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Old 02-07-2014, 07:49 AM   #41
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Here is a pretty good report from the CBO that discusses the reasons for the slow recovery of the labor market--

http://www.cbo.gov/sites/default/fil...rketReview.pdf
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Old 02-07-2014, 07:54 AM   #42
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Anybody find it strange that almost everybody on this site admits to not knowing what the markets are going to do because it is so complicated.....but on the ACA topic there are a lot of people who seem to know what is going to happen? Seems pretty complicated to me and I am going to sit back and wait until the dust settles....I know I'm not smart enough to figure it all out.
Good point.
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Old 02-07-2014, 09:00 AM   #43
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The labor force participation rate dropped sharply because it is much harder to find a job than it was before the financial crisis, not because workers suddenly found "more attractive alternatives" to work.
It's not either/or, it's both. There's less work (whether we measure it as full-time jobs or raw hours) being done today than in 2009. But, there are also many more people who have dropped out of the official labor force and are no longer being counted as unemployed (even by the BLS's U-5 or U-6 standards, which is not what we normally see quoted).
Charts from the BLS. See slide 19. Note that the "Discouraged" and "Marginally Attached" numbers shot up after 2009 and remain high. These are people who have looked for work within the last 12 months, but not within the last 4 weeks. Now, I suppose this is subjective, but if a person is unemployed/underemployed and hasn't looked for a job/better job in the last 4 weeks, I think it's hard to make the case that they are "desperate for work." And the chart doesn't even count people who haven't looked for a job in 12 months--they just drop out of the denominator and, if no new workers entered the labor force the unemployment rate would eventually go very low.
Summary: Labor force participation is decreasing because there are fewer people working and because there are fewer people who want to work. By the numbers.
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Old 02-07-2014, 09:14 AM   #44
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Summary: Labor force participation is decreasing because there are fewer people working and because there are fewer people who want to work. By the numbers.
And this is why numbers don't tell the entire story.
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Old 02-07-2014, 09:41 AM   #45
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Agreed. The CBO report I posted does a really good job of breaking all of it out.

I think my point that there is still more demand for jobs than there is supply still stands. The labor market is still pretty bad overall. We still have millions of people that would prefer to be working if the economy was doing well enough to generate more jobs.

As long as that is the case, the affects of the ACA facilitating voluntary retirements in the workforce are unlikely to have a large negative effect on GDP, unless the people doing the retiring have skillsets that can't be met by the people still looking for work.


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It's not either/or, it's both. There's less work (whether we measure it as full-time jobs or raw hours) being done today than in 2009. But, there are also many more people who have dropped out of the official labor force and are no longer being counted as unemployed (even by the BLS's U-5 or U-6 standards, which is not what we normally see quoted).
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Old 02-07-2014, 11:12 AM   #46
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E-Z fix time!

Just change the law slightly so that people must be employed for one continuous year before being able to claim Social Security. No more worries about people using the ACA to retire early, no problems with the 'reduced productivity' boogieman, and best of all, employers won't have to worry about improving incentives to get people to work for them.

Continued access to relatively cheap labor, improved productivity, and an incentive to participate in the work force! Sounds like a win all around, except maybe for a few members of the 'moocher/looter' class.

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Old 02-07-2014, 11:36 AM   #47
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Sounds like a win all around, except maybe for a few members of the 'moocher/looter' class.
I resemble that remark. Oh and hey, get off my lawn
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Old 02-07-2014, 11:58 AM   #48
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E-Z fix time!
Hey, it's a good start. See if we can link in other programs (food stamps, EITC, elimination of the standard deduction for non-workers, etc). Include sudden and somewhat arbitrary hard cutoff points (income, wait times) and I think it will be something that might be obtuse enough to live forever.
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Old 02-07-2014, 01:30 PM   #49
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Even worse, the workers, now free of 'job lock', may go off and become independent competition! .....
Partially agree. Although shall-issue HI has been available to prospective IC's for some time in many states & through many professional societies, for others ACA should make it easier to leave megacorp & start their new business. However this positive for economic growth may be at least partially offset by ACA "cliffs" which create some very real incentives for that IC to limit their business. A sole proprietor supporting his/her family of 4 is going to think long and hard about taking on that next small/mid-sized contract in Nov or Dec that puts the yr's income beyond the 'magic' $94+k or 400% FPL (with loss of $thousands in HI subsidy). And I personally know more than 1 business owner with 40-45+ employees who has cancelled plans to expand specifically because those next few hires (to 50+) would subject the business to employee HI mandate & destroy their already slim profit margin.

Not trying to discourage anyone from becoming an IC, but ACA has added a few twists (pos & neg) to the decision.
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Old 02-07-2014, 01:53 PM   #50
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Yes, I think it would make a lot of sense to smooth out those cliffs to make the incentives less perverse. I also think that if the exchanges work more or less as designed, it might make sense to consider dropping the employer mandate entirely so that we can inch towards getting employers out of the health insurance business at some point in the future.

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Partially agree. Although shall-issue HI has been available to prospective IC's for some time in many states & through many professional societies, for others ACA should make it easier to leave megacorp & start their new business. However this positive for economic growth may be at least partially offset by ACA "cliffs" which create some very real incentives for that IC to limit their business. A sole proprietor supporting his/her family of 4 is going to think long and hard about taking on that next small/mid-sized contract in Nov or Dec that puts the yr's income beyond the 'magic' $94+k or 400% FPL (with loss of $thousands in HI subsidy). And I personally know more than 1 business owner with 40-45+ employees who has cancelled plans to expand specifically because those next few hires (to 50+) would subject the business to employee HI mandate & destroy their already slim profit margin.

