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As far as we are aware, ours is the first study to examine whether the ACA accom- plished one of its primary goals, to reduce job lock due to fears of losing insurance. We confirm the presence of job lock before and after the ACA took full effect in 2014. Drawing on the prior methodology and identification strategies used to identify job lock, which also allows us to provide estimates for the pre-ACA period consistent with that in the literature, our results imply that the ACA has not significantly affected job mobility nor the perceived value of ESI. This is consistent with Heim and Lurie (2015), who found that ACA-like reforms in Massachusetts in 2006 did not increase job mobility.

In fact, our point estimates suggest that job lock actually got stronger following the ACA. One possible explanation for our finding is that the ACA’s individual mandate made insurance even more desirable by fining the uninsured. Another possibility is that workers continue to value employer-provided health insurance more over time as premiums continue to rise.

Today, the bill’s sponsors have good reason to be modest about its portability achievements: HIPAA provided little, if any, help to vulnerable consumers seeking more affordable health insurance options. It did create a false sense of security that lulled many buyers into getting less value for their insurance dollar. HIPAA tried to lock an outdated, employer-based insurance market structure into place. It stifled promising market innovations such as medical savings accounts (MSAs). Most recently, it has confronted proposed defined contribution health plans with legal uncertainties about how they might be regulated.

Meanwhile, the accountability side of HIPAA launched an expansion of the federal government’s role in controlling private health arrangements and reversed decades of regulatory deference to the states. Its vague statutory language set in motion a nearly incomprehensible maze of federal health privacy regulations that promised little in the way of effective privacy protection, yet imposed extraordinary compliance burdens. The HIPAA “privacy” regulations is sued in April 2001 and modified slightly in March 2002 actually granted government officials greater access to personal health information.

Two and a half years into the pandemic, small-business owners say they’re just beginning to recover from the sudden blow that hobbled many of them during the early 2020 pandemic restrictions. Since then, owners have dealt with surging costs, labor shortages and large swings in consumer demand often influenced by area cases of the coronavirus.

Now they’re being barraged by diverging economic messages that have many wondering what to do next. The U.S. economy shrank for a second quarter in a row, reviving fears that the country might be entering a recession. But an exceptionally strong jobs report this month wiped out many of those concerns while also making it harder and costlier for small-business owners, particularly in the hospitality industry, to find and keep workers.

An unexpected result of the pandemic era has been a surge in entrepreneurial activity. Since 2020, applications to start new businesses have skyrocketed, reversing a decades-long slump.

The reasons for the boom are manifold. Millions of people were suddenly laid off, giving them the time, and inclination, to start new businesses. Personal savings jumped, buoyed partly by a frothy stock market and government stimulus payments, providing would-be entrepreneurs with the means to fulfill their visions. Rock-bottom interest rates made money cheap and widely available.

Fundamental reforms like M4A could greatly aid labor market outcomes for U.S. workers. The most obvious benefits would be higher wages and salaries, increased availability of good jobs, reduced stress during spells of job loss, better “matches” between workers and employers, and greater opportunity to start small businesses.

Higher cash wages and salaries

[Tera, Jukka Maksimainen, James Manyika, and Navjot Singh, “An experiment to inform universal basic income,” McKinsey and Company, September 15, 2020, https://www.mckinsey.com/industries/social-sector/our-insights/an-experiment-to-inform-universal-basic-income, accessed June 25, 2023, GDS-LL]

A huge boost to well-being

[Tera, Jukka Maksimainen, James Manyika, and Navjot Singh, “An experiment to inform universal basic income,” McKinsey and Company, September 15, 2020, https://www.mckinsey.com/industries/social-sector/our-insights/an-experiment-to-inform-universal-basic-income, accessed June 25, 2023, GDS-LL]

Exhibit 3

[Tera, Jukka Maksimainen, James Manyika, and Navjot Singh, “An experiment to inform universal basic income,” McKinsey and Company, September 15, 2020, https://www.mckinsey.com/industries/social-sector/our-insights/an-experiment-to-inform-universal-basic-income, accessed June 25, 2023, GDS-LL]

Positive feedback loops

[Tera, Jukka Maksimainen, James Manyika, and Navjot Singh, “An experiment to inform universal basic income,” McKinsey and Company, September 15, 2020, https://www.mckinsey.com/industries/social-sector/our-insights/an-experiment-to-inform-universal-basic-income, accessed June 25, 2023, GDS-LL]

However, to date Finland is the only country that has managed to complete a nationwide randomized control trial of a basic-income program. The research methods used were particularly diverse and included literature reviews, microsimulations, surveys, data linking, in-depth interviews, and media analysis. In this article, we highlight the insights that we found most interesting. More research is needed in this multifaceted and complex area, not least because of the many unanswered questions on how a universal basic income could be funded—and how it would interact with other sources of government assistance.2 It is also worth noting that the methods and conclusions of the Finnish study were not undisputed (see sidebar, “Research-based policy making”).

