Could it be that the Affordable Care Act will actually widen the gender gap? President Obama has described the raw wage gap between women and men as a serious problem that public policy ought to solve. As we have discussed, however, the raw wage gap isn’t necessarily the most useful summary statistic for understanding how women and men far in the U.S. labor market, as it isn’t an apples-to-apples comparison. For an apples-to-apples comparison, we would want to compare the wages of women and men who are full-time, full-year employees who work similar hours and have similar experience. Such a comparison will yield a much smaller wage gap, in large part because women are more likely than men to reduce their work hours in order to meet family responsibilities. Given that women in younger cohorts are surpassing men in educational outcomes, this is a social dynamic that may well dampen U.S. growth potential over time, and I think it makes sense that business enterprises, civil society groups, and policymakers are thinking about how we might make it easier for women, and men, to better combine work and family life.
Yet because the president has described the raw wage gap as an “embarrassment,” it is worth reflecting on the fact that his signature domestic policy legislation seems likely to exacerbate it. A new analysis from the Congressional Budget Office projects that Obamacare will reduce full-time equivalent employment by 2.5 million, or three times what the CBO had estimated when the law was passed in 2010. It is important to keep in mind that this decline in work effort will largely reflect workers choosing to work fewer hours, as Josh Barro of Business Insider explains:
The decline in work will be almost entirely because people choose to work less, not because employers choose to hire less. Republicans tend to talk about Obamacare as “forcing people into part-time work.” But CBO expects the law to have “small or negligible” effects on labor demand in most parts of the economy. The main effects will come on the labor supply side. This has important implications for wages: While a decline in labor demand will tend to reduce wages, a withdrawal of labor supply may actually help push them up, as employers compete to hire from a reduced pool of available workers.