Will Obamacare Take ‘Yer Job?

The talking point that Obamacare will kill over two million jobs, supposedly gleaned from the latest CBO report, has gained traction with the wider public, so I thought I’d take it on head on. The latest report estimated that Americans will work 1.5 to 2% less hours between 2017 and 2024, and added all those hours together and divided by 40 to come up with the “Over two million jobs destroyed by Obamacare” headline that you’ve been seeing. But that’s really not the case.

When talking about this issue, there are a few different effects, but as the CBO said, one of the smallest effects we’re talking about is actual employers deciding that Obamacare has made it too expensive to retain or hire employees.

By far the two biggest effects are the welfare disincentive to work, and the effect of freeing people from “job lock”.

First, the welfare disincentive. As has been widely discussed in the blogosphere, all means-tested welfare programs share this feature: if you tie subsidies in Government programs to income, then poor people make marginally less money as they increase their income. If somebody is making $20,000, and decides to work an extra 3 hours per week and earn, say, $25,000 per year, they will not see that entire $5,000, because their subsidies will become less generous. On the margins, some percent of people will decide that those 3 extra hours are not worth the (now less than) $5,000.

The major effect, which CBO says is actually, “almost entirely” to blame here, is something called “job lock“. Many readers may be experiencing this effect right now, and not even know it. Basically, Job Lock is where people stay in their jobs, or work extra hours at a job they don’t like, only for the health insurance benefits. Now, with affordable insurance available to everyone, even those with pre existing conditions, people are much more free to decline those extra hours, retire on time or early, or go start a business. For example, said Larry Levitt of the non-partisan Kaiser Family Foundation, “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.”

Benefits like these abound when people no longer depend on their job for health insurance. As Dylan Scott over at Talking Points Memo put it:

Not many people quit their jobs to start their own companies: about 3 percent, according to the study. But if they had that alternative means of obtaining health insurance, which Obamacare helps provide, up to 4 percent would, the report projected, which would equal a 33 percent increase in the number of people starting their own business.

That’s 33% more of those “job creating”, “engine of the economy”, small businesses that Republicans love so much. You can debate until you’re blue in the face whether reducing Job Lock is a good thing. I think, having known people in that exact situation, it is obviously a good thing. But to argue that what the CBO describes is “killing over 2 million jobs” is intellectually dishonest, which is why you can guarantee people will do exactly that in the run up to the 2014 elections.


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