Medicare For All Would Wipe Out Jobs, Pensions and 401(k)s

Donald Trump famously made “You’re fired!” a household catchphrase. It may re-enter the American vernacular if the likes of Senators Bernie Sanders, Elizabeth Warren, or Kamala Harris take the White House.

That’s because Sanders, Warren, and Harris — along with Kirsten Gillibrand and Cory Booker, who are also competing for the Democratic presidential nomination — all support a brand of health reform that would wipe out millions of jobs. And that’s Medicare for All.

Sanders introduced a new iteration of his Medicare for All bill earlier this year; Warren, Harris, Gillibrand, and Booker have signed on as co-sponsors. The bill would abolish private health insurance and enroll all Americans in a single, government-run health plan.

A single government-run plan can in theory drive a harder bargain with doctors, hospitals, and other healthcare providers. Medicare for All envisions paying providers at Medicare’s rates, which are generally lower than those paid by private insurance.

But Medicare doesn’t pay hospitals enough to cover the cost of existing beneficiaries’ care. For every dollar hospitals spend on Medicare beneficiaries, they receive just 87 cents from the government.

Healthcare providers currently make up the difference by charging private insurers more. Medicare for All would abolish them, of course. To balance their books, providers would have little choice but to reduce their costs.

That means layoffs — or closing up shop altogether. According to a new report from JAMA, a medical journal, hospitals would eliminate up to 1.5 million clinical and administrative employees under Medicare for All. Dozens of hospitals, especially those in rural areas, would shut down. That would remove the biggest employer from scores of communities across the United States.

The effects would ripple through local economies. All the firms that counted on those hospitals as clients — construction firms, purveyors of cleaning products, food-service operators — would take a hit.

Then there are the hundreds of thousands of people employed by private health insurers whom Medicare for All makes no bones about throwing out of work. Health insurers employ more than half a million people directly, according to the Insurance Information Institute. The industry also supports hundreds of thousands of brokers and third-party administrators.

These jobs pay well — an average salary of $70,000. Medicare for All would destroy almost all of them.

At least Medicare for All’s supporters acknowledge as much. Congresswoman Pramila Jayapal, who has sponsored Medicare for All legislation in the House, recently said, “There’s about a million people we think will be displaced if Medicare for All happens.”

Even those with no apparent connection to the private health insurance industry would be collateral damage.

Many pension plans, mutual funds, and retirement accounts hold health insurance company stocks. CalPERS, the giant California public pension system, owns 2.8 million shares of UnitedHealth Group and more than 1 million shares of Anthem. The current value of those two holdings exceeds $900 million. The New York State Common Retirement Fund — the third-largest pension plan in the nation — owns more than 1 million shares of Cigna, worth more than $150 million.

If Medicare for All puts those companies out of business, then the retirement savings of millions of people could lose billions of dollars in value in short order.

“You’re fired” used to be confined to reality TV. If Medicare for All comes about, that line may become a grim reality for millions of Americans.

This article was originally published by Townhall.com

Work-Hating California Seeks to Stop Freelance Workers

JobsCalifornia has a well-deserved reputation for being unfriendly to business. Depending on what happens in Sacramento this year, the environment for workers could become unpleasant, as well.

An attack on workers’ freedom began nearly a year ago, when the California Supreme Court established a new legal standard for worker classification in its Dynamex ruling. Independent contractors must be considered employees and the companies hiring them must comply with the web of laws and regulations relating to minimum wage, overtime, payroll taxes, unemployment benefits, income tax withholding, and insurance plans.

Freelancers can be classified as independent contractors only when their work structure passes an “ABC test,” which sets an unreasonably high bar. Independent contractors cannot be supervised, they must be engaged in work the “hiring entity” isn’t otherwise involved in, and they must perform similar work for other hiring entities.

While the test has been applied a few times in court, it has not been codified into state law. That could happen during the current legislative session. Whatever Sacramento produces could potentially affect as many as two million contract workers across California. For many, it could mean the difference between being employed and unemployed, as well as the difference between being satisfied and unsatisfied with their jobs.

Support for codifying Dynamex comes from a belief that businesses are actively violating “employee rights” by misclassifying them as independent contractors. At least one lawmaker openly wishes to make things “more difficult” for companies.

