Republicans thought they found a gold mine when the Congressional Budget Office released its latest report Tuesday on the federal budget and Obamacare. They seized on one line in particular:
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
They had a new talking point: President Obama’s hated health care reform law would cost more than 2 million American jobs.
“Obamacare To Print Even More Pink Slips,” read the subject of the Senate Republican conference email blasted out after the report’s release.
“Obamacare will cost our nation about 2.5 million jobs,” tweeted Sen. Lindsey Graham (R-SC):
Obamacare will cost our nation about 2.5 million jobs and increase the deficit by $1 trillion.
— Lindsey Graham (@GrahamBlog) February 4, 2014
“For years, Republicans have said that the president’s health care law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers,” Speaker John Boehner (R-OH) said in a statement. “The middle class is getting squeezed in this economy, and this CBO report confirms that ObamaCare is making it worse.”
The New York Times summed it up by claiming that the CBO report is “providing Republican opponents of the law a powerful political weapon leading up to this year’s midterm elections.”
But is that what the CBO actually said or meant? No.
What the CBO really found was that the numbers of hours worked would decrease under Obamacare, by roughly 1.5 percent to 2 percent between 2017 and 2024. The report then translated those lost hours into the equivalent of 2.5 million jobs. But that doesn’t mean 2.5 million jobs are going to disappear from the U.S. economy.
The CBO report, in fact, specifically undermines that claim. Those lost hours will “almost entirely” be the result of people choosing to work fewer hours because of Obamacare — not because they lost their jobs or can’t find a full-time job.
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 report explicitly says that Obamacare isn’t going to force businesses to cut jobs on any grand scale. What it is going to do is change how much Americans work.
“I think it’s important to distinguish between people choosing to work less and jobs being lost,” Larry Levitt, vice president at the non-partisan Kaiser Famiy Foundation, told TPM. “That is something important to keep an eye on, since you don’t want to discourage work. But, it’s not in all cases a bad thing.”
“For example, some people in their late 50s and early 60s would like to retire because they have health issues but have kept working for the health benefits. Some of them can now retire because they can’t be discriminated against for having a pre-existing condition and may get help paying their premiums.”
The White House used that argument to push back against the GOP attacks.
“CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families,” White House Press Secretary Jay Carney said.
So how exactly will the law influence Americans? It is, of course, complicated.
The main takeaway is: Obamacare will affect how much Americans decide to work. Why? Benefits like tax subsidies to purchase private health coverage and expanded Medicaid are based on income. The more money you make, the fewer benefits you receive. In general, the law’s added financial security will likely give Americans a little less incentive to work.
Some Americans will therefore decide to work less. That could manifest in different ways: some people might chose to transition to part-time work; others might wait longer between jobs. One population — those nearing retirement age — might opt to retire early because the law allows them to continue receiving health coverage even if they don’t work.
But the ultimate impact of those decisions is the same: Americans will be working less. But not because there will be so many fewer jobs, as Kaiser’s Levitt explained to TPM.
“If you guarantee people insurance even if they don’t get it on the job and you give them help based on their income, that’s likely to lead to people working somewhat less,” he said. “That’s going to be true of any means tested program. The only way around it is not to give people the help.”
Obamacare will have some effect on businesses and how many workers they chose to employ, but the net impact is hard to deduce, the CBO reported. Parts of the law, such as the employer mandate penalty, will likely reduce the demand for workers among businesses. But that will be offset, at least in part, because of the law’s positive financial benefits, putting more money into the economy and increasing demand for goods and services.
The report didn’t include any specific projections of how those opposing forces would influence the labor market — and, as the CBO said itself, they should be negligible compared to Americans’ own decisions about how much they want to work.
But those nuances haven’t stopped the horse-race coverage from reading the report as a win for Republicans and a devastating blow to Democrats. At the Washington Post, Chris Cilliza gets the facts of the CBO report correct, but says it doesn’t matter. Republicans can still use it against Democrats.
“Republicans have made quite clear that they will do everything they can to make the 2014 election a referendum on Obamacare and, more broadly, President Obama. And this CBO report gives them a major arrow in that quiver.”