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Is It Fair to Say Obamacare Will Result in 2.5 Million Fewer Jobs?


Posted by Ryan Ellis on Friday, February 7th, 2014, 1:48 PM PERMALINK


Earlier this week, ATR released a study which illustrated one possible state distribution of how many fewer jobs (full-time or equivalent) Obamacare would result in.  The methodology was simple: The Congressional Budget Office estimated that the national figure for this is 2.5 million by 2024, so we simply distributed that by state based on the state's labor force relative to the country's labor force.  That invited a fact check today from the Washington Post.  Below is our rebuttal:

What did CBO actually say?  The CBO study in question comes from the 2014 Budget and Economic Outlook report released in February 2014.  The salient section says:

The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in fulltime-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect.  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).

So CBO says that 2.5 million full-time jobs (or the equivalent) will drop out of the labor force by 2024.

Does this mean 2.5 million people will be laid off?  No, and we never made this claim.  As CBO says above, the workforce will be 2.5 million job slots (or the equivalent hours) lighter under Obamacare as a result of a combination of layoffs, hours-worked reductions, and people leaving the workforce.

If people are leaving the workforce voluntarily, is that the same as a lost job?  Yes.  The claim is that Obamacare is shrinking the workforce.  People are "voluntarily" leaving the workforce only because Obamacare is making it prohibitive for them to keep working.  If they earn too much money, the tax credit associated with Obamacare phases out.  Or, they become ineligible for Medicaid.  There's a term for this: subsidizing people not to work.

It's obviously better for the economy if people are working and being productive.  By shrinking the labor force by 2.5 million full time (or equivalent) jobs in 2024, Obamacare is making these workers worse off.

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