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Media Headlines Mislead People on Obamacare's "Job Killing" Numbers

by Shawn M. Griffiths, published

The Internet could have exploded as headlines surfaced that the Affordable Care Act (colloquially known as Obamacare) is going to result in the loss of 2 million jobs in the next 4 years, according to the latest report by the Congressional Budget Office. This would seem to vindicate popular claims in the Republican Party that Obamacare is the ultimate job killer.

So, if this is truly the case, it only seems fitting that we would see headlines like this:


Similar headlines were featured on several news channels and websites, including CNN and the Wall Street Journal, but these news outlets have since corrected their headlines or clarified what the report actually says.

From the CBO:

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.

If we stop here, then yes it does almost sound like Obamacare is killing jobs because most people don't understand what that means without additional clarification:

The estimated reductions stem 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...
Overall, the CBO expects the demand for labor to increase over the next few years. The unemployment rate is expected to drop below 6 percent by the fourth quarter of 2017 -- around 5.8 percent. Now, this rate can often be misleading because it doesn't count people who have left the labor market -- discouraged workers -- and doesn't address underemployment. However, it does affect confidence in both the consumer and labor markets.

The general perception is that the lower the unemployment rate is, the better shape the economy is in. Thus, consumers are encouraged to be more active in the market, which leads to a higher demand for jobs. According to the CBO, Obamacare may affect demand to a small degree, but not very much -- so small it can't be measured. This means Obamacare is not the job killer some are now saying the CBO numbers report.

However, Obamacare will have an impact on how much workers choose to participate in the labor market. The health care law will decrease the incentives for people to work or maximize the amount of work they do. A major factor in this decision is the health care insurance subsidies in the law. It is a nice benefit, but it also decreases as people earn more money. How workers respond to this is entirely the choice of the worker as some may choose part-time work over full time in order to keep the subsidies.

While GOP talking points on Obamacare's effect on the job market are off, this doesn't mean there isn't room for improvement. A health care law should not discourage people from working more if they want to, especially since most Americans would obviously benefit from having more money in their pockets.

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