The ‘Obamacare Is a Job Killer’ Myth

Conservative claims about the health care law’s effect on employment haven’t come true.


A favorite way for lawmakers to cast aspersions on a piece of legislation or a law they don't like is to label it a "job killer." When President Obama wanted to raise taxes on the richest 2 percent of Americans? " Job killer." Financial reform to rein in the banks after the 2008 crisis? " Job killer."

But special ire has been reserved for the Affordable Care Act, aka Obamacare. "In my opinion Obamacare is the biggest job killer we have in America today. It's a weight over every employer that we have," said Speaker of the House John Boehner, R-Ohio. Senate Minority Leader Mitch McConnell, R-Ky., added, "there are so many stories about businesses holding back from expanding or hiring — even cutting back on their workforces — it's hard to even count."

That view has become an article of faith amongst conservatives, particularly as a few employers have come forward to say they would be hiring or increasing their employees' hours if it weren't for that darn Obamacare.

[ See a collection of political cartoons on the Republican Party.]

But how much of this is actually true and how much of it is employers and lawmakers finding a convenient bogeyman for the still-sluggish economic recovery, blaming the country's ills on a law they don't like for ideological reasons? According to a new report from Helene Jorgensen and Dean Baker at the Center on Economic and Policy Research, the actual empirical evidence that Obamacare has a negative effect on employment is exceedingly thin.

First, some background: Opponents of Obamacare blame the so-called "employer mandate" – the requirement that firms with more than 50 workers provide full-time employees (those working more than 30 hours per week) with health insurance – for killing jobs. The Obama administration recently delayed the implementation of the employer mandate, giving firms another year before it comes into effect.

But until the administration's announcement, employers expected the mandate to take effect in 2014, which means their penalties, or lack thereof, would be based on their 2013 employment levels. So if the mandate was a job killer, or employers were reducing hours to keep workers part-time, that should show up in the data for this year. But as the CEPR report shows, that didn't happen:

[T]he number and percentage of workers putting in between 26-29 hours per week was slightly lower in 2013 than in 2012. The average percentage of workers in this category for 2013 was 0.597 percent. That is down from 0.604 percent in 2012. While this drop is not close to being statistically significant, the change is in the wrong direction for the ACA as job-killer story.

While there may certainly be instances of individual employers carrying through with threats to reduce their employees' hours to below 30 to avoid the sanctions in the ACA, the numbers are too small to show up in the data. It appears that in setting worker hours employers are responding to business considerations in much the same way as they did before the ACA took effect.

[ See a collection of political cartoons on Obamacare.]

Earlier this month, Mark Zandi, chief economist of Moody's Analytics, said much the same thing: "Health care reform does not appear to be significantly hampering job growth, at least not so far. Job gains are broad based across industries and businesses of all sizes." Meanwhile, it's important to remember how few firms we're talking about feeling the penalty in the first place. Some 94 percent of the employers that would be affected already provide health insurance voluntarily.

This "debate" sounds a lot like the one that pops up any time lawmakers suggest raising the minimum wage. A few employers inevitably come forward and say that the cost of increased wages will cause them to fire employees; those employers are then trotted out by conservatives to show how much damage a minimum wage hike will do. But then the data collected after-the-fact show that raising the minimum wage actually has no significant effect on employment.

Now, for a host of reasons, the employer mandate is bad policy, and should probably be sent packing entirely. But being a "job killer" is not one of them.