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New Obama Poverty Measure Lowers Poverty Rates in Most States and Among Children Print
Written by Shawn Fremstad   
Thursday, 03 November 2011 11:00

On Friday, November 4, the Census Bureau is holding a webinar on the Obama Administration's proposed "supplemental" poverty measure. The webinar is in advance of the release of new research on the measure on Monday.

Media stories about the Obama measure have generally focused on the likelihood that it would produce a national poverty rate in recent years that is modestly higher than the outdated official poverty rate. Conservatives like Robert Rector and Robert Samuelson have seized on this to claim that the measure is part of a liberal plot "to promote income redistribution."

Alas, no. In fact, Obama's new poverty measure, like so many of the Administration's proposals, gives up too much to conservatives — without actually getting their support in return — and does too little to advance progressive priorities. For reasons I have detailed in a 2010 report and at a Brookings forum, it is at best a centrist compromise proposal that leans right, not a progressive initiative. While the Obama poverty measure is based on recommendations made by the National Academy of Sciences in 1995, those recommendations left a lot of wiggle room for policymakers, including on fundamental issues such as where to actually set the poverty threshold. However, on these issues, the Administration has consistently adopted a conservative reading of the NAS recommendations.

Read more...

 

 
CEPR News October 2011 Print
Written by Dawn Lobell   
Monday, 31 October 2011 14:15

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

CEPR on the Financial Transaction Tax
CEPR Co-director Dean Baker was one of the first to call for the adoption of a Financial Transaction Tax, or FTT (also referred to as the financial speculation tax or FST). CEPR continued to arm allies in the fight for the FTT in October, updating its paper titled "The Facts and Myths About a Financial Speculation Tax." On Friday October 21st, CEPR co-sponsored a congressional briefing on the FTT with Senator Tom Harkin and Representative Peter DeFazio, who will soon introduce new FTT legislation. CEPR Co-director Dean Baker was part of a panel that includes John Fullerton, Former Managing Director, J.P. Morgan Co.; and Damon Silvers, Director of Policy and Special Counsel, AFL-CIO. Americans for Financial Reform, AFL-CIO and The Center for Media and Democracy were also co-sponsors.

Dean was quoted in this Christian Science Monitor article on the FTT. And he was mentioned at a press conference in the Vatican City. Professor Leonardo Becchetti (Second University of Rome and member of the Scientific Committee of Zero Zero Cinque) presented the Pontifical Council for Justice and Peace note "For a reform of the international financial system in the perspective of a public authority with a universal jurisdiction." Professor Becchetti referred to Dean’s blog post "Ken Rogoff Misses the Boat on Financial Speculation Taxes."

Dean will take part in a teach-in on the FTT at #OccupyDC this Saturday, October 29th at 2PM. The teach-in is part of a global march for the "Robin Hood Tax." CEPR Co-director Mark Weisbrot is scheduled to participate in a teach-in on Sunday, October 30th at 12:30PM. More information can be found here.

Read more...

 

 
Labor Market Policy Research Reports, Oct. 17 – 28, 2011 Print
Written by Alexandra Mitukiewicz   
Friday, 28 October 2011 14:45

Five new labor market research reports were released this week and last week – one report discusses paid sick days while the rest focus on unemployment in the U.S.


Center for American Progress

Creating Unemployment: How Congressional Budget Decisions Are Putting Americans out of Work and Increasing the Risk of a Second Recession
Scott Lilly


Demos

State of Young America
Joint Publication by Demos and Young Invincibles        


Employment Policy Research Network

Unemployment Insurance and Job Search in the Great Recession
Jesse Rothstein


Institute for Women’s Policy Research

Denver Paid Sick Days Would Promote Children’s School Success
Sarah Towne, Rhiana Gunn-Wright, Kevin Miller, Ph.D., and Barbara Gault, Ph.D.


