On Tuesday the Congressional Budget Office projected the U.S. labor supply to shrink by the equivalent of 2.5 million full-time jobs over the next decade, due to the Affordable Care Act. But is that a bad thing? (More)
Who Are We, Part II: The ACA, ‘Job Lock,’ and Wealth Privilege
This week Morning Feature revisits the question of who is included in “We the People.” Yesterday we considered Coca-Cola’s “America the Beautiful” Super Bowl ad, and how the conservative response was fueled by white privilege. Today we see how Rep. Paul Ryan’s flip-flop on “job lock” after this week’s CBO report exemplifies wealth privilege. Saturday we’ll see how the ‘religious freedom’ movement manifests Christian privilege.
“Seems to me that Ted Cruz has hacked the CBO Press Office”
“The new healthcare law will cost the nation the equivalent of 2.5 million workers in the next decade, the Congressional Budget Office (CBO) estimated in a report released Tuesday,” The Hill’s Eric Wasson declared. Public relations spinner Yossi Gestetner quickly joined the conservative chorus on Twitter:
— Yossi Gestetner (@YossiGestetner) February 4, 2014
“Almost entirely from a net decline in the amount of labor that workers choose to supply”
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).
In short, because fewer people will have to work full-time solely to keep health insurance, more people will choose to work part-time, stay home with their kids, start their own businesses, or retire early. You’d think a party that talks so much about “freedom” would like that.
“Are we going to continue job-lock or are we going to allow individuals more choice?”
And indeed Republicans used to like that:
For example, listen to Ryan speaking in May 2009: “[The] key question that ought to be addressed in any healthcare reform legislation is, are we going to continue job-lock or are we going to allow individuals more choice and portability to fit the 21st century workforce?”
Here are a couple of Heritage Foundation analysts in 2008, praising a healthcare plan proposed by then-GOP presidential nominee John McCain: “Individuals who wish to take a better job, change careers or leave the workforce to raise a family or to retire early take substantial risks. … This health insurance obstacle to labor mobility is sometimes called ‘job-lock.'” (Igor Volsky has more examples of conservative hand-wringing about job-lock here.)
So what changed? Why did Rep. Ryan flip from deploring ‘job lock’ in 2009 to saying this in a hearing on Wednesday:
I guess I understand ‘better off’ in the context of healthcare. But ‘better off’ in inducing a person not to work who is on the low-income scale, not to get on the ladder of life, to begin working, getting the dignity of work, getting more opportunities, rising their income, joining the middle class, this means fewer people will do that.
“Because the largest declines in labor supply will probably occur among lower-wage workers”
Perhaps Rep. Ryan changed his mind because of which workers would most feel the relief from ‘job lock,’ according to the CBO report:
CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive. Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked.
Ending ‘job lock’ was fine with Republicans … when the hypothetical ‘job-locked’ worker was a middle- or upper-middle-class white male who wanted to start a business or take early retirement. But the CBO predicts the beneficiaries will more likely be low-wage workers who have been keeping dreary jobs solely for health insurance. And that’s “likely pernicious,” a Chicago Tribune op-ed declared yesterday:
But, and here’s where the impact is likely pernicious, some will quit or work less precisely because they’ll now qualify for Medicaid or for subsidies under the law. In effect, they’ll have a government incentive to be less productive.
“Redistribution will be stunningly lopsided”
In short, Republicans and conservatives are upset because the ACA will help the ‘wrong’ people. Consider the Washington Examiner’s Byron York:
A new study finds that Obamacare’s redistribution will be stunningly lopsided. Scholars at the liberal Brookings Institution have discovered that Obamacare will increase the income of Americans in the lowest 20 percent of the income scale, and especially in the lowest ten percent. But all other income groups – even people who make very modest incomes in the $25,000 to $30,000 range, as well as all income brackets above that – will experience a decline in income because of Obamacare.
Yes, it’s true that the Brookings Institution study projected small income declines – averaging less than 1% – for middle-income families … with a very important caveat:
Many workers with modest incomes will find it cheaper to obtain subsidized plans through the Exchanges or free Medicaid coverage than to continue their employer-based coverage. When they leave employer plans, they generate cost savings for their employers – assuming their employers do not have to pay penalties to the government. This will allow their employers to increase money wages. Money wage gains are more common for families with incomes between the 10th and the 25th percentiles and above the 80th percentile than they are in other parts of the income distribution. We therefore project families in these income ranges will see increases in their money incomes. Between the 25th and 80th income percentiles, we project money wages will decline modestly.
However, those workers who substitute subsidized government insurance for an employer health plan typically see a net gain in income under comprehensive income definitions.
In other words, when you factor in premium subsidies or increased write-offs for employer-based health insurance – which the authors presume will passed on in pay increases – and the phasing out of ‘junk’ insurance, most middle-income families will see almost no net income change.
But the poorest Americans will benefit a lot, and for conservatives that “stunningly lopsided” shift is unacceptable. But the even more stunningly lopsided shift in incomes from hardworking families to the very rich … well, that’s just the “free market” making everyone’s lives better.
Everyone that matters to conservatives, that is. And that’s a serious case of wealth privilege.