ObamaCare's Impact on Low-Wage Compensation

March 17, 2014

Low-income Americans will be hurt the most by ObamaCare's impact on compensation, says Drew Gonshorowski, a policy analyst at the Heritage Foundation.

While the Congressional Budget Office's (CBO) February budget outlook got a lot of attention, few focused on the aspect of the report that found that ObamaCare will lower aggregate labor compensation by 1 percent each year (a $1.016 trillion reduction from 2017 to 2024).

  • Gonshorowski modeled the 1 percent reduction across states and income groups, finding that individuals, on average, will receive somewhere between $700 and $900 less in compensation between 2017 and 2024.
  • For individuals at the federal poverty level, that is a 6 percent reduction in compensation. For lower-income individuals, the compensation that they will lose is a much larger percentage of their income than it is for higher income Americans.

And low-income Americans are hurt beyond mere reductions in compensation. They will also work less, meaning that they gain less experience and corresponding skills that they need to move up the income ladder, stunting their future earnings.

Source: Drew Gonshorowski, "Compensation and ObamaCare's Impact on Low-Wage Workers," Heritage Foundation, March 5, 2014.

 

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