We already know that Obamacare requires employers with 50+ workers to provide health insurance to all full-time employees (now defined as 30+ hours/week) or pay a $2k penalty/worker. That means the cost of current and future employees will increase.
No need to predict there. Logic dictates.
During 2013, business owners have been deciding whether to hire more part-time workers--to avoid the costs of providing health insurance--or to pay the penalty for full-time employees and reduce the insurance expense. At year's end, it seems that in 2013 the former has been the preferred options with many businesses, especially small businesses, opting to turn more jobs into part-time work and let the employees sign up for Obamacare.
The Motley Monk thinks those who designed Obamacare wanted that all along. So, there's no need to predict there. The increase in part-time work has already been "baked into the cake."
But, The Motley Monk has discovered a couple of scenarios that those who designed Obamacare may not have thought enough about, especially with 2014 being an election year.
In a New York Times article last August, the University of Chicago economist, Casey Mulligan, pointed these out:
- ObamaCare will contract the labor market because the law will depress American's incentive to work, and hence, the labor supply. Even those with full-time jobs will have a stronger incentive to work less because nearly everyone is required to purchase healthcare insurance. What used to be a "benefit" of employment will increasingly become a personal, after-tax expense.
- Obamacare will provide additional subsidies to low-income families and adds four significant, permanent, implicit unemployment assistance programs, plus various implicit subsidies for underemployment.
- An individual earning 138% to 400% of the poverty line qualifies to receive a federal tax subsidy for health insurance bought on a government exchange. Anyone earning 400 %+ is likely to try to reduce income below the 400% level. Working a little less achieves this goal.
Mulligan points out there's no way to know for sure how Americans will respond to the higher taxes that are part of Obamacare. But, it seems that 2014 will feature: a contracting labor market and labor supply; federal subsidies and unemployment programs will grow; and, productivity will decrease.
So, on that happy note, The Motley Monk wishes his fellow citizens a Happy Obamacare New Year!
Let the discussion begin...
To read Casey Mulligan's article in the New York Times, click on the following link: