Economists who support the economic policies of Obama/Biden point out that there were almost 1.5 million more jobs created during the final three years of the Obama/Biden administration than there were during the first three years of the Trump administration. That is factually correct but a closer look reveals the poor quality of the jobs Obama/Biden created.
In 2010, Congress passed the Affordable Care Act (ACA). The main goals of the act were to provide health insurance for the 50 million (about 15% of the population) who were uninsured and to control the cost of health care.
The cost goal failed miserably. Instead of the promised $2,500 per year cost reduction, health insurance costs rose at a similar rate than before the ACA was passed. This was initially very upsetting to the American public as less than half of Americans approved of the ACA in the early years.
In fact, costs never came down, which upset many Americans. Prior to the ACA, the 85% of Americans with health insurance were generally pleased with their coverage and with the quality of care they were receiving. Their only gripe was the cost.
The other promise that was broken was the claim that if an American liked their doctor before the ACA, they could keep their doctor after the ACA. That turned out not to be true for millions of Americans who were forced to end sometimes life-long relationships with their doctor because of the ACA’s provisions.
The ACA also failed to significantly reduce the number of uninsured. At it’s peak, the ACA provided health insurance for a total of 91% of the population. That means about 20 million uninsured Americans were now covered because of the ACA. That’s only 40% of the total 50 million uninsured prior to the ACA.
The bottom line was the ACA helped 6% of the population, 20 million Americans, while it was costlier and provided lower-quality service for the other 285 million Americans who were insured prior to the ACA.
One provision in the ACA was designed to force employers to pay for health insurance for all full-time employees. The provision was phased in gradually, but by 2015 it became fully engaged.
That provision said that every employer with at least 50 employees must provide health insurance to every worker or pay a $3,000 fine. To try to include as many workers as possible, the ACA defined a full-time worker as any employee working at least 30 hours per week.
In 2016, the employers, who were still trying to fully recover from the devasting 2008/2009 recession, and the slowest economic recovery since the great depression, simply could not afford this. It would drive up labor cost, reduce profit and slow business growth. Most firms found it impossible to pass the increased cost along to consumers.
Their response was to reduce the number of employees working at least 30 hours and hire more part-time workers to make up the difference. Since the published (U3) unemployment rate counts part-time workers as being employed, the employment numbers showed an increase. But the new jobs were mostly part-time and low paying with no benefits.
In other words, suppose a firm had 5 workers employed for 40 hours per week prior to the ACA. After 2015, to avoid paying health insurance costs, the firm reduced the number of hours for the five workers to 25 and then hired 3 more workers for 25 hours. They ended up with 8 employees working 25 hours (200 hours in total). Prior to the ACA, they had 5 employees working 40 hours (again 200 hours in total).
So, they added three more part-time employees. But the five original workers lost hours, forcing many to look for a second part-time job. That’s how more jobs were created in the last three years of the Obama/Biden administration.
The number of jobs Trump added was truly remarkable. When he entered office, the unemployment rate was 4.7%. Nearly all economists would say that was a full-employment level meaning reducing that number would be extremely difficult.
In spite of that Trump added more than 7 million jobs in his first three years and prior to the Coronavirus recession. In addition, workers’ wages were rising at the fastest rate in decades. The tepid Obama/Biden recovery was transformed into the Trump expansion.
It is not just the quantity of jobs created but the quality. Trump improved the economy and vastly improved the job market. Trump is already leading the economy into the fasted recovery from recession ever, as May, June, July and August saw nearly 11 million workers returning to full-time employment.
Let’s stay the course and re-elect Trump in November.