After an upswing at the beginning of this year, the labor market is back in the doldrums. The latest report from the Bureau of Labor Statistics said the U.S. economy created just 114,000 jobs in September, and although the unemployment rate fell to 7.9 percent, the workforce remains shrunken. And even those gloomy numbers obscure the suffering of the long-term unemployed and the millions of workers who have dropped out of the labor force in the aftermath of the recession. Stay up-to-date on the state of the labor market with AEI’s economic experts, and find out their ideas for how to get America back to work.
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As I was looking over the depressing jobs data for the last five years and the large number of working-age people leaving the work force, I came up with a hypothesis on a related subject, one worth testing and, if valid, acting on.
Let’s be clear: what the CBO says is that the central effect of the ACA will be that people will work less. None of this is surprising, given that millions of Americans now face marginal tax rates that are effectively five to twenty points higher, as an additional dollar of income earned will make them lose five to twenty cents in health-insurance subsidies.