As More Workers Drop Out, We Need a Better Solution
If you need further proof that government intervention can discourage, rather than promote, employment in a free market, look no further than the nonpartisan Congressional Budget Office.
According to CBO estimates, Obamacare will prompt many people who are currently in the workforce to drop out -- no need to work to get heath benefits if the government provides them, after all -- or reduce the amount of hours they plan to work. By 2021, the CBO is estimating the economy will have a whopping 2.3 million fewer full-time workers -- all because of the Affordable Care Act.
In fact, the CBO notes, Obamacare actually disincentivizes employment. The more money you make, the less generous the benefits offered under the government's plan.
Certainly, this will be fodder in the ongoing political debate over Obamacare, but it is downright scary for business owners and leaders. Right now, despite persistently high unemployment and the worst labor force participation rate since 1978, many entrepreneurs and business owners are having trouble hiring, because of the quality of the workforce.
Remember that, despite the rhetoric, it is the business community that creates jobs in a free market, not the government. Sure, it is in vogue to demonize American businesses. Even the president followed up his State of the Union address with a campaign to shame corporations into paying more money to their employees. But the answers to long-term economic health, and to a better employment situation for the country, rest in the budgets of the nation's CEOs, not in the policies of Congress or the administration.
Yet, it also takes a willing American workforce to bring it all together. More and more, we are seeing a cancerous discouragement on the part of the worker. That discouragement is being fed by a continuous policy buffet of long-term unemployment benefits and subsidized health care, which, as the latest CBO report suggests, keep people home rather than getting them to work.
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To truly help the worker, which in turn helps the employer who hires him, there has to be more of a push to make potential employees believe they are capable of succeeding in the first place. Many people attack the free-market solutions to joblessness as somehow immoral, or at the very least punitive to those who are most vulnerable. The opposite is true. A business-driven approach not only can get someone a job, but it can change the mindset of the employee for the better. That can free someone, emotionally, spiritually and economically.
Admittedly, it is a tough order. Given the state of our labor markets and the widening span of our safety net, the first step has to be to convince the individual to unshackle himself from what he perceives as a lifeline. Rather than accept unemployment insurance as offered by the state, he must pursue wealth and security for himself and his family through full-time employment. That requires a risk many not be willing to take. But businesses can play their part by enticing these workers with the promise of the reward inherent in that equation. That means good pay (which many, despite all the criticism, already provide), incentive programs like profit sharing, and job structures that support career mobility.
Some will argue this is pie-in-the-sky, that workers will take the easy way out by being a permanent class on the government take, or that businesses will always be inclined to mistreat their employees. But, given the wretched state of our labor markets -- with high unemployment, low participation and poor job-candidate quality -- there needs to be a philosophical change in the mindset of the American worker and business leader.
If not, we will continue to see more and more people leave the workforce for good, tethered to the whims of taxpayer-funded support. That is bad for business and bad for America. And it hurts the American worker the worst.
Ray Hennessey is the former editorial director of Entrepreneur.