Not trying to discourage anyone from becoming an IC, but ACA has added a few twists (pos & neg) to the decision.
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Old 02-07-2014, 02:10 PM   #51
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Yes, I think it would make a lot of sense to smooth out those cliffs to make the incentives less perverse. I also think that if the exchanges work more or less as designed, it might make sense to consider dropping the employer mandate entirely so that we can inch towards getting employers out of the health insurance business at some point in the future.
If HI costs keep going up there may be less and less impetus to drop the employer mandate. Employer-provided insurance will become less significant if businesses increasingly decide to pay the fine/tax/whatever and their employees have the option to go to the exchanges (and some will thereby get subsidies). If so, the "job lock" becomes even less of a problem and, as the national cost of providing the resultant subsidies will be escalating there will be little appetite for reducing the $$ gained from the fine/tax/whatever being paid by businesses. If all this comes to pass, it will just amount to an additional tax paid by medium/large American companies (with the resultant impact on their international competitiveness). Which brings us back to the discussion about jobs and where they come from.
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Old 02-07-2014, 02:18 PM   #52
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it might make sense to consider dropping the employer mandate entirely so that we can inch towards getting employers out of the health insurance business at some point in the future.
+1

If employers would simply stop providing HI coverage to employees while offering the necessary pay levels to attract and retain the people they would like to have on their team, job lock would be gone and labor efficiency would be greatly enhanced. The "employer mandate" promotes job lock.
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Old 02-07-2014, 03:47 PM   #53
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Old 02-08-2014, 11:44 AM   #54
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There's an interesting opinion article in the WSJ today about the effect of the ACA on employment and why the CBO made adjustments to their projections in the recent report. The article can be seen here....

http://online.wsj.com/public/resourc...5-20140208.pdf
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Old 02-08-2014, 05:37 PM   #55
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It's pretty standard supply-side nonsense. He seems to think that having 20 people apply for a job instead of ten magically creates more jobs.

It's like saying soup lines caused the Great Depression.

There are times that you can end up constraining the economy by reducing the supply of labor. It would be bad to extend unemployment benefits when you've got 4% unemployment, for example.

There may come a time when the reduction of the labor supply constrains the economy, but one key symptom of when that is happening is wage inflation, which is pretty much non-existent right now.


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There's an interesting opinion article in the WSJ today about the effect of the ACA on employment and why the CBO made adjustments to their projections in the recent report. The article can be seen here....

http://online.wsj.com/public/resourc...5-20140208.pdf
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Old 02-08-2014, 07:15 PM   #56
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There's an interesting opinion article in the WSJ today about the effect of the ACA on employment and why the CBO made adjustments to their projections in the recent report. The article can be seen here....

http://online.wsj.com/public/resourc...5-20140208.pdf
Interesting. Would this imply that countries with government supplied heath care are already "suffering" this side effect?
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Old 02-08-2014, 07:30 PM   #57
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Interesting. Would this imply that countries with government supplied heath care are already "suffering" this side effect?

Yeah. It turns out that most people interested in early retirement evaluate whether or not they are financially independent in terms of the locale where they intend to retire. I'm pretty sure the average English prospective early retiree doesn't include £1,000 a month for medical insurance for himself and the spouse.

Now the USAians, faced with guaranteed issue insurance and no more high risk pools with high rates and/or waiting lists, are beginning a demographical transition to a new equilibrium. This, as do many other changes, frightens or disturbs some people.
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Old 02-08-2014, 09:09 PM   #58
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Interesting. Would this imply that countries with government supplied heath care are already "suffering" this side effect?
It probably depends on the incentives their systems contain. Like the article points out, the hit to the US economy from the ACA is due to the way the incentives are structured. It's good that the CBO is agreeing with this, too bad they didn't do a more thorough analysis when it might have mattered more.

For those who haven't read the article, it is a profile of the work of an economist whose work helped the CBO come to their latest revised estimate of the employment impact of the ACA. It addresses the impact of subsidies, primarily, and says little about the whole "job lock" issue.

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It's pretty standard supply-side nonsense. He seems to think that having 20 people apply for a job instead of ten magically creates more jobs.
I doubt he thinks it's "magical." He might have noticed that having more unemployed people leads to lower labor costs (true), which makes it possible to have people do work that was not economically viable at higher labor rates (also true). Yes, having more unemployed people does create more jobs--not on a one-for-one basis, and not by magic, either.
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Old 02-08-2014, 09:40 PM   #59
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Do you think having falling wages during the crisis would have helped the economy, or actually done more damage?

Those lower wages mean lower spending, which means lower revenue for businesses, which lowers demand for labor as well. Those lower wages would have also meant higher rates of credit defaults as vast numbers of people making less money were unable to pay their creditors. Those creditors would then be unable to pay their creditors, etc, etc.

Deflation is death to an economy built on credit.

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I doubt he thinks it's "magical." He might have noticed that having more unemployed people leads to lower labor costs, which makes it possible to have people do work that was not economically viable at higher labor rates. Yes, having more unemployed people does create more jobs--not on a one-for-one basis, and not by magic, either.
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Old 02-08-2014, 09:54 PM   #60
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+1

If employers would simply stop providing HI coverage to employees while offering the necessary pay levels to attract and retain the people they would like to have on their team, job lock would be gone and labor efficiency would be greatly enhanced. The "employer mandate" promotes job lock.
But employers like job lock. After all a traditional defined benefits pension is another thing that locks one to a job, in particular after one is vested. (It is the final average pay formula in addition). The issue is keeping the 10-15 year experience contingent. So you have the HI job lock and the DB pension job lock. (After all a big part of the packages execs that move get is making them whole on their earlier pension i.e. paying as if the person had stayed at the original company and using the new final average pay.
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