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Relative Poverty Measures Can Help Paint a More Accurate picture of Poverty in 21st Century America Print
Written by Shawn Fremstad   
Thursday, 14 March 2013 15:00

In his most recent column, Thomas Edsall says there are three ways of defining poverty in the United States: the official measure, the Census Bureau’s Supplemental Poverty Measure, and a consumption-based measure. But this leaves out an important and commonly used set of poverty measures, ones that Edsall himself has cited in previous columns: so-called relative poverty measures, which set the poverty line at a percentage of median income, typically 50 or 60 percent of median, that reflects a very basic standard of living. (I’m not a big fan of the term “relative”—it’s hard to imagine a meaningful poverty measure in a wealthy nation that isn’t relative in some way to real-world living standards—but it’s the prevailing term among researchers, so I’ll use it here.)

The idea behind relative measures is simple and goes back to Adam Smith’s definition of “necessaries” to include “not only the commodities which are indispensably necessary for the support of life, but what ever the customs of the country renders it indecent for creditable people … to be without.” As I’ve explained previously, one of the strengths of relative poverty measures is that they do a better job, compared with poverty measures only adjusted for inflation, of capturing the change over time in broad public consensus—Smith’s “customs of the country"—on the minimum amount of income that an American family needs to “get along” in their local community.

A second strength, one particularly relevant to Edsall’s column, is that relative poverty rates are calculated using nominal dollars, allowing us to assess poverty in a way that brackets questions about how to properly measure inflation (for more on those questions, see my colleague Dean Baker’s post on Edsall’s piece as well as this earlier post of mine).

The chart below compares the official and Supplemental Poverty Measures with two relative poverty measures, one set at 50 percent of median income, the other set at 60 percent of median income. The relative thresholds are calculated using a fairly comprehensive measure of income, one that subtracts taxes and includes most benefits, including in-kind ones. For a family of four, the official poverty threshold is $22,811, the supplemental threshold is $25,222, the 50% of median threshold is $25,974, and the 60% of median threshold is $31,168. All of these amounts fall far below the amount that Americans say is the minimum amount of income a family of four needs to “get along in your local community.” In fact, in 2007, the median response to this question in a Gallup poll was $45,000.

Click for a larger version


Source: CEPR using Census CPS Table Calculator.



President Obama Wants to Give a Bigger Hit to Seniors on Social Security than He Did to the Wealthy on Taxes Print
Written by Dean Baker   
Wednesday, 13 March 2013 18:02

That's what President Obama's aides keep saying. They generally don't put in those terms, probably because they assume that everyone already knows, but the cut to the typical senior's Social Security benefit from the adoption of the chained CPI would be a larger hit to their income in retirement than the increase in income taxes put in place at the start of the year is the typical affluent taxpayer.

The arithmetic on the chained CPI is straightforward. It reduces benefits by an amount that increases 0.3 percentage points each year a person is retired. This means that after 10 years the reduction in the annual benefit would be 3.0 percent, after 20 years the reduction would be 6.0 percent, and after 30 years the reduction would be 9 percent. If we assume that a typical beneficiary lives long enough to collect benefits for 20 years, their hit from the chained CPI would on average be 3.0 percent over this period.

For the typical retiree, Social Security benefits are close to two-thirds of their income. This means that the use of the chained CPI would amount to a hit to their income of approximately 2.0 percent (two-thirds of 3.0 percent).

By contrast, if we assume that a couple earning $500,000 a year is the typical household affected by the tax increase, then their additional tax burden will be 4.6 percent of their income over $450,000 or $2,300. If we assume that this couple had not unusual exemptions (or even usual ones), then their after-tax income before the tax increase would have been around $350,000. This means that the Obama tax increase would reduce their after tax income by a bit less than 0.7 percent. This means that the hit to Social Security beneficiaries from the chained CPI will be around three times as large as the hit to the typical affluent taxpayer from the Obama tax increase.

Reduction in Income:
Chained CPI and Obama Tax Increases


The Congressional Progressive Caucus Budget: A Serious Budget That the Serious People Won't Take Seriously Print
Written by Dean Baker   
Wednesday, 13 March 2013 15:47

For those upset that the budget debate is getting ever further removed from the real world problems of an economy that is suffering from a deficit of 9 million jobs, there is good news. The Congressional Progressive Caucus (CPC) has produced a budget that is intended to make the unemployment situation better rather than worse.

