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Right to Rent Helping Families Move Back into Homeownership Print
Written by Nicole Woo   
Wednesday, 26 November 2014 10:41

The LA Times ran a nice story on Friday about the Coronel family of Azusa, California, and how they were able to buy back their foreclosed home "for $280,000, far less than the $400,000-plus debt that had gone into default." They had been able to stay in their home after their foreclosure because "Fannie Mae gave permission in 2010 for the Coronels to stay on in the Azusa house as renters."

The article asked if Fannie Mae's allowing this "indirect" principal reduction reflects a change in policy.  That's because before the Coronel's case, Fannie Mae and Freddie Mac required foreclosed homeowners to pay their entire outstanding mortgage balance before being able to repurchase their homes.  That's while other buyers were able to pay the lower market price for the same property.



Sharing Is Caring Print
Monday, 24 November 2014 16:40

The recent passage of a work-sharing program by the Illinois state Senate signals an increasing willingness across the country to provide employers with alternatives to layoffs. The state is now in the company of the District of Columbia and 27 other state legislatures, all of whom have also passeed work-sharing programs, and will be the 13th state to have done so since 2009. Back in 2011, CEPR Co-Director Dean Baker penned a report on work-sharing, both in the OECD and the U.S. states that had already implemented such programs, and detailed its potential impacts on productivity and employment.



Labor Market Policy Research Reports, November 14 – November 20 Print
Friday, 21 November 2014 15:35

The following reports on labor market policy were recently released:

Center for American Progress

How DACA Has Improved the Lives of Undocumented Young People
Zenen Jaimes Pérez

Center on Wisconsin Strategy

Turn Up the HEET! Reflections on Washington’s Six Years of Investment and Innovation in the Health Care Workforce
Laura Chenven and Laura Dresser

Oxfam America

From Paycheck to Pantry: Hunger in Working America
Mary Bebic, Theresa DelVecchio Dys, Monica Hake, Meghan O’Leary, Elaine Waxman, Andrew Yarrow

Urban Institute

Literature Review in Brief: Healthcare Occupational Training and Support Programs Under the Affordable Care Act
Randall R. Bovbjerg and Shayne Spaulding

The CCDF Policies Database Book of Tables: Key Cross-State Variations in CCDF Policies as of October 1, 2013
Sarah Minton, Christin Durham, and Linda Giannarelli

U.S. NEET Rates Not So Neat Print
Wednesday, 19 November 2014 09:35

UNICEF’s Office of Research-Innocenti recently released a report detailing the impact of the recession on children in rich countries in the EU and OECD. As might be expected, countries like Greece and Italy performed poorly across a variety of indicators, including child poverty, youth unemployment, and severe child material deprivation. One interesting comparison is that of France, which tends to be lumped among those whose workers are sometimes portrayed as lazy by outsiders. The French youth unemployment rates for those aged 15 to 24 in 2008 and 2013 were in fact higher than those of the U.S., though not as high as that of countries like Greece and Italy.



Labor Market Policy Research Reports, October 31 – November 13 Print
Thursday, 13 November 2014 00:00

The following reports on labor market policy were recently released:

Center for American Progress

Reforms to Help Meet the Growing Demand for Long-Term Care Services
Daniel Bahr, Topher Spiro, and Maura Calsyn

The Economic Benefits of Closing Educational Achievement Gaps
Robert G. Lynch and Patrick Oakford

Promoting Entrepreneurship Among Millennials
Sarah Ayres Steinberg



Private Equity at Work: PE Facing Up to Possibility of Lower Returns Going Forward Print
Monday, 10 November 2014 10:08

Have private equity investors begun to experience buyer’s remorse? That’s the question Private Equity International ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it  to subscribe to newsletter) poses in its November 7 Friday Letter. Apparently, the answer is yes.

Limited partners have “voiced growing concerns over how GPs plan to make back the high multiples they paid for companies this year,” according to the Friday Letter. And endowments and foundations are increasingly concerned about prospective returns in light of the high current valuations for companies the PE funds are acquiring.

We identified the possibility of low returns for funds launched in the current environment back in May and again in July. In our May report, we noted that:

The cyclical nature of private equity returns does not bode well for pension funds and other investors who are currently piling into private equity funds. … PE buyout funds have lots of cash on hand … and they are competing for a limited number of attractive companies. … [T]his competition among PE funds for desirable acquisitions has led PE funds to pay prices that are close to historic highs. This year U.S. PE funds have paid an average price equivalent to 9.2 times ebitda – close to the 2007 peak of 9.7 times. ... Acquiring companies at these high prices will make it difficult to exit these investments at a profit.

We warned of this danger again in July:

Academic studies (see here, here, and especially here) have shown that private equity returns are also highly cyclical. Funds launched at or near stock market peaks tend to perform poorly. Those launched in the current environment are unlikely to achieve returns in subsequent years that beat the market and justify the added risk and illiquidity.

