CBO: Obamacare would lead employees to work less
WASHINGTON - A government analysis sparked fierce debate Tuesday, projecting that the Affordable Care Act will lead American workers to voluntarily put in fewer hours on the job, a total that would add up to the equivalent of as many as 2.5 million jobs over the next decade.
The nonpartisan Congressional Budget Office said it expected total employment and compensation in the whole economy to increase over the next 10 years. But "that increase will be smaller than it would have been in the absence of the ACA," it said in a report.
The lower work total will come from people who choose not to be employed or to reduce their hours to maximize government-provided benefits under the new law. Such a decline is a common phenomenon in social-welfare programs, according to the agency.
The projected reduction in hours over 10 years could translate into the equivalent of two million fewer full-time jobs in 2017 than otherwise expected and 2.5 million fewer full-time jobs by 2024, the CBO said. While there's no way to be certain in advance how many people would leave the workforce altogether and how many would simply reduce their hours, the estimates reflect new thinking on how the Affordable Care Act might ripple through labor markets.
The report set off a pitched debate, with Republicans simplifying the analysis to say that the Affordable Care Act would eliminate jobs, and Democrats saying it was good that workers would have the flexibility to choose to work less.
"The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse," said House Speaker John A. Boehner (R., Ohio).
"CBO just reported that #ObamaCare will push 2.5 million Americans out of the workforce," said a tweet from the National Republican Congressional Committee.
"It's not that the businesses are cutting those jobs," said Jason Furman, chairman of the White House Council of Economic Advisers. The potential decision by workers to reduce their hours is an "option that they didn't use to have," he added.
One independent analysis Tuesday said Republicans overstated the case in claiming that the report said the health-care law would eliminate jobs. "CBO did not say Obamacare will kill 2 million jobs," said the Fact Checker column in the Washington Post.
Yet the column also concluded that "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."
Was some Obamacare software written in Belarus? A16.