The story of course is that we are still in a situation where we need the government as a source of demand in the economy. This is independent of how much we like the government or the private sector. The private sector does not expand and create jobs just because governments want it to, as is being discovered now by leaders in the United Kingdom, Greece, Italy, Spain and everywhere else where deficit reduction is now in vogue. In the current economic situation, loss of demand from the government is a loss of demand to the economy. That is why recent steps to reduce the deficit, such as the ending of the payroll tax cut (which put money in consumers' pockets) and the sequester, will lead to slower growth and higher unemployment.

The CPC decided to produce a budget that recognized this reality. It provides for a mix of short-term measures aimed at immediate job creation, such as jobs programs and additional money to defray state and local government revenue shortfalls, along with an ambitious long-term infrastructure agenda. According to estimates from the Economic Policy Institute this agenda would create 6.9 million additional jobs by the end of next year compared to the CBO baseline scenario.



New CBO Estimates Show How Shifting to Chained CPI Would Harm Poorly Compensated Workers and Others Struggling to Afford the Basics Print
Written by Shawn Fremstad   
Monday, 11 March 2013 14:00

I wrote back in December about how the shift to a “chained” CPI would have negative impacts that go far beyond Social Security. On March 1, the Congressional Budget Office released a new estimate that helps quantify these impacts.

The table below shows the amount of benefit cuts that would result over the next 10 years from switching to the chained CPI. The table is limited to “mandatory” programs and the tax code. CBO assumes that shifting to a chained CPI would reduce annual adjustments to mandatory programs by .25 percent per year.


An important thing to remember about the chained CPI is that it is a cut that keeps on growing. In the first year, reducing inflation adjustments by .25 percent results in a .25 percent cut; but in the 10th year, it means a 2.5 percent cut. So, for example, as the CBO estimate shows, the cuts to the EITC and other refundable tax credits are $300 million in 2015, but grow to $3.7 billion in 2023.

Proponents of the chained CPI assume that it is a more accurate measure of inflation, including for the elderly and for low- and moderate-income people, because it better captures opportunities that people may have to respond to price increases by substituting to goods whose prices are rising more slowing. But the elderly and low-income people have more limited consumption baskets than higher-income people and don’t necessarily have the ability to substitute. As Dean Baker and many others have pointed out, the Bureau of Labor Statistics has an experimental elderly price index that shows the inflation rate experienced by the elderly has risen faster than the current CPI. (Dean participated in a recent Hill briefing on the changes involved with tying COLAs to a chained CPI.)



Labor Market Policy Research Reports, February 23 – March 8, 2013 Print
Written by Will Kimball   
Friday, 08 March 2013 15:15

The following is a collection of the latest labor market policy research reports:

Center for Economic and Policy Research

The Human Capital Dimensions of Sustainable Investment: What Investment Analysts Need to Know
Thomas Kochan, Eileen Appelbaum, Carrie Leana and Jody Hoffer Gittell

Center for Law and Social Policy

Implementing Earned Sick Days Laws: Learning from Seattle's Experience
Liz Ben-Ishai

Center on Budget and Policy Priorities

Changes in TANF Work Requirements Could Make Them More Effective in Promoting Employment
Liz Schott and LaDonna Pavetti


Discredited: How Employment Credit Checks Keep Qualified Workers Out Of A Job
Amy Traub



Let’s Not Make a Deal Print
Written by Nicole Woo   
Thursday, 07 March 2013 16:54

With news of President Obama's efforts to make some Republican BFFs, there are reports that he's trying to make a deal by yet again offering to cut Social Security and other benefits, while at the same time raising income taxes on almost everyone.  

This would be done by changing an official measure of inflation to a new index, called the Chained CPI.  As CEPR has shown, this change would lead to a painful cut in Social Security benefits and a stealth tax hike, by slowing down annual increases in Social Security and other benefits – including those for veterans, the disabled, and low-income children and their families – as well as income tax brackets. (That would lead to incomes jumping to higher brackets faster, or in other words, tax increases.)

In fact, as Howard Gleckman at the Tax Policy Center recently noted, the Congressional Budget Office has estimated that moving to the Chained CPI "would raise taxes as much as it would cut spending."



