The best thing that Congress can do to unleash jobs creation is to repeal the Patient Protection and Affordable Care Act.
The law is discouraging businesses from hiring. According to a recent U.S. Chamber of Commerce survey, 33 percent of small business owners say the law is either their greatest or second-greatest obstacle to new hiring.
The president of the Federal Reserve Bank of Atlanta, Dennis Lockhart, says that “prominent” among the obstacles to hiring is the “lack of clarity about the cost implications” of the legislation.
“We’ve frequently heard strong comments,” Lockhart said, “to the effect of, ‘My company won’t hire a single additional worker until we know what health insurance costs are going to be.’ ”
The law also discourages people from seeking work. The director of the Congressional Budget Office, Douglas Elmendorf, said earlier this year the health law will mean 800,000 fewer workers in the American labor force. He said this is due to provisions in the health law that “will effectively increase marginal tax rates, which will also discourage work.”
James Sherk of The Heritage Foundation compared the rate of job growth before and after the health law was enacted in March of 2009. His analysis shows that jobs creation came to a screeching halt in the month after the measure was enacted.
In the first 15 months of the Obama administration, there were early signs of an economic recovery with employers hiring workers at an average rate of 67,600 a month. But when the measure was signed into law in late March 2010, the hiring freeze began. In the 15 months after the law passed, the economy added a mere 6,500 jobs each month on average – less than one-tenth the pre-health-care act rate.
Other factors are at work, of course. Companies must see an improvement in the business climate before they need to hire more workers. But there are enough other data points to strongly indicate that the uncertainty of health costs because of the act’s mandates is depressing hiring.
Starting in 2014, employers will be forced to provide expensive government-approved policies or pay federal fines. Larger companies already are starting to pare back on entry-level jobs, and some are automating to avoid the added cost of employing actual people.
McDonald’s restaurants and CVS drug stores, for example, are replacing some human order-takers and cashiers with electronic ordering and check-out systems. This especially hurts entry-level employees who need jobs to so they can get the skills to enter the workforce. Is it any surprise that teen unemployment has now hit 25 percent? The jobs they need are evaporating.
Another survey by Mercer consultants found that many employers plan to cut part-time employees back to fewer than 30 hours a week so they don’t have to provide them with health insurance.
“Small employers think the consequences of (the law) will almost uniformly be negative,” according to a survey by the National Federation of Independent Business’ Research Foundation.
It found that small business owners “expect the new law will increase taxes, will increase the federal deficit, will not slow health insurance cost increases, will not ease their administrative burdens, and will not improve public health.”
Before the health law passed, former House Speaker Nancy Pelosi promised: “So this bill is not only about the health security of America. It’s about jobs. In its life, it will create 4 million jobs – 400,000 jobs almost immediately.” Clearly, the health law is killing jobs, not creating them, and the best thing that Congress could do to spur jobs creation is to repeal the unpopular health law and lift the heavy cloud of mandates and regulatory burdens threatening employers.
Then Congress must offer a fresh approach to health reform that reduces health costs and frees employers to begin hiring again.
Published in The Sacramento Bee, September 1, 2011.