Sunday, September 22, 2013

Obamacare and the labor markets

The impact of the Affordable Care Act (ACA) on US employment remains a hotly debated topic - particularly as the budget deadline looms. When it comes to the impact on job creation nationally, there is no smoking gun. While many point to growth in part-time employment as evidence for changing patterns in hiring, the Obamacare complexity and the latest payrolls data make it difficult to demonstrate a causal relationship.

Source: FRED

Nevertheless any regulatory uncertainty, particularly one that is this complex and broad, is generally not helpful to business expansion and hiring. Furthermore, numerous recent surveys continue to suggest that the impact of ACA on payrolls growth has indeed been quite negative.
Sal Guatieri/BMO Capital Markets: - ... a number of surveys strongly suggest that the ACA has curbed employment and will continue to do so. According to the Economist, more than 10% of firms (surveyed by Mercer, a consultancy) plan to reduce workers’ hours because of the health care act. A Gallup poll found that 41% of small companies have frozen hiring because of the ACA, while 19% have already cut staff. The New York Times reports that some California agricultural growers plan to lay off workers or shift workers to part-time status to avoid paying an estimated $1 per hour more per worker to meet the health plan rules. The Fed’s February 2013 Beige Book noted that “Employers in several Districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.” A Philadelphia Federal Reserve survey found that 2.8% of firms have already laid-off workers or slowed hiring because of the ACA, 5.6% have shifted full-time workers to part-time status, and 11.1% have outsourced work.6 Moreover, the latter three figures jump to 5.6%, 8.3% and 18.1%, respectively, when the companies are asked about planned changes in the year ahead.
Whatever the case, a government shutdown that could result from this debate will not be helpful for job growth either. The good news is that the public is finally beginning to pay attention to the situation. The Google Trends search frequency for "Obamacare" and "Shutdown" have both risen in the past few days - although the shutdown risk may not be fully sinking in just yet.






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