Obamacare Defenders: Don't Worry, All Obamacare Is Doing is Destroying the Incentive to Work

Defenders of the President are arguing that we are misreading the CBO report on job losses due to Obamacare.  And I have to agree.  Partially.

Looking more closely, the CBO report does in fact say that it cannot find that many companies eliminating full-time jobs due to Obamacare.  I think they are missing the boat, as I explained earlier, but perhaps my personal experience as a business owner is unusual.

The President's defenders want to make sure that we understand that the CBO is actually saying the 2 million job losses are from people dropping out of the work force because they have lost the incentive to work and/or they want to make sure they don't earn their way out of government freebies.

Whew.  I am sure relieved that all Obamacare is doing is destroying the incentive to work.  I thought for a second there we had a real problem.


  1. Russ R.:

    To be fair, the incentive to work is evidence of scarcity. People typically work because they have unfulfilled wants and needs (yes, some individuals work because they enjoy it), and that work (insofar as it is productive) is performed for the sole purpose of serving the wants and needs of others.

    If some new technology (perhaps the replicator device from Star Trek) made scarcity a thing of the past, what would that do to the incentive to work when all wants and needs can be satisfied at negligible cost? And would that be a bad thing?

    Obamacare defenders may truly believe (erroneously, of course) that the new system will make actual care more available for all, reducing overall scarcity, and better meeting the marginal wants and needs of a large segment of the population who may no longer need to work. The only flaw in this belief is that the costs will inevitably outweigh the benefits, increasing scarcity and need for the vast majority of the population.

    TANSTAAFL and all that.

  2. mesaeconoguy:

    Don't Worry, All Obamacare Is Doing is Destroying the Incentive to Work, and the entire economy.

    There, fixed it for you.

  3. slocum:

    Expect a lot of the labor-force dropouts to be pre-Mediare early retirees. These folks are expensive to insure and, due to their low post-retirement incomes, they'll qualify for big subsidies. Even worse, the people best able to pull this off will be the relatively well off (those people with pensions or enough savings to live on before they're eligible for Social Security). So we'll be providing expensive medical coverage at minimal personal cost to lots of high-net worth individuals (and, yes, that includes pensioners -- the NPV of a lifetime pension to a 59-year-old with COLA adjustments and spousal survivorship rights is huge) . And on top of it all, with the cost of medical insurance no longer a problem (for the retirees themselves), expect an even greater trend toward people taking SS at 62 rather than waiting for full retirement age -- blowing an even bigger hole in SS and Medicare (even though they won't be receiving Medicare until 65, the early retirees will obviously stop paying in as soon as they retire). Also -- the problem will get worse over time as organizations (both private and public) that currently offer retirement health benefits switch and instead provide cash to retirees to buy (heavily subsidized) insurance on the exchanges.

  4. MNHawk:

    Me, in other words. No, I'm not rich, but I do figure I can swing a retirement at 55, if someone young and stupid picks up my tab for health insurance.

    Or I move to a low cost country, which is probably still the plan, saving you all form having to carry my worthless butt through a remaining lifetime of leisure.

  5. NL7:

    Classic unemployment is unsold labor, typically because the seller cannot find acceptable options and is unwilling to accept underpriced options where the return to labor is too low (anybody can be employed if they're willing to accept low enough compensation). But if the return to employment or additional work time is too low because of taxes, transfer payments, or transfer eligibility thresholds, then that's just a different cause for the same motivation.

    People who might otherwise prefer to work are not doing so because the returns are unacceptably low.

  6. NL7:

    In principle, entirely true. It would be great if nobody had to work and everybody worked only for fun or fulfillment. But these people are projected to be unemployed because the returns are too low, not merely because they don't want more.

    It's a classic welfare trap. The gulf between low-paid work and mid-range work deeper and wider. Further advancement results in zero or negative returns to labor. People are punished for extra work and extra income, so they have good reason to delay advancement, delay acquisition of experience, and depress their lifetime earnings.

    While it's good that people are not so desperate that they'd work for pennies, there might be a gap in here where extra work is negative return (especially if you factor in the lifestyle costs of less free time and more work stresses). Depending on the thresholds, people might see ACA phaseouts, EITC phaseout, SNAP/housing phaseouts, state incentives phaseouts, etc. I don't know the relative thresholds, but it could easily get expensive to make more money.

  7. AudreyA:

    I wonder how many of those incentivized to stop work are the low-end health care workers--the nurses aides, the night-shift cleaning staff, etc. My sister-in-law manages an assisted living facility and one of the ways they attracted workers for these unglamorous jobs was to offer good benefits, even if the reality of Medicare meant the per hour wages had to be low. (Medicare payments are so low, the facility can't afford to pay workers more.) So now what will happen? How will they attract the low-skilled workers they need? There is no way to make washing soiled bedding a fulfilling task--there are a lot of jobs that no one wants to do but need to be done. I foresee more assisted living facilities simply refusing Medicare patients in the future.

  8. Gdn:

    Welfare Can Make More Sense than Work

    Most decisions in life are the result of a cost-benefit analysis. When residents in Connecticut consider getting a job, they assume they would be better off having a job than not. They’d be wrong. Because in Connecticut, it pays not to work.
    Next Monday, the Cato Institute will release a new study looking at the state-by-state value of welfare. Nationwide, our study found that the value of benefits for a typical recipient family ranged from a high of $49,175 in Hawaii to a low of $16,984 in Mississippi.

    In Connecticut, a mother with two children participating in seven major welfare programs (Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, housing assistance, utility assistance and free commodities) could receive a package of benefits worth $38,761, the fourth highest in the nation. Only Hawaii, Massachusetts and the District of Columbia provided more generous benefits.

    When it comes to gauging the value of welfare benefits, it is important to remember that they are not taxed, while wages are. In fact, in some ways, the highest marginal tax rates anywhere are not for millionaires, but for someone leaving welfare and taking a job.

    Therefore, a mother with two children in Connecticut would have to earn $21.33 per hour for her family to be better off than they would be on welfare. That’s more than the average entry-level salary for a teacher or secretary. In fact, it is more than 107 percent of Connecticut’s median salary.


  9. curmudgeon:

    As GDN and NL7 put it there is certainly an advantage for certain members of the lowest income quintile not to work, but single males fall in the cracks and the "marriage
    penalty" in the lowest and next to lowest quintiles is formidable. The effective "tax rate" for earners who are just under the ACA limits for subsidies on any increment of income
    above the subsidy level starts at 100%+ and drops slowly as the increment goes up, but does not become negligible until the increment is at least 40% of the pre increment
    income. Finally the spin from the NYT and Sec of Labor Perez (on Diane Rehm Feb 5) is that the ACA is not destroying jobs but creating opportunity and enhancing freedom
    as the worker no longer has to hold on to a "bad Job" because of employment bound insurance. Workers can now start their own business, change jobs freely or 'take care of
    the kids' if desired without worry over health insurance. Kumbaya.......

  10. teapartydoc:

    It's not just low-enders. I'm a doc. I'm not all that far from retirement age. If I get my hands on an inexpensive way to get health insurance, I'm outta here pronto. And there are hundreds of thousands like me. Say hello to your new doctor: just got off the boat from Zanzibar.