Medicare Cost Reductions: Is the Point to Save Money or Inflict Pain? Print
Written by Dean Baker   
Tuesday, 05 March 2013 10:38

Washington budget debates often contain a large element of the absurd. In 2000 there was a major debate among serious people over the year in which we should pay off the national debt (really). Today one of the central stumbling blocks to a budget deal appears to be President Obama's reluctance to make cuts to Medicare that would inflict serious pain on beneficiaries.

The fact that Medicare poses such a stumbling block is striking because we have already seen sharp declines in the projected cost of Medicare over the years in which President Obama and Congress have been fighting over the deficit. The Congressional Budget Office has lowered its projections for Medicare costs over the years 2013-2023 by $400 billion compared with what was projected back when Bowles-Simpson put together their initial budget proposal. That proposal called for a bit more than $300 billion in cuts to Medicare, less than the reductions in projected spending that we have already seen.

Furthermore, CBO has not reduced its projections by as much as cost growth has slowed in the last three years. In a new discussion piece in the Journal of the American Medical Association, Harvard economics professor David Cutler and researcher Nikhil Sahni argue that the trend for slower health care costs is likely to continue. They calculate that if CBO adjusts its projections in line with the slower cost growth that we have seen to date it would imply another $363 billion in savings through 2023.

This is not a reason not to seek further savings, for example by bringing Medicare payments for prescription drugs more in line with payments in other countries. However, it suggests that we have likely already exceeded the targets that even deficit hawks were setting for savings in Medicare.

This raises the obvious question, if we hit our targets for savings in Medicare, why is the Washington policy crew still insisting on further cuts to the program? This demand is coming not just from conservatives and Republicans, but from ostensibly centrist types who say that President Obama must make cuts to Medicare to show that he is serious about dealing with the deficit. It seems as though inflicting pain on low and middle income seniors has become an end in itself in elite Washington circles. As we can see, Washington budget debates often contain a large element of the absurd. 

CEPR News February 2013 Print
Written by Dawn Lobell   
Friday, 01 March 2013 13:45

The newsletter highlights CEPR's latest research, publications, events and much more.

CEPR on the Minimum Wage

President Obama's call for an increase in the minimum wage during his State of the Union address drew much attention from the media, providing CEPR with an opportunity to inform the debate. CEPR released a new paper that finds that moderate increases in the minimum wage – such as the one proposed by President Obama – have little impact on employment, due to adjustments by employers and workers. The paper, "Why Does the Minimum Wage Have No Discernible Effect on Employment?" by CEPR Senior Economist John Schmitt,reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests the most important adjustments are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases.

"This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don't have much impact on employment," said John.

Brad Plumer wrote a long summary of the report for Ezra Klein's Wonkblog, and it was mentioned on several other blogs from the National Journal to Jared Bernstein's blog (Jared called the report a "must read" in a subsequent post). Paul Krugman cited the paper in a post where he supported the proposed increase, and he linked to John’s paper in the online version of his New York Timescolumn. Rachel Maddow highlighted the report on her MSNBC show, and it was also mentioned in this piece on CBS News' Moneywatch. Newspapers across the country ran articles on the report, including the Orlando Sentinel and the Minnesota Daily.

John gave several radio interviews about the paper, including this one for WNUR's This is Helland this one for KBAI's The Joe Show. The paper also served as the basis for John's testimony on February 25th before a Select Committee of the Minnesota state legislature and his remarks at a separate public event on the minimum wage sponsored by JOBS NOW Coalition at the University of Minnesota. John also penned this post for the CEPR Blog responding to an ad in Politico by the conservative Employment Policies Institute claiming that the minimum wage harms low-wage workers, as well as this post on his Dissent article with Colin Gordon on benchmarking the minimum wage

CEPR Co-director Dean Baker weighed in with this piece for the Huffington Post, and he was mentioned in this highly-viewed piece on Yahoo!Finance. Dean also wrote this post for the CEPR Blog, where he and co-author CEPR Domestic Intern Will Kimball showed what the minimum wage would be if it had kept up with productivity growth over the past 44 years. CEPR Senior Research Associate Shawn Fremstad wrote thesetwo CEPR blog posts on the issue.



The Bipartisan Policy Center Endorses a Bi-Partisan Failure Print
Written by Dean Baker   
Friday, 01 March 2013 09:30

The Bipartisan Policy Center's Housing Commission released its report, Housing America's Future, on housing policy this week. Its recommendations include winding down Fannie Mae and Freddie Mac, and limiting federal government involvement in mortgages to a "Public Guarantor." In a post originally published by the National Housing Institute. Dean Baker responded.

