there’s no longer any doubt. The Affordable Care Act is costing us jobs.