Obamacare Threatens Cheap Labor

The Republicans give various reasons for their opposition to the Affordable Care Act, but only two matter. One has been obvious since Obamacare became law, but the other was revealed just recently. In this revelation, it’s clear the Republicans are on even shakier ground than they already were. As the country continues to feel the impact of economic inequality, the Republicans may reconsider their big-business loyalties.

The first is political. Like Social Security and Medicare, Obamacare is creating a national electorate predisposed to supporting the party that championed the law. Meanwhile, the more time Americans have to experience the law, the more Republicans will have to modify their stance. As the years go by, it may be suicidal to attack Obamacare openly.

As the country continues to feel the impact of economic inequality, the Republicans may reconsider their big-business loyalties.

Of course, the Republicans can’t say they oppose Obamacare because it’s good for the Democratic Party. So they say it violates state’s rights. They say it infringes on individual liberty. They say it hurts small businesses. They say it will cost Americans their jobs.

None of these has withstood scrutiny. The law was written with states in mind. It doesn’t erode individual liberty. And while it will be some time before we know about the law’s full economic impact, the evidence so far suggests that it puts more money into the pockets of more people who will spend it, according to a report by the Congressional Budget Office.

Wasn’t that the same report that said Obamacare is killing jobs? Indeed, many news outlets reported exactly that. But that’s a misreading of the report. And that report leads us to the second reason for Republican opposition. Unsurprisingly, it’s about money.

More precisely, whose money. The CBO found that some workers—mothers with small children, students and those close to retirement—have voluntarily left the workplace because, thanks to Obamacare, they didn’t need a job to maintain access to quality health care. They quit to take care of kids, focus on educations or settle into their golden years. That’s not such a bad thing, and when properly understood this way, it takes a lot of the air out of the critique that the Affordable Care Act reduces the incentive to work.

Instead, the voluntary exit of more than 2 million workers will have a tightening effect. When labor markets are slack, workers have less bargaining power. When they are tight, they can make more demands. But tight labor markets mean more than bargaining power—it means higher wages too. When the supply of labor decreases, the cost of labor increases. As long as the number of jobs keeps steady, or grows, the employed should see wages go up. When coupled with greater bargaining power, wages may rise further still.

At the same time, money saved on health care can be spent in things that small businesses sell. Yes, I know. Republicans claim higher wages are bad for small businesses, and because small businesses are the engine of the economy, Obamacare is a job-killer. That’s just incorrect. Wages are not the top concern of small businesses. Taxes and poor sales are. So with more money in more pockets, sales receipts should climb. And with stronger sales, small businesses will be in better positions to hire.

When you strip away the rhetoric while seeing what Obamacare actually does, it’s clear the main reason Republicans continue to oppose the law is that it raises wages and increases workers’ bargaining power. As the party of big business, which the GOP makes little effort to hide, the Republicans hate Obamacare because it threatens the great fortunes of their core constituency, those who have for years enjoyed the fruits of cheap labor.


John Stoehr is the managing editor of The Washington Spectator.

John Stoehr