[Matthew, “Money for everything? Universal basic income in a crisis,” Economy and Society, Volume 51, Issue 3, 2022, , Accessed 6/27/23, GDS – PL]

These issues take on salience following the lockdowns enforced in response to COVID-19: these have consolidated prevailing consumption trends favouring online shopping and contactless deliveries over the high street, shifting revenue away from diverse place-based businesses towards tax-avoiding platform corporations like Amazon. Without concomitant measures to close tax loopholes, UBI would subsidise Silicon Valley and give the tech giants a free ride. It risks becoming a public subsidy for tech firms to continue exploiting gig workers and zero-hour contractors through ‘digital Taylorism’ while extracting value from the free labour that produces data (Spencer, Citation2018). UBI thus contains the seed of a dystopian world in which digital denizens are freed from wage slavery only to be dominated differently, as data producers for the harvesting of value by a new class of platform capitalists.

Why there’s no value-added tax in the U.S. Although VATs have been lucrative elsewhere, the levy faces political hurdles in the United States, said Bunn. Some Democrats see the VAT as regressive because it hits families regardless of income, whereas Republicans may fight a broad-based tax increase, he said. Plus, it may also be a tough sell to lawmakers in states without a sales tax, Bunn added. The logistics of a VAT may also elicit pushback from the business community, Kopczuk said.

The main result that emerges from our analysis is that both our identified labor market shocks play a significant role in explaining economic fluctuations. These shocks account for 20% of output fluctuations on impact and almost 80% in the long run. Moreover, they explain around 50% of unemployment fluctuations at short horizons and 80% at long horizons. The wage bargaining shock is more important at short horizons (especially for unemployment), whereas the labor supply shock is crucial to capture macroeconomic dynamics in the long run (both for output and unemployment). Put differently, our findings suggest that shocks generating the type of co-movements between variables that are typically associated with wage markup shocks are important both in the short run and in the long run. Moreover, they are not the only driving force of unemployment in the long run. Thus, we do not find support for the polar assumptions on the role of wage markup shocks made in the previous literature (cf. Galí et al., 2011; Justiniano et al., 2013).

An important role for shocks originating in the labor market in driving economic fluctuations is in keeping with results from previous VAR studies that include labor supply shocks (without, however, disentangling wage bargaining shocks). In Shapiro and Watson (1988), the labor market shock explains on average 40% of output fluctuations at different horizons and 60% of short-term fluctuations in hours (80% in the long run). In Blanchard and Diamond (1989), shocks to the labor force explain 33% of unemployment volatility in the very short run and around 15% in the long run. In Chang and Schorfheide (2003) labor-supply shifts account for about 30% of the variation in hours and about 15% of output fluctuations at business cycle frequencies. Peersman and Straub (2009) do not report the full variance decomposition in their VAR but the limited role of technology shocks in their model let us conjecture an important role for the two remaining shocks, that is, demand and labor supply. We conclude that the available VAR evidence is reinforced by our results. Although the structural interpretation of labor supply and wage bargaining shocks remains an open question, our model suggests that supply shocks that move output and real wages in opposite directions play a significant role in macroeconomic dynamics.

