How Obamacare Crushes Working Class Job Opportunities

Family and Their HouseThe Congressional Budget Office recently confirmed its estimate that Obamacare will shrink the workforce by 2 million full-time equivalent (FTE) jobs in 2025. When the CBO first published its (initially somewhat larger) estimate, in February 2014, it felt compelled to wriggle around the headline, claiming that it did not really mean what it said.

It is strictly true that some of this job loss will be “voluntary,” in that Obamacare’s subsidies will cause them to seek less work than otherwise. Those individuals will probably feel better off than if they had been laid off or fired. However, cutting back working hours because government subsidies encourage it is not quite the same as cutting back because you have changed your priorities – either economically or morally.

The new analysis allows us to see where the burden on employment lies – mostly on those eligible for tax credits in Obamacare’s exchanges. These are people who earn between 100 percent (or 138 percent, depending on the state) and 400 percent of the Federal Poverty Leve. For a family of four this ranges from $24,250 to $97,000 in 2016.

The report actually estimates compensation will be 0.86 percent less in 2025 than it would without Obamacare, which it transforms into 2 million fewer FTE jobs. In other words, there would be about 232,560,000 jobs without Obamacare and 230,560,000 jobs with Obamacare.

That might not look like a big deal. However, the burden is mostly borne by a small population: Those within the income range for Obamacare tax credits who do not have employer-based benefits. I estimate that about 85 percent of the approximately ten million enrolled in Obamacare exchanges in 2016 will be entitled to tax credits. That figure will grow a little by 2024 but not by much, as estimates of Obamacare enrollment are shrinking.

Fully half of Obamacare’s burden on employment (0.43 percent/0.86 percent) comes from the perverse structure of tax credits. So, one million FTE jobs lost is borne entirely by about 8.5 million of us. (See this policy paper for NCPA’s solution to this problem.)

The other one million FTE jobs lost due to other taxes (e.g. the so-called “Cadillac” excise tax on expensive employer-based health plans) and regulations is mostly distributed among the entire population. Yet, almost all corporate lobbying to “fix” Obamacare seeks to repeal these taxes and regulations, instead of removing the more harmful disincentives to work contained in Obamacare’s tax credits.


Comments (2)

Trackback URL | Comments RSS Feed

  1. Al says:

    Thank you for dispelling a myth.

    From the paper: “Ultimately, we project that the number of jobs in the economy will be smaller than it would be in the absence of the ACA ”

    When that person decides not to work because of the ACA my taxes go up to make up the difference.

  2. Ron Greiner says:

    John, my daughter with MS quit her job on 1/1/2014 the 1st day of Obamacare and started her own business and she is wildly successful and employs other workers. She was enrolled into an Obamacare plan with a ZERO premium but when she called them they didn’t answer their phones so she purchased insurance from the company of her choice and pays the full premium. I don’t believe any of those numbers. They might as well of pulled some numbers out of a hat.

    John, last week I got a call from an old MSA client from 2000 that is having his TIME Insurance terminated soon. He has $120,000 in his tax-free HSA and he has accumulated $40,000 in Qualified Medical Expenses (QME). His current premium is $8,000 a year with a $10,000 deductible for himself and his wife. I gave him the 2 best options that are available in Iowa. 1) United Healthcare HSA PPO with a $13,700 deductible and his premium soars to $14,000 a year. 2) the secret – a plan governed by Iowa State law with medical underwriting. It’s a PPO with a $3,000 per person deductible, only $100 on accidents, then 100% coverage and his premium drops, plummets, nose-dives to $6,440 a year.

    This is why Obamacare is dead. United Healthcare (UHC) is doing it too. UHC terminated agent commissions on the exchange but still pays commissions on their Short-Term-Medical (STM) which only takes healthy people. Trust me, agents want commissions so all healthy people go STM and only the sick go to the exchange. Then if a STM client gets cancer UHC dumps them on the exchange during the next Open Enrollment. So it’s just a matter of TIME before Obamacare dies.

    Obamacare won’t be here 2025 now will it?