White House: Americans out of Workforce No Longer 'Trapped in a Job'

White House: Americans out of Workforce No Longer 'Trapped in a Job'

on Thu, 6 Feb 2014

The Congressional Budget Office (CBO) said Tuesday that, by 2024, Obamacare will reduce the size of the U.S. labor force by 2.5 million full-time workers, to which White House Press Secretary Jay Carney replied that 2.5 million Americans leaving the workforce was a good thing because they would no longer be “trapped in a job.”

As Avik Roy reports at Forbes, the CBO in its annual Budget and Economic Outlook analyzed how Obamacare will affect the job market:

The new, larger estimate of the law’s negative impact on the labor force derives from three factors: (1) Obamacare’s employer mandate, which will discourage hiring and reduce wages offered by employers; (2) Obamacare’s $1 trillion in tax increases, which will discourage work and depress economic growth; and (3) the law’s $2 trillion in subsidies for low-income individuals, which will discourage many from remaining in the labor force.

Focusing on the third point, Roy figures that, based on research by several economists, Obamacare will disincentivize some of those low-income individuals receiving subsidies from continuing to work. These researchers have found that rising unemployment is associated with an expansion of Medicaid, which is what is happening with Obamacare.

In addition, Roy states that the new subsidized health insurance exchanges will permit low-income workers to work less while maintaining the same effective income. Then, because the subsidies drop on a sliding scale as an individual makes more money, as people work more, they make less per hour worked, a concept called the “substitution effect.”

After CBO released its report, Carney published a statement in which he said that it’s "empowering" that millions of Americans may drop out of the work force:

Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families. At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams. This CBO report bears that out, and the Republican plan to repeal the ACA would strip those hard-working Americans of that opportunity.

“Bored with your job? No worries – now you can quit, thanks to the generosity of other taxpayers,” quips Roy. “Want to retire early? No worries – now you can, thanks to the generosity of other taxpayers, and also thanks to the higher premiums that young people will be forced to pay on your behalf.”

“The White House’s apparently sincere belief – echoed by progressive pundits at MSNBC, The New Republic, and the L.A. Times – is that it’s a good thing for fewer Americans to be economically self-sufficient,” Roy concluded.