Here are Casey B. Mulligan’s estimates of the impact of emergency unemployment compensation ending in December 2013:
[R]eport after report has rolled in about employers restricting work hours to fewer than 30 per week — the point where the mandate kicks in. Data also point to a record low workweek in low-wage industries.
In the interest of an informed debate, we’ve compiled a list of job actions with strong proof that ObamaCare’s employer mandate is behind cuts to work hours or staffing levels. As of Oct. 17, our ObamaCare scorecard included 351 employers. (Full list is here.)
See previous post here. The effects seem more pronounced for small firms than for large ones (but remember: most larger firms are already providing health insurance). This is from a survey by the Foundation of Employee Benefit Plans (HT: David Beckworth):
More generous unemployment benefits tend to elevate participation rates since workers must be looking for work to qualify. With disability insurance (DI), however, the opposite applies: to qualify applicants must generally demonstrate that they cannot work. In theory, disability and unemployment should not be correlated — and from 1966 to 1985 they were not, according to a new study prepared for the Brookings Papers on Economic Activity by Olivier Coibion and two others. But in 1984 DI eligibility criteria were eased so that applicants could qualify based on a combination of conditions rather than just one. Since then, highly subjective conditions such as back pain and mental illnesses have grown to account for most DI beneficiaries, and claims have become more correlated with unemployment (see right-hand chart). That strongly suggests that many workers find a way to qualify for DI when other benefits have been exhausted…
[T]his could explain between 31% and 59% of the decline in participation among 16-to-64-year-olds.
Source: The Economist.
Because of ObamaCare, that is. This is from Casey Mulligan:
Work incentives for low-wage workers are eroded more than 10 percent of their compensation over the next couple of years, compared with 5 percent for midwage workers. Before the Affordable Care Act, the compensation for each additional hour of work by a low-wage worker, as with midwage workers, was split 50 percent, on average, for employee and 50 percent for the government. Under the law, it will be 39-61.
[U]nlike the Recovery Act’s program, [the Affordable Care Act] welcomes people out of work even if they left work by quitting, retiring or being fired for cause. It also welcomes people who have the possibility of joining a spouse’s plan and people who had no health insurance on their prior job.
Thus, we are about to begin a federal program that subsidizes layoffs to a degree that we have not seen before. Nevertheless, economic and budget forecasts by the Congressional Budget Office and others have yet to consider the effects of the layoff subsidy on the size of the program and the number of layoffs that will occur.
More from Casey Mulligan at The New York Times economics blog.
We market monetarists believe that monetary shocks [are] the primary cause of business cycles, indeed almost the only cause of big swings in unemployment…
Most people don’t believe this; indeed it’s not even clear that most economists believe this. Instead the average person thinks recessions are caused by big real shocks, or financial shocks, of one sort or another. Asset bubbles bursting, 9/11, stock market crashes, devastating natural disasters, etc…
[W]hen you turn your attention to the labor market you can really see how little real shocks matter. Real shocks do not cause big jumps in unemployment. Period, end of story. Even I’m surprised by this fact, but it is evidently true. Recessions are caused by unstable NGDP [nominal GDP], which is in turn caused by unstable monetary policy (by definition, as stable NGDP growth is my definition of a stable monetary policy — and Ben Bernanke’s too.)