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Obamacare May Push More to Work Less

The Affordable Care Act may have Americans working fewer hours, by choice.

A new report from Congress projects 2.5 million fewer jobs due to the Affordable Care Act’s effect over the next 10 years, but the drop will mostly come from Americans reducing their own work hours. With easier access to health care outside of the full-time job market, some may drop out to pursue passions or join the rising freelance trend.

The Congressional Budget Office’s latest report projects that the ACA will cause the number of full-time-equivalent workers to drop significantly. The reduction’s primary source will be workers looking to supply fewer hours. The 2014 to 2024 Budget and Economic Outlook report states:

“The ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor — given the new taxes and other incentives they will face and the financial benefits some will receive.”

While the exact reasons for the decrease in labor are unclear, the report states that the new law could make it easier for workers to take jobs that match their skills, now that they don’t have to worry about insurance.

What will workers be doing when they work less? If they follow rising patterns seen elsewhere, some may take advantage of the ACA to join the growing freelance trend. CFOs may be among them.

A 2009 poll by The Daily Beast found one-third of respondents working “either freelance or in two jobs.” A 2011 Reuters article found freelance jobs skyrocketing. CNBC reports that, with the help of technology, about 42 million Americans are now freelancers.

Source: The worst headline for Democrats this year from The Washington Post.

5 thoughts on “Obamacare May Push More to Work Less

  1. If I can choose to drop a job I don’t like because I can now afford to buy my own health insurance, I am not “pushed” into that new freedom. You slant the headline, in the style of Fox News.

    • Hi Walter, that wasn’t the intent. By saying push, what I was referring to was the report’s statement that people who were previously on the edge of working less hours or as a freelancer would be ‘pushed’ off the edge and into making a decision. In that sense it wasn’t that they would be forced, but that this new opportunity would push people to make a decision that they were previously hesitant on.

      Indeed, the content of the report states that the choice to decrease work hours would come almost entirely from the workers, not the employers, I hope the article sufficiently reflected that.

  2. I think more companies are choosing to cut employee’s hours so they don’t have to cover them. Most people can’t afford to work part-time. People still have families to support and part-time won’t cut it. It’s a nice thought but with the cost of more expensive insurance, I don’t see many people moving to part-time.

    • It’s very possible! The CBO’s predictions are just that, predictive. However, there are some good indications outside of the data that is collected in the CBO report that indicate things may move in that direction.

      Of course, not everyone will feel this effect. Perhaps there will be enough who take the opportunity offered by the new laws that they will to make a significant impact on the job market and economy.

  3. This “answer” leads me to think of other questions.

    1. If those mentioned are currently doing productive labor, wouldn’t their employers need to replace those skills? If so, why are total hours worked falling?
    2. What is the impact on Obamacare cost if more people opt to take the subsidies? Current estimates are that Obamacare will cost 2-3 times the amount predicted when the bill was being debated.
    3. Wouldn’t this lead to more adverse selection (assuming those opting for Obamacare in this case are older workers not yet eligible for Medicare)?
    4. What would be the impact on income tax payments? Working fewer hours could lead to workers being pushed down into lower income tax brackets. Lower income tax payments and higher subsidies. Let’s not think about what this will do to the deficit.


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