Jared Bernstein, former economic advisor to Joe Biden, takes to the Times to tell us that the recent CBO report really wasn't about jobs and disincentives to work.
Hey, changing the subject is a time-honored tactic, and good luck to him. However, we were rendered slack-jawed by this policy insight (my emphasis):
What the Congressional Budget Office is saying is that because people receiving subsidies through the health care act will see those subsidies reduced as their earnings rise, they’ll choose to work less to avoid that loss.
The Affordable Care Act gives that job holder an option and, for some, an incentive to work less without losing health coverage. Conservatives might well object to making that choice on the taxpayers’ dime. But there’s no model of health care reform from the left or the right that doesn’t involve a subsidy that fades out as income rises. So this labor-supply-choice problem is endemic.
Uhh, does single payer really have subsidy phase-outs? I don't claim to be up to speed on every aspect of every progressive fantasy, but then again, I never worked for Joe Biden. I would have guessed that if Uncle Sam picked up the tab for everyone's health care and paid for that out of general tax revenues, there would be no specific subsidies to be phased. The overall level of taxes might rise, providing a general disincentive to work, but that disincentive would not be focused on the subsidy-eligible lower-earners, as with the ACA.
Well. Perhaps as a demonstration of the impact of delivering a reduced work effort, Mr. Bernstein then linked approvingly to this comic riff:
So what do you get when there’s less labor supply around stable labor demand? A tighter job market.
The economist Dean Baker uses Congressional Budget Office numbers to make this point:
“If hours fall by 1.5 to 2.0 percent, but compensation falls by 1.0 percent, then compensation per hour rises by 0.5-1.0 percent due to the ACA. If this is bad news for workers then someone must have been enjoying the new found freedoms in Colorado or Washington State too much.”
I'm crying. OK, I'm laughing through the tears, but the tears are real. The CBO was crystal clear - lower earners will have the disincentive to work due to subsidy phase-outs, so they will be more inclined to retreat from the labor market:
However, people whose employment or hours worked will be most affected by the ACA are expected to have below-average earnings because the effects of the subsidies that are available through exchanges and of expanded Medicaid eligibility on the amount of labor supplied by lower-income people are likely to be greater than the effects of increased taxes on the amount of labor supplied by higher-income people.
And this is arithmetic anyonne can do, even an advisor to Biden. If the lower earners reduce their participation in the labor pool then the average wage of those WHO CONTINUE TO WORK will... (a) go up; (b) go up; (c) go up.
If you picked "go up", well done. If the folks earning $10 bucks an hour cut back on their hours and the folks earning $30 bucks an hour stick to their old schedule then total hours worked will fall and the average wage will rise even though no one gets a raise or works more hours.
As BS spin goes this could hardly get weaker. How Obama or his fellow progressives can think the working class will overcome the challenge of income inequality (the defining challenge of the age!) by slacking their way to success remains a mystery.