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February 5 2014

CBO Report: Two Million Fewer Working Full-Time Because of ObamaCare

Charlotte Hays

If you like your full-time job, you can keep your full-time job.

Well, actually, no—that might not be the case at all. A report from the nonpartisan Congressional Budget Office out late yesterday estimates that because of the Affordable Care Act, the economy will shed two million full-time jobs by 2017 and 2.5 million over the next decade, three times the original estimate.

Pooh, pooh says the White House—this is good news! It means that more people, now that health insurance is supposedly more widely available, will make the decision to work part-time. They will spend more time doing more meaningful things.

The White House has emphasized that the CBO report addresses the issue not of the availability of jobs but of whether people will be willing to work full-time after the Affordable Care Act. There is bountiful evidence already that ObamaCare also will reduce the number of jobs available but today we will focus on willingness to work, the subject of the CBO report.

President Obama likes to portray himself as the champion of the middle class. The report is just as devastating for the middle class as it would be if reported that employers would cut two million jobs. Indeed, the situation foretold in the report is one in which the incentive to work, which is generally what gets a family into the middle class and maintains it there, is reduced.

Steve Hayes last night on the Fox News panel quoted Nancy Pelosi’s famous justification for passing the Affordable Care Act. Ms. Pelosi said:

So, you can‘t—everybody has so much to gain from this, small businesses, as I said, seniors, young people, women, our economy. Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance or that people could start a business and be entrepreneurial and take risk, but not job loss because of a child with asthma or someone in the family is bipolar—you name it, any condition—is job locking.

The Affordable Care Act is the fulfillment of Nancy Pelosi’s vision. But of course real people who want to get jobs and build lives and families don’t see it that way—yet.

In an editorial in the Wall Street Journal headlined “The Jobless Care Act,” the editors assess how people will be hit by the developing situation:

There are 7.8 million Americans working part-time who want full-time work, including a fry cook whose restaurant cut his hours to avoid Affordable Care Act mandates and confronted President Obama in an online Google GOOG +1.04% Q&A last week: "We can't survive. It's not a living." Mr. Obama changed the subject to raising the minimum wage. But he can't dodge reality forever as the evidence piles up that ObamaCare is harming the labor market.

On Tuesday no less than the Congressional Budget Office reported that the health law is causing Americans to work less or not at all, in a remarkable intellectual turnabout for the budget shop that Democrats cited repeatedly when selling ObamaCare. Now CBO—full of liberal-leaning economists—says the economy will lose the equivalent of two million full-time workers by 2017 and 2.5 million over the next decade, a threefold increase over its prior estimate.

CBO's analysis is rooted in ObamaCare's complex design that includes new subsidies, taxes and mandates. For low-wage, lower-skilled or discouraged workers in particular, ObamaCare offers incentives that can force them to trade jobs for entitlement benefits.

CBO's conclusion is that ObamaCare will encourage people to supply less labor by deciding not to take a job or by working fewer hours. The law's insurance subsidies are gradually taken away as income rises, "creating an implicit tax on additional earnings," the CBO observes. These effective marginal tax rates reduce the rewards for work—whether it be overtime, accepting a promotion, or training in the hope of higher future earnings. CBO doesn't note, though we will, that simply extending "free" coverage skews job search decisions by offering an in-kind bonus for unemployment.

The Washington Post’s Factchecker Glenn Kessler’s headline is “No, CBO Did Not Say ObamaCare Will Kill 2 Million Jobs.” Mr. Kessler adopts a world-weary tone: here we go again, the misinformed tweets are already pouring in and Fact Checker must set the record straight:

First, this is not about jobs. 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.

One big issue: the health insurance subsidies in the law. That’s a substantial benefit that decreases as people earn more money, so at a certain point, a person has to choose between earning more money or continuing to get the maximum help with health insurance payments. In other words, people might work longer and harder, but actually earn no more, or earn even less, money. That is a disincentive to work. (The same thing happens when people qualify for food stamps or other social services.)

 Actually, what Fact Checker is describing is more devastating than the idea that jobs will be destroyed: because under the Affordable Care Act, it is people who will be destroyed. They will be destroyed by “a disincentive to work.” It will also harm the American economy as a whole. Fact Checker writes:

All things being equal, in a normally functioning economy, the total demand for jobs would equal 95 percent of the supply of jobs. So advocates of the Affordable Care Act should not jump to the conclusion that departing workers will be simply replaced by other workers.

In fact, competition for workers will initially lead to upward pressure on wages. But over time, the nation does end up with a slightly smaller economy.

So the taxpayer will pick up the tab so more people can voluntarily leave full-time employment and the economy will be “slightly smaller.” Peachy. If the economy is slightly smaller than right now, it will not bode well for those who, in previous generations, would have gotten an entry level job, worked hard, and moved up the ladder. This, President Obama, was the ladder to the middle class.

To sum up what we learned yesterday from the CBO: if you previously had family responsibilities that kept you getting up and going to work every day and off the dole, the Democrats have found a way for you to quit your job and receive entitlements.

It may very well be that the White House is serious about its rosy response to the CBS report—though I have to say that deputy press secretary Josh Earnest, who was sent out to defend this message, didn’t look like a man who believed a word of what he was saying. But this is a White House that has fostered not the middle class but dependency. But Earnest looked yesterday like a man who knows this vision doesn’t appeal to the rest of the country—yet.

ObamaCare could be as destructive to the work ethic as welfare programs were to the American family.

This Just In: The always-original Power Line has an interesting take on the CBO report. (It mentions my book, but I'd recommend it anyway. It also cites John Podhoretz's important column this morning--Podhoretz says that the CBO report is the death blow for ObamaCare.)

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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