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Feb 10 2011

CBO Director Confirms the Health Law Causes a Reduction of 800,000 Workers

Testifying today before the House Budget Committee, Congressional Budget Office (CBO) Director Doug Elmendorf confirmed that the health care law will reduce the number of jobs in the labor market. The Budget and Economic Outlook released by CBO in August projected a 0.5 percent reduction in the labor market as a direct result of the health care law. Director Elmendorf responded in the affirmative when asked by House Budget Committee Chairman Paul Ryan whether CBO has found that the new health care law will reduce jobs and decrease labor force participation. In subsequent questions, Elmendorf confirmed that CBO projects that household employment will be about 160 million in 2021, therefore the 0.5 percent reduction in the labor market resulting from the health care law will equal roughly 800,000 full time employees.

See comments from the unofficial CQ transcript: HERE. 

__________________

Chairman Ryan: “it’s been argued and was argued here yesterday with the Chairman, that the new health care 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?”

Director Elmendorf : “Yes.”

_________________

Rep. Campbell: Thank you, Mr. Chairman, we'll -- and Dr. Elmendorf -- and we'll continue this conversation right now. First on health care, before I get to -- before I get to broader issues, 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 1/2 of 1 percent, given that, I believe you say, there's 160 million full-time people working in '20-'21. That means that, in your estimation, the health care law would reduce employment by 800,000 in '20-'21. Is that correct?

Director Elmendorf: Yes. The way I would put it is that we do estimate, as you said, that the household (ph) employment will be about 160 million by the end of the decade.

Half a percent of that is 800,000. That means that if the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage, that there would be a reduction of 800,000 workers. In fact, as we mentioned in the -- in our announcements last summer, the legislation also creates (inaudible) that might affect the number of hours people work might affect the tendency to work with lower and higher income people. We haven't tried to quantify those things.

But the impact is that these 800,000 might not be exactly the number...

(CROSSTALK)

Director Elmendorf: ... but the equivalent of withdrawing 800,000...

(UNKNOWN): Sure, but that's your best estimate at this point.

# # #

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