National Employment Law Project

What Is Causing Record-High Teen Unemployment? Range of Economic Factors Drives High Teen Unemployment, But Minimum Wage Not One of Them
Anne Thompson

 
#OWS: Who Supports the Movement? Print
Written by Alexandra Mitukiewicz   
Friday, 28 October 2011 12:45

Last week, a report was released examining the support for the #OWS movement. The report, “Mainstream Support for a Mainstream Movement” by Héctor R. Cordero-Guzmán Ph.D, analyzes data gathered from an anonymous survey posted October 5th on occupywallst.org, concluding that those involved in the #OWS movement are representative of the 99 percent. To see how Cordero-Guzmán’s 99 percent compares with the U.S. 100 percent, I decided to compare the results with nationally representative data from the American Community Survey (ACS) and Current Population Survey (CPS).

The survey is not perfect. The results are conditional on visiting occupywallst.org on October 5th – of the 350,346 visits to the website on the 5th, only 1,619 individuals completed the survey. However, despite this non-random design, Cordero-Guzmán is providing us with data that has been in short supply since the start of #OWS movement. There has been a lot of discussion on who is actually participating and supporting the protests, and thanks to this survey we have a first look at the make-up of the #OWS 99 percent.

According to the survey, there is great support for the movement, with little outright disapproval of #OWS (see the figure with responses to Question 3, below). By October 5th, early in the protest, a quarter of respondents had participated in the protests (see the figure for Question 4). Since then there has been growth in the movement, with demonstrations springing up in both U.S. and international cities, and greater participation.

Read more...

 

 
Strong Investment Gives GDP a Boost, But Growth Remains Weak Print
Written by Dean Baker   
Thursday, 27 October 2011 15:30

Strong investment, particularly in non-residential structures and equipment and software, boosted GDP growth in the third quarter, according to the latest Bureau of Economic Analysis' report on the Gross Domestic Product. Non-residential investment grew at a 16.3 percent annual rate, accounting for 1.54 percentage points of the 2.5 percent GDP growth in the quarter. Non-residential structures saw a 13.3 percent growth rate, while equipment and software investment rose at a 17.4 percent annual rate. Consumption growth was weak at 2.4 percent, but considerably better than the 0.7 percent rate reported for the second quarter. Growth for the quarter was depressed by a sharp decline in inventories. Final demand grew at a somewhat more respectable 3.6 percent rate.

The economy is settling into a pattern of sustained weak growth, which is grossly inadequate. Investment growth is likely to remain relatively healthy as equipment and software investment stays strong, while structure investment becomes at least a small positive in the growth data. Housing has bottomed and will likely be a small positive going forward. Consumption growth is likely to be in a 2-3 percent range. Consumers still have not fully adjusted to their loss of housing wealth (at 4.1 percent, the saving rate in the quarter was well below the 8 percent pre-bubble average), so consumption is likely to trail income growth. Given a backdrop of 9 percent unemployment, this growth rate is very disappointing. Unfortunately because many analysts have raised fears of a double-dip recession, some may view this growth rate as being good.

For more, read the latest GDP Byte.

 
The Military Spending Fairy Print
Written by Dean Baker   
Wednesday, 26 October 2011 04:05

Faced with the prospect of cuts to the Defense Department's budget, the defense industry is pushing the story of the military spending fairy on members of Congress. They are telling them that these cuts will lead to the loss of more than 1 million jobs over the next decade.

Believers in the military spending fairy say things like "the government can't create jobs," but also think that military spending creates jobs. Under the military spending fairy story, if the government spends $1 billion dollars paying people to do research or to build items related to the civilian economy it is just a drag on the private economy; however if the same spending goes to military related purposes, then it creates jobs.

It's not clear exactly how the military fairy blesses projects to make them helpful to the economy rather than harmful. For example, the highways were built in the 50s ostensibly in part for defense purposes. They made it easier to move troops and military equipment around the country in the event of an attack. Government subsidized student loans were also originally dubbed as defense loans since they were ostensibly intended in part to produce more graduates in science and engineering who could help us compete with the Soviet Union in defense related technologies. 

Read more...

