Tag Archives: jobs

Obamacare Jobs Impact

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The American Health Policy Institute has some data [emphasis in the original].  Although their study concerned itself primarily with the cost impact of Obamacare to large employers—those with 10,000 or more employees—the study’s outcome has implications for our economy’s jobs picture.

  • The cost of the ACA…is estimated to be between $4,800 to $5,900 per employee.
  • These large employers will see overall ACA-related cost hikes of…4.3 percent in 2016 and 8.4 percent in 2023 over and above what they would otherwise be spending.
  • The total cost of the ACA to all large US employers over the next ten years is estimated to be from $151 billion to $186 billion.

This comes after a downward trend in employer cost increases—to no and nearly no increase just prior to Obamacare’s passage—for employee health care benefits has been completely reversed by Obamacare, as this graph from the study demonstrates:

Now for those implications:

At the US median annual wage of $51,000 in 2013 (a decrease from 2012, an added bonus of President Barack Obama’s economic policies), and just taking the lower bound of the 10-year cost range, those $151 billion in added dollar costs work out to a jobs cost of nearly 3 million jobs over that decade—300,000 jobs per year—in a static analysis that ignores the economy’s response to the loss of those jobs: a loss that would increase by some amount each succeeding year as the economy actually responded.

Alternatively, that $151 billion cost is money not being spent on R&D or product development.  To put this in perspective, US companies spent some $424 billion on R&D in 2013; at $15.1 billion/year over the decade, that works out to a 3.6% cut in R&D.  This is a very large drop in a company expense that’s already very low in an increasingly competitive global economy (if not particularly competitive anymore in the US)—Apple’s R&D spending, for instance, amounted to just 3% of net sales in 2013; IBM and GM spent just 5-6% of total revenue on R&D.  This reduction leads directly to a commensurate cut in company profitability, with its own cascade effect on jobs in the US.

Of course, the true outcome will be somewhere in between—a loss of fewer than 3 million jobs, but still a large loss, and a cut in R&D of less than 3.6%, but still a significant cut—each and both with still significant cascade effects in future job losses.

Unionizing College Sports

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In light of the NLRB’s ruling that Northwestern football players can join a union, I have a number of questions and concerns.

How many other college semipro sports will unionize?  Will athletic departments survive the costs of unionization?  Will ticket sales?

What will the NLRB’s ruling do vis-à-vis Title IX?

How will the vast majority of college and university programs that don’t make money from their athletic departments will survive?  How will those programs within athletic departments that don’t make money survive–will the “football” union be willing to subsidize them?  Even were they willing, will they have the money to do so for all?

Will academic students now be forced to pay union dues, since they “benefit” from the “football” union’s…bargaining?  Will other student athletes in other sports?

Unionized semi-pro athletes who happen to attend college represent a fertile training ground for future union membership.  This ruling sets up that farm system.

And as The Wall Street Journal cites NLRB’s Peter Sung Ohr [emphasis added]:

[C]ollege players aren’t student athletes who get an academic scholarship in return for competing in a sport. They are “employees” and thus eligible to have a union collectively bargain with their university employer.  Mr Ohr explains that college players spend 40-50 hours a week at their sport during the season, often more than on class work, and that they are essentially paid for their work via a scholarship that covers tuition, fees and room and board worth about $61,000 a year.

Not a trace of irony there.  No, Sir.

The WSJ added this parting point:

Don’t look for the football players to give up their gourmet training tables in solidarity with the geeks majoring in pre-med.

Be all right with me if colleges shut down their athletic programs, converted them all to IMs, converted existing athletic scholarships to academic scholarships of the same value, and stopped offering athletic scholarships altogether.  Put the “student” back in “student athlete.”

False Premises

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Bill Gates had a thought on how to help workers, especially low-skilled workers facing automation.  However, he’s operating from a number of false premises.

I think tax structures will have to move away from taxing payroll.  …  Software substitution—whether it’s for drivers or waiters, nurses…it’s progressing.  And that’s going to force us to rethink how these tax structures work in order to maximize employment given that capitalism in general over time will create more inequality, and technology over time will reduce demand for jobs, particularly at the lower end of the skill set.  …  Twenty years from now, labor demand for lots of skill sets will be substantially lower, and I don’t think people have that in their mental model.  …  Economists would have said a progressive consumption tax is a better construct at any point in history.  But what I am saying is that it’s even more important as we go forward because…I want to distort in the favor of labor.  …  When people say we should raise the minimum wage—I know some economists disagree—but I worry about what that does to job creation.  The idea that through the Earned Income Tax Credit you would end up with a certain minimum wage that you would receive, that I understand better than intentionally dampening demand in the part of the labor spectrum that I’m most worried about.

The first, and prior, false premise is that taxes should be used to achieve social engineering goals—whether government’s or any others’.  No.  Taxes are for funding the government so it can carry out the tasks for which we’ve hired it.  Our Constitution lays out the sole purposes of spending at the Federal level: paying our nation’s debt, funding our national defense, and the general welfare—which is explicitly enumerated in the 18 Clauses of Article I, Section 8.  Nowhere in there is spending for social engineering listed.  Taxes, then, can only be used to raise funds for those three spending purposes, and not for social engineering.

