The Corner

Job Killing

Among the more peculiar arguments Democrats made in favor of their health-care bill last year was that it would create new jobs. Days before the final vote, for instance, Nancy Pelosi insisted that “it’s about jobs. In its life, [the bill] will create 4 million jobs — 400,000 jobs almost immediately.”

 

In a hearing of the House Budget Committee today, Paul Ryan asked CBO director Douglas Elmendorf about that claim, saying that some people have argued the new law “will create jobs and increase labor force participation. But if I recall from your analysis, it was quite the opposite. Is that not the case?” Elmendorf answered “Yes.”

 

Rep. John Campbell then asked him to expand on that point:

Campbell: You just mentioned that you believe—or that in your estimate, that the health-care law would reduce the labor used in the economy by about one half of one percent. Given that, I believe you say, there’s 160 million full-time people working in 2021, that means that, in your estimation, the health-care law would reduce employment by 800,000 in 2021. Is that correct?

 

Elmendorf: Yes. The way I would put it is that we do estimate, as you said, that household employment will be about 160 million by the end of the decade.  Half a percent of that is 800,000.

That’s 800,000 fewer jobs people employed in ten years than we would have had without the law, even if you accept all the dubious assumptions that CBO was required to accept about future spending and taxes under the law.

 

Here’s the exchange.

 

UPDATE: This post originally referred simply to the number of jobs rather than the number of people working in 2021—CBO notes that the law will reduce the supply of labor as well as the demand, and they expect the greatest effect to be on supply at the margins of Medicaid eligibility, where the expansion of Medicaid will significantly reduce incentives to work. The 800,000 figure combines both effects—the agency did not provide a specific figure for the effect of the diminished demand for labor alone. I should have been clearer and more specific.

Yuval Levin is the director of social, cultural, and constitutional studies at the American Enterprise Institute and the editor of National Affairs.

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