Obamacare will push 2 million workers out of labor market: CBO

Obamacare will push the equivalent of about 2 million workers out of the labor market by 2017 as employees decide either to work fewer hours or drop out altogether, according to the latest estimates Tuesday from the Congressional Budget Office.

That’s a major jump in the nonpartisan budget agency’s projections and it suggests the health care law’s incentives are driving businesses and people to choose government-sponsored benefits rather than work.

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“CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 to 2 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor — given the new taxes and other incentives they will face and the financial benefits some will receive,” CBO analysts wrote in their new economic outlook.

The scorekeepers also said the rollout problems with the Affordable Care Act last year will mean only 6 million people sign up through the state-based exchanges, rather than the 7 million the CBO had originally projected.

But over the long run, Obamacare will eventually catch up and by 2020 only about 30 million people will be without insurance coverage — down from 45 million this year. That will mean about 92 percent of legal U.S. residents without guaranteed access to Medicare will have insurance coverage.

Via: Washington Times
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Youth Unemployment Tops 20%

Raising minimum wage is sure bet to create more jobless young Americans

The unemployment rate for 16 to 19 year olds was an astonishingly high 23.8 percent last month. The United States is facing a youth employment crisis.

Young workers are finding it increasingly difficult to enter the labor market, get their first job and work their way up the career ladder. Yet, during this time of persistently high youth unemployment, there have been calls to increase the minimum wage from $7.25 to as high as $10 per hour.

America's youth are having a hard time reaching the first rung on their career ladders. Now is a bad time to increase minimum wages and make that important step more difficult.

Higher minimum wages generate a tradeoff between higher wages for the employed and higher rates of unemployment. When minimum wages increase, many workers who earn less than the new higher minimum wage lose their jobs. Firms often decide that they can get by with fewer workers instead of paying higher wages.

As one might expect, David Neumark of the University of California's Irvinecampus and William Wascher of the Federal Reserve Board survey recent research on minimum wages and find that the least-skilled workers are hurt the most by minimum wages.

Minimum wages are particularly damaging for the future prospects of young workers as they typically earn the low wages that are impacted by the change in the minimum wage law.

In 2010, 50 percent of workers aged 25 and below, and 78 percent of teenagers earned less than $10 per hour. With youth unemployment topping 20 percent, it has become clear that employers are not willing to hire young workers at the current minimum wage, much less at an even higher one. It would damage the prospects of those willing but no longer able to work for wages below the minimum wage.

So in the short term, higher minimum wages make it difficult for young workers to find jobs. In the long term, higher minimum wages diminish the career prospects of young workers. Higher rates of unemployment mean that young workers do not have access to the resume-building activities associated with employment and do not gain the experience necessary to earn higher wages in the future.

Via: AEI

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