 

 
House Prices Unchanged in August, While Tax Credit Leaves Some Underwater Print
Written by Dean Baker   
Tuesday, 25 October 2011 12:30

The Case-Shiller 20-City index in August rose by just 0.2 percent from its July level, with prices rising in 10 of the cities and declining in the other 10. Most of the changes in prices were modest. Washington, D.C., saw the largest gain, at 1.6 percent, while Atlanta saw the largest drop, at 2.4 percent. Cities in the Midwest — such as Cleveland, Chicago, Minneapolis and Detroit — have shown strong price growth over the last few months. Prices in Cleveland rose at a 10.4 percent annual rate between May and August. Prices in Chicago and Minneapolis rose at a 29.1 percent and 29.3 percent rate, respectively, and prices in Detroit rose at a 55.9 percent rate over this period.

Much of the movement continues to be focused on the bottom end of the market, which in most cities is again doing worse than more highly priced homes. Most of the story with bottom-tier homes over the last two and half years can be explained by the first-time buyers tax credit. Predictably, the credit had the largest effect on the bottom tier of the market both because this is where first-time buyers are concentrated and also because the credit would be a large share of the house price. A good example is Minneapolis, where prices of bottom-tier homes rose by 30.6 percent from a pre-tax-credit level to a tax credit peak in 2010. Since then, prices in the bottom end of the market have fallen by 26.4 percent. This means that anyone who took advantage of the credit to buy a bottom-tier house in the summer of 2010 is almost certainly underwater and has lost considerably more equity in their home than they received from the credit.

For more, check out the latest Housing Market Monitor.

 
One Poverty Roll Please, Hold the Mayo! Print
Written by Shawn Fremstad   
Tuesday, 25 October 2011 11:15

Today's New York Times has a story on the disproportionate increase in income poverty among people living in the suburbs. Over the last 10 years, the number of people with incomes below the austere U.S. poverty line ($22,350 for a family of four) has increased by 53 percent in the suburbs, compared with a 26 percent increase in cities.

While the story was good, I was struck by a puzzling reference to "the poverty roll", which the story says has increased by 5 million in the suburbs. Searching for "poverty roll(s)" in NYT stories since 1851, I found about a dozen more stories and references that use the term, just about all of them from the 1990s and 2000s. This strange use of "roll" seems to be limited to poverty; there are no NYT stories referencing the growth in the "billionaire rolls" or the "Latino rolls" or noting the decline in the "middle-class rolls." 

What is a "poverty roll" exactly? The NYT uses it to mean "people with incomes below the poverty line." But this is very different from the actual definition of "roll" that seems most relevant here: "an official list or register of names." Thankfully, the United States doesn't keep any such list or register of the names of people living below the poverty line. A kind of poverty roll, known as a "Parochial List" — a list of "paupers" receiving relief from their local parish and of workhouse inmates — was kept under the English poor laws in the 18th and 19th century, so perhaps the NYT wants to evoke those happy times of progress for the working class.

So, the NYT is abusing the English langauge. Should we care? In this case, I think we should. One of the important progressive achievements of the 20th century was the "depauperization of poverty." This effort, as historian Alice O'Connor explains in Poverty Knowledge (p. 18): "recast public understanding of poverty by emphasizing its roots in unemployment, low wages, labor exploitation, political disenfranchisement, and more generally in the social disruptions association with large-scale urbanization and industrial capitalism." Modern statistical approaches to measuring poverty — which do away with the sorts of moral categorization that prevailed in earlier times — are a product of this movement. 

Terms like "poverty rolls" effectively repauperize poverty in a way that isn't helpful to progressive efforts to reduce it.  When people read a reference like "on the poverty roll," what most of them actually hear is something like "on the dole." Referring to the one-in-seven Americans who have extremely low incomes as being on some sort of imaginary "roll" dehumanizes them, and implies that they are a kind of passive and inert mass.  The Times would never use the term for other groups, they shouldn't use it to describe people with low incomes.

 
#OccupyThePress: Where is #OWS Headed? Print
Written by Alexandra Mitukiewicz   
Thursday, 20 October 2011 10:00

With all the recent attention and coverage of the Occupy Wall Street (#OWS) protest, there is great interest in what exactly is being protested and the movement’s future plans. Here is a roundup of recent articles and blog posts discussing the issues and agenda of #OWS.

