Here we go again. During the 2012 campaign, The Fact Checker had to repeatedly explain that the Congressional Budget Office never said that the Affordable Care Act “killed” 800,000 jobs by 2021. Now, the CBO has released an updated estimate, nearly the triple the size of the earlier one: 2.3 million in 2021.
The inevitable tweets arrived:
This tweet and dozens others were spawned in part by seriously flawed headlines on the Web […]
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.)
Thus, some people might decide to work part-time, not full time, in order to keep getting health-care subsidies. Thus, they are reducing their supply of labor to the market. Other people near retirement age might decide they no longer need to hold onto their job just because it provides health insurance, and they also leave the work force.
Look at this way: If someone says they decided to leave their job for personal reasons, most people would not say they “lost” their jobs. They simply decided not to work.
The CBO, in its sober fashion, virtually screams that this is not about jobs. (Note the sections in bold face.)
“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, 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).”
The CBO did look at the effect on demand for labor (i.e., jobs) but said the effects are mostly on the margins or are not measurable. In fact, in contrast to a common GOP talking point, the CBO declares that “there is no compelling evidence that part-time employment has increased as a result of the ACA,” though it notes the data may be murky because the employer mandate was delayed until 2015.
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.
Finally, we should note that the figures (2 million, etc.) are shorthand for full-time equivalent workers — a combination of two conclusions: fewer people looking for work and some people choosing to work fewer hours. The CBO added those two things and produced a hard number, but it actually does not mean 2 million fewer workers. (This is also off a base of more than 160 million people, meaning the number of fewer workers is a relatively small percentage of the overall pie.)
In fact, no one really knows what percentage will leave the work force entirely and what percentage will shift to part-time work, making it difficult to predict how this will shake out in the end. [read more]
The GOP has taken this report and ran with it. I snipped the bit out of the article that shows all the erroneous headlines for the sake of post length, but you can view them at the link.
What has been particularly maddening about this is the fact that everywhere I’ve seen this pointed out to conservative commentators, they still want to spin it as something horrible and and replying with things like, “Well, I don’t want my tax dollars paying a subsidy for someone who decides not to work.”
What they are not understanding is this will actually open up jobs for other people who want them. The reduction is on the supply side (workers) not the demand side (employers).