There is a good argument for having a public company like the old Fannie Mae sustain a secondary market in mortgages. Fannie Mae created this market in the 1930s. It was able to substantially reduce regional differences in mortgage costs and availability, with minimal operating expenses. This publicly-run company was a success by any reasonable measure.

We also know that the private market can provide housing finance without any direct support from the government. This is demonstrated by jumbo mortgages, which typically carried a premium of 25-50 basis points above conformable mortgages.

Given these successful routes for providing housing finance, the Bipartisan Policy Center took the natural path for people in Washington: a proven failure.

Instead of opting for either a public company or companies to sustain the secondary market or leaving finance to the private sector, the Bipartisan Policy Center opted for the sort of public-private mix that we saw with Fannie Mae and Freddie Mac in the years leading up to the housing crash. They want the government to guarantee investors’ stakes in mortgage backed securities.



The Family and Medical Leave Act at 20: A Record of Success, But More Can Be Done Print
Written by CEPR   
Thursday, 28 February 2013 13:45

The federal Family and Medical Leave Act (FMLA) celebrated its 20th anniversary this month. It was a huge step forward for the U.S., which lags behind nearly all other high-income countries in enabling people to take the time they need, without worrying that they may be fired from their jobs, to care for themselves and their families when faced with serious illness or welcoming a new child.

The FMLA has been used 100 million times in the last 20 years, benefiting families and without unduly burdening employers. Yet there remain millions of Americans who are not covered by the FMLA – they can still be fired if they get sick, have a baby, or need to care for a seriously ill family member. And millions more are eligible but do not take the time off because they do not know they are eligible or can’t afford to go without pay.

Department of Labor surveys of experiences with the FMLA, released earlier this month, find ways to improve the effectiveness and increase the coverage of family and medical leave for American families. CEPR senior economist Eileen Appelbaum recently wrote a series of blog posts to review these findings of the FMLA surveys and draw lessons about what to do next.



Benchmarking the Minimum Wage Print
Written by Colin Gordon and John Schmitt   
Thursday, 28 February 2013 12:10

In his State of the Union address, President Obama heartened many progressives with a call for raising the minimum wage to $9.00 (from its current $7.25), and then pegging its value to increases in the cost of living. This would be a bold move, and it raises an important question: What should the minimum wage be? What is the appropriate floor for the labor market?

Every legislative battle over the minimum wage has been marked by grave concerns about interfering with markets or freedom of contract, and by dire predictions that each increase would drive businesses into bankruptcy and workers into the soup lines. In the absence of a professional wage commission (common in other countries, including the United Kingdom), every increase had to run the gauntlet of Congress. As a result, the American minimum wage hits a lower target, and covers a smaller share of its workforce, than those in most of its peer countries. Of the subset of thirteen rich OECD democracies with comparable data, all but two (Spain and Portugal) have higher minimum-wage rates (calculated at either the exchange rate or the purchasing power parity of the U.S. dollar) than the United States. On the ratio of minimum-wage rates to the median earnings of full-time workers in each country, the United States ranks dead last.

Read the entire article at Dissent.

Temporary Assistance for Families Should Empower Working-Class Parents Not Serve as a Slush Fund for States Print
Written by Shawn Fremstad   
Thursday, 28 February 2013 09:55

A House subcommittee is holding a hearing today to review guidance, issued by HHS last summer, on a federal statute that allows states to test “innovative strategies … that are designed to improve employment outcomes.” The guidance made clear that under this longstanding law the federal government can approve state requests to test whether Temporary Assistance programs that use new types of outcome-based performance measures are more effective than programs that use the old-school activity-rate measures.

Why is the House holding a hearing on such a mundane matter? Apparently, many conservatives today believe that outcome-based performance measures are anti-work, while activity-rate measures are pro-work. Go figure.

The real problem with Temporary Assistance is its failure to provide millions of striving, low-income parents with the support and tools they need to provide for their families while securing a job, getting needed skills and education, and weathering setbacks.

Even conservatives sometimes acknowledge that Temporary Assistance should be helping low-income parents in this way. In fact, in the notice for the hearing, Chairman Dave Reichet (R-WA) tells us that “Americans consistently believe welfare should … empower able-bodied [low-income parents] with the tools to secure a job, lift oneself out of poverty, and provide for one’s family.”

