One day after the Congressional Budget Office informed Congress that Democratic proposals will create jobs much more effectively than conservative ideas — a conclusion that Republicans are guaranteed to ridicule or ignore — two GOP senators are relying on an old distortion of CBO calculations to argue that the Affordable Care Act is a job-killer. In a Politico op-ed today, Sens. John Barrasso (R-WY) and Orrin Hatch (R-UT) write that the CBO “has testified that the new health law will result in the loss of more than 800,000 new jobs.”
Wrong. One might think that two sitting senators, writing a piece for publication, would get this right. One might also think a news outlet would balk at publishing claims that have already been debunked.
And yet, here we are.
What Hatch and Barrasso don’t understand is the meaning of the phrase “reduction of labor.”
At a House Budget Committee hearing in February, Rep. John Campbell (R-Calif.) pressed Douglas Elmendorf, director of the Congressional Budget Office, on the effects of the Affordable Care Act on employment figures. Elmendorf explained that once the law is fully implemented, given the projected “reduction of labor,” there would be “a reduction of 800,000 workers” by the year 2021.
Barrasso and Hatch think this means the CBO believes the law will kill 800,000 jobs. That’s not even close to true.
What Elmendorf and the CBO found is that the Affordable Care Act may reduce the labor supply, not the number of actual jobs. The small, projected shift in labor would not come as a result of employers cutting jobs; it would come as the result of some people working less. And why might people work less? Because some workers might decide to retire earlier, knowing that they won’t have to keep working in order to have health care benefits. (And when these older workers leave the workforce, it creates opportunities for younger workers.)
As Jon Chait explained at the time, “In other words, people who are only working because they desperately need employer-sponsored health insurance will no longer do so. They’re not going on the public dole — they’re just people who have the means not to work full-time and will be free to make employment decisions that aren’t premised upon an individual health insurance market that shuts them out. Some workers will choose to retire early because they now have the ability to buy their own health insurance. This is what Republicans call ‘destroying jobs.’”
Sitting senators should be able to grasp this.