#OWS issues:

Mike Konczal uses posts from the #OWS-related “We are the 99%” Tumblr to gather data and identify the common concerns of blog’s posters. His quantitative approach presents the concerns in a simple manner with informative, easy-to-follow charts.

While Henry Blodget does not touch upon all the popular #OWS issues, he does paint a great story through charts about unemployment, corporate profits, income inequality and the financial sector.

Mary Pilon highlights another major #OWS issue, student-loan debt, in the WSJ blog Real Time Economics.

Catherine Rampell’s NYT Economix blog post uses annual income statistics for the top 1%, providing more information about who makes up the 99% and 1% in the United States.

Read more...

 

 
Ending Loser Liberalism and Restructuring the Market Economy Print
Written by Dean Baker   
Wednesday, 19 October 2011 15:00

The growing nationwide response to the Occupy Wall Street movement displays a widespread discontent with the direction the country is taking. The economy is experiencing the worst downturn since the Great Depression, after a decade of bubble-driven growth. The banks who were the main culprits in driving the bubble are largely back on their feet, with top executives again enjoying the same sort of pay and bonuses as they had before the crash. Meanwhile the bulk of the working population continues to suffer the fallout from the crash in the form of unemployment, underemployment, and underwater mortgages. It’s not surprising that people are unhappy with this situation.

What is most important to understand is that this outcome is not just an accident of the market. The banks - who took great risk in extending the credit that fueled the bubble - are back on their feet because of extensive support from the government. This includes not only the $700 billion that Congress appropriated through the TARP, but the trillions more that were lent by the Fed through its special facilities at the peak of the crisis. In addition, an even larger amount of guarantees provided by both the Fed and the FDIC ensured that the banks could survive the crisis that they had helped to bring on.

The extensive government intervention that has allowed the financial industry to survive largely intact is not an exception. In other areas of the economy the interventions may be less transparent, but it is easy to identify ways in which the government has structured the market to redistribute income upward.

Read more...

 

 
Research for the 99% Print
Tuesday, 18 October 2011 09:30

The #occupywallstreet protests in New York City - and those around the country - have sparked a much-needed dialogue about inequality in the United States. The level of inequality in our economy has been growing for decades, and has reached a level not seen since prior to the Great Depression:

Share of Total Income, Top 1% of U.S. Income Earners

In a research paper from 2009, CEPR Senior Economist John Schmitt took a careful look at this sorry state of affairs and concluded that it "is not due to chance circumstances but is the direct result of a set of policies designed first and foremost to increase inequality." CEPR Co-Director Dean Baker's most recent book, The End of Loser Liberalism: Making Markets Progressive, examined the role of the government in "structuring the market in ways that ensure that income will flow upwards" and argues that progressives need to focus on preventing this, rather than acting after the fact on ways to re-redistribute income.

Going hand in hand with inequality is poverty, and CEPR Senior Research Associate Shawn Fremstad has written extensively on both of these subjects. In his most recent CEPR paper, he talked about how to frame the discussion on poverty. Previously, he examined how poverty is measured in the U.S. and concluded that the current poverty measure "is outdated and has failed to keep up with public consensus on the minimum amount of income needed to 'get along' in the United States in the 21st Century." He also looked at competing measures and presented one that was inclusive and more aligned with current views on poverty. 

In related work, CEPR recently co-sponsored an event on "Jobs, Inequality, and the Public Sector: Improving the Economic Competitiveness and Innovative Capacity of the U.S.", Schmitt summarized two reports on economic insecurity by the Institute for Women's Policy Research, and Fremstad reminded National Review Editor Rich Lowry of what "a more substantive conservative intellectual" had to say on the topic of the social contract and taxes.

For more of our work on inequality and poverty, please go here.

 
Clearing the Air on "Too Big To Fail" Print
Monday, 17 October 2011 16:23

With Occupy Wall Street continuing to build steam, Cato's Mark Calabria chose to engage in a little friendly fire. I like to believe that libertarians and progressives could come together to rewrite the rules of a rigged system, but Calabria seems interested in thickening the fog of war rather than clearing the air.

