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Obamacare Will Drive 2.5 Million Americans Out Of Workforce

by Avik Roy - Forbes

Yesterday, Washington’s official non-partisan bean-counter, the Congressional Budget Office, dropped a bomb. By 2024, says the CBO, Obamacare will reduce the size of the U.S. labor force by 2.5 million full-time-equivalent workers. That’s roughly triple what the CBO had estimated three years ago. Such a sizeable decline in the labor force will have substantial detrimental effects on the U.S. economic and fiscal picture. But the CBO wasn’t responsible for the most amazing thing that happened yesterday. That title belongs to the Obama White House, where Press Secretary Jay Carney claimed that 2.5 million Americans leaving the workforce was a good thing, because they would no longer be “trapped in a job.”

How Obamacare shrinks the labor market

Here’s what happened. In its annual, 182-page Budget and Economic Outlook, the CBO undertook an overhaul of the way it analyzes the effect of Obamacare on the job market. The new, larger estimate of the law’s negative impact on the labor force derives from three factors: (1) Obamacare’s employer mandate, which will discourage hiring and reduce wages offered by employers; (2) Obamacare’s $1 trillion in tax increases, which will discourage work and depress economic growth; and (3) the law’s $2 trillion in subsidies for low-income individuals, which will discourage many from remaining in the labor force.

Let’s focus on that last point, because it’s the one that has been the least-discussed in the media. In the past twelve months, a spate of research from academic economists has concluded that the health law, by offering economic benefits to low-income individuals, will disincentivize some of these individuals from continuing to work. Casey Mulligan of the University of Chicago has been particularly persuasive on this front, publishing two papers with the National Bureau of Economic Research.

Several economists, like Harvard’s Kate Baicker, MIT’s Amy Finkelstein, Texas A&M’s Laura Dague, and Northwestern’s Craig Garthwaite have found that rising unemployment is associated with an expansion of Medicaid. “Taking that research into account, CBO estimates that expanded Medicaid eligibility under the ACA will, on balance, reduce incentives to work.”

More significantly, as Casey Mulligan has warned, the new subsidized insurance exchanges will allow low-income workers to work less while maintaining the same effective income: what economists call the income effect. In addition, because the subsidies decline on a sliding scale as you make more money, that sliding scale means that as workers work more, they make less per hour worked: what economists call the substitution effect.

CBO labor participation
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This is sick. Who are these

This is sick. Who are these people?

What if I have my dream job? Huh? Then what? Assholes.

Thanks for posting this.

I almost did, as well.

"Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the office of a thoroughly nasty business concern." ~~C.S. Lewis
Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

Crazy - isn't it?

All of these perverse incentives.

But it is ok, because it is only a "small percentage of the workforce." LOL!

Here is another article + video:

http://www.realclearpolitics.com/video/2014/02/04/white_hous...

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