According to the recent CBO report on the Affordable Care Act, Obamacare is a jobs killer, but not in the way the GOP would have us believe. Rather than burdening employers with unsustainable new costs, forcing them to lay off workers in order to stay in the black, the employees themselves will voluntarily exit or reduce their involvement in the labor force.
The reasons for this are fairly simple. Under the new health care law, those who make less than 400 percent of the income demarcating the Federal Poverty Line—(which varies according to familial status)—are eligible for subsidies covering health insurance premiums, and those making less than 250 percent are eligible for aid covering out-of-pocket costs. The law has a number of these progressive gradations, meaning those who work less and therefore earn less, stand to gain more in transfer payments. Furthermore, thanks to an increase in insurance options for low- and some middle-income Americans, those who were once working mainly or even solely to maintain employer-provided health insurance, no longer find themselves handcuffed to the job.
Conservatives, as embodied in a recent WSJ editorial and a similar article by Charles Cooke over at National Review, are outraged by the ACA’s perceived attack on the American work ethic. The fact that the law sponges away the equivalent of 2.3 million jobs in work hours is to them an unacceptable cost for socialized health insurance—(itself an undesirable program in the eyes of the GOP.) For at least two reasons, however, this outrage is overblown.
Firstly, the withdrawal of some workers from the labor force will create a labor supply shortage, meaning demand for labor will increase among employers. As a result, wages for the lower- and middle-classes will increase. This means that those whose work ethic is unaffected by the ACA stand to gain a lot monetarily, and those whose priorities are simply elsewhere have a lot to gain in terms of leisure. Keep in mind that those in the latter category are rarely the welfare sponges that the Republican establishment makes them out to be. Some of these workers are close to retirement and wouldn’t like to spend their last few years toiling. Some are parents who’d like to spend more time with a son or daughter, especially when their spouse is in the workplace. Relatively rare, however, is the American teetering on the financial edge who will drop his or her primary source of income thanks to health insurance coverage—which, before the ACA, wouldn’t have been part of the financial equation anyway.
True, some large employers and other wealthy Americans may stand to lose from this economic re-arrangement. But before we feel too much sympathy for this segment of the population, consider a few facts about the changing structure of the American economy over the last few decades: the median household income is essentially the same now as it was in 1989; for those near the bottom of the income spectrum, real salaries are the same as they were in the late 1970s. The only group that has reaped the benefits of our work ethic over the past several decades is the wealthy: the 90thpercentile household income in the U.S. has increased by more than $50,000 since 1967.
None of this divergence, however, is a result of laziness in the American workforce. Workers in the industrial sector work the same hours as they did in 1946, and, according to Juliet Schor, author of the bestseller The Overworked American, the average American family increased the time they worked by 500-700 hours annually over the ’80s and ’90s.
It’s true that dis-incentivizing toil is, generally speaking, an unfortunate side effect of social welfare programs. But given the changing structural realities of the American economy, this program, which increases the salaries and the work options of squeezed working class Americans, has my support. At the very least, it seems a bearable side effect of insuring tens of millions of residents who, for years and years, have been balancing on the brink of financial and physical disaster.
What’s more, the CBO predicts that the ACA will curb “job lock,” a condition by which certain workers, especially those with pre-existing conditions or chronic health problems, find themselves stuck in a job that poorly fits their skill set. In other words, many of these Americans walking off the job because of the ACA are potential entrepreneurs or workers seeking positions appropriate to their skills, rather than sluggish welfare queens. So though this newfound labor motility may create some job loss, it will also end a widespread state of indentured servitude for the ill and infirm that ACA opponents have come to confuse with ‘the American Dream.’