Gates’ second false premise is that a free market is somehow a zero sum game.  In a free market economy, two men freely arrive at terms of an exchange (e.g., a good for an amount of labor, either of those for an amount of money, etc) and make the exchange.  After that exchange, both men are better off than they were before it, since each man now has something of value to him that he didn’t have before—and that thing did not cost him more than it was worth to him, with the possibility that each man got slightly more than he paid as evidenced by his willingness (now hypothetically) to have paid slightly more than he actually did.  Plainly, a free market economy is a positive sum game.

His third false premise is that “technology over time will reduce demand for jobs.”  Like technology reduced employment when car manufacturing replaced horse buggy manufacturing.  Like Henry Ford’s assembly line technology reduced manufacturing employment.  Like computers have reduced employment.  Again, no.  Technology over time changes the kinds of jobs that have value, but it doesn’t reduce the number of jobs available.

His fourth false premise is that government subsidy (minimum wage or EITC or anything else) somehow makes labor less costly—at least to the employers.  Again, no.  Whether those labor subsidies are paid for by taxes or by borrowing, they’re paid for by taxes: all government borrowing does is shift the taxes onto later generations (and without their being in a position impudently to protest the matter).  Those taxes come out of the citizenry’s pockets, and (under present tax structures) out of the revenues earned by businesses.  Costs to the citizens and to the businesses thus are increased, and they’re increased by an excess amount derived from the difference between the actual value of the man’s labor and the subsidized price paid him for that labor.  Ultimately, too, that excess amount works through the economy in the form of higher prices—inflation—and the man is no better off in the end than he was at the pre-subsidy start.

Finally, there’s the matter of wealth/income inequality about which Gates worries.  Bill Gates, however, is the modern poster boy for that sort of inequality.  That inequality, though, is neither good, nor bad; it just is, like money generally.  It’s a tool, and like any tool, it can be used for good or ill, or it can be left on the shelf to rust.

Gates, in fact, has been enormously generous with his wealth, far more so than any of the rest of us could be, and to a degree that is utterly impossible without the enormous (unequal) wealth that Gates has and the enormously unequal income he earns with which to accumulate that wealth.  As have been the Carnegies, the Rockefellers, et al., of our capitalist nation.

I’ll leave off the mechanics of a “progressive consumption tax” and the inevitably byzantine nature of the sales tax code developed to implement this.  I’d be curious to see how Gates would implement such a thing: a customer in WalMart, at the cash register imputing (in some verifiable manner) his income, and the cash register calculating his sales tax accordingly (oh, wait—there’s that technology putting a cashier out of a job…)?

We all get sales tax refunds on 16 April according to our incomes and the amount of sales taxes we paid through the year?  How will the man living in the region of the Federal Poverty Guideline live on his sales tax-reduced income before he gets his refund?

 

h/t AEIdeas

More Governance by Diktat

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Rule by law, not rule of law.  Here‘s the latest Obama installment.

The president plans to make the announcement [ordering Labor to expand overtime pay requirements to include millions more workers] on Thursday at the White House, a senior administration official confirmed to Fox News. Though the administration has claimed previous executive actions had bipartisan support, officials are acknowledging that this particular move [does not.]

These aren’t blue-collar jobs covered by “collective bargaining” agreements—union contracts—either.  Now, managers and executive officers of companies will be…covered: fast-food restaurant managers, loan officers, computer technicians, and more.

There’s not even a pretense of union-management mutually agreed compensation structure in this latest government move—the Federal government is dictating to businesses how they must conduct their businesses, the Federal government is dictating to businesses how they must structure their internal costs.

No market forces allowed.  And if the law doesn’t let the Federal government do what it wants to do to us, the Feds (not us) will change the law, and the Feds will change it with, or without, our permission.

What’s next?  It’s a truism, that if something becomes—or is made—more expensive to have, buyers will buy less of it.  If labor—blue- or white-collar—is made more expensive, businesses will retain/hire less of it.  Look for slowed hiring and outright management staff reductions, either in people retained or in salaries paid to make room for the mandated overtime increases.

Then, look for this administration to change/write its own law to mandate that salaries and wages can never be reduced, and that once hired, an employee can never be terminated.  Businesses, after all, are jobs welfare programs in the Progressive mind.

Jobs

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Here’s where we are, five years into the Obama “recovery” from the Panic of 2008:

  • 4.1 million fewer full-time workers today than in November 2007
  • 81% of workers are full-time now vs. 83% prerecession—and that per centage is of a smaller labor force than extant in 2007
  • per CBO, employment at the end of 2013 was about 6 million jobs short of where it would be if the unemployment rate had returned to its prerecession level…”if the participation rate had risen to the level it would have attained without the current cyclical weakness”

Real wages have gone nowhere in this recovery:

And this graph of the performance of the Obama “recovery:”

This recovery is some 10 per centage points below the recoveries of the three prior…recessions.

If this sounds like a broken record, it’s because this “recovery” is a broken record.