The Friday Letter notes that many LPs – notably wealthy individuals who invest via family offices – still believe private equity is an attractive investment. But noting the “frothy pricing environment,” PEI finds it reasonable to question “how current vintages are likely to be faring.” The big exits some investors have realized, in their view, have “more to do with competition than skill.”

Coming as it does from Private Equity International, this is a warning that LPs – especially pension funds, which are entrusted with the retirement savings or working men and women, should heed.

Jobs Flash: Employment-to-Population Ratio Jumps in October Print
Written by Dean Baker   
Friday, 07 November 2014 08:41

The employment-to-population ratio increased by 0.2 percentage points in October to 59.2 percent. This is above the ratio of a year ago, although it is still down by more than 4.0 percentage points from its pre-recession peak.

The other news is the report was overwhelmingly positive. The establishment survey showed a gain of 214,000 jobs, with restaurants (42,000 jobs) and retail (27,000 jobs) leading the way. With upward revisions of 31,000 to the prior two months data bringing average growth over the last three months to 224,000. In addition, average weekly hours edged up to 34.6, the highest level since May of 2008.

The household survey also showed a further decline in involuntary part-time employment, with the number dropping 67,000 from the September level. It is now almost 1 million below the year-ago level.

By contrast, voluntary part-time employment is continuing to rise. It increased by 152,000 and now stands 880,000 above its year-ago level. The rise in voluntary part-time employment is likely in part attributable to the Affordable Care Act as workers are now able to get insurance through Medicaid or the exchanges, whereas previously they needed to work a full-time job.

Fun With the “It’s Hard to Get Good Help” Crowd Print
Written by Dean Baker   
Saturday, 01 November 2014 16:40

For the last several years there has been a regular drumbeat of business people, economists, and pundits telling us that the economy’s real problem is that workers lack the skills necessary to fill the jobs that are available. From this perspective, the problem is not that the economy lacks demand; the problem is that our workers need more education and training. In other words, don’t blame the folks in Washington for mismanaging the economy; blame the workers for being dumb.

This crew got a little ammunition for this argument recently when the job opening rate rose back to its pre-recession level. The job opening rate is the number of job openings that firms are listing divided by the number of people employed. The rise of the job opening rate to its pre-recession level could be taken as meaning that companies are having a hard time finding qualified workers even though measures of employment, unemployment, and involuntary part-time employment all seem to imply substantial slack in the labor market.

Before we rush to retrain and re-educate the millions of unemployed and underemployed workers it is worth looking at the job opening data a bit more closely. In most sectors, the job opening rate is still somewhat below the pre-recession level. However, there are some exceptions as shown in the figure below.

Job openings 10357 image001

                                 Source: Bureau of Labor Statistics.

There are several items that are worth noting about the sectors of the economy in which employers appear to be having trouble finding workers by the job opening rate measure. First, these are not especially high skilled areas. In fact, the retail and accommodation and food service (i.e. hotels and restaurants) stand out as being among the lowest paying sectors in the economy, with the least educated workers.



Labor Market Policy Research Reports, October 24 – October 30 Print
Friday, 31 October 2014 14:23

Labor Market Policy Research Reports, October 24 – October 30

The following reports on labor market policy were recently released:

Center for American Progress

Eds, Meds, and the Feds: How the Federal Government Can Foster the Role of Anchor Institutions in Community Revitalization
Tracey Ross

A Great Recession, a Great Retreat: A Call for a Public College Quality Compact
David Bergeron, Elizabeth Baylor, and Antoinette Flores

Economic Snapshot: October 2014
Christian E. Weller and Jackie Odum



CEPR News - October 2014 Print
Friday, 31 October 2014 14:04

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



GDP Flash: GDP Growth Higher than Expected in Third Quarter Print
Written by Dean Baker   
Thursday, 30 October 2014 07:48

GDP grew at a higher than expected 3.5 percent annual rate in the third quarter. The biggest factors in this growth were a 16.0 percent increase in defense spending, which added 0.66 percentage points to growth; an 11.0 percent increase in the export of goods, which added 0.99 percentage points to growth; and a 2.4 percent decrease in the import of goods, which added 0.34 percentage points to growth. In other categories, consumption grew at a modest 1.8 percent annual rate, while non-residential investment grew at a 5.5 percent rate.

The jump in defense spending is likely an anomaly which will be reversed in future quarters. Defense spending is always erratic and big movements are usually reversed in later quarters. The trade data are encouraging, but may be reversed as the dollar has strengthened in recent weeks, making U.S. goods less competitive.

One piece of good news in the report is that the slowdown in health care spending is continuing. Nominal spending in the third quarter is just 3.5 percent above the year-ago level. It is difficult to determine the extent to which this slowdown can be attributed to the ACA, but clearly the predictions that costs would explode due to the extension of coverage have proven wrong.

