Comments and observations on social and political trends and events.

Saturday, September 3, 2011

Economic Recovery Stalled After Obamacare Passed - James Sherk

James Sherk of the Heritage Foundation released a report which indicates that Economic Recovery Stalled After Obamacare Passed. The primary reasons are outlined below.

The law discourages employers from hiring in several ways:
  • Businesses with fewer than 50 workers have a strong incentive to maintain this size, which allows them to avoid the mandate to provide government-approved health coverage or face a penalty;
  • Businesses with more than 50 workers will see their costs for health coverage rise—they must purchase more expensive government-approved insurance or pay a penalty; and
  • Employers face considerable uncertainty about what constitutes qualifying health coverage and what it will cost. They also do not know what the health care market or their health care costs will look like in four years. This makes planning for the future difficult.

There is a telling graph showing how job growth per month flattened almost immediately after the passage of the bill. Admittedly that by itself doesn't prove that Obamacare was the culprit. I think Sherk's explanation makes sense though. In addition in discussions with my accounts almost every one has said their sales have improved but they're reluctant to start hiring again because of the uncertainty of what other regulations might be imposed on them. The known affects of Obamacare and the unknown future regulations makes for a potent double whammy on job creation.

When I mention this to liberal friends here in Massachusetts their typical reaction is to shrug it off as if to say “Oh well, too bad. Those businessmen will think of something.” It’s as though they believe businesses have unlimited resources, an infinite capacity to bear any burden and an unfair advantage over us proles. In one sense this is true, for those crony capitalists who curry the favor of their government buddies to form an unholy alliance that protects the businesses from competition. But I don’t believe this applies to most businesses who don’t have an inroad to the Capitol and who have to find ways to absorb the constantly increasing financial and regulatory demands while still making a profit and declaring a dividend (if they’re a publicly held company) to their shareholders.

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