Obamacare and Jobs, What's Really Going On?

This past week, the nonpartisan Congressional Budget Office (CBO) released a report that included its projection of Obamacare’s impact on the economy, specifically in labor markets. In Appendix C of the report, the CBO concluded that Obamacare will cause “…a decline in the number of full-time-equivalent workers of about 2 million in 2017, rising to about 2.5 million in 2024.”

Then, the media went crazy.

Headlines such as “ObamaCare could lead to loss of nearly 2.3 million US jobs” (Fox News) and “The Jobless Care Act,” (Wall Street Journal) popped up everywhere. These headlines grossly misrepresented the report and the CBO’s intent behind that statement. The Wall St. Journal should know better.

The CBO did not say 2.5 million Americans would be fired because of the Affordable Care Act (ACA), nor did they claim that employers would seek 2.5 million less employees. This statement means that 2.5 million Americans will voluntarily leave their jobs or not seek employment over the next few 10 years. In CBO Director Douglas W. Elmendorf’s words, “[there] is there’s a critical difference between people who like to work and can’t find a job or have a job that was lost for reasons beyond their control and people who choose not to work.”

Fewer Americans will look for jobs due to Obamacare’s incentives, which are both beneficial and detrimental to society. Democrats point out how an individual willingly leaving their jobs to pursue other things is a positive and that one should not work just to get health insurance. For example, mothers of young children or the elderly may happily leave their job because affordable health care is available elsewhere. Republicans discuss how the subsidies the ACA provides to the poor disincentive work because as income goes up, the amount of subsidies one receives goes down. In that case, it may be better to rely on the government safety net instead of actively seek a job.

For once, both the Democrats and Republicans are probably right. I say probably because the policies within the ACA have never been implemented on such a large scale and unintended and unpredictable outcomes in the labor market are to be expected. The CBO admits, “The actual effects could differ notably.” In the 6 years of debate about the merits of the ACA, there have been too many lies, misrepresentations and dishonesty from both sides. This CBO report could have easily been twisted as “2.5 million new jobs over the next 10 years” and that would have been a distortion of the truth as well. So, whatever the ramifications of the ACA are over the next 1, 10, even 20 years, I recommend following the old saying “believe none of what you hear, and only half of what you see.”
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Luke Wolf