Nonpartisan government analysts say Obamacare will cost our economy up to 2.5 million jobs.
Here’s a claim we expect to hear often from Republicans in the 2014 midterm races: Obamacare is a jobs killer. The National Republican Congressional Committee gave us a sneak peek at how the attack will be framed with a new ad critical of Alex Sink, the Democrat vying for the former seat of U.S. Rep. C.W. Bill Young, R-Fla., in a special election. "Nonpartisan government analysts say Obamacare will cost our economy up to 2.5 million jobs," the ad says. "Yet Alex Sink still supports it." It’s amazing how quickly an economic report can turn into an attack ad. The claims stems from new numbers from the Congressional Budget Office, a nonpartisan fiscal scorekeeper, that came out just last week. We’ve already rated similar statements a couple of times already. We said they’re Mostly False. Here’s the problem with the ad’s claim: The CBO estimated that by 2017, there would be the equivalent of about 2 million fewer workers than there would be in the absence of the law. The CBO said that number would grow to about 2.5 million by 2024. The ad misinterprets the difference between "workers" and "jobs." And the word "costs" makes it seem like these are positions that employers are eliminating as a result of the Affordable Care Act. Instead, the CBO report says that with Obamacare in place providing greater access to insurance on the individual market and subsidies to help pay for it, some Americans will decide on their own to work less. The CBO estimated that Obamacare would "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." This would equal 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," the report continued. "By providing subsidies that decline with rising income and by making some people financially better off, the ACA will create an incentive for some people to work less," the report said. An important distinction in the report is that labor force will reduce by the equivalent of 2.5 million full-time workers over the next decade. That doesn’t mean 2.5 million people will leave their jobs. Some people will only cut back a few hours or leave a second part-time job while others may stop working entirely. This would not increase unemployment. Instead, it may actually create new opportunities for those who have been looking for work. It could also invite people who have given up on looking for work (who aren’t counted in unemployment statistics) back into the labor market, the report said. That doesn’t mean the outlook is entirely rosy. As more people choose to work less, the labor force participation rate should decline, putting a larger burden for supporting the social safety net on those who remain working. Any change in labor force participation comes on top of an already major shift toward retirement driven by the aging of the baby boom. Also, some commentators have expressed concern about having people work less because taxpayer-subsidized insurance is available. Ultimately, it boils down to a tradeoff, said Tara Sinclair, a George Washington University economist. "Admittedly there are some touchy issues with the government potentially paying or subsidizing the health care costs for people who could work but choose not to," Sinclair told PolitiFact last week. "In a macroeconomic sense, this still means fewer people working, even if that is their choice," she said. "It also probably means relatively higher wages and better bargaining power for those who are looking for a job. This is very different than the short-run effects of employers cutting positions, where we would see unemployment rates go up, less bargaining power for workers, and potentially relatively lower wages. So, the description of the source of the cut -- whether it’s from supply or demand -- does matter, but not for the count of ‘jobs.’" In an email to PolitiFact, the NRCC pointed to stories about the new CBO numbers on Obamacare. But those stories distinguished that this was a decrease in workers, not jobs cut by employers, and that’s important. Our ruling The NRCC said "nonpartisan government analysts say Obamacare will cost our economy up to 2.5 million jobs." It’s misleading to suggeset the report indicated cuts in jobs. Instead, workers who can now receive subsidized insurance will cut back on hours equivalent to about 2.5 million workers by 2024. The distinction is critical to understanding the law’s impact on the labor market. We rate this statement Mostly False. Correction: Though our ruling statement accurately quoted the ad as saying, "Nonpartisan government analysts say Obamacare will cost our economy up to 2.5 million jobs," a later line in our story inaccurately quoted the ad as saying "cuts" instead of "costs." That line has since been corrected. The ruling remains the same.
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