What conservatives seem unable to acknowledge (and this goes for plenty of Clinton-style moderates also), is that Temporary Assistance isn’t actually doing what the public thinks it should be doing.



The Family and Medical Leave Act at 20, Part 4 Print
Written by Eileen Appelbaum   
Wednesday, 27 February 2013 09:45

The first three entries in this series examined the need for better outreach, education and enforcement to ensure that all workers eligible for a job-protected leave under the Family and Medical Leave Act know about and have access to such leaves. The second entry showed that extending the FMLA to cover work sites with fewer than 50 workers would not be a heavy lift for smaller businesses, many of which already provide at least some types of FMLA leave. Expanding the coverage of the FMLA to smaller businesses would level the playing field for these good employers. Part 3 of the series documented the unequal access of workers to employer-provided pay during FMLA leaves, mostly cobbled together from paid time off, paid sick days, and paid vacation benefits that are far less available to worker in low-paid and low-status jobs. A paid leave insurance program similar to those in California and New Jersey would narrow the gap in access to pay during a family or medical leave between workers in high-paid and low-paid jobs and help reduce inequality without burdening employers.

In this final entry in the series, we examine the experiences of employers with the FMLA.

Family and Medical Leave – A Non-Event for Employers

For a decade before the FMLA was finally signed into law, business lobbyists opposed its passage on the grounds that it would impose a burden on employers and would lead to fraudulent claims and abuse by workers. Now that employers have had 20 years' experience with the Act, it is clear that these fears were unwarranted.

The 2012 Employer survey asked employers what effect complying with the FMLA had at their work site on employee productivity, absenteeism, turnover, career advancement and morale, as well as the business' profitability. More than 9 out of 10 (91.2 percent) of employers at covered work sites with 50 employees in a 75 mile radius reported either no noticeable effect (53.8 percent) or a positive effect (37.4 percent). Intermittent leaves – periodic leaves for chemotherapy treatments or to recover from a disabling migraine head ache – were a special concern of employers who felt that they would be especially detrimental to business operations and would be vulnerable to abuse by employees. Neither of these fears has materialized. Just 3.1 percent of employers at covered work sites report moderate or large negative effects on productivity at their work site, and 1.6 percent report moderate or large negative effects on profitability.



Studying the Studies on the Minimum Wage Print
Written by John Schmitt   
Tuesday, 26 February 2013 16:45

In a full page ad in today's Politico, the conservative Employment Policies Institute (not to be confused with the progressive Economic Policy Institute) claims that “85 percent of the most credible economic research from the last 20 years” demonstrates that the minimum wage “reduces opportunities for the least-skilled jobseekers.” In making that claim, the Employment Policies Institute cites research published by economists David Neumark and William Wascher in 2007.

The problem here is that Neumark and Wascher make a decidedly subjective selection of studies to draw their conclusion. We actually have objective evaluations of the full body of recent minimum wage research and these point strongly in the direction of no significant effects on employment.

In their analysis,* Neumark and Wascher reviewed 102 studies of the minimum wage, 33 of which they declared “credible.” Of the 102 studies examined, only 53, however, used data for the United States, which would seem to be an important criteria for evaluating the employment impact here. Of these 53 U.S. studies, 19 earned the rating of "credible" from Neumark and Wascher. But, fully five of these 19 — more than one-fourth — were ones that Neumark and Wascher had conducted themselves. This raises real questions about the objectivity of Neumark and Wascher's evaluations.



The Family and Medical Leave Act at 20, Part 3 Print
Written by Eileen Appelbaum   
Monday, 25 February 2013 09:30

In Part 1 of this series we saw that two decades after passage of the FMLA, about a third of all workers (34 percent) still have not heard about the Act. More surprising, perhaps, is the finding that a significant share of employers who are covered by the FMLA do not comply with all of its provisions. Nearly a quarter of work sites subject to the FMLA, employing nearly a tenth of all workers (9 percent), do not know that the FMLA applies to them.  Twenty percent of work sites covered by the FMLA do not permit employees to take leave for one or more FMLA qualifying reasons for leave. Nearly a third of workers are employed at these work sites.  A greater emphasis on outreach, education and enforcement can increase the number of employees able to take a family or medical leave.

In Part 2, we saw that 20 years of experience with the FMLA has created the beginnings of a culture change among employers. Many businesses that are too small to be covered by the FMLA either believe that they are covered and offer leaves for FMLA-qualified reasons to their employees or, even knowing they are not required to do so, allow workers to take leave for many of the FMLA-qualified reasons.

