And now for today's math quiz. Let's say you decide to work 2 percent fewer hours this year. At the end of the year, your total compensation is 1 percent lower. Does that mean you got a pay cut?
If you answered "yes," you might want to reread the question. Or, you might be Marc Thiessen, former Bush speechwriter and torture enthusiast turned AEI fellow and Washington Post columnist.
Writing in Monday's Post, Thiessen tried to add a sequel to the GOP's discredited sound bite that the Affordable Care Act will cost the U.S. economy 2.5 million jobs over the next decade. On the same day the Congressional Budget Office (CBO) once again debunked that tried but untrue talking point, Dubya's former wordsmith concocted a new one:
While much attention has been paid to the report's finding that Obamacare will reduce employment by as much as 2.5 million workers, buried on page 117 (Appendix C) is this bombshell: "CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017-2024 period, compared with what it would have been otherwise."Please read below the fold for more on this story.
Translation: Obamacare means a 1 percent pay cut for American workers.
How much does that come to? Since wages and salaries were about $6.85 trillion in 2012 and are expected to exceed $7 trillion in 2013 and 2014, a 1 percent reduction in compensation is going to cost American workers at least $70 billion a year in lost wages.
Now, the prospect of American workers getting a 1 percent pay cut because of the Affordable Care Act would be troubling—if it were true. Because what the nonpartisan CBO actually says in Appendix C is that thanks to their ability to obtain health insurance outside of the workplace, on aggregate Americans will work up to 2 percent fewer hours by 2024. As a result of those cutbacks they themselves choose to make, workers total pay will be 1 percent less:
CBO estimates that the ACA will reduce the total number of hours worked, on net, 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. Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. Specifically, CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017-2024 period, compared with what it would have been otherwise.To repeat, "the reduction in aggregate compensation," the CBO explains, "will be proportionally smaller than the reduction in hours worked." And as CBO Director Douglas Elmendorf put it on Monday:
When the labor market is strong and people decide on their own to retire, to leave work to take care of their families, or to cut back on their hours to pursue other interests, those people presumably think they are better off (or they would not be making the voluntary choices they are making). As a result, other people are generally happy for them and do not describe them as having "lost their jobs."In a nutshell, they haven't lost their jobs. And that doesn't sound like a pay cut, either.
Unless, that is, you subscribe to the tortured logic of Marc Thiessen. As ThinkProgress writer Matthew Yglesias explained to waterboarding advocate Thiessen four years ago:
"If Marc Thiessen doesn't want to be compared to the Spanish Inquisition, he should stop advocating torture techniques used in the Spanish Inquisition."