Obamacare’s Workforce Toll Read Two Ways in CBO Report

Photograph by Ben Torres/Bloomberg

Job seekers wait in line to enter a job fair hosted by JobExpo.com in Dallas on Jan. 29, 2014.

The headline on the CBO report today is of a declining federal deficit.

The subhead that Republicans are retweeting is about a declining labor market — the toll that the Affordable Care Act, aka Obamacare, will take on the American workforce.

The president’s health care law aimed at ensuring that more Americans have insurance “also will exert conflicting  pressures on the quantity of labor that employers demand, primarily during the next few years,” the nonpartisan Congressional Budget Office reported today.

“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor,” the CBO reports, “so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).”

This isn’t the first time the CBO has calculated an impact on the w9rkforce stemming from the healthcare overhaul. Yet Republicans were ready for this one, framing the health-care act as a job-killer as they renew calls for rolling back or repealing the 2010 law.

 

The Washington Post’s Glenn Kessler offers a ”Fact Checker” suggesting that critics have turned the headline upside down.

“This is not about jobs,” Kessler writes. “It’s about workers — and the choices they make. The CBO’s estimate is mostly the result of an analysis of the impact of the law on the supply of labor. That means how many people choose to participate in the work force. In other words, the nonpartisan agency is examining whether the law increases or decreases incentives for people to work.”

See Bloomberg’s Alex Wayne on the CBO report here.

“The ACA’s largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level,” the CBO reports, estimating that the law “will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.”

“Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. Specifically, CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017–2024 period, compared with what it would have been otherwise. ”

“The decline in fulltime-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect. ”

Sen. Ted Cruz, who led the charge for repeal of Obamacare last fall, a move which resulted in a 16-day partial shutdown of the government, maintains that the law will be repealed — it’s only a question of when. The 2014 elections, he suggests, will leave Washington with a different landscape than the one that has upheld the president’s law.

 

The president’s party, for its part, is intent on promoting the benefits of the law for those finding insurance for the first time.

 

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