A few months ago, I wrote a memo for a political office-seeker who was looking for perspective on why the American worker was getting so uncompetitive. It didn’t seem right, to this candidate, that owing to free-trade agreements stretching back to NAFTA in the 1990s, Mexicans and Chinese were eating our lunch, as a good many in the electorate seemed to feel. Surely this was not the case. Marginal people in the global economy do not suddenly become world-beaters.
The memo I wrote discussed the costs added to the two basic inputs to manufacturing production by government: costs to labor and costs to capital. Labor and capital—if government makes each more expensive, then the goods that come from their application and mixing will become more expensive and uncompetitive.
President Obama, Swamp Thing
During the Barack Obama administration, the costs government has placed on labor and capital have risen substantially. On the labor side, the phenomenon has been extreme. Thanks to the 2009 stimulus bill, Obamacare, and associated acts willed through Congress by the president since 2009, the average effective marginal tax rate faced by those entering the workforce from welfare, etc., is near (if not over) 50 percent.
This number is not a misprint, not a guesstimate, not some talking point. It is the result of comprehensive research by the top econometrician of in the field of public policy, the University of Chicago’s Casey Mulligan. The average amount a worker coming off entitlements hands over to the government, on taking a job, is 50 percent or so of the further earnings. In a number of cases, there are “tax cliffs,” where an individual’s income increases become negative on getting paying work. That’s right, under Obamanomics people regularly lose more in government benefits if they find employment and gain pay.
The details are all available in Mulligan’s vast research. As one earns income up to and past median family income of around $55,000 per year, Obamacare subsidies phase out, as do a host of other things from unemployment insurance to housing support. In some cases, you have to move from your place if you clear a certain income limit—if you get a job, you have to get out.
The consequences for those trapped in entitlements are forbidding. Getting a job means losing your situation—in housing, health care, and so on, with criminal penalties if you don’t come clean about making more money. The authorities play along in the enforcement/judicial system because it brings them more business, as the brave new entrants to the real workforce are tagged as “offenders.” Ordinarily, we’d call this enserfment, or worse.
The working class, in the 2010s, faces hurdles surely unprecedented in our star-spangled history to do just that, work. Thanks, Obama. Or maybe it is thanks, Nancy Pelosi. You recall after she waved through Obamacare in the House in 2010/11, she said it will free up people to discover themselves, namely not to work. How prescient that unfortunate creature was.