“Individuals are not able to make it on three side hustles,” says Assemblywoman Lorena Gonzalez Fletcher, a Democrat in San Diego. “That shouldn’t be the norm. That shouldn’t be accepted.”

If the court’s decision becomes state law, “the norm” will be a reduction in work, disappearing opportunities, fewer dollars earned, and diminished free agency for those who’d rather, and in some cases have no choice but to, work in the gig economy.

While politicians argue without evidence that the gig economy is “rigged,” and want employment affiliations to be dictated by the court’s guidelines, almost all independent contractors prefer the work arrangements they have set up for themselves. The Bureau of Labor Statistics has found that “fewer than one in 10 independent contractors” would choose traditional work environments over freelancing.

Faced with the likelihood of losing their autonomy, independent contractors are already leaving jobs. The entire staff of independent barbers at Bottle & Barlow, a hipster barbershop on R Street in Sacramento, walked out in September when the shop reorganized its business to meet the court’s ABC requirement. Shop owner Anthony Giannotti, who said the Dynamex ruling “really gutted us,” explained why barbers — and other independent contractors — are at a disadvantage under a Dynamex framework.

“Something that attracts most of us to this industry is the freedom,” Giannotti told the local media. “I don’t want to have a boss above me telling me what to do and that’s kinda what the state’s forcing us to do now.”

Tina Kerrigan, a dietary consultant who contracts with Southern California nursing facilities, assisted living homes, and hospices, also sees unwelcome change ahead. She told the San Gabriel Valley Tribune last fall that if she is classified as an employee, she expects to “lose all of my flexibility and I’d see about a 30 percent drop in pay.”

The future of newer, innovative companies, which drive economic growth, would also be bleak. Uber, Lyft, TaskRabbit, DoorDash, Instacart, and other entrepreneurial enterprises that have successfully followed business models requiring contract workers could find their plans might no longer work under a Dynamex regulatory regime. Even if they adapt, they will be forced to shift resources that would otherwise be dedicated to research, development, and consumer demand to compliance exercises.

Transitions will be costly. A UCLA study found that companies retaining independent contractors save “between 29 and 39 cents for every dollar” of earnings they pay out. While some argue that’s a downside of the gig economy, it’s in reality one of its advantages, because it makes companies more profitable, an outcome that should be universally supported. As Austrian economist Ludwig von Mises wrote, “a profitable enterprise tends to expand, an unprofitable one tends to shrink.”

While it’s possible gig economy companies will remain profitable, should the Dynamex decision become California law, profits will fall, which means expansion will be contracted. Is it that what lawmakers want?

Those hoping to codify Dynamex claim they’re simply trying to protect workers. But they’re more likely serving the interests of unions, which would rather trap workers under their boot than see them employed independently.

This article was originally published by the Pacific Research Institute

California unemployment rate at record low 4.1%

JobsCalifornia’s unemployment rate dropped to 4.1 percent in September, a record low since it started tracking the number this way in 1976, the Employment Development Department reported Friday.

The Bay Area boasted the state’s lowest unemployment rates, falling below 3 percent in eight of the nine counties, all but Solano, where it was still under the statewide average.

The San Francisco, Oakland and San Jose metro areas all posted unemployment rates that were the lowest for the month of September since 1990. They fell below the lows set in September 1999, the peak of the dot-com boom.

Economists cheered the numbers, coming 10 years after the financial crisis that sent the country into a tailspin, but said they may be overstating the health of the labor market. Wage growth is still subpar, with benefits and bonuses making up a growing percentage of total compensation. And the labor force participation rate, which measures the percent of the adult population with a job, is markedly below where it was 10 year ago. This suggests that there are still discouraged workers sitting on the sidelines who could be pulled back into the labor force if wages were more enticing and employers more willing to hire them. …

Click here to read the full article from the San Francisco Chronicle

Taxpayer Danger Lurks Beneath California’s Employment Numbers

JobsOn a superficial level, things look pretty good in California. Sure, we have big problems with wildfires and other periodic disasters, but the state’s finances have made a strong recovery since the depths of the recession. Indeed, Gov. Brown has repeatedly touted the multi-billion-dollar surplus and the state’s balanced budget.

