Now comes the Patient Protection and Affordable Care Act (two lies in one title, anyone?) with a different set of incentives. Betsy Newmark identified two commentators who suggest, in a world with less union coverage of working hours, a new set of incentives.
First up, Lawrence Kudlow identifying the wedge.
Because of Obamacare, there’s an additional 0.9% Medicare tax on salaries and self-employment income, a 3.8% tax increase on capital gains and dividends, a cap on health-care flexible spending accounts, a higher threshold for itemized medical-expense deductions, and a stiff penalty on employer reimbursements for individual employee health-policy premiums.Some of these provisions are a lump-sum charge that apply to a worker, and they'd have the same effect on hiring (reduced) and overtime (increased) as the fringe benefits of a United Auto Workers contract. But there's a further wrinkle, in that the provisions apply differently to part time workers and to employers with small work-forces.
The business mandates and penalties imposed by Obamacare when small firms hire a 50th employee or ask for a 30-hour workweek are so high that firms are opting to hold employment to 49 and hours worked to 29. Lower employment and fewer hours worked are a double death knell for growth.Might work better as a testable hypothesis phrased as "does the law favor hiring part-timers?" If you're daring enough, you might also want to investigate the data for an effect on overtime among the remaining full-time workers, or salaried workers.
The [Bureau of Labor Statistics] sheds light on this: Although part-time work has fallen during the recovery, to 7 million from around 9 million, it hovered around 4 million during the prior recovery. Part-time employment, which as a share of total employment peaked at around 20% in 2010 and has slipped to about 19%, hovered around 17% during most of the prior expansion. Obamacare?
Everybody is complaining about the low labor-force participation rate and the equally stubborn reduction in the employment-to-population rate. But why are we surprised? Obamacare is effectively paying people not to work.
University of Chicago economist Casey Mulligan argues that Obamacare disincentives will reduce full-time equivalent workers by about 4 million principally because it phases out health-insurance subsidies as worker income increases. In other words, Obamacare is a tax on full-time work. After-tax, people working part time yield more disposable income than working full time.There are other dissertation topics hiding in Mr Kudlow's column, should you, dear reader, be seeking one. I want to focus on those non-convexities. Let us turn to Robert E. Moffit.
Mr. Mulligan calculates that both explicit and implicit marginal tax rates within Obamacare may rise to near 50% as the law discourages those who attempt to climb the ladder of success. National prosperity and economic growth are again the victims.
The complicated insurance subsidy program itself has been a mess. H&R Block reported that about two thirds of subsidy recipients had to repay money back to the government because they got bigger than allowable subsidies. With the individual mandate, the administration has been granting lots of exemptions to insulate most of the uninsured from any penalty. That’s rather predictable; after all, even candidate Barack Obama argued that an individual mandate was unfair and unenforceable.There's much more for future research in that column. Does it come as a surprise that if you authorize Medicare and Medicaid with powers Wal-Mart or the most grasping monopsonist of literature could only dream of, that the effect would be reduced provision?
As for the employer mandate—another fractured cornerstone of Obamacare—the administration has delayed it for one year. Even liberal supporters now want to repeal it, fearing damage to the labor markets.