Cato's Mark Calabria leveled a strange charge at Joseph Stiglitz, suggesting that in 2002 Stiglitz and his coauthors (Jonathan and Peter Orszag) "sold their work to the highest bidder defending the system" of socialized losses and privatized gains. The paper analyzed the taxpayer risk of guaranteeing the debt of Government-Sponsored Enterprises (GSEs—primarily Fannie Mae and Freddie Mac) and found that under one of the two capital standards, the expected costs to taxpayers would be very low.

Of course, in 2011 this appears laughably naïve, given the many billions of dollars of support to Fannie and Freddie in the wake of the housing bust. However, Calabria's charge is utterly bizarre for several reasons. First, Stiglitz, Orszag, and Orszag specifically address the importance of "too big to fail" in taxpayer risk. Second, Calabria ignores the fact that risks grew considerably since the publication of the paper. Third, Calabria abuses some math in order to make it appear that the authors downplayed the potential costs.

Far from avoiding the question of "socialized losses and privatized gains," Stiglitz, Orszag, and Orszag rightly point out that the risk to taxpayers is far from limited to GSEs. They write,

"In the absence of Fannie Mae and Freddie Mac, mortgage risk would likely be held by large banks and other types of financial institutions, which themselves benefit from the perception that they are 'too big to fail.' Fannie Mae and Freddie Mac are among the largest financial institutions in the country. Even in the absence of a GSE charter it is likely that they would continue to benefit from their size, since the government has intervened on behalf of other large institutions in the past."
Read more...

 

 
How's That Hopey Changey Work Share Thing Doing? Print
Written by Dean Baker   
Monday, 17 October 2011 14:08

Just in case you were wondering, work share looks like it's doing pretty damn good in Germany, the country that has embraced it most aggressively. Since the downturn began in the fourth quarter of 2007 Germany's GDP growth has been only slightly better than in the U.S. However, while our unemployment rate rose from 4.8 percent in the 4th quarter of 2007 to 9.1 percent in the most recent quarter, Germany's unemployment rate fell from 8.3 percent to 6.0 percent for the same period. (The German unemployment data for the third quarter of 2011 does not include September.) 

Click to Enlarge

GermanyU.S._Unemployment_2904_image001

Source: OECD.

In fairness, work sharing is not the whole story. Germany has other programs that encourage employers to keep workers on the payroll. Germany also has a slower growing workforce, so it takes less GDP growth to keep pace with its underlying population growth. Still the contrast between Germany's 2.3 percentage point decline in unemployment and the 4.3 percentage point rise in the U.S. is rather striking.

 
#OccupythePress! Print
Written by Dean Baker   
Friday, 14 October 2011 15:51

The sun came up this morning and George Will doesn’t like the Occupy Wall Street (OWS) crew. He found some protestors there who said things that he found silly. For example, someone on Wall Street thought the minimum wage should be $20 an hour. That might seem a bit high, but if the real value of the minimum wage had kept pace with productivity growth since 1969 it would be almost $20 an hour today.

Will also seems to think that the bankruptcy of Solyndra is some incredibly damning piece of evidence against those who think the government can play a constructive role in the economy. I suppose that would be a compelling argument to people who have never heard of the Internet, Dos, penicillin or any of the thousands of other innovations that have benefited from government support. Also, the Solyndra failure may not seem that impressive to people who have seen the fraud and bankruptcies at companies like Enron, WorldCom, Lehman Brothers, and Bear Stearn. Maybe Will’s point is clearer to those who travel in his circles.

The idea of spending $1 trillion for infrastructure (much less than we are actually projected to spend in the next decade) also comes in for ridicule by Will. I guess he is blaming the OWS folks for thinking small.

He then warns progressives:

“From 1965 through 1968, the left found its voice and style in consciousness-raising demonstrations and disruptions. In November 1968, the nation, its consciousness raised, elected Richard Nixon president and gave 56.9 percent of the popular vote to Nixon or George Wallace. Republicans won four of the next five presidential elections.

Perhaps things will go better for progressives this time.”

