• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Obamacare: No Prescription for Economic Recovery

    The economy is recovering at an unusually slow pace. Typically, employment grows strongly after a severe recession. Not this time. Unemployment remains stuck above 9 percent more than two years after the recession officially ended. What is going on?

    Initially, the economy appeared on track for a steady recovery. The economy went from losing 841,000 jobs in January 2009—the recession’s low point—to gaining 229,000 jobs in April 2010. By the spring of 2010, the Administration confidently predicted a “Recovery Summer.”

    But that spring, Congress also passed President Obama’s health care legislation. The law does not exactly encourage hiring.

    • 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;
    • Businesses with fewer than 50 workers have a strong incentive to maintain this size, to avoid these higher costs; 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.

    Within two months of Obamacare’s passing, the recovery stalled. The chart above comes from a recent Heritage WebMemo and shows net private-sector job creation from January 2009 onward. The red line shows the trend in job creation before and after April 2010. Private-sector job creation improved by an average of 67,600 jobs per month before April 2010.

    In May 2010, the job situation stopped improving. Job creation dropped to just 48,000 net private sector jobs, and private-sector hiring took a new course. From May 2010 onward, private job growth improved by only 6,500 jobs per month—less than one-tenth the previous rate.

    The fact that the job market ground to a halt after Congress passed Obamacare does not prove that the health care law caused it—correlation cannot prove causation. It does, however, lend strong weight to the voices of businesses who say the law is strangling them.

    In a recent survey, 33 percent of small business owners said the health care law was either their greatest or second-greatest obstacle to new hiring. Federal Reserve officials report similar concerns. The data suggest these businesses are not just blowing steam. The health care law has proven to be no prescription for recovery.

     

    Posted in Obamacare [slideshow_deploy]

    25 Responses to Obamacare: No Prescription for Economic Recovery

    1. Bobbie says:

      OBAMACARE promotes illness so everyone that has a government doctor job has a government doctor job to do.

      Cut obamacare and stop all personal tax exemptions. there's your compromise and tax revenue increases.

    2. Bobbie says:

      Increase tax revenues? stop discriminant PAYROLL tax exemptions!

    3. Daniel Rabiner says:

      Based on your 'analysis' if 'Obamacare' was not passed we'd be creating about 1 million jobs a month by now right because the first trend line would of continued at an unrealistic pace?

    4. Jeff, Illinois says:

      More importantly the chart shows that the net jobs change is positive. I'm sure there are other factors that affect the rate of job creation. Once the affordable healthcare plan is fully implemented there will be no going back because the populace will find it extremely beneficial. The constant demonization of the healthcare program is absurd and recent polls show that most people are supportive of it.

      • TimO says:

        That is about as absurd as the unachievable and health destruction bill itself. The same freedom hating, incompetant losers that are running oud r country right now will be trying to cure complex diseases. They can't even make speeches without telepromptors. I sure don't want these braindead traitors touching me or my family. They'll probably be hiring witch doctors. We already see experienced doctors leaving their practices. Less and less people are signing up for medical field education. (Why go to school for all those years to make average wages). 60% of the liberally educated high school graduates can't even get into a two year program without remedial training three month's after they graduate. And these are the people you want in the affordable deathcare industry. NO THANKS

    5. Charles says:

      The United States is becoming(or shall I say already) a Dead Zone for employment.Products are being made overseas and then sold through peoples computers on sight like EBAY,Amazon and ect…Our Manufacturing Plants are closing down and moving away We are a Nation of warehouses for Companys that send their product over and we distribute their products.We have become the Middleman.And for that our Nation has STOP growing in Jobs.If we don't take care of this now,there wont be Jobs in Manufacturing that Helps keep the Factorys and Plants growing.

    6. Jon says:

      "There are two kinds of propaganda — rational propa­ganda in favor of action that is consonant with the enlightened self-interest of those who make it and those to whom it is addressed, and non-rational propa­ganda that is not consonant with anybody's enlight­ened self-interest, but is dictated by, and appeals to, passion. Where the actions of individuals are con­cerned there are motives more exalted than enlight­ened self-interest, but where collective action has to be taken in the fields of politics and economics, enlight­ened self-interest is probably the highest of effective motives. If politicians and their constituents always acted to promote their own or their country's long-range self-interest, this world would be an earthly paradise. As it is, they often act against their own inter­ests, merely to gratify their least creditable passions; the world, in consequence, is a place of misery. Propa­ganda in favor of action that is consonant with en­lightened self-interest appeals to reason by means of logical arguments based upon the best available evi­dence fully and honestly set forth. Propaganda in fa­vor of action dictated by the impulses that are below self-interest offers false, garbled or incomplete evi­dence, avoids logical argument and seeks to influence its victims by the mere repetition of catchwords, by the furious denunciation of foreign or domestic scape­goats, and by cunningly associating the lowest pas­sions with the highest ideals, so that atrocities come to be perpetrated in the name of God and the most cyni­cal kind of Realpolitik is treated as a matter of reli­gious principle and patriotic duty. " -Brave New World Revisited, by Aldous Huxley

    7. Adam says:

      Your chart label is wrong. It's not 6,400 jobs/month. It's per month squared. But it would have been even more apparent how bogus this chart is if you labeled it accurately.

