When the Congressional Budget Office published a report last week that the economy would have 2.5 million fewer jobs under Obamacare by 2024, its defenders resorted to redefining commonly used terms to deflect criticism.
Politifact found a sudden distinction between the number of jobs and the number of workers. How? By redefining “jobs” to mean positions created by employers. But the normal usage of job – in journalism and academia – is to refer to a match between a worker and a position. Likewise, the phrase “job destruction” is a standard way academics refer to the end of such a match, whether initiated by the worker or the firm.
Dale Mortensen and Christopher Pissarides clarified the language they prefer in a widely-cited 1994 paper:
We say that job creation takes place when a firm with a vacant job and a worker meet and start producing; opening a new job vacancy is not job creation, though we might refer to it as creating a job vacancy. Job destruction takes place when a filled job separates and leaves the market.
In their model, as in most others, job destruction occurs more often when the benefit from not working is larger.
The rare harmony between jargon and journalism did not convince the Washington Post’s Fact Checker, which published a list of “seriously flawed headlines,” including CBO says Obamacare will add to deficit, create reluctant work force, CBO nearly triples estimate of working hours lost by 2021 due to Affordable Care Act, and Congressional Budget Office: Obamacare A Tax On Workers. Those are among the most literal and economically precise headlines that could be written about the CBO report. But the author then commits the same redefinition of jobs, saying, “this is not about jobs.” Meanwhile, the news team at the Washington Post continues to use the typical definition of jobs: workers hired into positions.
At the LA Times, Michael Hiltzik redefines “the number of jobs” as the “aggregate demand for labor.” His mistake is a classic from ECON-101, confusing “demand” with “quantity demanded”. Fortunately, the LA Times business section gets it right.
Some went even further, spinning the disincentives as freedom from work. The White House sees “empowered” people “retiring on time” and “choosing to spend more time with their families.” Usually when the White House talks about someone spending more time with his family, there’s a forced resignation involved! Paul Krugman echoes the talking points: “more time with their children, an earlier retirement.”
Americans Against the Tea Party had the biggest laugher, “This is good news, as it makes an expected 2.3 million jobs available to the millions of people still looking for work.” That would be nice, but it’s a wish totally unsupported by CBO’s results. If supply shrinks and demand stays constant, quantity falls. Their implicit assumption is that labor demanded is the same at all wage rates; empirical research shows that is far from the truth.
The exception that proves the rule, Kevin Drum shows that Obamacare supporters can come to grips with the data. For those of us who care about economic mobility, the discouragement of work among the poor is a pretty important downside to welfare policy.
Salim Furth, Ph.D. researches and explains how public policy affects economic growth as senior policy analyst in macroeconomics at The Heritage Foundation’s Center for Data Analysis. Follow him on Twitter.