Nope, not a job killer. Actually, Obamacare lowers unemployment while improving lives

While Obamacare opponents have claimed that a recent CBO report shows the law is a “job killer,” that’s a clear misrepresentation of what the study concluded.

Rather, as I explained, people would gain job flexibility and not have to work as much and as long in order to keep health care.

And, by making this choice, overall unemployment goes down

How so? As the CBO report stated, Obamacare will increase demand for goods and services, thus creating greater demand for workers.

On page 124, the report estimates that the ACA will “boost overall demand for goods and services over the next few years because the people who will benefit from the expansion of Medicaid and from access to the exchange subsidies are predominantly in lower-income households and thus are likely to spend a considerable fraction of their additional resources on goods and services.” This, the report says, “will in turn boost demand for labor over the next few years.” [source]

Douglas Elmendorf, director of the Congressional Budget Office

Douglas Elmendorf, director of the Congressional Budget Office

That Obamacare will decrease unemployment was confirmed when the CBO director, Douglas Elmendorf, visited Congress to take questions.

By the way, Elmendorf has a bachelors degree in Economics from Princeton University and a Ph.D from Harvard in Economics.

He agreed with a congressional questioner that the increase in demand for goods and services “spurs employment and would reduce unemployment over the next few years.”

In addition, Rep. Paul Ryan (R-WI), the 2012 Republican nominee for Vice-President confirmed that people leaving the job market would be their choice and not the result of employers firing them.

“Just to understand, it is not that employers are laying people off,” Ryan said.

“That is right,” Elmendorf said. [source]

So, that claim that Obamacare is a job killer? No doubt the law’s opponents will continue to say the CBO said it, but in fact the CBO says the very opposite.

Now, it’s true that some dislike people deciding to work less and don’t approve of the greater job flexibility.

But there’s a fascinating take on this by Jonathan Chait, who asks us to imagine that the ACA, after being implemented for a long time, suddenly went away.

If Obamacare vanished, suddenly people would have to go out and try to work more. But what would that look like?

Suddenly desperate and at risk of losing access to medical care for themselves or their families, they would find options like working part-time or staying home to raise their children or running their own business to be impossibly expensive or risky. They would flock to any job they could get that came with insurance as a benefit. The influx of new workers, without any corresponding increase in demand for labor, would decrease wages. Many workers would become less productive because the need to get employer-sponsored insurance would force them into a job that didn’t match their skills.

You’re free to question the assumptions I’ve just laid out here. But I’m not making this up. I’m merely describing the assumptions of the CBO’s report – the one celebrated by conservatives yesterday — in reverse.

In our hypothetical world, I don’t think the release of this reverse-CBO report [explaining the outcomes of repealing the Affordable Care Act] would be good political news for the administration proposing to repeal national health insurance. I think it would be a political disaster. Reporters would flock to tell the stories of victims like John, the engineer who saved enough to retire at 59 years old, but has a heart condition and is losing access to individual insurance and has to find a job with benefits until he’s eligible for Medicare, or Mary, a 27-year-old mother who can no longer raise her children at home because her husband’s small business lacks affordable insurance. [source]

I’m inclined to agree with Chait. All that new job-seeking would not be seen as positive by Americans, and it would make their lives harder. And Chait’s thought experiment clearly illustrates that greater job flexibility is something that helps Americans.

Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.