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Obamacare Will Cost More Than 2 Million Jobs, But Not for the Reason You Think

A familiar refrain among those who oppose the Affordable Care Act, President Barack Obama's signature health reform law, is that its implementation will destroy jobs.

Last summer, many cited the fact that more part-time than full-time jobs were created in the first half of 2013 as evidence that employers were reducing their full-time work force in order to avoid the Obamacare mandate. The employer mandate requires employers with 50 or more workers to provide health insurance for employees who work 30 or more hours per week  – or face penalties.

A new report from the Congressional Budget Office seems to add weight to the argument that Obamacare is costing jobs. The report notes that the country will likely see a reduction in the number of full-time-equivalent jobs of around 2 million by 2017, and up to 2.5 million by 2024. The good news, however, is that these will be voluntary job reductions – and not the consequence of job destruction wrought by health care reform.

Three times the CBO's former estimate
The current CBO report notes that Obamacare will reduce the total FTE hours worked by 1.5% to 2% from 2017 to 2024, three to four times the 0.5% estimated impact the office had reported back in 2010. The authors explain that new information has been mixed into its analysis, including how workers will react to changes in tax rates.

It is the tax rate issue that is at the heart of the decrease in working hours, since health insurance is subsidized at lower levels of income. The CBO believes that the loss of subsidy that accompanies rising income will prompt many people to work less in order to keep income lower  – while simultaneously maintaining the same standard of living. Essentially, Obamacare will create a tax on labor income, according to the CBO.

Good, bad, or neutral?
While Speaker John Boehner has characterized the CBO's original estimate of decreased work hours as "destroy(ing) 800,000 American jobs", the decrease of 0.5% in FTE jobs was also a voluntary reduction. Likewise, the allegation that people were being forced into part-time positions in response to the employer mandate was actually disproved in a study by the Center for Economic and Policy Research. Workers mindfully reducing their working hours and people losing their positions due to job cuts are two very different things.

Another issue is whether the 2 million FTE jobs taken out of circulation over the next 10 years will be injurious to the economy – particularly with the CBO's projected continued deterioration of the nation's labor force participation rate.

As the CBO notes, the greatest reduction in FTE jobs will occur by 2017, after which time the situation will begin to moderate. In addition, there are definite job opportunities on the horizon in the health care field, as Obamacare begins to highlight job shortages in the health care delivery system.

At any rate, a dearth of available jobs compared to the number of people who want them is nothing new. The Bureau of Labor Statistics reports that there were 4 million job openings at the end of December – while the number of unemployed stood well over 10 million. Addressing this problem, as well as the issue that nearly 4 million persons number among the long-term unemployed, would go a long way toward creating a more robust economy that could easily withstand the loss of working hours that may develop in the years ahead.

The real story behind Obamacare
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Read/Post Comments (18) | Recommend This Article (6)

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  • Report this Comment On February 08, 2014, at 3:23 PM, crevallejack wrote:

    "Obamacare Will Cost More Than 2 Million Jobs, But Not for the Reason You Think" Um... so where's the part that everyone with a brain didn't already know? Yes, it is all about people having the freedom to choose their employment without the weight of employer-provided healthcare handcuffs. This WILL NOT REDUCE JOBS OR FTE's. The jobs remain and... so will the FTE's, which will be backfilled from those currently unemployed or under-employed. The REAL big news here is... THIS WILL POSITIVELY IMPACT UNEMPLOYMENT, BIG TIME, as people who don't want to be working as much as they are work less and people who do want to be working step in. This is GOOD NEWS.

  • Report this Comment On February 08, 2014, at 6:25 PM, CrazyDocAl wrote:

    Nothing like our stupid media to blow the headlines. The CBO did not say that Obamacare will cost 2+ million jobs. It said it would reduce the hours worked by Americans. The reduction of hours would equal to 2.3 million, 40 hour a week, 52 weeks a year jobs.

    That means 10 million Americans will be forced to cut hours to either be classified as part time or so they can reduce their income so they can get a larger subsidy to offset the cost of their health care insurance. The CBO makes it sound like they will make this choice freely. That's a total farce. The reduction will either be forced by companies trying to reduce costs, people who are sick, or by people who are struggling to get by.

    Anyone who understands our welfare system knows that it's almost always better financially for the poor not to work. When you can get a check for doing nothing that's equal to what you would get if you work a 40 hour a week low paying job who would bother working. Just because someone decides to give up and no longer work or work fewer hours so they can qualify for government assistance doesn't make it a good thing.

    What Obamacare will do is push more and more people onto government assistance. That's a bad thing. The Democrats get it. They also get that they broke the middle class with all of the hidden taxes heaped on them. That's why we are now seeing a push to raise the minimum wage. The Dems know that if they can't make working a more attractive option that living off the government teat the government will not survive.

    Any new system is going to be a rejection of the old system, that's a rejection of the rich (who will have fled long ago with their money) and a rejection of the government getting too large and government handouts. The second two are staples of the Democrat party.

  • Report this Comment On February 08, 2014, at 6:58 PM, wolfman225 wrote:

    I can see this site has gone to liberal hell. This is NOT "good news".