Does the OECD Think That the South Should Rise Again? Print
Tuesday, 28 October 2014 09:55

A post at Wonkblog earlier this month noted that a recent analysis by the Organization for Economic Cooperation and Development (OECD) of regional well-being across its member countries found that the U.S. South was “the worst place to live in the United States.” The OECD --as diplomatic as it is-- did not say this in so many words, but Wonkblog reporter Roberto Ferdman pulled together the OECD's state-level data for the United States and it would be hard to arrive at any other conclusion.



Taxi Alternatives Not Really So Attractive After All Print
Friday, 24 October 2014 14:08

The taxi industry and its start-up offshoots, such as Uber and Lyft, have been dominating the news lately; a simple Google search for Uber news, for example, produces 10.7 million results. SherpaVentures, a venture-capital firm that has invested in a number of start-ups, and whose founder was a large investor in Uber, recently released a report of what it refers to as the “on-demand economy,” which they describe as based on the “instant, pervasive access to goods and services, tailored to individual needs, often without the burden of long-term ownership or commitment.” SherpaVentures, however, paints a positive, but incomplete, picture of what these new forms of economic organization mean, especially for the workers involved. While there is a lot not to like about the report, I will limit myself here to their comparison of traditional taxi drivers and Uber drivers.



Labor Market Policy Research Reports, October 17 – October 23 Print
Friday, 24 October 2014 09:13

The following reports on labor market policy were recently released:

Center on Budget and Policy Priorities

State “Income Migration” Claims Are Deeply Flawed
Michael Mazerov



Government Spending on the Forbes 400 Compared with Government Spending on Kids Print
Written by Dean Baker   
Tuesday, 21 October 2014 09:37

It is a popular sport in policy circles to complain that the government spends so much more on seniors that it spends on kids. The gap between spending on seniors and spending on kids comes from taking average Social Security and Medicare benefits, along with some other programs, and showing that is vastly exceeds what we spend on kids. (The calculation usually leaves out state and local expenditures, which accounts for the bulk of education spending.)

The problem with this calculation is that seniors have paid for Social Security and Medicare benefits through the payroll taxes taken out of their paycheck over their working lifetime. According to calculations from the Urban Institute, the typical retiree pays more into Social Security than she can expect to get back in benefits.



Labor Market Policy Research Reports, October 10 – October 16 Print
Thursday, 16 October 2014 16:01

The following reports on labor market policy were recently released:

Center for American Progress

A Win-Win for Working Families and State Budgets: Pairing Medicaid Expansion and a $10.10 Minimum Wage
Rachel West and Michael Reich

Retailer Revelations: Why America’s Struggling Middle Class Has Businesses Scared
Brendan V. Duke and Ike Lee



Work-Family Policies Can Stem the Decline in Women’s Employment Print
Friday, 10 October 2014 14:39

Back in 2000, a higher share of U.S. women aged 25 to 54 were employed than was the case for prime age women in six of our peers in the OECD. Newly released data from the OECD (see figure below) show that the rate has declined, in both relative and absolute terms, over the last 14 years and is now the lowest in the group, a trend clearly visible in the graph below. Even Japan, which in 2000 was more than 10 percentage points below the U.S. now has a higher share of prime age women in employment.



Labor Market Policy Research Reports, October 3 – October 9 Print
Thursday, 09 October 2014 16:00

The following reports on labor market policy were recently released:

Center for American Progress

Harnessing the EITC and Other Tax Credits to Promote Financial Stability and Economic Mobility
Rebecca Vallas, Melissa Boteach, and Rachel West



Labor Market Policy Research Reports, September 26 – October 2 Print
Friday, 03 October 2014 07:47

The following reports on labor market policy were recently released:

Center on Wisconsin Strategy

Raising the Quality of Childcare: Examples of Private/Public Training Partnerships in Childcare and Other Industries
Jody Knauss and Laura Dresser



Jobs Flash: Job Growth Picks Up Pace in September Print
Written by Dean Baker   
Friday, 03 October 2014 07:26

The economy added 248,000 jobs in September. This growth, along with upward revisions to the prior two month's data, brings the 3-month average to 224,000. The unemployment rate also dropped to 5.9 percent, the first time it has been below 6.0 percent since July of 2008. In spite of the rapid job creation, there was no change in the employment-to-population ratio which remained fixed at 59.0 percent. In fact, labor force participation fell by 0.3 percentage points for white men in September and 0.2 percentage points for white women.

The number of people involuntarily employed part-time by fell 174,000 to 7,103,000. This is extraordinarily high given the unemployment rate. The number of people choosing to work part time rose slightly and now stands 642,000 above its year-ago level. This presumably is the result of people taking advantage of Obamacare and getting insurance through the exchanges or expanded Medicaid rather than their employers.

By sector, the biggest job gains were in retail (35,300), employment services (33,600), health care (22,600) and restaurants (20,400). Wages have grown at a 2.0 percent annual rate over the last three months, the same as their rate of increase over the last year.

*CEPR's Jobs Flash is published each month upon release of the Bureau of Labor Statistics' employment report. It previews the more detailed Jobs Byte, which is published later in the day*

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