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No, That is Not Evidence That Obamacare Has Created Jobs

David Godow
January 21, 2011, 3:58pm

In the wake of the House's vote to repeal Obamacare on Wednesday, a number of the President's cabinet advisors have struck back by touting the law's purported benefits. Secretary of Labor Hilda L. Solis released a brief statement following the vote, arguing that President Obama's health care reform has actually created jobs since its passage last March:

"The American people are looking to Washington for solutions to grow our economy and make America more competitive. Instead, Republicans in the House of Representatives have chosen to vote to repeal individuals' freedom, control and choice in health care decisions.
"Despite false and confusing rhetoric, the Affordable Care Act supports job growth. Since its passage, more than 1.1 million jobs have been created in the private sector. In fact, job growth has accelerated every quarter in 2010. The reforms included in the ACA will reduce the burden of health care costs on businesses, allowing them to be more competitive in the global market. These reforms will continue to support a stronger labor market and the broader recovery in 2011 and beyond. "
Repealing health reform represents a step backwards for our nation, at a critical time when we need to be focusing our energies on moving our economy and our nation forward."

So to support the claim that the Affordable Care Act (ACA, aka PPACA or Obamacare) supports job growth, Secretary Solis notes that job growth has accelerated since the measure's passage. This is certainly true. Still, perhaps one of the Labor Department's 1,262 talented economists can remind her that correlation does not equal causation. The fact that jobs were created after the bill was passed does not mean that it spurred job growth.

In reality, making a convincing argument that Obamacare created jobs last year is going to be an uphill struggle for the bill's proponents. We can at the very least be sure that it was not the law's passage that spurred last year's modest job growth. By the time the ACA was passed in March 2010, the economy's shift to job growth was already well underway - it started in November 2009. Moreover, the acceleration of job creation in 2010 follows improvement in a bunch of macroeconomic indicators that turned the corner to growth just a little before employment did (e.g. retail sales, personal consumption, corporate profits, business inventory/sales ratios, and any number of others). This was a job recovery due to economic fundamentals, and it's uncertain whether response to the ACA had anything to do with it.

Here's a graph showing year-over-year growth/decline in employment over the last three years by sector of the economy.  It's pretty plain that the inflection point in job growth was not after the passage of Obamacare in March 2010, but in mid/late 2009, when job loss slowed in most sectors, on the way to the first month of net job creation in November.

It's worth noting that job creation in the education and health services sector, which we might expect to spike in mid and late 2010, was actually slower last year than in 2008 (though faster than 2009). Interestingly, it's also the only major sector the BLS tracks that has created jobs every single month since the recession began.

None of this means that Obamacare didn't create any jobs. Perhaps it did. Perhaps we can credit it for every one of the jobs created since March 2010. But the simple fact that job creation has occurred since it was passed is not evidence that it had anything to do with health care. And there's a strong indication that the recovery in employment was due to a strengthening macroeconomy, not a health care deus ex machina.

Solis is certainly correct on one point: it's no fun to muddle through "false and confusing rhetoric" in the health care debate. Let's not add bad statistics to the mix.


David Godow is Research Assistant


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