    That people "voluntarily choose to work less" is not a positive. It's exactly analogous to the welfare recipient choosing not to work the additional hours available because doing so would lower his/her benefit check.

    What the rep from the CBO said in hearings confirmed that the implementation of Obamacare would increase the dis-incentives for people to work, in favor of taking government benefits (i.e., handouts paid for out of taxes on the employed).

    The last thing government should be doing is instituting policies and programs that encourage government dependence and discourage initiative and the traditional American work ethic.

  • Report this Comment On February 08, 2014, at 9:02 PM, sw022551 wrote:

    the socialist dream, don't work and expect to be taken care of...........but then who pays?

  • Report this Comment On February 08, 2014, at 9:11 PM, Gman wrote:

    You can't measure Obama's performance on any scale of satisfactory productivity because no scale exists for such low levels of performance. You have to use your imagination and fantasize and exceptable standard. Being a democrat is of great assistance on this matter, without that I find the goal unreachable.

  • Report this Comment On February 08, 2014, at 9:59 PM, northstar534 wrote:

    The ACA, even though a disaster, is still a work in progress, based upon Obama's interfering on deadlines, who gets time dispensation and who doesn't. There have been so many changes and delays and spins, it is difficult to determine where we all stand.

    These unilateral changes/delays to a passed law, can he legally manage by fiat? If he can, then this explains the discriminatory outcomes. A law has to be enforced consistently and equally or chaos will ensue...and we are there!

  • Report this Comment On February 08, 2014, at 10:38 PM, gb1556 wrote:

    Motley fool cracks me up, it obvious they are so against anything Obama does. Why not put the blame for job loss where it belongs? On the sorry employers that dont want to pay anyone a decent salary, want them to work for nothing and would rather lay them off instead of giving a little to insure they can have health care. Its all about the dollar,lay them off instead of pay to help them . Employers used to realize that workers were their greatest asset and wanted them to have a decent life where they could feel good about their jobs. No wonder people hate their jobs so bad and have no company loyalty.

  • Report this Comment On February 08, 2014, at 10:47 PM, dlwatib wrote:

    The CBO is notoriously bad at predicting what people are going to do in response to tax law changes. It is unlikely that workers will "voluntarily" reduce their hours in order to limit their income. Usually it is the employer who chooses how many hours to schedule the employee and the employee feels obligated to work all the hours on his or her schedule or risk job termination.

    OTOH, employers are greatly incentivized to keep their total full time headcount low so as to stay well under the limit of 50 "full time" employees working 30 hours or more per week, and make due with as many part time workers (usually only working 20 hours per week) and overseas workers as possible. Obamacare will cause these trends to continue, or even accelerate.

  • Report this Comment On February 09, 2014, at 12:17 AM, homerbgone wrote:

    How anyone cannot see this as a positive is beyond me. This allows people to not be a slave to their employer to pursue other dreams and passions. Of course like all things there will be some to take advantage. But make no mistake about it, this will help the economy and individualization to thrive. It is shame that there is a full time tabloid that puts a cancer on society which many take for truth, when in fact it is lie after lie to promote a corporate world with no rules. This way they can pollute the land and water at the same time creating slave labor. What is astonishing though is those who spread this rabble are doing to their own demise, and do not even realize it. But good job Mr President this has been a long time coming.

  • Report this Comment On February 09, 2014, at 1:30 AM, real32 wrote:

    Wolfman is clueless. This is good news. You have many seniors who continue to work becaue of the increasing cost of healthcare. Most of those 2 million workers will be seniors who can now retire adn spend more time with love ones instead of worrying about not being able to afford their meds. 2nd most of those on welfare are not on welfare becasue they want to be. This ideal that the majority of people on welfare would rather take less than $100 weeks instead of working a low paying job is bullsh!t. And if you want to complain about social services then complain about the biggest social services program in our history, which is the defense budget.

  • Report this Comment On February 09, 2014, at 4:30 AM, Badgenumber150 wrote:

    My taxes go up, my health insurance goes up and my take-home pay goes down so some other guy can work 29 hours a week, sit home on his butt, smoke dope and learn to play the flute? WHAT THE HELL IS WRONG WITH THESE MORONS??????

  • Report this Comment On February 09, 2014, at 10:38 AM, edimike99 wrote:

    So a company who wants to keep labor rates low is evil, but a consumer buying the cheapest product available is OK? Expecting a company to do anything other than find a way to keep cost low is naive.

    More laws passed with good intentions while never considering the unintended consequences.

    At least Jimmy Cater had a job before becoming president. Did we expect anything more from a man who never had to put together a budget or had a real job?

    BO promised every group something and they forgot about the greater good for all.

    Remember to vote or you'll end up with something like this again.

  • Report this Comment On February 09, 2014, at 12:54 PM, VegasSmitty wrote:

    Obamacare, like Obama = epic fail.

