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 

Can the U.S. Afford the Affordable Care Act?

Democrats and Republicans have again entered into heated debate over the possible side effects of the newly adopted Affordable Care Act. Nonpartisan budget analysts have reported that, starting in 2017, the act will start to push the economy in a negative direction by dampening the supply of labor. Projections show a drop of 2.5 million laborers by the year 2024. This is mainly due to the Affordable Care Act affecting the previous relationship between employment and healthcare. The fact that healthcare is now independent of employment serves as a disincentive for the work force, where individuals are receiving this benefit regardless of their employment status. Furthermore, the lower labor participation rates are affecting the amount of taxable income in the economy. Republicans believe that the decrease in hours worked will have a substantial effect on the amount of tax moneys the government will inherit from income taxes over the next several years. This is certainly a dangerous position, especially with a government that is already looking into the eyes of a $17.2 trillion deficit.

Congressman Hakeem Jeffries

Democrats claim that the subsidies provided by the Affordable Care Act are freeing a large portion of the country from what the call a “job lock”, where individuals are unable to choose their work hours due to their dependence on their employer for healthcare benefits. Also, those who support the law are standing by the statistic that it will be responsible for the coverage of almost 13 million Americans this year alone. Hakeem Jeffries (D., NY) defended the Act; comparing it to the strict regulations put on child labor in the late 1930s. This shrunk labor participation rates, but was a necessary step to relieve the United States of its child labor problem. While many would see this as an extreme exaggeration, it poses the legitimate question of whether or not the law itself is worth the potential harm that it could bring to a slowly recovering US economy.
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Jack McIlvaine