We’ve been Gruberized….
A new Congressional Budget Office (CBO) report says ObamaCare will reduce work hours equivalent to 2 million jobs in the next decade amid a host of incentives not to work or to work less. Fox News reports that the CBO report estimates the Affordable Care Act will make the labor supply shrink by 0.86 percent in 2025. This amounts to a shrinkage equivalent to approximately 2 million full-time workers.
CBO estimates that the decline will come primarily due to workers responding to changes made by the law to federal programs and tax policy. This includes the introduction of health care subsidies tied to income as a key factor, which raises effective tax rates as someone’s earnings rise, therefore reducing the amount of work Americans choose to do.
Because math is tough for proggies, here’s how the report describes what will happen: “Subsidies decline as income increases, reducing the return on earning additional income. That decline is effectively an increase in recipients’ effective marginal tax rate, so it generally reduces their work incentives through the substitution effect.”
It gets better! Because the subsidies also reduce the burdens attached to unemployment, the CBO predicts that the law will create additional “work disincentives” for those who are unemployed for part of the year. It concludes that those exchange subsidies will contribute to half of the overall reduction of the labor supply.
It gets better! The ACA’s hike of the payroll tax on high earners for Medicare’s Hospital Insurance Program could be a reason for discouraging some from working.
It gets better! Another pressure on wages will come from the employer mandate, which imposes a penalty on employers if they have more than 50 employees and do not provide insurance. The CBO predicts that within a few years this charge will be passed on to employees in the form of lower wages.
Nancy Pelosi will be proud of this achievement, no doubt: In what will be seen as a positive by ObamaCare’s supporters, the CBO predicts that a contributing factor to the shrinkage in the labor force will be the consequence of insurance subsidies that will make it easier for some people to stop working, or work less, without losing health insurance. “Some people would choose to work fewer hours; others would leave the labor force entirely or remain unemployed for longer than they otherwise would,” the report says.
DCG
