Congressional Budget Office Report Shows ACA Will Lead To Reduction In Worker Hours

Congressional Budget Office: ACA Will Reduce Number Of Full-Time Workers. In its February 4 release of the Budget and Economic Outlook for 2014 to 2024, the Congressional Budget Office (CBO) noted that the ACA will allow workers to choose to work less, amounting to a decline in full-time equivalent workers. From the report (emphasis added):

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. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect. The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses' demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week). [Congressional Budget Office, 2/4/14]

Right-Wing Media React With Outrage About Americans Choosing To Work Less

Fox's Varney: Effects Of ACA On Employment “A Complete Reversal Of American Work Ethic.” On the February 5 edition of Fox News' Fox & Friends, Fox Business' Stuart Varney used the CBO report to criticize health reform, claiming that the reduction in workers' hours was “a complete reversal of the American work ethic” and that the law has “shifted the whole concept of work.” [Fox News, Fox & Friends, 2/5/14]

Fox's Scott: White House Trying To “Sell This As Somehow A Good Thing.” On the February 5 edition of Fox News' Happening Now, host Jon Scott cast doubt over the purported benefits of ACA's impact on reducing workers hours, claiming that the Obama Administration was trying to “sell this as somehow a good thing.” Scott went on to ask guest Douglas Holtz-Eakin “can you see in any way that this is a good thing if two million fewer Americans are working in a few years?” [Fox News, Happening Now, 2/5/14]

WSJ: Health Reform A “Job Destroyer” That Reduces “Economic Mobility.” In an editorial titled “The Jobless Care Act,” the Wall Street Journal reacted to the CBO report by claiming that the ACA provides an “in-kind bonus for unemployment,” and concluded “now we learn that the law is a job destroyer that is removing rungs from the ladder of upward economic mobility.” [Wall Street Journal, 2/4/14]

Wash. Post's Rubin: ACA Induces “Sloth To Get Government Benefits.” On her Washington Post blog, conservative commentator Jennifer Rubin cast doubt on the benefits of the ACA allowing workers to put in fewer hours:

So we see with Obamacare. Looking at the latest Congressional Budget Office report, the left, given the talking point from the White House (I kid you not, this is the defense of Obamacare), says 2.5 million jobs aren't going away, it's millions of people who will leave the workforce and/or work less because they get free or subsidized healthcare. Now there's a selling point -- induced sloth to get government benefits. [Washington Post, 2/4/14]

But Economists Note That The Reduction In Hours Is Evidence Of ACA Reducing Economic Insecurity

Economic Policy Institute: ACA Giving Americans More Health Insurance Options An “Unambiguously Good Thing.” Reacting to claims that the CBO report showed that the ACA reduces the number of jobs, economist Elise Gould of the Economic Policy Institute argued that the reduction in workers' hours resulting from the law was evidence that Americans have reduced economic insecurity:

Not surprisingly, the CBO finds that, all else equal, people are less likely to work and will work fewer hours under the ACA. They find, and I quote, “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in business' demand for labor” (page 117).

These are purely voluntary labor supply decisions, not people being laid off from jobs they'd rather keep, or people looking for work and being unable to find it. Working-age adults can now choose, without regard to their need to secure health insurance, whether they wish to supply labor and how much labor they wish to supply to the labor market. This is unabashedly a good thing for them.

Opponents of the ACA will try to paint these CBO estimates as evidence that the ACA has “killed jobs” or something like it. That's flat wrong. What the ACA has done is expand the menu of options available to Americans about how to obtain decent health insurance without having their income fall to poverty levels. That menu used to include one option--“go to work for a large employer.” The fact that it's broader now is an unambiguously good thing. [Economic Policy Institute, 2/4/14]

Economist Dean Baker: ACA Allowing Some Americans To Work Less “A Huge Plus.” In a February 4 L.A. Times post, Michael Hiltzik quoted economist Dean Baker's reaction to the CBO report's findings. Baker noted that the report showed that people who previously had to work to receive health insurance have additional economic security because of health reform:

As economist Dean Baker points out, this is, in fact, a beneficial effect of the law, and a sign that it will achieve an important goal. It helps “older workers with serious health conditions who are working now because this is the only way to get health insurance. And (one for the family values crowd) many young mothers who return to work earlier than they would like because they need health insurance. This is a huge plus.” [Los Angeles Times, 2/4/14]

For more about the Affordable Care Act's role in reducing economic insecurity, click here.