Newsflash: Apparently, Obamacare will Reduce Full-Time Employment. Who Would Have Guessed?

The Washington Post reports on an updated CBO report:

The Affordable Care Act will reduce the number of full-time workers by more than two million in coming years, congressional budget analysts said Tuesday in the most detailed analysis of the law’s impact on jobs.

After obtaining coverage through the health law, some workers may forgo employment, while others may reduce hours, according to a report by the Congressional Budget Office. Low-wage workers are the most likely to drop out of the workforce as a result of the law, it said. The CBO said the law’s impact on jobs mostly would be felt after 2016.

This almost certainly underestimates the impact.   Why?  Well, one reason is that a lot of full-time jobs were switched to part-time jobs way back in late 2012.  That is what our company did.  Why so early?  Because according to rules in place at the time (rules that have since been delayed at least a year) the accounting period for who would be considered full-time for the purpose of ACA penalties would be determined by an accounting period that started January 1, 2013.  So, if a business wanted an employee to be considered part-time on January 1, 2014 (the original date employer sanctions were to begin), the changes to that employees hours had to be put in place in late 2012.  More on this here in Forbes.

In addition, this CBO report is  a static analysis of existing business.  It does not seem to include any provisions for businesses that have dialed back on investment and expansion in response to the ACA (we have certainly cut back our planned investments, and we can't be the only ones.)  This effect is suggested (but certainly not proven) by this chart.

click to enlarge

The sequester and government shutdown were cited by the Left as reasons for a sluggish economy.  Which government action seems most correlated with a flattening in job growth?



  1. trentmcbride:

    I do want to take issue with that last chart - this is only slightly off topic. I think it is incorrect to call the upswing in that graph a "recovery", or the plateau a " stagnation". Since the y-axis is labeled as "change in employment", it is more appropriate that the upslope is more like a deceleration of the recession (but still bleeding jobs), and the plateau is more like a relatively steady recovery (if much more slow than one would expect after such a bad recession). This does not change the conclusion one might draw that obamacare affected the speed of the recovery; but I get annoyed when liberals misread this graph, so only fair that I point it out now.

  2. trentmcbride:

    In other words, I am only complaining about the label of the green and red arrows, not the conclusion you drew for the purposes of the post. I apologize in advance if these are not your labeled arrows, but I thought I remember you doing this.

  3. brandonberg:

    Right. The "recovery" was a period of job loss, while the "stagnation" is a period of job growth. The first derivative can't keep increasing at that rate forever. It had to level off at some point. It is troubling that there has been no compensatory growth to get employment back to trend, and the four-monthdip back into job loss territory immediately after the passage of Obamacare is suggestive, but recovery until Obamacare and stagnation thereafter is largely the opposite of what the data actually say.

    Hey, Trent!

  4. mesaeconoguy:

    The really, really obnoxious part of this is that this CBO prediction is still way too low.

    One of Obama’s major accomplishments on his watch has been to completely destroy the credibility of practically all government reporting.

    None of it is taken seriously anymore, including and especially CBO and Fed forecasts.

  5. Matthew Slyfield:

    Alas, I have but one up vote to give.

    One minor quibble: "One of Obama’s major accomplishments on his watch has been to completely
    destroy the credibility of practically all government reporting."

    GW Bush gave him a pretty good head start.

  6. mesaeconoguy:

    Actually, I don’t think that’s the case.

    Over the past 5 years, Fed forecasting in particular has become an absolute joke -

    Prior to this, the Fed was the gold standard for economic forecasting, and almost universally well-regarded. Their reputation is now garbage.

    CBO is GIGO – the numbers they were given by the supporters of Obamascare to score Obamascare initially were completely fraudulent, so it is now completely unsurprising that they sucked initially. The question becomes when do they admit that even this massive negative revision is way, way too small?

    And even more hilarious is how stupid the architects of the implementation (supporters and designers of Obamascare) and monitoring are at forecasting and analyzing their own mistakes

  7. a70%taxRateOnTheRichIsLow:

    Weird how the rate of job growth stagnated right when the tea party congress pulled into town, eh?