WASHINGTON – New estimates that President Barack Obama’s health care law will encourage millions of Americans to leave the workforce or reduce their work hours have touched off an I-told-you-so chorus from Republicans, who’ve claimed all along that the law will kill jobs. But some aren’t telling it straight.
The analysis by the nonpartisan Congressional Budget Office predicts the law will give several million people an opportunity to work less or not at all, because they won’t be stuck in jobs just for the sake of keeping the health insurance they get from employers. To some Republicans, that amounts to “wreaking havoc on working families,” ‘’dire consequences for workers” and a shower of pink slips across the land – conclusions unsupported by the report.
The study estimates that the workforce will be reduced by the equivalent of 2.3 million full-time workers by 2021 as people choose to leave it. More would take early retirement, work fewer hours or otherwise rearrange their work-home balance to take advantage of new subsidies for health insurance and new markets for individual policies that don’t depend on having a job.
In a key point overlooked in the GOP response, the report says: “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.”
As if recognizing that fellow Republicans were getting a bit overheated, Rep. Paul Ryan of Wisconsin, House Budget Committee chairman, introduced a reality check when questioning Douglas Elmendorf, budget office director, during a hearing Wednesday. “So just to understand this, it’s not that employers are laying people off, it’s that ... people aren’t working in the workforce, aren’t supplying labor,” he posited.
“That is right,” Elmendorf replied.
A look at some of the Republican claims and how they compare with the facts:
Sen. Marco Rubio of Florida: “Just yesterday, the Congressional Budget Office found that Obamacare will cost millions of Americans their jobs.”
Rep. John Kline of Minnesota: “The president’s health care law is destroying full-time jobs.... This fatally flawed health care scheme is wreaking havoc on working families nationwide.”
Rer. Phil Gingrey of Georgia: Obamacare creates “unprecedented uncertainty for job creators that, according to the non-partisan Congressional Budget Office, will leave millions of people looking for work in the next few years.”
The facts: No one knows whether the health care law will turn out to be good or bad for jobs and the economy. Everything is guesswork, however educated the guess.
The budget office, generally respected by both sides but not infallible, predicts some elements of the health care law will help job growth and other parts will hurt it.
On the plus side, for example, it expects lower-income people to have more money to spend because more of them will have their health insurance partially or fully paid for by government under the law. On the negative side, Elmendorf told Ryan’s committee that in the short run, the law would increase employers’ costs for their workers and reduce the number of people they hire. Over time, this could put downward pressure on wages, he said.
But those effects, good and bad, are expected to be modest. Of more consequence is the expectation that millions will take themselves voluntarily out of the labor force because they can afford to
The budget office forecast that over the next several years, there will be plenty of unemployed people available to fill those jobs. But over the longer term as the economy improves, the supply will shrink, and because of that, total employment and the number of hours people work will be less than it would have been without the health care law.
A smaller workforce means fewer people producing goods and services, which translates into slower economic growth. The CBO report also forecasts that an aging population will cause more Americans to retire, further reducing the work force. That’s the main reason it expects growth will average roughly 2.5 percent over the next 10 years, below its long-run pace of about 3 percent.
Some Republicans picked their words more carefully than others in reacting to the report.
House Speaker John Boehner, for example, said the report backs up Republican arguments that Obamacare “hurts take-home pay,” a plausible point as far as it goes. Ryan said the availability of health insurance subsidies will be a disincentive to find work, a claim supported by the study.
But the predicted withdrawal from the labor market is no more a killer of jobs than today’s surge of retirements by baby boomers entering old age. If anything, it could open job opportunities for people who can’t get in the workforce now.