But objective assessments from government experts and academicians have warned of troubling aspects of the state’s financial condition. These include mega projects we can’t pay for, business flight out of California, unfunded pension obligations in the hundreds of billions of dollars, a state government that is growing much faster than population and inflation combined and a dysfunctional political system.

Close analysis reveals that California is like a home with a fresh coat of paint but a crumbling foundation. It may look pretty, but there are serious problems that are not readily apparent.

One area where there is a gulf between superficial appearance and reality is in California labor statistics. Here again, on the surface, the state’s 4.2 percent unemployment rate looks very good — and it is. During the depths of the recession, the state hit a high of 12.2 percent unemployment and tens of thousands of Californians were suffering. There’s no denying that we’ve seen a vast improvement.

But there are metrics beyond the simple unemployment rate that must be taken into consideration to fully comprehend the health of California’s labor force. A recent report from the California Center for Jobs and the Economy has troubling news: “California’s labor force grew only 16,922 over the 12 months ending July 2018, or 0.1 percent growth. The U.S. as a whole grew 1.8 million — a 1.1 percent expansion.” In other words, California’s labor force has seemingly hit a plateau — an unusual occurrence given the strength of the national economy. …

Click here to read the full article from the Long Beach Press-Telegram

Should We Really Need a License to Work in California?

JobsTaking a job as a manicurist in California requires more than filling out an application and receiving an offer from an employer. Manicurists have to have at least 400 hours of training, which can cost thousands of dollars. They must also take a written and practical exam.

The government-created barrier to a career in hair care and makeup application is even higher. A cosmetologist needs 1,600 hours of state-approved training. A barber has to have 1,500 hours, according to the California Department of Consumer Affairs.

Meanwhile, a mortgage originator, who must already be a licensed broker, or salesperson, needs only 20 hours of pre-licensing education, an emergency medical technician requires 160 hours, and a crane operator doesn’t have to have any at all, according to the Hoover Institution’s David Crane. Even tree trimmers are compelled to put in more training hours than EMTs, says Dick Carpenter from the Institute of Justice.

Though occupational licenses are purported to be protections for consumers, Crane points out that “studies have consistently found that licensing laws produce no better or safer services for consumers than do less protectionist and less costly alternatives.”

Instead, an occupational license is, as the Institute for Justice has straightforwardly explained, simply “government permission to work in a particular field.” And that permission is harder to come by in California, where more than one in five workers needs a government-issued license to hold a job, than in any other state but one.

There more than 200 jobs, and maybe as many as 250, in California that require an occupational license. The National Conference of State Legislatures has said that “the tangle of laws has become so thick that a commission in California recently admitted that the state has no way of knowing how many occupations it licenses.” Whatever the number, the Goldwater Institute says it is the most of any state. Mississippi has the fewest licensed jobs, a mere 40.

Overall, California was next to last in the overall burden on the workforce by the Institute for Justice’s License to Work rankings. Those rankings considered the “number and burden of licensing requirements combined.” Only Arizona has a higher burden.

Occupational licensing has been called a “protection racket” for good reason. It shields established workers from competition from newcomers. Morris Kleiner, a University of Minnesota professor who has researched the economic consequences of occupational licensing, told the Goldwater Institute that barring competition through government licensing allows existing practitioners to charge about 15 percent more for their services.

Kleiner has also said that “the cost of licensing nationally in the form of lost jobs” is 0.5 percent to 1 percent. This would mean an additional 39,000 to 78,000 jobs in California if licensing were reduced “relative to certification or other less restrictive forms of regulation.”

An alternative to the current regime would be a policy of reciprocity. Rather than forcing workers moving in from other states to go through California’s stiff licensing requirements, the state would instead recognize those workers’ permits if California has recognized their previous state’s requirements as appropriate. Under this arrangement, “the suppliers of a licensed service can adjust to changes in demand more quickly, limiting any surges in pricing, or delays in service provision,” Pacific Research Institute fellow Wayne Winegarden wrote in “Breaking Down Barriers: How Occupational Licensing Reform Can Improve The Insurance Markets, Benefit Consumers, and Expand Job Opportunities.”

Reciprocity would also encourage, Winegarden adds, “more competitors to enter the state” which “would also benefit consumers through lower prices and higher quality.”

“In the longer-term, reciprocity and/or recognition of other states’ licenses enables states to learn from one another,” says Winegarden. “Specifically, the competitive process of suppliers from different states competing with one another will enable states to discover how to better implement the desired licensing regulations.”