    8. Pingback: The Morning Links (7/21) | From the Desk of Lady Liberty

    9. Pingback: Obamacare: No Prescription for Economic Recovery | Fix Health Care Policy

    10. Judy says:

      Repeal Obamacare! Businesses are holding off hiring due to Obamacare. Neil Boortz on the radio had a sound clip with Pelosi stating, "If we pass Obamacare, it's about jobs. It'll create 400,000 jobs almost immediately." When it got shoved on the American people using chicanery and shoved down the throats of the American people, it turns out that after passing jobs dropped by 90%! If you rescind Obamacare, we would get back 1-1/2 Trillion under the debt ceiling plus saving another 1-1/2 Trillion that is slated in taxes to help fund Obamacare. It's been like a huge Ponzi scheme!

    11. Guest says:

      Dan … do you not know what the slope of a line is? The rate of increase was ~67,000 jobs/month. The line could extend like that to infinity and not change the rate at all — 67,000/month. The slope (rate) is what changed dramatically after ObamaCare. Now, we both know that even at a modest rate of increase we will at some point level off, as there aren't an infinite number of people in the US. But isn't it interesting to see the slope change so quickly at Congress' passing of that bill?

    12. kindness says:

      Man Heritage Foundation….you aren't even paying attention to your own graphs! Employment went up after the ACA became a law.

      I know your benefactors want you to Blame President Obama and Democrats for everything but could you at least make arguments that are supported by the facts you put forth?

    13. Guest says:

      Kindness … the argument being made is to show the change in job growth after the bill became law. Also, it was clearly stated that correlation does not default to causation, or did you not read that part? ( … correlation cannot prove causation …) Also, anemic job growth is not able to reduce unemployment — in fact, it has recently been on the rise — it's like trying to chase a car moving away from you at 60 mph while you only go 35. You never catch it. So, even though one can point to statistics that show jobs are being created, the fact is they are not being created At a pace that can keep up with those entering (or re-entering) the job market. Hence, rising unemployment.

    14. Josh says:

      Ha ha ha ha ha. No, seriously, this is incredible! Before health care reform passed, the economy was LOSING JOBS. Afterward, it was GAINING JOBS. But because the rate at which job losses slowed (but were still losses!) is higher than the rate at which jobs were created (but were still, you know, CREATED), this is an indictment of health care? Do you actually believe that? It's a serious epistemological question. I mean, do you (1) know you're peddling mathematical nonsense and are generally OK with it because it's good propaganda, or are you (2) just confused by math?

    15. Guest says:

      Josh …. a very appropriate name for you in this case … the argument is NOT that jobs were being created, nor was it that we were losing jobs up to a certain point. It's that the RATE of job production has slowed to a level that is causing rising unemployment, and that it coincided with the ObamaCare bill passage. That's it … anything else you wish to employ are only strawmen. If you wish to counter, please address that which is claimed.

      PS: I majored in math and taught college level statistics and technical math.

      • Rob says:

        Wow, I feel sorry for your students. Did you not notice that the change in slope also coincided with crossing the x-axis? Do you think that maybe (just maybe) that corresponds to some kind of real-world obstruction?

        ps I'm an actual mathematician, do I win?

      • Jeff, Illinois says:

        The chart . . doesn't """ necessarily """ suggest rising unemployment. That can not be determined from that chart, because what mathematically could be happening is the number jobs available to be filled could also be declining as the work force available to fill them decreases. There are only X number of jobs and Y number of citizens to fill them. As the two numbers converge there inevitably will be some compression in the chart. Though there may be some correlation that the rate of change of net jobs corresponds to an administrative action, there may also be other factors. Lost in the chart amazingly is the information that the trend in job creation became a net positive when the Obama administration came into office, and that before that during the end of the Bush administration the trend was rapidly negative.

    16. Dave says:

      This is a disgustingly misleading post since it fails to make clear that the rate of change prior to ACA was primarily due to a lessening of job loss, not net job creation. As to why the difference, very likely because not eliminating a job is much easier than hiring somebody new, but nowhere is this (or any other reasoning) mentioned. Clearly, the author was simply hoping some people would simply take a quick look, think that ACA had killed a period of net job creation going back to January 2009, and blame Obama and ACA.

    17. Eric says:

      Is it just me or does this chart seem to match the timing of Obama's stimulus as seen:
      http://research.stlouisfed.org/fredgraph.png?g=1e

      and from Mark Zandi of Moody's:
      http://www.economy.com/dismal/graphs/blog/mz_0622

    18. ottnott says:

      Per the chart, private employers started hiring after they knew the Healthcare Reform Act would pass. Cool.

      Now let's see a chart for before and after the Bush tax cuts.

    19. Bobbie says:

      seems some obamacare doctors or obamacare healthcare providers., have joined the conversation. Lets keep in mind who's hired and doing the hiring? Who's qualified? Who's ethical? Who's accountable? Who's held accountable? Who staffs efficiently? Who's efficient, period? Who's paying for these jobs (tax payers) and at whose expense? (tax payers and everyone's health by determination of the government.) get obamascare OUT! it serves no purpose but it's own. It's unconstitutional!! We want to trust with confidence, not by force!

    20. Bobbie says:

      gols, I wish you could've read the comment before the instant deletion…

    21. Bobbie says:

      thank you…

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×