Obamacare's Collateral Damage

Lately, Obamacare’s defenders have been on message. They have been saying, over and over again, that the program is working well.

To hear them tell it, the program is not going to cost the Democrats too many votes in the next election.

Worse yet, they are talking as though Obamacare is here forever.

The Wall Street Journal has often editorialized about President Obama’s signature achievement. In a recent editorial it placed the program in a larger context, revealing what would be called, in other circumstances, collateral damage.

Whatever the advantage in getting some of the uninsured insured, part of the cost lies in the number of people who no longer have full time jobs.

Obamacare, the Journal explains, is a highly efficient job killer:

On Thursday the Federal Reserve Bank of Philadelphia reported the results of a special business survey on the Affordable Care Act and its influence on employment, compensation and benefits. Liberals claim ObamaCare is of little consequence to jobs, but the Philly Fed went to the source and asked employers qualitative questions about how they are responding in practice.

The bank reports that 78.8% of businesses in the district have made no change to the number of workers they employ as the specific result of ObamaCare and 3% are hiring more. More troubling, 18.2% are cutting jobs and employees. Some 18% shifted the composition of their workforce to a higher proportion of part-time labor. And 88.2% of the roughly half of businesses that modified their health plans as a result of ObamaCare passed along the costs through increasing the employee contribution to premiums, an effective cut in wages.

Those results are consistent with a New York Fed survey, also out this week, that asked "How, if at all, are you changing (or have you changed) any of the following because of the effects that the ACA is having on your business?" For "number of workers you employ," 21% of Empire State manufacturers and 16.9% of service firms answered "reducing."

Last week Janet Yellen, Chair of the Federal Reserve remarked that the job situation was not very good. True enough, the unemployment rate is down. True enough, the economy is creating more jobs. Unfortunately, most of those are part time jobs.

For those who cannot find full-time employment the job situation is dismal:

To complete the triptych, an Atlanta Fed poll earlier this month found that 34% of businesses planned to hire more part-time workers than in the past, mostly because of a rise in the relative costs of their full-time colleagues. ObamaCare may be contributing to that surge to the extent the law's insurance mandates and taxes increase spending on fringe benefits for people who work more than 30 hours.

As it happens, the workforce participation rate has never recovered from the recession.

The Journal explains:

Liberals will dismiss this as merely anecdotal or of minor impact, but it makes sense that ObamaCare's labor effects would be concentrated in some industries with relatively low-wage or marginal workers. The data points also help explain why the number of people employed part-time surged by 12% during the recession but the rate hasn't fallen even as the economy has improved. Or why labor force participation is the lowest since the late 1970s.