By Lanhee Chen
(c) 2014, Bloomberg News.
Obamacare supporters have long argued that the law will not have a negative impact on jobs. President Barack Obama's latest delay of the employer mandate contains a clear admission that it will.
As recently as last week, advocates for the Affordable Care Act fiercely responded to a Congressional Budget Office report, which concluded that the law will push the equivalent of 2.5 million full-time workers out of the labor market by 2024. Liberal talking heads, journalists and White House officials argued that what the CBO report actually said was that Obamacare would help people pursue their dreams, unencumbered by the jobs that had been so brutally holding them in place. Republicans, of course, countered that the CBO report was tangible proof that the law is a job killer.
This week, the Obama administration finalized a regulation that delays enforcement of the employer mandate until 2015 for companies with 50 to 99 workers. Contained in the regulation was the clearest admission to date that Obamacare, and its employer mandate in particular, will indeed have a negative effect on jobs: To qualify for the delay, employers must certify that they haven't reduced the number of workers in their company, or the total hours of service of its employees.
Put another way, if employers are going to take advantage of the one-year delay in enforcement of the employer mandate, they have to attest (under penalty of perjury) that they aren't cutting jobs or reducing hours because of Obamacare. By pointing this out as a possibility — or an outcome to be avoided — the administration is acknowledging what it long denied: The law creates incentives for employers to cut hours and jobs.
The regulation delaying the employer mandate tries to give employers some flexibility, allowing them to reduce the number of employees for “bona fide business reasons” such as the “sale of a division, changes in the economic marketplace in which the employer operates, or terminations of employment for poor performance.” This raises the question of how the administration intends to enforce the very exception it has created.
After all, there can be a very thin line between workforce reductions due to “bona fide business reasons” and those due to the economic pressures created by Obamacare. But employers arguing that they reduced their workforces for bona fide reasons, particularly if they are at or near the 99 employee mark, are making themselves vulnerable to harassment by IRS auditors and other officials.
So why would the administration admit that Obamacare is bad for jobs? Perhaps to acknowledge the possibility that the law negatively affects jobs, and to attempt to avoid the negative labor market effects that critics of Obamacare have been warning about all along. Or maybe they figured that the employer community would be so busy celebrating the mandate delay that they wouldn't notice they were being asked to promise that Obamacare had nothing to do with their basic business decisions.
Most likely, the administration knew that these certifications would allow them to silence the very employers who have been warning, all along, that Obamacare (and its employer mandate in particular) incentivizes employers to cut hours and jobs. Now, it is those employers who have to keep their mouths shut (and argue that any job cuts are for bona fide business reasons) if they are to take advantage of the delay.
In short, the White House is trying to take a potent argument away from Obamacare's detractors, particularly in an election year. So, the next time a Republican complains that the law is forcing employers to cut jobs or hours, the White House has sworn certifications from some employers saying that's not the case. It's a clever political maneuver, but it comes with a very inconvenient confession: that Obamacare is a job killer after all.
Lanhee Chen is a Bloomberg View columnist, a research fellow at Stanford University's Hoover Institution and an adviser to several Republican campaigns, including that of California gubernatorial candidate Neel Kashkari. He was the policy director of Mitt Romney's 2012 presidential campaign.