Washington Post columnist and former Republican speechwriter Marc Thiessen erroneously claimed that a recent report shows the Affordable Care Act (ACA) will reduce wages and cause a "$70 billion pay cut" when in fact the report shows that the health care law will result in increased compensation.
On February 4, the Congressional Budget Office (CBO) released its annual 10-year projection of current policy's impact on the budget and economy. The report garnered so much attention following its release that CBO Director Doug Elmendorf was forced to issue a public response refuting misleading allegations that the ACA would erase up to 2.5 million jobs over the next decade.
Having lost the battle to spin the ACA as a job killer, right-wing media have pivoted to a new erroneous claim: Americans will see a "$70 billion pay cut" thanks to the health reform law.
On February 10, Washington Post columnist Marc Thiessen published an op-ed claiming that "buried on page 117" of the CBO report was evidence of the ACA depressing American wages. Thiessen spun the report's mention of a "roughly 1 percent reduction in aggregate labor compensation over the 2017-2024 period" to mean that the health care law was taking money out of the pockets of working-class Americans. From The Washington Post:
Obamacare means a 1 percent pay cut for American workers.
How much does that come to? Since wages and salaries were about $6.85 trillion in 2012 and are expected to exceed $7 trillion in 2013 and 2014, a 1 percent reduction in compensation is going to cost American workers at least $70 billion a year in lost wages.
Economist Dean Baker of the Center for Economic and Policy Research was quick to note that the next decade will see relative compensation increase as a result of health reform. Had Thiessen included the CBO's actual conclusion in his analysis, he would have found that the CBO projects hours worked to decrease more than relative compensation. From CEPR (emphasis added):
"According to CBO's more detailed analysis, the 1 percent reduction in aggregate compensation that will occur as a result of the ACA corresponds to a reduction of about 1.5 percent to 2.0 percent in hours worked. (p 127)"
We checked with Mr. Arithmetic and he pointed out that if hours fall by 1.5 to 2.0 percent, but compensation only falls by 1.0 percent, then compensation per hour rises by 0.5-1.0 percent due to the ACA. In other words, CBO is telling us that for each hour worked, people will be seeing higher, not lower wages. That is the opposite of a pay cut.
In a February 6 New York Times op-ed addressing the CBO's findings, Nobel Prize-winning economist Paul Krugman arrived at a similar conclusion. Among numerous corrections of right-wing media distortion, Krugman noted that "wages will go up, not down" in response to a marginally and voluntarily diminished supply of labor over the next decade.
This sort of factual analysis is missing from a right-wing media landscape unilaterally aligned against every facet of the ACA. Right-wing media have spent years promoting an array of false claims about the calamitous effects of the health care law, and recent Media Matters research exposed conservative media turning to misrepresentations of the CBO's findings to support claims that the ACA is going to destroy the job market.