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Home Publications Blogs Beat the Press Scary Uncertainty Over Obamacare Slows the Economy (Right)

Scary Uncertainty Over Obamacare Slows the Economy (Right)

Tuesday, 30 April 2013 05:10

In an article about problems with the implementation of Obamacare the NYT tells readers:

"Uncertainty over the law’s future hung over employers and investors throughout 2012. 'It impeded the recovery,' said the economist Mark Zandi."

It's difficult to see what this uncertainty would be and who exactly would be affected. The vast majority of large firms, the ones who employ more than 50 people and would face new obligations under the Affordable Care Act (ACA), already provide workers with health insurance. There seems little basis for the often expressed concern that firms can put themselves over the line by hiring a 50th worker, given the fact that firms can fire workers at any time for no reason in the United States. The firms that don't provide health care seem especially unlikely to be worried about dismissing a worker in order to avoid costs imposed by the ACA. (There is also a large amount of turnover, so a firm near the threshold could almost certainly quickly fall below the 50 person cutoff through attrition.

News reports have routinely repeated assertions from economists about uncertainty affecting the economy which have subsequently proven to be without foundation. For example, there were numerous reports in the business press last fall which claimed that uncertainty over the "fiscal cliff" was leading firms to delay investment. As it turned out, investment grew at a 13.2 percent annual rate in the fourth quarter of 2012. It grew at just a 2.1 percent rate in the first quarter of 2013.

When reporters present economists' assertions about uncertainty having an impact on the economy they should press them for evidence for this claim. That could prevent news stories from misleading readers in the future.

Comments (1)Add Comment
Is Mark Zandi an Economist or Does He Just Play One on TV for His Clients?
written by Last Mover, April 30, 2013 7:36
Or just apply the other metric typically used by Dean Baker to debunk uncertainty myths. If demand is really there and uncertainty is all that stands in the way of supplying it:

Why isn't overtime expanding by employers unwilling to hire more employees in the short run?

On the downside, where Obamacare can let employers off the hook from providing health care for part time workers, that's more about the certainty of not providing health care.

Again, if demand is really there, more part time workers would be hired rather than downgrading existing full time workers to part time status with little change in total employed hours.

Mark Zandi knows better. Employers don't leave money on the table and when demand is really there, money is really on the table.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.