  • Report this Comment On February 09, 2014, at 12:57 PM, misspiggy6555 wrote:

    here is one no one has thought of. Small businesses and medium size even big business will have more funds available to hire more people because they have money freed up. about ACA giving people an incentive not to work , does ACA pay all your bills? Your mortgage your electric bill? In France people work a 4 day week take 2 hours for lunch have time to spend with their children. and that is right if you hate your job you can look for another one

  • Report this Comment On February 09, 2014, at 8:33 PM, OldJim51 wrote:

    Misspiggy6555 - socialism is socialism even if its injected only in the healthcare and insurance business. Yes, France has as 32 hour work week and liberal lunch/wine breaks. You didn't mention their tax rate is as 48 to 52% due to the high unemployment. The ACA is not the answer to reducing the cost of healthcare, it control of the insurance industry. The rates are not competitive with the rates of 2012 on middle class family and the first time employed, yet it the sick and elderly that need it but at other rate payers expense not the government. When you pay for your car insurance and a clean driving record you are penalized for the bad drivers with a higher rate within the state or locality. Is that fair?

  • Report this Comment On February 09, 2014, at 9:32 PM, PaulSell wrote:

    When asked about the CBO prjected job loss from the law, Barry smiled and said, "I just love that Yahoo picture of me with the Great Seal behind my pointy head, that looks like a halo on me. In addition I just want you to know, "I have a Bic Pen and an Obamaphone."

    Actually the Republicans are now just waiting for Barry & Company to work the kinks out of his legacy legislation OB☭M☭C☭RE ●! After all this isn't Dear Leader's just shuck and jive stuff, this is about millions of peoples lives. When OB☭M☭C☭RE ● smoothes out with the millions of lives it has disrupted, the Republicans promised to get right on immigration. Barry was quoted as saying," When I go out and say the, "You like it you can keep it 's...for years and still as recently as the SOTU, constantly fudge my numbers and get 4 Pnocchios from the Washington Post the next day, I JUST CAN NOT UNDERSTAND WHY "YOU PEOPLE" STILL DON'T BELIEVE MY SHUCK & JIVE ANYMORE? I know you're all struggling and I want you to just think back about Christmas. It cost you taxpayers $800,000 to bring my main squeeze "Snuff Lip" back from her extended stay in Hawaii. Now, for the millennials: Welcome to YOUR OB☭M☭C☭RE ●! The Liberals that now have to survive re-election with that albatross hanging around their socialist necks, STILL have to convince you soft headed millennials into another suicide vote for them again. Maybe we, Barry & Company, can chat up Pot Legalization, minimum wage increase, and Income Inequality, while still avoiding your chances at even getting a job, we Dems are just going to encourage you into believing that the lying Dems are actually going to make your lives so much better."

    OB☭M☭C☭RE ● NOW has DEATH SPIRAL written all over it. I do hope the Republicans are meeting with Insurance Companies, as I write, figuring out how to defuse this Economic time bomb with their new plan, when they regain the Senate in 2014.

  • Report this Comment On February 10, 2014, at 2:00 AM, HappyCustomer wrote:

    The thing that surprised me was that there are 4 million jobs available. Not sure what kind of jobs they are, but I thought that companies weren't hiring.

    I'm no hardcore conservative thug, but if that's the case than don't extend the benefits. Of course I'd have people out there working on the roads in order to earn their unemployment checks. Don't need a lot of skills to operate a shovel and everyone knows that our infrastructure is a mess....can't find a job we've got one for you. Two birds, one stone.

    I'm just saying that I've had a job since I was 13 years old and have had exactly two weeks between jobs in 30 years time. I'm not special, I'm not extraordinary and some of those jobs were pretty horrible, but I worked. My last two jobs I merely made a phone call, put together a resume and didn't even need an interview. You know why? Because I paid my dues by working those horrible jobs and built a performance record. Hell, I don't even have a degree.

    If you want a job you can find one. If you can't find one than move to where jobs are. If you don't have the skills or training to get the job you want than guess what....the government isn't going to change that. Take some damn responsibility and control for your own life and stop waiting for the government to miracle you a job. Times may be tough, but if I have a job with little or no effort than what does that say about you as a person?

  • Report this Comment On February 10, 2014, at 7:52 AM, Rantingmonkey wrote:

    "Likewise, the allegation that people were being forced into part-time positions in response to the employer mandate was actually disproved in a study by the Center for Economic and Policy Research"

    That's not entirely accurate. They did claim to disprove it but part of that was them dismissing employers who have already stated that they were reducing worker hours because of the law. They simply label what these employers said as "not plausible."

    That report only disproves the employer mandate is forcing people into part time if you want to believe it. Reality says the employer mandate has already had an effect, one that forced the president to delay implementation, and that it will only get worse as the delayed deadline approaches.

    The report also brings up that 94% of companies that the law would cover already offer insurance, saying this proves those companies already think health insurance is important. What it doesn't adequately address is how much those companies will save by canceling their plans and just paying the fine.

    It doesn't take a business degree to see that companies can boost profit very quickly by dropping coverage and hours. And it doesn't take a history major to see that such quick methods of raising profit for the sake of stock health makes this scenario very likely.

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