The Wall Street Journal is out with an editorial this morning that attempts to conflate the Obama administration’s announcement yesterday that it was delaying the employer mandate again with last week’s Congressional Budget Office report that found that the Affordable Care would lead to a reduction in work.
The editorial mischaracterizes liberal reaction to the report and then proceeds to misunderstand the report itself.
Let’s break it down.
Yesterday, Health and Human Services announced that employers with 50-99 employees would be exempt from the mandate until January 1, 2016 and employers with 100+ employees would only have to cover 70% of their workers next year and 95% thereafter.
The Journal argues that this delay validates conservative arguments that Obamacare is hurting the economy. Forgive the long block quote:
Like the individual mandate, the employer decree is central to ObamaCare’s claim of universal coverage, but employers said the new labour costs — and the onerous reporting and tax-enforcement rules — would damage job creation and the economy.Liberals insisted that such arguments were false if not beneath contempt, but then all of a sudden the White House implicitly endorsed the other side. Now the new delay arrives amid a furious debate about jobs after a damning Congressional Budget Office report last week, only this time with liberals celebrating ObamaCare’s supposed benefits to the job market.Well, which is it? Either ObamaCare is ushering in a worker’s paradise, in which case by the White House’s own logic exempting businesses from its ministrations is harming employees. Or else the mandate really is leading business to cut back on hiring, hours and shifting workers to part-time as the evidence in the real economy suggests.
The Journal is right that the employer mandate delay is an indication that the White House is concerned about its effects on the labour market in the next few years, but that doesn’t mean that the law won’t have a positive impact on workers over the long-term.
These are two entirely separate ideas that the Journal conflates to set-up a false comparison:
The employer mandate will reduce hiring in the short-term. CBO projects that the costs of the employer mandate and other regulations will eventually be passed on to employees, who will adjust their working hours accordingly. That is, eventually the employer mandate will lead to reductions in the labour supply as employers reduce their compensation.
However, employers are often unwilling to reduce their employees’ nominal wages (a phenomenon known as sticky wages) and will instead let inflation reduce their real value over time. Thus, in the short-term, employers may not pass on those costs to their employees, but will eat the costs themselves and adjust their hiring in response.
- Obamacare will have both positive and negative effects on the labour market in the long-term. Liberals have not argued that Obamacare will usher “in a worker’s paradise.” Instead, they have argued that some features of the law’s effect on the labour market – such as ending job lock – are a positive development while others – the disincentive effects on work – are a negative one. The White House and many liberals believe the net effect is positive overall.
The Journal sets up a straw man argument that it’s impossible to have both of these views.
But it’s entirely coherent for the administration to phase in the employer mandate, because they believe it will reduce hiring in the short-term, while also arguing that the law enhances worker power over the long-term. Liberals do not have to choose between these ideas.
In addition, CBO also found that, despite the Journal‘s claims otherwise, “there is no compelling evidence that part-time employment has increased as a result of the ACA.” That’s as clear as it gets.
The editorial concludes with the following:
Liberals say the law isn’t harming jobs or economic growth, but everything this White House does screams the opposite.
This simply isn’t true. The employer mandate has the potential to reduce labour demand in the upcoming years, but it is not affecting the economy right now. The same goes for the law as a whole, which is equally likely to be helping the economy reach full employment as it is to be standing in its way.
The Journal wants to portray Obamacare as a job-killer that liberals have been wrong about all along. But that only works if you ignore what they’ve been saying, what the law actually does, and instead attack a straw man argument.
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