Tuesday, February 4, 2014


I never took economics, but even I know there are 2 basics to most markets, including the labor market: supply and demand.

I was, for a few years, quite active in AFTRA, the broadcasters’ union, serving on the NY Local Board, and as official shop steward or unofficial “point man” on labor issues at 2 radio stations and one TV news operations.  This gave me a fine appreciation of how that worked in labor negotiations:  the people who supplied the labor might push up the price of a job, but those who chose to demand controlled how many jobs were available.

Someone please tell the NY Times.

Health Care Law Projected to Cut the Labor Force”

That’s how the Times headlined its online report on a Congressional Budget Office (CBO) assessment of the effects of the Affordable Care Act (ACA a.k.a. “Obamacare”) on the American workforce.

First, this is not about jobs. It’s about workers — and the choices they make.” 

Kessler then explains, -- Times editors and staff take note – how ACA affects the workforce.  “The health insurance subsidies in the law,” he says, are “a substantial benefit that decreases as people earn more money, so at a certain point, a person has to choose between earning more money or continuing to get the maximum help with health insurance payments.”

 In other words, closer to my workforce experience, Obamacare frees (admittedly at the public expense) some people to ask the one labor question whose answer they control: “Is this job worth it?”

 Even if, in the CBO’s analysis, 2.3 million people over the next 10 years say, “Hell, No!” this does not mean they will not be replaced.

 Even if some employers will reduce their full-time workforce to duck contributing to their employees’ health insurance, this does not mean their hours will not be re-claimed by someone else.

All that comes from the demand side of the ledger.  The employer will hire as many workers as he needs, and smart employers will deploy them in the most efficient manner (even if that means fewer, but full-time workers rather than the greatest use of cheaper part-timers.)

Or, as WaPo’s Kessler points out, the CBO, -- his words --, “virtually screams,” its not-hard-to-understand analysis.  “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will [produce neither] an increase in unemployment or underemployment.

Rather than detail for you the Times’ mentally and politically unbalanced story, take a look for yourself at the Gray Lady’s triangulation: (1) the Republicans say this and this and this (2) which we admit doesn’t really square with the facts, but (3) what the Democrats give us is drivel.

Fair enough, but how does that correct the complete misconception of the CBO report with which the Times leads and frames the story?

I would quibble with one assumption Kessler makes:  “All things being equal, in a normally functioning economy, the total demand for jobs would equal 95 percent of the supply of jobs. So … over time, the nation does end up with a slightly smaller economy.”

Sounds like a mathematical certainty; except that it does not describe the real world (any more than the allegedly shrinking official unemployment rate describes the real world of job seekers’ opportunities).  Kessler assumes that the folks who “opt out” disappear, at least in terms of their net contribution to the economy.  But some of these people will continue to work, some of these will work “off-the-books” or in what we call “the black economy.”  A few will create new enterprises which in turn produce more jobs and more returns to both the official and unofficial economies.  It is possible the shifts in the workforce attendant upon ACA's subsidies will actually benefit the economy, not shrink it.

In free market terms, the folks whose main motivation at work was to protect their health benefits should be replaced by workers with more productive motivations.  One would bet (heavily) we are talking mostly about the replacement of older workers by younger, perhaps more vigorous, perhaps more flexible, perhaps more adaptable to the ever-changing needs of the employer.  Hang me for a geezer-traitor.

If the economy is to work, we should think not in terms of two workers for the price of 1.5, but 3 times the productive output from the cost of 2.5 new workers.

In any case, here’s one final lesson for the Times from the great Fact Checker of the Post: “If someone says they decided to leave their job for personal reasons, most people would not say they ‘lost’ their jobs. They simply decided not to work.”


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