Feb 04, 2014 - 4:00pm

4 Quotes from the CBO Report Show How Damaging Obamacare is to the Job Market

Senior Editor, Digital Content


HealthCare.gov screenshot
Photographer: Andrew Harrer/Bloomberg.

In its latest Budget and Economic Outlook [PDF], the Congressional Budget Office (CBO) ratcheted up its estimate of the damage Obamacare will do to labor markets.

I’ve boiled it down to four takeaways.

1. CBO tripled its estimate of the number people that will no longer be in the workforce because of the health care law:

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.

In 2011, CBO estimated a reduction of 800,000 workers.

2. This is partly because Obamacare will incentivize people to work less:

CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.

3. However, the employer mandate, going in effect in 2015, will also put a check on hiring:

In the longer run, some businesses also may decide to reduce their hiring or shift their demand toward part-time hiring—either to stay below the threshold of 50 full-time-equivalent workers or to limit the number of full-time workers that generate penalty payments.

4. Obamacare’s poor implementation has likely kept employers from hiring:

Uncertainty in several areas—including the timing and sequence of policy changes and implementation procedures and their effect on health insurance premiums and workers’ demands for health insurance—probably has encouraged some employers to delay hiring.

Let me be clear, since Glenn Kessler at The Washington Post’s Fact Checker is on a rampage. Because of the perverse incentives in Obamacare that drive people out of the workforce, CBO expects a “net reduction in the supply of labor." There will be fewer workers in the workforce than there otherwise would be.

We already knew Obamacare was an anchor weighing the job market. Unfortunately, now we know it’s an even heavier one.

Here’s additional reporting on the CBO report:

[via memeorandum]

UPDATE: CBO Director Douglas Elmendorf testified before the House Budget Committee about the work disincentives in Obamacare:

By providing heavily subsidized health insurance to people with very low income and then withdrawing those subsidies as their income rises, the act created a disincentive for people to work relative to what would have been the case in absence of that act.

CBO Director: Obamacare Creates a Disincentive For People to Work

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.