Tag Archives: Labor Force Participation

New study: Obamacare will decrease workforce by 2 million full-time worker’s hours

He voted for Obamacare, and he got it

He voted for Obamacare, and he got it… good and hard!

The study was done by the non-partisan Congressional Budget Office (CBO), and reported by Fox News.

Excerpt:

ObamaCare will reduce work hours equivalent to 2 million jobs in the next decade amid a host of incentives not to work or to work less, a new Congressional Budget Office (CBO) report says — the latest blow to President Obama’s signature health insurance plan.

The report estimates the Affordable Care Act, or ACA, will make the labor supply shrink by 0.86 percent in 2025. This amounts to a shrinkage equivalent to approximately 2 million full-time workers.

The nonpartisan CBO estimates that the decline will come primarily due to workers responding to changes made by the law to federal programs and tax policy. The agency points to the introduction of health care subsidies tied to income as a key factor — which in turn raises effective tax rates as someone’s earnings rise, therefore reducing the amount of work Americans choose to do.

“Subsidies decline as income increases, reducing the return on earning additional income,” the report says. “That decline is effectively an increase in recipients’ effective marginal tax rate, so it generally reduces their work incentives through the substitution effect.”

Since the subsidies also reduce the burdens attached to unemployment, the CBO predicts that the law will create additional “work disincentives” for those who are unemployed for part of the year. It concludes that the exchange subsidies will contribute to half of the overall reduction of the labor supply.

The report also points to direct taxes, such as ACA’s hike of the payroll tax on high earners for Medicare’s Hospital Insurance Program, as a reason for discouraging some from working. Another pressure on wages will come from the employer mandate, which imposes a penalty on employers if they have more than 50 employees and do not provide insurance. The CBO predicts that within a few years this charge will be passed on to employees in the form of lower wages.

[…]The report comes at an awkward time for the Obama administration: just days after the Senate passed a bill that would repeal key parts of the law. The White House has said that President Obama will veto the legislation.

Oh well. It’s not like workers need to be paid fairly for their labor, right? I’m really not seeing how Obama expects the next generation to pay for the $10 trillion he’s added onto the national debt. If they are working less, then they are paying less in taxes. It’s fun to give speeches where you promise your gullible supporters a lot of goodies, but then, if the goodies discourage their employers from giving them work hours, then how will the spending be paid for?

More than anyone in modern politics, Barack Obama is a man who has perfected the art of sounding confident about things he literally knows nothing about. When elect a clown, you get failure. It doesn’t matter how confident a candidate sounds. It matters whether he has a record of solving the problems that he is talking about. Results, not rhetoric.

Gallup CEO: The real unemployment rate is much higher than 5.6%

This is a striking column from Jim Clifton, CEO of the Gallup polling company. His claim about the real unemployment rate is going to come as no surprise to most of my regular readers, who are used to me pushing labor force participation as the real measure of unemployment. Still, it’s nice to get some confirmation from high places.

He writes:

Here’s something that many Americans — including some of the smartest and most educated among us — don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.

There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.

There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

[…]Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America’s middle class.

Why does anyone think that higher taxes, massive government spending, huge deficits, and 18 trillion national debt would encourage job creators to create more jobs? Only a Democrat voter could believe that making things worse for job creators would actually result in more jobs. And maybe it does – just in some other country, when the companies here tire of high taxes and burdensome regulations and ship their jobs overseas.

Here is the labor force participation graph:

Labor Force Participation 2015
Labor Force Participation 2014

That’s where unemployment really stands – this is what Democrats like Barack Obama, Nancy Pelosi and Harry Reid deliver. The Republicans lost control of the House and Senate in January 2007, and George W. Bush was a good President, but a lousy at vetoing socialist bills passed by Pelosi and Reid. Every dip in the labor force participation from 2008 on should be blamed on Democrats. They were in the driver’s seat, they crashed the car.

 

Obama’s unemployment: 11,472,000 Americans left the workforce since January 2009

CNS News reports.

Excerpt:

11.4 million Americans age 16 and over have left the workforce since President Obama took office in January 2009, according to data released today from the Bureau of Labor Statistics (BLS).

In July 2014, there were 92,001,000 Americans, 16 and over, who were classified as “not in the labor force,” meaning they not only did not have a job, but they didn’t actively seek one in the last four weeks.

This number has increased by 11,472,000 since January 2009, when the number of Americans not in the labor force was 80,529,000.

The number of Americans not in the labor force dropped slightly in July, down 119,000 from the 92,120,000 Americans not in the labor force in June.

The participation rate, which measures the percentage of the civilian non-institutional population that participated in the labor force by either having a job or actively seeking one, increased from 62.8 percent in June to 62.9 percent in July.

In July, the number of unemployed Americans increased by 197,000 (from 9,474,000 in June to 9,671,000 in July), meaning they did not have a job even though they were actively seeking one.

While the number of unemployed increased in July, so did the number of employed Americans: In June, there were 146,221,000 employed Americans, and that number climbed to 146,352,000 in July, a one-month increase of 131,000.

By contrast, George W. Bush created 8.1 million jobs after his 2003 tax cut.

Excerpt:

Obama and other critics of Bush’s tax cuts argue that they did little to boost economic growth or jobs. But they tend to start their count when Bush signed the first tax cut bill into law in mid-2001.