Yes, Republican presidents did win those elections although it’s not clear how many people voted for George H.W. Bush in 1988 because of the Vietnam protests in 1968. More importantly, people should remember that Republicans in the White House created the Environmental Protection Agency, the Occupational Health and Safety Administration, proposed a more radical national health care plan than Obamacare, proposed a guaranteed annual income (like the one advocated by an OWS protestor that Will mocks) appointed Harry Blackman and John Paul Stevens to the Supreme Court and allowed us to have a 3.5 percent unemployment rate in 1969.

If President Obama supported measures that were as progressive as the ones pushed by Presidents Nixon and Ford, the Tea Party would be turning to nuclear weapons. It wasn’t that these Republican presidents were born radicals (I’m quite sure that neither were Moslem), they were responding to the pressures of their time.

If the #OWS protestors and their supporters around the country can sustain the momentum, then it can change the atmosphere in which the folks in Washington conduct their business. I suspect that few of them care whether Democrats or Republicans occupy the White House and Congress, they care about the policies pursued. If they can create an environment that results in presidents who push along a progressive agenda to the same extent as did Nixon and Ford, but it is Republicans who do the job, I doubt that many will be disappointed.  

 
Labor Market Policy Research Reports, Oct. 10 – 14, 2011 Print
Written by Alexandra Mitukiewicz   
Friday, 14 October 2011 15:35

A roundup of the labor market research reports released this week.

Demos

Worth Working For: Strategies For Turning Bad Jobs Into Quality Employment
Ben Peck and Amy Traub


Economic Policy Institute

Assessing the job impact of guidelines for marketing food and beverage products to children
John Irons


Institute for Women’s Policy Research

Valuing Good Health in Denver: The Costs and Benefits of Paid Sick Days
Kevin Miller, Ph.D. and Claudia Williams


National Employment Law Project

Filling the Good Jobs Deficit: An Economic Recovery Agenda for Our States and Cities
Anastasia Christman and Christine Riordan

Hanging On By a Thread: Renew Federal Unemployment Insurance to Aid Families, Boost Stalled Economy; Nearly Two Million Jobless Workers Face Premature Cut-Off in January 2012


Political Economy Research Institute

What Does the Literature Tell Us About the Possible Effect of Changing Retirement Benefits on Public Employee Effectiveness?
Christian E. Weller

 
The 'Regulation Impedes Job Growth' Story Has No Evidence Print
Written by Dean Baker   
Wednesday, 12 October 2011 11:45

Suppose the Republican presidential candidates blamed an invasion by space aliens for the failure of the economy to generate jobs. Would the media dutifully repeat it without comment? Given the media's response to Republican complaints about regulation preventing job growth, we should assume that they would view the space alien invasion explanation as perfectly reasonable.

If the story that regulation was impeding job growth were true, then there should be evidence to support it. For example, we should see firms increasing average hours as a way to avoid hiring workers. We don't: Average weekly hours are still below their pre-recession level. We should be seeing firms hiring temps as a way to avoid hiring more permanent workers. We don't see this, either. Temp employment is still down by almost 20 percent from its pre-recession level.

We should also see some differences in hiring patterns across industry: Industries in which jobs tend to be longer-lasting should be doing less hiring than industries in which the length of employment tends to be very short. We don't see this, either. Job growth has been relatively good in sectors such as engineering and law offices; it has been comparatively weak in sectors such as retail and restaurants, which tend to have high turnover.

We might also expect that businesses would blame regulation for limited growth when they are asked. They don't. The National Federation of Independent Businesses' survey of its members show little change in the percent of businesses that list regulation as a major obstacle from the Bush or Reagan years.

In short, the "regulation is impeding job growth" story has no evidence to support it. This story is a pure invention of the right wing. Presidential candidates who repeat it should be ridiculed by the media – just as if they were talking about space aliens.

This post originally appeared in The Guardian.

 
Stan Greenberg Appears to be Confused About the Effects of Conservative Block Grant Schemes Print
Written by Shawn Fremstad   
Tuesday, 11 October 2011 10:00

After writing about Elaine Kamarck's wrongheaded defense of the conservative 1996 Personal Responsibility Act, I remembered pollster Stan Greenberg's similarly odd claim, made in a widely read New York Times commentary published last July, that "Mr. Clinton's welfare reform in 1996 required efforts to make work pay and expand child care ...." 

