Will Obamacare Kill Jobs?

The Congressional Budget Office thinks Obamacare will reduce employment by the equivalent of about 2 million jobs in 2017. Here’s what you need to know.

You've probably already read that the Congressional Budget Office thinks the U.S. health-care overhaul will reduce employment by the equivalent of about 2 million jobs in 2017. Republicans are saying it will cost 2 million jobs; the White House, meanwhile, is framing this as a choice that people are now free to make. Here's what you need to know:

-- The CBO is not an all-powerful seer that gazed into its crystal ball this morning and foresaw an army of unemployed rising from the barren wastes of the Patient Protection and Affordable Care Act. It is full of very smart people who are phenomenally dedicated to their appointed tasks. But those people frequently work with very incomplete information, and this is one of those cases. We've never done this before, and 2 million may be an overestimate, it may be an underestimate or it may be just right. We may never even know which of those three was the case; any disemployment effect is going to be hard to pick out of the statistical noise.

-- Most of the projected disemployment will be voluntary -- people leaving the workforce because they no longer need to work to maintain their health insurance. Or second earners who look at the extra income they get from their jobs, look at the amount it will cost the family in child care, other expenses, and lost Obamacare subsidies, and decide they might as well stay home. The CBO is not saying that millions of people will be thrown out of work because of Obamacare; it's saying that millions of people will be leaving of their own accord.

-- Determining whether this is good or bad is an exercise that must be left for the reader. Social conservatives might like the idea of Obamacare effectively subsidizing stay-at-home moms in low- to middle-income families. (As it does.) Or they might object to subsidizing early retirement with taxpayer dollars. (As it does.) Liberals might have the opposite reaction: Worry that you're subsidizing women to leave the workforce when they may have a hard time getting back in; celebrate the subsidy that allows folks to retire and start enjoying their golden years while they're still healthy.

-- Economically, this is obviously going to be something of a drag, and it will put strains on other systems. People who retire early probably aren't collecting Social Security yet, but they aren't paying into it, either.

-- This is related to, but not the same as, an economic benefit that the law's supporters have touted: reducing "job lock." The idea is that people are effectively trapped in their jobs by the need for health insurance, so making it easy to buy on the exchanges may increase labor mobility and rates of entrepreneurship. It's not clear how large the job-lock effect actually is, but the CBO is suggesting that 2 million folks will unlock the doors to their offices and head home, not to a hot new startup. We don't know how many others will flee their corporate prisons for the entrepreneurial frontier.

-- This is not entirely new; the CBO has long expected Obamacare to reduce labor-force participation. The latest number is higher than earlier projections -- more than double, in fact. But it's not particularly startling.

-- The most worrying thing is what this implies about gross domestic product, wages and income growth. If Obamacare sends more people home early, it will be in part because their jobs are not offering them enough to keep them in the office.

(Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @asymmetricinfo.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.