FMLA leaves are unpaid, creating undue hardship for many families when leave is necessary. This blog examines what we can learn from the employer and employee surveys about paid family and medical leave.

Family and Medical Leave Insurance

The U.S. is the only high-income country without a national program of paid family and medical leave. Out of 178 nations, it is one of only three that has no national program of paid maternity leave; the other two are Papua New Guinea and Swaziland. Some employers provide pay to workers who take a family or medical leave by letting them draw on paid sick days, paid vacation or other paid time off, or via short or long-term disability insurance. Other research has shown that it is mainly professional and managerial employees that have access to these employer-provided benefits. While paid sick days and paid vacations are basic employment standards that employers should provide for all employees, this is not the case for the more extended family and medical leaves. Paid family and medical leaves are best handled through a family leave insurance program.  



Labor Market Policy Research Reports, February 9 – 22, 2013 Print
Written by Will Kimball   
Friday, 22 February 2013 16:21

Here is a collection of the latest labor market policy research reports from the past few weeks:

Center for American Progress

An Executive Order to Prevent Discrimination Against LGBT Workers
Lee Badgett, Crosby Burns, Nan D. Hunter, Jeff Krehely, Christy Mallory, and Brad Sears

Center for Economic and Policy Research

Why Does the Minimum Wage Have No Discernible Effect on Employment?
John Schmitt

Center for Law and Social Policy

A Framework for Measuring Career Pathways Innovation

The Alliance for Quality Career Pathways Approach: Developing Criteria and Metrics for Quality Career Pathways

Center on Budget and Policy Priorities

Cutting State Personal Income Taxes Won’t Help Small Businesses Create Jobs and May Harm State Economies
Michael Mazerov

Testimony of Chad Stone, Chief Economist, on Unintended Consequences: Is Government Effectively Addressing the Unemployment Crisis?
Chad Stone

Economic Policy Institute

Declining Value of the Federal Minimum Wage Is a Major Factor Driving Inequality
Lawrence Mishel

Institute for Women’s Policy Research

Increasing Pathways to Legal Status for Immigrant In-Home Care Workers
Cynthia Hess and Jane Henrici

Improving Career Opportunities for Immigrant Women In-Home Care Workers
Jane Henrici

Valuing Good Health in Maryland: The Costs and Benefits of Earned Sick Days
Claudia Williams

The Family and Medical Leave Act at 20, Part 2 Print
Written by Eileen Appelbaum   
Friday, 22 February 2013 09:20

In Part 1 of this series we saw that two decades after passage of the FMLA, about a third of all workers (34 percent) still have not heard about the Act. More surprising, perhaps, is the finding that a significant share of employers who are covered by the FMLA do not comply with all of its provisions. Nearly a quarter of work sites subject to the FMLA, employing nearly a tenth of all workers (9 percent), do not know that the FMLA applies to them.  Twenty percent of work sites covered by the FMLA do not permit employees to take leave for one or more FMLA qualifying reasons for leave. Nearly a third of workers are employed at these work sites.  A greater emphasis on outreach, education and enforcement can increase the number of employees able to take a family or medical leave.

Expanding Coverage of the FMLA

In this blog post, we examine what the DOL surveys tell us about the possibilities for expanding coverage of the FMLA. Just a tenth (9.7 percent) of work sites employ 50 or more workers and thus are covered by the FMLA; although 16.6 percent self-report that the FMLA applies to them. Since the FMLA applies to larger businesses, the 10 percent of employers actually covered by the Act employ almost three-quarters (73.6 percent) of employees.

Not all workers at a covered business are eligible for leave under the FMLA. To be eligible, a worker must not only be employed at a covered work site, but must have worked for that employer for 12 months (not necessarily consecutively) and must have logged at least 1,250 hours in the past 12 months.  Just under three-fifths (59.3 percent) of workers in the U.S. meet all of these criteria. According to the employee survey, 15.9 percent of eligible employees took an FMLA leave in the past 12 months; although just 3.1 percent were on leave at the time the survey was taken. Employers report that 9.8 percent of employees took a leave for an FMLA-qualified reason.



Gender, Debt, and Dropping Out Print
Written by John Schmitt   
Thursday, 21 February 2013 14:44

The latest issue of the peer-reviewed academic journal, Gender and Society, has an excellent paper by Rachel Dwyer, Randy Hodson, and Laura McCloud on “Gender, Debt, and Dropping Out of College” (which is, unfortunately, behind a paywall).

