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Under Obamacare rules, wage gap could widen

by The Oklahoman Editorial Board Published: March 13, 2014

PRESIDENT Barack Obama has made “income inequality” a political focus, decrying the gulf between rich and poor. Yet the president’s chief legislative accomplishment — Obamacare — could actually increase that gap.

Recently, the Congressional Budget Office determined Obamacare would reduce work hours by an amount equivalent to 2 million fewer jobs by 2017. Under Obamacare, many poor Americans could lose insurance subsidies or Medicaid eligibility if their incomes increase. Since the extra cash would be less than lost government benefits, the CBO predicts many individuals will turn down work.

Democrats tried to spin this as good news, saying it frees people from “job lock.” White House press secretary Jay Carney even claimed Obamacare would empower citizens “to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families.”

Two recent reports paint a far different picture.

The CBO estimates Obamacare will lower aggregate labor compensation by about 1 percent, so Drew Gonshorowski, a policy analyst in the Center for Data Analysis at The Heritage Foundation, used economic modeling to determine the state-level impact. In Oklahoma, he estimates Obamacare will generate a 12.22 percent reduction in 2017 compensation for citizens with income at or below the federal poverty level (currently $11,670 for an individual). For Oklahomans earning between $11,670 and around $16,100, the health care law will lead to a 3.58 percent reduction in compensation.

Gonshorowski warns that shift creates other barriers to upward mobility.

“Since low-skill workers work less, they will gather less experience and not develop valuable skills that they need to move up the economic ladder,” he writes. “Work experience creates more human capital and leads to higher future earnings. As a result of less work, there is a reduction in human capital, and lifetime earnings will be permanently lower …”

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by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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