This should result in lighter restrictions all around.

Furthermore, says Winegarden, “reduced licensing regulations can also remove barriers to innovation,” a benefit that would be particularly useful in California, where much of the economy depends on innovation.

There are a couple bills in the current legislative session that were written to lower the job hurdles created by occupational licensing: Assembly Bill 2483, introduced by Assemblyman Randy Voepel, and Assembly Bill 2409, introduced by Assemblyman Kevin Kiley. These should be of particular interest to those who are having a hard time making a living because they’ve been shut out by California’s existing system and want no more than to complete on a level playing field.

Kerry Jackson is a Fellow at the California Center for Reform at the Pacific Research Institute.

This article was originally published by Fox and Hounds Daily

$15 minimum wage to cost California 400,000 jobs

California reached a deal on legislation to raise the state minimum wage across all businesses to $15 per hour by 2023, a move that could cost the state hundreds of thousands of jobs, according to a new report.

A study conducted by the Employment Policies Institute (EPI), which analyzed employment trends from 1990 through 2017, found that each 10% increase in the minimum wage in the Golden State has resulted in a corresponding 2% decline in employment for affected employees. The impact was larger, 5%, for lower-paid workers. By those estimates, the EPI projects that the pending $15 minimum wage hike would cost California 400,000 private sector jobs, with heavy losses in both the foodservice and retail sectors.

While the EPI acknowledges that real firms could “respond to higher minimum wages in ways that cause divergent effects,” it says “what is not in dispute” is that “rising minimum wage has depressed employment opportunities in the most heavily-impacted industries.”

As of January 1, California’s minimum wage will increase to $11 per hour from the current level of $10.50 per hour for businesses with 26 employees or more. From that point, it will be a $1 per year increase trajectory through 2022. Businesses with 25 employees or less will reach the $15 per hour threshold by 2023. …

Read the full article from Fox Business

State job-creation incentives fail to produce desired results

JobsIn February 2014, Gov. Jerry Brown’s administration unveiled an Economic Development Initiative to replace an enterprise zone program that had fallen out of favor after nearly three decades. Enterprise zones offered tax incentives to promote the starting of businesses in areas with high unemployment, but many analyses concluded they didn’t have a substantial positive effect. Now a centerpiece of Brown’s replacement initiative is offering up similar mixed-to-poor results.

The California Competes program was initially billed as providing $180 million through the end of fiscal 2014-15 for tax credits to lure businesses to the Golden State or to keep them from leaving. As the Sacramento Bee reported at the time, emergency regulations were hastened into place to get the program up and running.

Panorea Avdis, the chief deputy director of the Governor’s Office of Business and Economic Development, justified the move in a memo obtained by the Bee: “This program must go into effect immediately to help minimize the migration of business to other states and to encourage growth and expansion in this state.”

Four and a half years later, the sense of urgency among Brown aides about getting California Competes started is hard to square with its disappointing results. A recent Legislative Analyst’s Office report offered many criticisms:

– Slightly more than a third of awarded credits – 35 percent – went to companies that primarily competed with other California businesses, meaning the credits create no additional economic activity, lead to an unfair competitive advantage for firms getting the credits and consume state resources that could have been use for constructive purposes.

– There were no metrics to judge the effectiveness of the remaining 65 percent of credits, which went to companies that sold goods or services both in California and out.

– The size of the hiring and investment commitments the companies made per $100,000 of tax credits has declined steadily in recent years, reflecting a lack of enthusiasm about the value of the credits.

– The interest in the program had waned among small businesses, which had 25 percent of available annual tax credits set aside for their use. The LAO noted that in the last fiscal year – 2016-17 – only 49 percent of the credits were awarded, or about $30 million.

LAO says close program, but role in Amazon bid may provide cover

“The executive branch has made a good-faith effort to implement California Competes, but the problems described above are largely unavoidable,” the LAO wrote. “We recommend that the Legislature end California Competes. In general, broad‑based tax relief – for all businesses – is preferable to targeted tax incentives.”

