Most have heard by now of the earth-shattering release of the OMB report on the Affordable Care Act and its devastating announcement of a loss of 2 million American jobs. You’ve probably also heard the White House response led by Jay Carney, and his now infamous remark that seems to indicate people should have no problem with not working and getting free Medicaid, if they want to. But here are a few details you might not have heard.
First – there is no OMB report on the Affordable Care Act. The OMB has released its regular Budget and Economic Outlook for 2014-2024; they release a 10-year forecast every year. It’s chalk full of fascinating information, including things like the prediction of a 5% unemployment rate by 2017 and a continuing reduction in the deficit. A 12-page portion of the report, Appendix C, outlines the “Labor Market Effects of the Affordable Care Act”; that’s actually the title of the appendix.
Second, and where it gets interesting and a little comical in my estimation, yes, the appendix does say the loss of hours worked will be the equivalent of 2 million full time jobs, rising to 2.5 million by 2017. The report goes on to describe various scenarios wherein workers could choose to work less hours in order to retain either Medicaid or exchange subsidies. This led GOP lawmakers, like Eric Cantor, to conclude, “Under Obamacare, millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced.”
Now is the time you get to put on your thinking cap, as our 3rd grade teachers used to tell us. If Johnny and Susie quit their job at Daisy’s Diner – does the job disappear? Apparently, yes, if you rely on the thinking of the leading minds of the GOP.
Frankly, the OMB report doesn’t do much better, rarely clarifying their “labor supply” analysis with statements that acknowledge the obvious fact that “other applicants will be readily available to fill those positions.” In other words, no jobs lost. For instance, if a full-time worker decides they can work part-time and become eligible for an exchange subsidy, they would instantly quit their full-time job and go to a part-time job. In the OMB’s calculation, that means there would be 20 labor hours per week missing from the work force; two individuals making that choice would be the loss of the supply of labor equivalent to a full-time job. (Not the loss of an actual job.)
Most of the appendix outlines these types of labor supply scenarios that range from retirement to disability to current Medicaid recipients. I find most of them highly improbable and symptomatic of the basic flaw in analyzing the behavior of low-income workers in America. Namely, an insurance subsidy doesn’t pay the rent. If your monthly earnings are $1,550 a month and your premium is $100 a month, you are not going to quit your job just because you might qualify for Medicaid at half that wage. Not even if it means the difference between free health care and paying deductibles and co-pays that will take more of your income, on paper. Why? Free health care doesn’t pay the rent. Neither does a more generous subsidy. Cash pays the rent, buys a car or bus pass, buys shoes and a coat, buys toilet paper and soap. Low-income people have to work and they have to make as much cash as they are able in order to meet their most basic needs.
Oddly enough, when analyzing the motivation of earners at over 400% of the poverty line, when faced with income adjustments due to ACA the OMB concludes they will work more hours to make up any income loss. There is no mention of a similar response for low-income workers to adjust to income reductions due to the cost of new health insurance premiums. The concept of upward mobility is missing from the report entirely. I don’t know how a 12-page labor analysis is completed without acknowledging the need for workers to remain in entry-level positions at entry-level salaries in order to have any opportunity for future advancement, whether their insurance subsidy shrinks or their new position includes healthcare benefits.
When the basic motivations for low-income workers are missing, namely job experience and cash to pay the bills, the entire report should be looked at with a healthy dose of skepticism. The GOP conflation of millions of hours of labor supply with 2.5 million jobs is just flat inexcusable. But as long as they find happy lackeys in the media, this False News will continue.