The problem is that much of that tax plan — including reductions to most of the income tax brackets — wasn’t scheduled to take full effect until 2006.

Bush’s second tax cut, signed in May 2003, accelerated those tax cuts, letting them kick in retroactively to the beginning of that year. The 2003 law also cut taxes on capital gains and dividends.

It turns out that the month after Bush signed that 2003 law, jobs and the economy finally started growing again.

From June 2003 to December 2007, the economy added 8.1 million jobs, according to the Bureau of Labor Statistics. The unemployment rate fell to 5% from 6.3%. Real GDP growth averaged close to 3% in the four-plus years after that, and the budget deficit fell steadily from 2004 to 2007.

And despite Obama’s claim, Bush’s policies did not increase income inequality. In fact, inequality was the same when Bush left office as when he came in, according to theCensus Bureau. A study by University of California economist Emmanuel Saez found that inequality has climbed much faster under Obama.

What’s more, the rich ended up paying a larger chunk of the federal income tax burden after Bush’s tax cuts went into effect, with the share paid by the top 1% rising to 40% by 2007, up from 37% the year before Bush took office, according to IRS data.

The Congressional Budget Office, meanwhile, found that the federal income tax was more progressive in 2007 than it was back in 1979.

Recall that these tax cuts didn’t cost us a thing – the 2007 deficit was $160 billion dollars, which was down from the previous year. Economic growth raised tax revenues.

When you let job creators keep more of their own money, they create jobs. When you tax and regulate job creators more, you destroy jobs. You can’t argue with the Bureau of Labor Statistics numbers. These are the official numbers and they show that Obama failed where Bush succeeded.

Young people who voted for Obama are holding fewer and fewer jobs

Youth labor force participation
Youth labor force participation

Stephen Moore writes about Investors Business Daily.

Excerpt:

Economists are scratching their heads trying to figure out a puzzle in this recovery: Why are young people not working? People retiring at age 60 or even 55 in a weak economy is easy to understand. But at 25?

The percentage of adult Americans who are working or looking for work now stands at 62.8%, a 36-year low and down more than 3 percentage points since late 2007, according to the Labor Department’s May employment report.

This is fairly well-known. What isn’t so well-known is that a major reason for the decline is that fewer and fewer young people are holding jobs. This exit from the workforce by the young is counter to the conventional wisdom or the Obama administration’s official line.

The White House claims the workforce is contracting because more baby boomers are retiring. There’s some truth to that. About 10,000 boomers retire every day of the workweek, so that’s clearly depressing the labor market. Since 2009, 7 million Americans have reached official retirement age. The problem will get worse in the years to come as nearly 80 million boomers hit age 65.

But that trend tells only part of the story. The chart above shows the real problem: The largest decline in workforce participation has been those under 25.

[…]We do no favors to the young by teaching them that they can consume or have a good time without first earning the money they spend.

I think young people are often brainwashed at a young age to think that bashing the free enterprise system and voting for socialism isn’t going to take away their jobs. But if you vote to tax and regulate the businesses who may employ you later, you’ll find that they are too busy groaning under the strain of big government to employ you.

If young people were serious about getting jobs, they’d be voting to cut subsidies on universities to lower tuition costs, to lower corporate taxes, to cut environmental regulations, to repeal Obamacare, and so on. They would be more concerned that schools teach them actual skills instead of politically correct views, and so they would be voting for school choice and for right-to-work laws, to weaken the teacher unions who are not accountable to them. They should be voting against the minimum wage hikes that will price them out of an all-important first job. They should be voting against the (more than) doubling of the national debt in the 5.5 years under Obama. Job offers are not just there independent of the legal and economic environment. And just reaching a certain age doesn’t mean that you are qualified for a job.

Only 74,000 jobs added in December, lowest in 3 years

Labor Force Participation down to 62.8%
Labor Force Participation down to 62.8%

CNS News reports on the disappointing job numbers.

Excerpt:

The economy added only 74,000 non-farm jobs in December, the fewest in three years. Yet the unemployment rate dropped 0.3 points to 6.7 percent — the first time in 60 months it has dropped below 7 percent, the Labor Department announced on Friday.

With so few jobs added, the jobless rate still went down because people stopped looking for work.

The Bureau of Labor Statistics says the number of unemployed persons declined by 490,000 to 10.4 million in December, indicating that many of them dropped out of the labor force.

The government counts people as unemployed only if they are actively searching for work.

[…]In 2013, job growth averaged 182,000 per month, about the same as in 2012, when it averaged 183,000 a month.

I am thinking about whether the Obama administration has done anything in the last 5 years to create any jobs. I know they could have suspended the employer portion of payroll taxes. They didn’t do that. They could have allowed the Keystone XL pipeline. They didn’t do that. They could have repealed Obamacare so that employers didn’t have to reduce worker hours to avoid having to pay penalties. They didn’t do that. They could have stopped borrowing over a trillion dollars a year. They didn’t do that.

So I am just wondering what exactly this government has done to create jobs. I know the economy is resilient, and some jobs get created every month, no matter what. But I would like someone to tell me how this government has encouraged the private sector to hire more workers. I think if they had done anything to specifically address jobs, then I would know about it.

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