What's happening to the workweek in low-wage industries?

http://news.investors.com/politics-obamacare/020714-689319-low-wage-workweek-hits-new-low-with-obamacare.htm

Gerri and Sebelius

http://video.foxbusiness.com/v/3223019970001/white-house-denying-obamacares-impact-on-jobs/

Lou Dobbs and Me

http://video.foxbusiness.com/v/3218002758001/is-obamacare-a-disincentive-to-work/

The ACA and wages

The ACA reduces hourly employer cost in at least 3 ways:

(1) employer penalty. I doubt the national accountants will count this as employee comp, so it will lower measured employer cost even if it raises marg prod of labor

(2) productivity. the aca changes the allocation of factors to sectors and the allocation of spending to sectors. my best estimate is that it lowers productivity one percent

(3) for large segments of the population, quasi-fixed costs of employment are amortized over fewer hours. ie, part-time jobs pay less per hour than full-time jobs do.

Trevor and I have a paper with two of these effects. "wedges, wages and productivity under the ACA"

A paper with the third is almost ready for NBER wp. Trevor also looks at the productivity losses from inducing employers to keep FT employment below 50.

Far more important than any of this is what the ACA does to AFTER-TAX wages: sends them to zero in too many cases. I'd like to see the empirical labor economists try to take the log of that!

Cutler and Pollack are not with the White House Economists

Both Cutler and Pollack got the wrong impression that I called them dishonest. I did not write the WSJ article and did not call them dishonest. I told the WSJ interviewer that the 2011 letter authors and signers were unaware of the disincentives in the ACA:

there was "a general lack of awareness" and economists simply didn't realize everything that government was doing to undermine incentives for work. "You have to dig into it and see it,"

Regarding the White House economists and their allies this week (neither Cutler nor Pollack are in that group. Hardly any of the letter signers are either) who now praise the market-contracting/drudgery-avoiding attributes of their policies, I said "it looks like they're trying to leverage the lack of economic education in their audience by making these sorts of points."

To be clear, Cutler and Pollack did not and are not trying to leverage the lack of economic education ... That's Furman, Krugman, etc.

Remember what the President said about the ACA and the Labor Market

CBO moves toward my estimate

I have predicted that the ACA would contract the labor market about 3 percent. Maybe more, maybe less, but that was my best guess. I continue to work on it.

Meanwhile, CBO was saying 0.5 percent, and my critics (rather than giving an economic argument), point to the "nonpartisan CBO's" estimate as proof that I am out on the fringes.

Today CBO revised -- tripled -- its estimate to 1.5 percent. They still have a bit of the economics wrong, but it is a major step that they now acknowledge most (but not all) of the incentives that have been identified, and their analysis is vastly closer to mine now.

CBO should be credited for honestly re-assessing perhaps their most cited estimate ever. I imagine that it might have been tempting to stick with the original. But CBO Director Elmendorf was one of my teachers in college, and knowing him I expected that a better estimate would be forthcoming as research increasingly clarified what was missing in the original.

I also give the CBO credit for never falling into the trap that ACA = Romneycare, ergo the ACA's labor market effects are minimal. HHS will be asked to answer the CBO's revision, and I guarantee you that they will tempt the rest of America to fall in the trap.

The real problem for America was not the CBO estimate but that such a sweeping law was passed before the best economists in the nation could digest the incentives and unintended costs that it contained.

Prediction Comes True, Belatedly

A year and a half ago, I predicted "I suspect that ... in less than a year major carriers will have to reduce their monthly cellular charges to be much closer to Straight Talk [the Walmart cell services plan]." (emphasis added)

I'm not sure when T-Mobile cut their prices, but AT&T did not, until now.