Should We Want People to Work?

Originally published in the Herald-Mail

Thomas A. Firey Feb 19, 2014

The Congressional Budget Office roiled Washington earlier this month with a new analysis of the Patient Protection and Affordable Care Act (PPACA, better known as “Obamacare”).1

According to the CBO, because PPACA uses subsidies and other features to help people buy health insurance, those people will be less inclined to get coverage the old-fashioned way, through work. As a result, many people will voluntarily reduce their work hours or quit their jobs altogether. The report estimates that, in 2017 alone, the lost time will add up to the work hours of 2 million full-time employees; by 2024, it’ll reach 2.5 million. That’s a major loss: between 1.5 and 2 percent of the labor force. Worse, an independent analysis suggests that the effect could be three times larger than what the CBO estimates.2

Politicians and talking heads responded to the report in their usual way, by running their mouths without reading the paper. One of PPACA’s critics, House Majority Whip Eric Cantor (R-Va.), claimed the CBO showed that “millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced.”3 (Perhaps that’ll happen, but the report is about people choosing to cut their hours or leave their jobs.) Meanwhile, one of PPACA’s architects, House Minority Leader Nancy Pelosi (D-Calif.), claimed the CBO showed that the law helps people “to start a business, to actually release the entrepreneurship of America because people would no longer be job-locked” in insurance-providing jobs.4 (Again, perhaps, but the report is about people working less, not shifting to new jobs and ventures.)

Fortunately, in the following days, people apparently did begin to read the report, because their comments about it became more accurate—if not more thoughtful. For instance, Washington Post columnist E. J. Dionne hailed the CBO analysis because, he said, it would help “a 64-year-old with a condition that leaves her in great pain.”5 (Perhaps, but Social Security Disability Insurance already offers coverage—and income—to such people.)

The comments did provide one interesting insight, though: Washington politicians and talking heads are increasingly polarizing over two very different views of employment and public policy. On one side are folks who embraced the CBO’s conclusion that the law will encourage people to leave their jobs or reduce their work hours (even though PPACA was supposed to be about helping people who didn’t have insurance). On the other side are PPACA critics who believe government shouldn’t discourage people from working.

In other words, the latter group thinks a top goal of public policy should be to bolster employment, while the former group disagrees. The former may nonetheless support employment, but they think other goals are more important. As Rep. Keith Ellison (D-Minn.) told a television audience, “[W]e might want to look at our work—our work-life balance—and [PPACA] is something that gives us a great opportunity.”6

Recognizing this division helps us to understand two other labor controversies that are playing out in American politics: the push to continue “emergency” unemployment insurance benefits for people who have already received benefits for six months, and the fight over increasing the minimum wage. On unemployment insurance, the “bolster employment” side believes half a year is long enough for people to draw unemployment, and after that time they should take any job they can find. This side points out that the longer people are unemployed, the less likely they are to find work that could (one day) pay as well as their old jobs.7 On the minimum wage, the “other goals” side thinks workers should be prohibited from taking jobs that pay below a certain amount that this side considers unacceptable—even if some people want those jobs.

It’s hard to argue with Ellison’s feeling that people shouldn’t have to work so much in order to live a comfortable life. But there’s surprisingly little space between his praising PPACA for allowing some people to work “reasonable hours” and Pelosi’s praising PPACA for giving people “the freedom to be a writer, to be a photographer, to make music, to paint, … to follow their passion.”8

Once we realize how small and subjective that space is, then we have to wonder about the people who will need to work more—and pay more taxes—in order for others to leave work and enjoy those freedoms. What will happen if the taxpayers begin to ask themselves, why should we work harder so that other people can have more while working less?

Thomas A. Firey is a senior fellow with the Maryland Public Policy Institute and a Washington County native.

2 See Joseph Rago, “Casey Mulligan: The Economist Who Exposed ObamaCare,” Wall Street Journal, Feb 8, 2014.

3 Office of Rep. Eric Cantor. “Congressman Cantor: CBO Report Confirms What Republicans Have Been Saying for Years,” press release. Washington, D.C., Feb. 4, 2014.

4 Office of the Democratic Leader. “Transcript of Pelosi Press Conference.” Washington, D.C., Feb. 6, 2014.

5 E. J. Dionne. “Must the Obamacare Debate Be Stupid?Washington Post, Feb. 6, 2014.

6 ABC News. This Week with George Stephanopoulos, transcript. Washington, D.C., Feb. 9, 2014.

7 See Alan B. Kreuger and Andreas I. Mueller, “A Contribution to the Empirics of Reservation Wages,” NBER Working Paper no. 19870, National Bureau of Economic Analysis, Jan. 2014.