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Feb052014

NHDP - Washington Post Fact Checker: No, CBO did not say Obamacare will kill 2 million jobs 

Key Point: "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... 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....Once again, we award Three Pinocchios to anyone who deliberately gets this wrong."

Washington Post Fact Checker: No, CBO did not say Obamacare will kill 2 million jobs
http://www.washingtonpost.com/blogs/fact-checker/wp/2014/02/04/no-cbo-did-not-say-obamacare-will-kill-2-million-jobs/
BY GLENN KESSLER
February 4 at 2:07 pm

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:

Health-Care Law Expected to Take Greater Toll on Workforce

Obamacare will push 2 million workers out of labor market: CBO

CBO: Obamacare to cost 2.3 million jobs over 10 years

CBO: Obamacare Will Lead To 2 Million Fewer Workers In The Labor Force By 2017

Deficit Down But Health Costs to Bleed Red Ink Again

Why Obamacare Will Mean Fewer Hours Worked and (Mostly) Lower Incomes

CBO: Lower enrollment, bigger job losses with Obamacare

Budget Office Revises Estimates of Health Care Enrollment

CBO: O-Care slowing growth, contributing to job losses

The CBO Just Nuked Obamacare

CBO says Obamacare will add to deficit, create reluctant work force

CBO nearly triples estimate of working hours lost by 2021 due to Affordable Care Act

Obamacare Will Cost 2.5 Million Jobs: Report

Obamacare to Cut Hours of Work by Low-Wage Earners, CBO Says

Congressional Budget Office: Obamacare A Tax On Workers

What’s really going on here? Hang on, because it’s a confusing issue.

The Facts

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 are 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 getting less help with health insurance payments. In other words, they 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, someone 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.

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 that 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.”

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.

The Pinocchio Test

The Fact Checker takes no position on the implications of the CBO’s analysis. Some might believe that the overall impact of the health law on employment is bad because it would be encouraging people — some 2.3 million  – not to work. Indeed, the decline in the workforce participation rate has been of concern to economists, as the baby boom generation leaves the work force, and the health care law appears to exacerbate that trend.

Moreover, the argument could go, this would hurt the nation’s budget because 2.3 million fewer people will pay taxes on their earnings. That’s certainly an intellectually solid argument — though others might counter that universal health care is worth a reduction in overall employment — but it’s not at all the same as saying these jobs would be lost.

Once again, we award Three Pinocchios to anyonewho deliberately gets this wrong.

Three Pinocchios

 

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