We begin with labor supply, as this effect dominates discussions of the economics of means-tested transfer programs. Traditional welfare programs, with low phaseout points P and high tax rates T, unambiguously lead to reductions in labor supply through negative income and substitution effects. By contrast, the EITC, which has effectively replaced traditional cash welfare as the main income assistance program for families with children, has no transfer for nonworkers (G = 0) and a high phase-in rate (S), so it creates strong incentives to enter work. (For those with positive earnings, the EITC creates both a negative income effect and, in the phase-out range, a negative substitution effect, so it is expected to reduce working hours.) Existing program structures, the shift from AFDC to TANF, and the EITC reflect a general trend in recent decades in the United States toward programs that attempt to minimize labor supply disincentives. These take two forms. First, historically means-tested programs in the United States have used “tagging” (Akerlof 1978), limiting eligibility to those in exogenously defined groups who have low potential to work (or expectation to work). Second, current policies are increasingly designed to avoid punitive tax rates (lower T) and increase earnings disregards (higher P). This can also, as in the case of the EITC, include programs that use a positive S and no income floor (G = 0) to create incentives toward increased labor supply (Nichols & Rothstein 2016). UBI proposals move policy in the opposite direction, and in general they can be expected to reduce labor supply relative either to a no-transfer hypothetical baseline or to the status quo. First, the canonical UBI generates a pure income effect that would reduce work on the extensive and intensive margins. Second, many UBI proposals impose phaseouts, and the added P > 0 and T > 0 lead to a further work disincentive through negative substitution effects.19 Third, the high G in a UBI relative to existing cash welfare programs likely leads to larger labor supply reductions (though the higher P and lower T would arguably work in the opposite direction). Fourth, the absence of tagging means that vastly more people are exposed to these work disincentives than in our current patchwork system.

A UBI system is still a theoretical approach, one that comes with good intentions and noble goals. Still, widespread financial equality and independence offer the potential to cause some serious economic issues.

One major issue with a universal basic income, raised by those who oppose such a practice, is inflation. It’s easy to see how the institution of a UBI may fuel inflation.

[Daniel, “Why a universal job guarantee beats the basic income pipe dream,” The Conversation – Canada, July 27, 2022, Jesuit Lexis, accessed June 27, 2023, GDS-LL]

Economic stabilizer

The American safety net is not perfect – not by a long shot – but it does a good job of ensuring that low-income Americans have enough support to meet their basic needs. The data are clear about that: Consumption poverty, which measures the wellbeing of the poor after accounting for safety net assistance provided by the government, declined to an all-time low of 3 percent in 2016. Thanks to a good economy and strong public assistance programs, very few Americans live in deprivation.

Universal Basic Income (UBI) would be an unaffordable way to undermine our social safety net’s successes. UBI would transfer money away from those who need it most, change the distinctly American relationship between citizen and government, and sharply raise taxes or the national debt (or both). And critically, it would fail to improve upon our current safety net’s biggest weakness: UBI would destroy – not improve – incentives to work.

[Rachael, "Five Problems with Universal Basic Income – Third Way," Third Way, 5/28/18, https://www.thirdway.org/memo/five-problems-with-universal-basic-income, accessed June 29, 2023, GDS-LL]

Economic growth would suffer

[Pavlina, “The High Costs of UBI are Not Financial: They are Real,” Eastern Economic Journal volume 45, pages327–330 (2019), February 4, 2019, Springer Link, https://doi.org/10.1057/s41302-019-00134-7, accessed July 1, 2023, GDS-LL]

Here we confront the key, perhaps fundamental, concern with such large-scale government programs: namely, does the structure of the economy produce the needed real goods and services that those UBI benefits are destined to purchase? In other words, even if UBI does not threaten solvency, is the enormous expenditure on the program warranted? What are the real macroeconomic effects of passing UBI and will it ensure a minimum standard of living for all? In my view the answer to these questions is “no” due to some perverse and unintended program effects.

[Daniel, “Why a universal job guarantee beats the basic income pipe dream,” The Conversation – Canada, July 27, 2022, Jesuit Lexis, accessed June 27, 2023, GDS-LL]

Instead of a guaranteed fixed income, a universal job guarantee policy provides jobs - and wages - to people who aren't able to find work on their own. In theory, a universal job guarantee could help stabilize inflation by providing stable, full-time employment, addressing unemployment, enhancing economic productivity and reinforcing price stability.

[Pavlina, “The High Costs of UBI are Not Financial: They are Real,” Eastern Economic Journal volume 45, pages327–330 (2019), February 4, 2019, Springer Link, https://doi.org/10.1057/s41302-019-00134-7, accessed July 1, 2023, GDS-LL]

The best fiscal policy is one that serves as a thermostat for the economy and adjusts spending counter-cyclically. UBI has no such feature (remember the same grant is provided to all year after year, rain or shine).