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John Stoehr: What Obamacare Threatens

March 5, 2014

It’s not Americans’ jobs, but big business’s supply of cheap, compliant labor.

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Image from Flickr via DonkeyHotey

By John Stoehr

The Republicans give various reasons for their opposition to the Affordable Care Act, but only two matter. One—the states’ rights argument—has been obvious since Obamacare became law, but the other was revealed just recently. With this new revelation, it’s clear the Republicans are on even shakier ground than they already were. As the country continues to feel the impact of economic inequality, the Republicans may reconsider their big-business loyalties.

The first is political. Like Social Security and Medicare, Obamacare is creating a national electorate predisposed to supporting the party that championed the law. Meanwhile, the more time Americans have to experience the law, the more Republicans will have to modify their stance. As the years go by, it may be suicidal to attack Obamacare openly.

Of course, the Republicans can’t say they oppose Obamacare because it’s good for the Democratic Party. So they say it violates states’ rights. They say it infringes on individual liberty and or that it hurts small businesses.

None of these has withstood scrutiny. The law was written with states in mind. That’s why states can build and run their own insurance exchanges according to the needs of state residents. The law’s “individual mandate,” which requires that everyone buy health insurance, doesn’t erode individual liberty. The Supreme Court said the federal government has the authority to tax individuals who don’t buy insurance just as it has the authority to tax their income.

The voluntary exit of more than 2 million workers from the workforce will have a tightening effect.

There’s also the argument that Obamacare will cost people their jobs. So far, that’s not the case. It will be some time before we know about the law’s full economic impact, but for now the evidence suggests just the opposite. It puts more money into the pockets of more people who will spend it, according to a report by the Congressional Budget Office.

Wasn’t that the same report that said Obamacare is killing jobs? Indeed, many news outlets reported exactly that. But that’s a misreading of the report. And that report leads us to the second reason for Republican opposition. Unsurprisingly, it’s about money.

More precisely, whose money. The CBO found that some workers—mothers with small children, students and those close to retirement—have voluntarily left the workplace because, thanks to Obamacare, they didn’t need a job to maintain access to quality health care. They quit to take care of kids, focus on educations or settle into their golden years. That’s not such a bad thing, and when properly understood this way, it takes a lot of the air out of the critique that the Affordable Care Act reduces the incentive to work.

When you strip away the rhetoric while seeing what Obamacare actually does, it’s clear the main reason Republicans continue to oppose the law is that it raises wages and increases workers’ bargaining power.

Instead, the voluntary exit of more than 2 million workers will have a tightening effect. When labor markets are slack—as they have been in recent years—workers have less bargaining power. When they are tight, workers can make more demands. But a tight labor market means more than just bargaining power—it means higher wages too. When the supply of labor decreases, the cost of labor increases. As long as the number of jobs keeps steady, or grows, the employed should see wages go up. When coupled with greater bargaining power, wages may rise further. A similar dynamic emerged in the 1940s and 50s when union membership was at its peak.

At the same time, money saved on health care can be spent in things that small businesses sell. Yes, I know. Republicans claim higher wages are bad for small businesses—they can’t absorb the cost, so pass it on to customers or hire fewer people. Therefore, Obamacare is a job-killer.

But that’s incorrect. Wages are not the top concern of small businesses. Taxes and poor sales are. So with more money in more pockets of the people who will spend it, small business sales should climb. And with stronger sales, small businesses might be in better positions to hire.

When you strip away the rhetoric while seeing what Obamacare actually does, it’s clear the main reason Republicans continue to oppose the law is that it raises wages and increases workers’ bargaining power. As the party of big business, which the GOP makes little effort to hide, the Republicans hate Obamacare because it threatens the great fortunes of their core constituency, big corporations that have for years enjoyed the fruits of cheap labor.

John Stoehr is the managing editor of The Washington Spectator.

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