The Congressional Budget Office (CBO) released a report on the Affordable Health Care Act (ACA) which has stirred some debate between Democrats and
Republicans. There is a specific section that most news agencies are quoting. I've taken that section and attempted to boil down the language in an
attempt to better understand what exactly is being said.
Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it
would have been in the absence of the aCA.
[Employment will increase but at a lower rate because of the ACA.]
The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people
working fewer hours;
[CBO starts by stating that there is in fact a decline in full-time employment as a result of the ACA. They further qualify that statement by
indicating that this loss of full-time employment is the result of some people not being employed and others having part time employment.]
however, CBO has not tried to quantify those two components of the overall effect.
[they didn't bother to crunch the numbers]
The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply,
[people have chosen to either stop working or work fewer hours]
rather than from a net drop in business’ demand for labor,
[those people weren't fired or moved to part-time status by the employer]
so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what have occurred otherwise
rather than as an increase in unemployment (that is, more workers seeking, but not finding jobs) or underemployment (such as part-time workers who
would prefer to work more hours per week).
[It might look like fewer jobs or hours are available but actually it's because people chose to cease employment or voluntarily reduce hours.]
Ultimately this particular section of the CBO report dealing with the ACA hasn't presented it's findings in a very clear and concise way or included
additional information to explain the findings. I suspect that this is the reason why there is some debate on the actual interpretation of the
Taking a broader view of the information presented and taking into account my own interpretation I feel I can present what I conclude is being said.
The ACA is not causing employers to reduce worker hours or reduce jobs available. Instead the ACA is causing workers to either seek other means of
employment or reduce hours. This means that the ACA is causing people to choose different employment options. So overall the ACA is in fact the cause
of a change in employment status but it appears to be some indirect cause that I haven't seen the CBO actually identify.
Now that I've given my rendition of what I think this portion of the CBO report is actually saying I'm going to illustrate a few points that come to
If it's true that some people have chosen to cease employment or reduce hours voluntarily, then I have to wonder why. I infer that somehow the ACA is
to blame for this but this particular section of the CBO report hasn't given any reasoning as to why this is the case. I could venture a guess that
some employers may have stopped offering over-time hours to cut costs because the ACA has increased over-head. This could cause some workers to change
to working two part-time jobs in an attempt to work extra hours and make more money. Even if they aren't making over time pay, 50 hours or more of
work is still better than only 40. It's may also be possible that workers that stop employment at a specific company may have done so in order to
seek better employment elsewhere for the same reasons. Again, this section of the report doesn't actually give any specific reasoning why anyone
would voluntarily leave a job or reduce hours.
The CBO indicates on their website that they are a bi-partisan entity that offers independent analysis. I wonder if they tried to obfuscate some
conclusions specifically so the CBO can't be said to be taking one side or the other. Ultimately I feel that the conclusions reached by the CBO
indicate that claims by both the Republican and Democratic party about the ACA in relation to employment are both wrong. While is seems that the ACA
has caused a change in employment status for workers, it isn't something that employers are doing. So while the Republican party has claimed that the
ACA has caused employers to change employment status of workers this report indicates that is is a invalid claim. However, the claim that the
Democratic party has that the ACA has not caused ANY change in employment is also incorrect.
So that's what I think the report is actually saying. I welcome any further thoughts or additional insights that anyone chooses to provide.