The new paper finds strong evidence for one of the arguments that Heather Boushey and I made in a 2010 report for the Center for American Progress called: “The College Conundrum: Why the Benefits of a College Education May Not Be So Clear, Especially to Men” (pdf). We argued there that one reason why men may be falling behind women in college completion is that men have a lower tolerance for going into debt to finance their education. According to Dwyer, Hodson, and McCloud's research, once men hit a debt level of about $12,500, further increases in debt reduce their likelihood of completing college. For women, the estimated debt threshold is about $2,000 higher, meaning that women are more likely to hang on as the debt piles up.

One explanation the researchers offer for this finding is that --in the short run, at least-- men without a college degree face a much smaller wage penalty for not finishing college than young women do. The wage penalty increases for men and women later in their careers, but over a shorter time horizon, men can do much better than women without a degree, which may lead more men than women to drop out (or to skip college altogether).



The Family and Medical Leave Act at 20, Part 1 Print
Written by Eileen Appelbaum   
Wednesday, 20 February 2013 11:44

The federal Family and Medical Leave Act, signed into law in 1993 by President Bill Clinton, was a huge step forward for the U.S., which lags behind nearly all other countries in establishing standards that enable people to take the time they need to care for themselves and their families. The FMLA makes it possible for eligible employees to have time to recover from their own serious illness or from child birth, to bond with a new child, or to care for a seriously ill spouse, parent or child without worrying that they may be fired from their jobs. It has been used 100 million times in the last 20 years with resounding benefits for families and without undue burdens on employers. Concerns about the FMLA raised by employers’ associations and business lobbyists have proven to be unwarranted.  

Yet, as we celebrate the accomplishments of the FMLA, we remain acutely aware of the millions of Americans who are not covered by the Act – who can still be fired if they get sick, have a baby, or need to care for a seriously ill child or family member: and of the millions more who are eligible but do not take the time they need because they do not know they are eligible for leave or can’t afford to go without pay. We can do better.

Department of Labor surveys of work site (employer) and employee experiences with the FMLA, released in early February on the Act’s 20th anniversary, tell us a lot about the directions in which we can go to improve the effectiveness and increase the coverage of family and medical leave for American families. This series of blog posts will review the findings of the FMLA surveys to draw lessons about what we can and should do next. 

We begin our series with a discussion of the need for education and enforcement so that people who are eligible can get a leave when they need it. Subsequent blog posts will examine what the surveys tell us about expanding coverage to small businesses, providing family leave insurance so that the leaves are paid, and the effects of the FMLA on businesses including small employers.



Why Are Proponents of the Chained CPI So Scared of Data? Print
Written by Dean Baker   
Friday, 15 February 2013 14:58

Like the global warming deniers, proponents of basing the Social Security cost-of-living adjustment (COLA) on a chained CPI are scared to death of data. They are all anxious to assert that the chained CPI is a more accurate measure of the cost of living and therefore it should provide the basis for the COLA. However, they have no research on which to base this assertion.

There is research showing that the chained CPI is a better gage of the cost of living for the population as a whole. But we know seniors have substantially different consumption patterns than the population as a whole. They tend to consume more housing and health care and spend less on new cars, computers, and smart phones. The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index that shows seniors experience a higher rate of inflation than the population as a whole.

It also has conducted research on the size of the substitution bias that the chained CPI is supposed to eliminate. This research shows that the substitution bias differs by income group and for those receiving benefits like Supplemental Security Income and Temporary Assistance for Needy Families (TANF) it was essentially zero. This may well prove to be the case with the larger Social Security population as well. If the goal is to have a more accurate COLA for seniors then the remedy is simple; have the BLS construct a full elderly CPI and see what it shows.

While no one knows what a full elderly CPI will show, we do know that switching the COLA to a chained CPI will reduce lifetime Social Security benefits by an average of about 3 percent. This doesn't raise a huge amount of money, but it would be a big hit to seniors, 70 percent of whom rely on Social Security for more than half of their income.

For those who find it more politically practical to take money from moderate income seniors than high income taxpayers (for example as a mechanism for funding pre-K education) switching the basis for the COLA to the chained CPI can serve a very useful purpose. But let's be very clear, this is just about cutting Social Security benefits. The chained CPI has nothing to do with accuracy.

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