WASHINGTON (CBSMiami) – The Congressional Budget Office typically doesn’t make a lot of news, but Tuesday the CBO was front and center in the media. Unfortunately, most in the media and many politicians completely misinterpreted what the CBO reported.
When the CBO released a report yesterday, part of it looked at the impact the Affordable Care Act, or Obamacare, would have on the job market. Like many things from the CBO, the analysis was long and detailed.
The CBO report analyzed multiple parts of the economy, but one line sparked a media flurry on the Internet and on cable networks.
“The reduction in CBO’s projection 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 CBO wrote.
Many politicians and media outlets immediately began sending out tweets and breaking news alerts saying the CBO was predicting job losses of more than 2 million due to Obamacare. Even some politicians opposing Obamacare jumped on the reports.
And if one stopped reading at that point in the CBO report, it seems straight-forward that the Affordable Care Act will cost more than two million jobs. And many in the media, along with politicians stopped at that point and ran with the story.
But, that misses the rest of the story.
In the same paragraph, the CBO explained how it came to those numbers:
“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, 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).”
Put another way, the health care subsidies in the law decrease as people earn more money. Thus, a person may have to choose between earning more money by working more hours or getting more help with insurance payments. Thus, workers will choose to work less and reduce their working hours to keep government help for health insurance.
So any employment problems would come from people choosing to work less, not from unemployment or underemployment.
Here are some headlines released in the first few hours after the CBO was released, most were later changed when the report was better analyzed.
Washington Times: Obamacare will push 2 million workers out of labor market: CBO
UPI: CBO: Obamacare to cost 2.3 million jobs over 10 years
Politico: CBO: Lower enrollment, bigger job losses with Obamacare
The Hill: CBO: O-Care will cost 2.5M workers
The CBO did take a look at how Obamacare would impact the demand for labor (jobs) and found that the numbers not measurable. It further stated that, “there is no compelling evidence that part-time employment has increased as a result of the ACA,” according to the Washington Post. That could change later, but as of Tuesday, those were the facts in the CBO report.
Political strategists have put forth the theory since the initial reports that it doesn’t matter the initial reports were factually incorrect, the headlines will still fit perfectly into 30-second ads on the campaign.