How Obamacare Could Be A Boon For Workers, According To CBO

The GOP spin after the Congressional Budget Office released Tuesday its newest report on Obamacare was that the law would be disastrous for the U.S. economy, killing millions of jobs. But set aside that misreading of the CBO report and there’s actually potentially great news in there: the law could end up boosting worker wages.

Business Insider’s Josh Barro presented the theory shortly after the report’s release. He cited economist Donald Marron, fellow and director of economic policy initiatives at the Urban Institute, who outlined his reasoning in four tweets.

TPM spoke with two other top economists who agreed with Marron’s analysis: People choosing to work less because of Obamacare, as CBO projects, would mean higher wages.

“That stands to reason. You get this sorting effect,” Dean Baker, co-founder of the left-leaning Center for Economic and Policy Research. “You have a lot of people working now who don’t want to work. The only way they can get insurance is through their employer.”

Those people retire or cut back their hours or otherwise lower their participation in the labor market — a possibility that CBO raised itself — reducing the labor supply. Over the long term, that drives up wages. Baker said that CBO said as much in its analysis: The report projected that total hours worked would drop by as much as 2 percent by 2024 because of Obamacare, but total compensation would fall only 1 percent.

That disparity suggest that wages would be increasing, Baker said.

Jared Bernstein, senior fellow at the Center for Budget and Policy Priorities and former economic adviser to Vice President Joe Biden, concurred — and added an additional avenue through which Obamacare could increase wages.

Some employers are expected to drop their health coverage and send their employers to HealthCare.gov and its state counterparts to purchase coverage with the law’s tax subsidies. If they do, those employers will likely increase the base wages for their workers in correspondence with those lost health benefits.

“To the extent that employers provide less health care, they will increase the worker wages accordingly,” Bernstein said. “I think both a slightly tighter labor market and employers replacing health benefits with higher wages could be in play here.”

Correction: This post has been updated to correct Donald Marron’s title.

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