Because the program loses its authority to grant tax credits at the end of fiscal 2017-18, the LAO report may shape the Legislature’s and the Brown administration’s decision on what to do about California Competes. The LAO says if the program is retained, its eligibility rules should be tightened up and other provisions should be revised to make it more likely the credits go to companies facing competition from rival firms in other states.

But at least until Amazon makes its decision on where to locate its second North American headquarters, the LAO’s call to shut down California Competes is unlikely to be heeded. In October, some $200 million over five years in California Competes funding was listed as the single biggest incentive to get Amazon to build its second home in California – topping the long list of tax and regulatory incentives that the Brown administration offered Amazon as enticements.

If California Competes is eventually shuttered, some state politicians are likely to strengthen their calls for the full revival of another economic development program shut down at Gov. Brown’s behest – redevelopment. In theory, redevelopment takes a portion of incoming local government revenue and directs it to projects with the promise to improve the local economy or to provide needed facilities.

Critics of redevelopment say it has a long history of being used for crony capitalism in California and that the diverted revenue often goes to cover routine City Hall expenses. But former Los Angeles Mayor Antonio Villaraigosa has made reviving redevelopment a key focus of his 2018 gubernatorial campaign, arguing that it is essential to building more affordable housing and responding to California’s housing crisis.

This article was originally published by CalWatchdog.com

4 signs California’s job market is cooling

As reported by the Orange County Register:

Have California bosses changed their hearts about hiring?

After six straight years of job gains, 2017 started with the slowest employment upswing since the first year of the recovery from the Great Recession.

Using data from the state Employment Development Department and the U.S. Bureau of Economic Analysis, here are four reasons behind the cooling.

No. 1: Fewer layoffs

California bosses have a low-risk way to keep payrolls up: skip the pink slips!

Just look at initial unemployment claims, seen as a snapshot of how many employees have recently lost their jobs. State employment counters report that in the year ended in February, 2.35 million unemployment claims were made.

That may sound like a like of layoffs but it’s actually historically small.

For starters, it’s the slowest annualized pace of Californians filing for jobless claims since December 2007. …

Click here to read the full article

So this is the Recovery? Californians not feeling it

JobsIs the Great Recession over?

In California, the signals are mixed.

On one hand, a recent study of U.S. Census data by the Washington, D.C.-based Economic Innovation Group found that Los Angeles County led the nation with the largest number of jobs added, a total of 352,840 between 2010 and 2014.

The good news extended statewide. Twenty counties in the U.S. accounted for half of net new businesses established in those years, and five of those counties are in California.

Yet the latest Field Poll found that 74 percent of California voters list the economy and jobs as their top concern.

Is that just habit? Or something else?

A closer look reveals a problem of definitions, starting with: What is a job?

“People are considered employed if they did any work at all for pay or profit during the survey reference week,” explains the website of the U.S. government’s Bureau of Labor Statistics, referring to its monthly survey of 60,000 households, “This includes all part-time and temporary work, as well as regular full-time, year-round employment.”

So when people pick up part-time or temporary work for a few days or even for a few hours, the government counts them as “employed” at “a job.”

Some people are counted as “employed” at “a job” even if they don’t get paid.

Here’s an example from the BLS website: “Garrett is 16 years old, and he has no job from which he receives any pay or profit. However, Garrett does help with the regular chores around his parents’ farm and spends about 20 hours each week doing so.”

Here’s another one: “Lisa spends most of her time taking care of her home and children, but she helps in her husband’s computer software business all day Friday and Saturday.”

According to the Bureau of Labor Statistics, Garrett and Lisa have “jobs.” They’re in a category called ”unpaid family workers,” which includes …

Click here to read the full article.

This piece was originally published by the L.A. Daily News

California Chamber releases list of ‘job killer’ bills

As reported by the Sacramento Bee:

The California Chamber of Commerce on Tuesday released a list of 18 bills it says will reduce jobs and hurt the state economy.

The chamber introduces it’s so-called “job killers” every spring and boasts a high success rate of blocking bills on the list from becoming law. Critics question the organization’s methodology to determine the list.

All of the bills labeled job killers this year were introduced by Democratic lawmakers and four carried over from 2015.

“As everyone knows, California has areas that are booming economically and other areas that are stagnating,” said Allan Zaremberg, president and chief executive officer of the California Chamber, in a statement. “Each part of California has unique problems and these job killers will negatively impact future economic …

Click here to read the full article