Obamacare Boosts Wages, Tennessee Proves

What’s that you say? It’s true, according to Dean Baker:

This is the “job loss” that has gotten opponents of the ACA so excited. But there is another aspect of this picture that should get other people excited. Back in intro economics we teach students about supply and demand. Other things equal, we expect a reduced supply – in this case of workers – to lead to a higher price or wage. In other words, a reduction in labor supply associated with the ACA might lead to some increase in wages.

We have an opportunity to test this proposition since Tennessee effectively did Obamacare in reverse, eliminating health insurance subsidies for low and moderate income adults without children in 2005. If the resulting change in labor supply has an impact on the market, then we would expect to see a drop in wages in Tennessee relative to other states.

That is in fact what we see. The figure below shows the median real wage for workers with high school degrees or less (the workers most likely to be affected) in Tennessee since 2000 compared to the workers without high school degrees elsewhere in the South.

btp-2014-02-20

Interesting idea. Also ironic that Tennessee kicked its low and moderate income folks in the teeth 9 years ago and saw a decline in wages as a result. It stands to reason that lifting up these folks will see a rise in wages. It’s sorta what people like Krugman have been saying since forever, but don’t expect the Republican’ts to start listening.

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3 Comments

Filed under healthcare, Obamacare, Tennessee, wages

3 responses to “Obamacare Boosts Wages, Tennessee Proves

  1. Joseph Stans

    Good luck! Maybe Corker will fall into the dog food chopper at Milo’s pet food company and retirement home.

  2. jazzbumpa

    Tennessee kicked its low and moderate income folks in the teeth 9 years ago and saw a decline in wages as a result.

    Feature, not bug.

  3. There is something wrong with commenting. I can’t deal with it. Five minutes to try to type a few sentences. I’ll come back later.