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House Majority Leader Eric Cantor, R-7th, says his description of Obamacare as a job killer has been validated by a new report by the nonpartisan Congressional Budget Office.
Shortly after the study was released on Feb.4, Cantor issued a news release saying, "The CBO’s latest report confirms what Republicans have been saying for years now. Under Obamacare, millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced."
Cantor is hardly the only Republican to hail the report; House Speaker John Boehner tweeted that Obamacare is "expected to destroy 2.3 million jobs." Democrats replied that conservatives were misrepresenting the CBO’s projections.
We looked at the CBO report to see if Cantor’s statement is accurate. The agency estimates that Obamacare will lead to a decline of about 2 million full-time equivalent workers in 2017, 2.3 million in 2021 and 2.5 million by 2024.
Cantor suggests the CBO is saying businesses will eliminate existing jobs. But the report refers to employees who decide on their own to leave the workforce because of various Obamacare provisions.
"The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor," the CBO says on pages 117-118 of the report.
House Budget Committee Chairman. Paul Ryan, R-Wisc., phrased the CBO’s findings correctly during a Feb. 5 hearing with CBO Director Douglas Elmendorf.
"Just to understand this, it’s not that employers are laying people off, it’s that people aren’t working in the workforce, aren’t supplying labor, to the equivalent of 2.5 million jobs in 2024 and as a result that lower workforce participation rate that less labor supplied lowers economic growth?" Ryan asked the CBO director.
"Yes that’s right," Elmendorf responded.
Because Obamacare allows people to get subsidies for health care coverage or find insurance outside of an employer setting, the CBO says some folks won’t feel the need to work as much to get health care benefits.
Some lower-income workers who receive health care subsidies under Obamacare gradually will get lower federal subsidies as their incomes rise. That, the CBO said, will end up "discouraging work." Remember, the CBO is talking about a loss of full-time equivalent jobs. These job equivalents are of a lot of bits and pieces of work hours each week that people will chose to drop. Some people working several jobs, for example, will decide to cut back.
Other provisions in the health care law will lower the cost of insurance plans offered to older workers outside the workplace, the CBO said, and that will cause some senior citizens to retire earlier.
The report notes that under Obamacare, employers with 50 or more full-time equivalent workers must provide health care coverage to those working 30 hours or more a week. That, the CBO says, may cause some businesses to limit full-time hiring or put more part-time workers on the payroll.
But, the CBO added, "there is no compelling evidence that part-time employment has increased as a result of the ACA (Affordable Care Act)." The future impact of the employer mandate is still unclear, the CBO said, noting that it does not go into effect until next year.
When we asked Cantor’s office for comment, press secretary Megan Whittemore emailed, "We stand by the assertion that millions of Americans and tens of thousands of Virginians will lose their jobs as a result of Obamacare..." She provided no reference to findings in the CBO report.
Cantor says the CBO confirmed a long-standing Republican talking point -- that millions of people would "lose their jobs" as a result of the health care reform. But the statement is misleading.
The CBO projected the law will lead to 2.5 million fewer full time equivalent workers by 2024, but the report does not say that those legions will "lose their jobs." That implies the employees will be laid off or forced out of work.
To the contrary, the report takes pains to note that virtually all of those people will be working less due to their own choices, such as opting to receive higher federal subsidies for care rather than working more to boost their wages. The CBO said it’s not projecting the law would cause a bump in unemployment or underemployment.
The report does not paint a rosy picture of the economy and it can be easy to miss the distinction between people leaving jobs because they want to as opposed to being laid off. But Cantor’s statement is deeply flawed and we rate it Mostly False.
Rep. Eric Cantor, "Congressman Cantor: CBO report confirms what Republicans have been saying for years," Feb. 4, 2014.
The Congressional Budget Office, "The budget and economic outlook: 2014 to 2024," pages 117-127, Feb. 4, 2014.
E-mail from Megan Whittemore, spokeswoman for Rep. Eric Cantor, Feb. 5, 2014.
The Washington Post Fact Checker, "No, CBO did not say Obamacare will kill 2 million jobs," Feb. 4, 2014.
FactCheck.org, "The ACA: Losing jobs vs. choosing not to work," Feb. 4, 2014.
PolitiFact, "John Boehner says Obamacare ‘is expected to destroy 2.3 million jobs,’" Feb. 5, 2014.
PunditFact, "Carlson: CBO says Obamacare will cut full-time jobs by 2.3 million," Feb. 5, 2014.
The New York Times, "Health care law projected to cut the labor force," Feb. 4, 2014.
Associated Press, "Anti-Obama chorus is off key," Feb. 6, 2014.
GOP Rapid Response video of Rep.Paul Ryan’s interview of CBO Director Douglas Elmendorf, Feb. 5, 2014.
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