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The Massive Labor Reallocation Under Obamacare

"If we can but prevent the government from wasting the labours of the people, under the pretence [sic] of taking care of them, they must become happy." –Thomas Jefferson

When evaluating the impact of the Affordable Care Act, better known as Obamacare, most arguments focus almost entirely on the law’s fiscal impact. This is not an inappropriate context to frame the issue. The raw dollar cost of the bill is shocking. At $2.4 trillion over the next 10 years, Obamacare will be one of the more expensive pieces of domestic legislation ever devised—growing the already massive deficit by $700 billion. [1] Yet, both supporters and critics of the law fail to consider other burdens that Obamacare places on our government and economy.

The most striking example is the sheer number of labor hours that will be required to simply complete the necessary paperwork associated with more than 150 rules, regulations, and reporting requirements under the new system.

The Massive Labor Reallocation Under Obamacare

Labor is a resource just like any other raw material needed to perform a service or manufacture a good. As with any resource, labor hours are finite. This means that when a laborer is engaged in accomplishing one task for a given hour, there are limitless other tasks that will not be accomplished during that time. This is the opportunity cost of employment. In a perfect world, advantaged by a completely free market, available labor could spontaneously perform the tasks that are most efficient and beneficial to themselves or their employer, and thus benefit the broader economy. However, when government interferes and directs labor to meet the demands of central planning, the labor resources are redirected to tasks that would otherwise not be performed. These efforts generally produce the least value, subject to the yoke of inefficient bureaucracy.

Obamacare proves a particularly egregious example of this ruinous phenomenon. By law, agencies tasked with administering and enforcing rules and regulation must estimate the hours needed to satisfy annual compliance.  Staff members representing three Congressional committees in the House of Representatives then gather and assess that data.

This group of staffers—hailing from Ways and Means, Education and the Workforce, and Energy and Commerce—determined compliance with already-enacted rules of Obamacare will total approximately 127.6 million man-hours each year.[2] Considered in context of the 40-hour work week, that means nearly  63,000 jobs across government and the private sector are dedicated to pushing pencils and licking stamps. At the average hourly wage for July, 2013, of $23.98[3], this amounts to roughly $3.141 billion in misallocated labor costs, annually.

These are just the visible impacts of regulatory compliance with Obamacare. The true costs are incalculable and theoretically infinite. Should the law go into effect as currently conceived, we will never adequately measure the potential economic value of those squandered labor resources. Instead they will simply anchor the 2 and a half trillion dollar drag that Obamacare is already slated to have on the economy.

You can view the entire list of rules and regulations and their estimated compliance times here:

[1] Dean Clancy, Top 10 Ways ObamaCare Sticks It to Young Adults, FreedomWorks, July 16, 2012.

[2] Obamacare Burden Tracker, Compiled by staff at the Ways and Means, Education and the Workforce, and Energy and Commerce Committees.

[3] Economic News Release of the BLS, Table B-3: Average hourly and weekly earnings of all employees on private nonfarm payrolls by industry sector, seasonally adjusted, August 02, 2013.