Sally Pipes at Forbes is spewing fear, uncertainty and doubt at Forbes magazine on Obamacare again. Her ‘argument’ this time is that Obamacare is bad for wage earners and she commits the usual sins of trusting Avik Roy and his ilk to be good faith brokers of non-bullshit, but then she tries to slide one hell of a doozy by that flies in the face of any economic modeling or theory that I can think of:
Killing jobs and reducing pay is bad enough. But another report, from the American Health Policy Institute, finds that Obamacare will also shrink the labor force by reducing incentives to work.
In other words, workers are going to get squeezed from both sides. There will be less demand for them even as Obamacare makes it less financially appealing to have a job.
This is a reprisal of the CBO report from last winter that wingnuts used to claim that Obamacare would cause 2 million job losses. In actuality, what the CBO reported was that people would voluntarily remove themselves from the labor force because they did not need to work just for healthcare, and if healthcare was disconnected from employment, they had much better things to do with their time.
These are the types of decisions the CBO project will occur for millions of Americans over the next decade. Some people will opt out of the labor force because they are not tied to their health insurance any more and they have better things to do with their time and money then work. Some people will not enter the labor force because they no longer have to work for insurance. Some people will voluntarily work part time because insurance is no longer just available to full timers. The summations of all of these projected decisions is two million or more people deciding to get ouf of the labor pool over the next decade.
More importantly, let’s go back to simple supply and demand for labor. If in the base case the labor pool is at a certain level, then the labor market (assuming non-zero-bound conditions) clears at a certain set of wages. If two million people leave the labor pool because they have better things to with their time than hang onto health insurance, what happens to the labor market, all else being equal?
The labor pool gets smaller, the competition for fewer workers gets slightly more intense and better offers have to be made to keep and get good workers. The really simple story is that total employment compensation package will rise. Most likely this means more cash in my pocket every two weeks. If we make it a more complex story and project that Obamacare does a decent job of holding down the rate of medical cost inflation, the story gets even better as the proportion of compensation that goes to health insurance stabilizes or declines which means more people start seeing cash raises. But even with the simpler story, a smaller workforce, all else being equal, is a good thing for the remaining workers.
Now, it is not as good of thing for business owners and Forbes magazine readers but fuck them, as Ms. Pipes is the asshole of the week for spreading illogical FUD.