No. It. Didn't.

Here, however, are some of the things that the 1996 measure signed by President Clinton actually did do: 1) block granted the Social Security Act's Aid to Families with Dependent Children program; 2) froze federal funding for the block grant—as a result, real federal funding today for the program is more than 25 percent below its 1997 level; 3) made many immigrants who are lawfully in the U.S. ineligible for various health and public benefits that citizens are eligible for; and 4) cut Food Stamp eligiblity and benefits for millions of families.

Among the things the 1996 law didn't do: 1) increase funding for any program; 2) require states who receive block grant funding to do anything to "make work pay"; 3) require states to do something as minimal as report on how many families they are helping with the vast majority of their block grant funds.

Read more...

 

 
Labor Market Policy Research Reports, Sept. 26 – Oct. 7, 2011 Print
Written by Alexandra Mitukiewicz   
Friday, 07 October 2011 15:30

A roundup of the labor market research reports released this week and last week.


Center for American Progress

Redefining Teacher Pensions: Strategically Defined Benefits for New Teachers and Fiscal Sustainability for All
Raegen Miller


CLASP-CEPR

How Much Does Employee Turnover Really Cost Your Business?


Demos

The State Of Massachusetts' Middle Class
Tamara Draut

Read more...

 

 
Health Care Job Growth Notable in Otherwise Dismal Report Print
Written by Dean Baker   
Friday, 07 October 2011 12:30

According to the latest Bureau of Labor Statistics' employment report, the economy added 103,000 jobs in September. While this increase — together with upward revisions to the prior two months’ data, which brought average job growth over the last three months to 99,000 per month — brings job growth almost exactly to the number needed to keep pace with the growth of the labor force, the jobs numbers are still really pathetic.

Nonsense talk of a double-dip has created an environment where even this dismal rate of job growth looks good. The truth is that the economy is continuing to grow at a very slow rate and we are making no progress in bringing the economy back to full employment. One notable bright spot in the latest jobs report is the health care sector, which added 43,800 jobs in September. This number is striking because this seems to be part of an ongoing trend. Health care employment has grown at a rate of 31,400 per month since June, accounting for almost one-third of employment growth over this period. In a very weak labor market, health care jobs are becoming ever more important.

For more, read the latest Jobs Byte.

 
Inflation: How Do You Spell Debt Relief? Print
Written by Dean Baker   
Friday, 07 October 2011 05:25

In his column today, Paul Krugman picks up the suggestion from Richard Yeselson, that debt relief for working people would be a good demand for the Wall Street occupiers to pursue. While there is a good logic to this demand -- many people find themselves facing crushing mortgage, credit card or student loan debt -- there are also problems with going this route.

For example, suppose we go the route of making every underwater mortgage above water by writing off the extent to which the debt exceeds the value of the home. As of what date do we wipe out underwater debt, today, six months ago, six months from now? That it isn't a joke, home prices are still falling in many areas. So do we say that people who were smart enough to be underwater as of some prior debt benefit, but folks who waited to get underwater are screwed?

Do we have a limit on debt write-offs? There are a lot of people who were speculating in homes who took out zero-down mortgages on expensive properties in places like Las Vegas and Miami at the peak of the bubble. Say they borrowed $450k on a home that is worth $200k today. Is it important to ensure that these people have their mortgages brought above water.

There is also the question of the other side of these loans. Close to half would of the underwater mortgages would now be held by Fannie Mae or Freddie Mac, so the write off would be a loss of government money. We can argue over whether this is the best use of it. Some of the rest of the mortgages are held by banks, but most are in pools. The owners of these pools include some rich investors, but it also includes institutional investors like pension funds and individuals with 401(k) holdings.

This raises both a question of fairness and also dampens the economic impact -- which has been hugely overstated in any case. If we eliminate $900 billion in underwater mortgage debt (certainly a high estimate, since it implies that almost 10 cents of every mortgage dollar outstanding represents underwater debt), we should expect the additional wealth to generate around $54 billion of additional consumption a year (this assumes a 6 percent wealth effect)

Read more...

 

 
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