MacIver News Service | February 4, 2014[Washington, D.C.] The Affordable Care Act will lead to two million fewer jobs in the labor market, according to a new report from the non-partisan Congressional Budget Office (CBO).
The new report, which was released on Tuesday, expects the total number of hours worked to be reduced by 1.5 to 2.0 percent from 2017 to 2024.
“The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024,” the report reads.
The reduction in jobs are “almost entirely because workers will choose to supply less labor,” according to the report. New taxes and increased financial benefits are the reasons CBO gives for the decrease in the labor supply.
Low-wage workers will be hit hardest by the expected reductions because they are most likely to receive taxpayer-funded financial benefits through the health care law. The federal subsidies will discourage individuals from trying to increase their income, according to CBO.
The law’s effects on employment are expected to continue past 2024, but CBO does not provide projections past 10 years.
The report also expects that labor demand will decrease slightly due to the penalty on employers of 50 or more that do not offer insurance, beginning in 2015.
“That penalty will initially reduce employers’ demand for labor and thereby tend to lower employment,” the report reads. CBO expected the penalty will eventually be passed onto workers in the form of reduced wages and benefits.
CBO also released a report on Tuesday that shows only six million people are expected to sign up for insurance on the exchanges due to the many glitches and technical difficulties during the federal website’s launch. The new estimate is one million lower than the original projection.