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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)



Supplemental Security Income for Disabled Kids: A Success Story Conservatives Don't Want to Tell Print
Written by Shawn Fremstad   
Wednesday, 05 October 2011 09:45

Signed into law by President Nixon, Supplemental Security Income provides basic income supplements to adults and children who have severe disabilities and limited resources. The number of children with disabilities who are SSI beneficiaries is quite modest: about 1.2 million nationally in 2009, compared with 31.5 million children total in low-income households. But for these children the help SSI provides is extremely important.

Research has shown that families caring for children with disabilities are more likely to experience various economic hardships than families caring for non-disabled children, even controlling for income. This is no surprise since caring for children with disabilities is expensive, health insurance doesn't cover many added expenses, and raising a child with a disability can take a considerable physical, emotional and financial toll on parents. Research conducted by Mark Duggan and Melissa Schettini Kearney has shown that increases in the receipt of SSI by disabled, low-income children are "associated with a significant and persistent reduction in the probability that a child lives in poverty of roughly eleven percentage points" without reducing parental employment. In short, the hard evidence shows that SSI is a small program that works well. 



Ken Rogoff Misses the Boat on Financial Speculation Taxes Print
Written by Dean Baker   
Tuesday, 04 October 2011 15:34

In a profession that is controlled almost exclusively by people who completely overlooked the largest asset bubbles in the history of the world, Ken Rogoff earns at least a “B” for his early warnings of dangerous economic imbalances. However, his column criticizing financial speculation taxes (FST) is more on a par with the work of his hopelessly lost colleagues.

The column argues that an FST of the size being considered by the European Union (EU) would reduce the information content of prices, reduce liquidity, and have no appreciable impact on volatility. In the long-run they will raise the cost of capital and therefore slow growth, and not end up raising much revenue.

This is a serious list of charges against a tax of 0.1 percent on a stock trade (0.05 percent on each side) and 0.01 percent on derivative trades (0.005 percent on each side). The most obvious reason for skepticism about Rogoff’s attack is that the increase in transactions costs implied by the tax would just raise them back to the levels of early or even mid-90s.

Computerization and deregulation has led to a sharp decline in transactions costs over the last three decades. A tax of 0.1 percent on stock trades would just remove part of this decline. Trading costs would still be lower than they were in the 80s and much lower than they were in 50s or 60s when they were typically 1 percent of the share price or more.



Living on the Edge: Economic Insecurity Print
Written by John Schmitt   
Monday, 03 October 2011 14:00

The Institute for Women's Policy Research (IWPR) has released not one, but two, major research reports today. Both analyze rising economic insecurity and draw on the findings from a large survey commissioned by IWPR and the Rockefeller Foundation in the fall of 2010.

The first report, "Women and Men Living on the Edge: Economic Insecurity After the Great Recession" (pdf) is a comprehensive overview of widespread economic hardship, a situation that has continued almost unabated despite the official end of the recession in the summer of 2009. The official statistics tell us that the unemployment rate hovered around 9 percent in the fall of 2010. The IWPR/Rockefeller survey reveals this figure to be only the tip of the iceberg: more than one-third of respondents "reported that they or someone else in their household had been unemployed and looking for work for at least one month during the previous two years."

The survey provides many other extensions of the existing official statistical record of the downturn: whether families have savings for emergencies, their children's education, or their own retirement (a large share do not); whether families have had difficulty paying food, health care, housing, utilities, or credit-card bills (a large share do); whether adults were willing to learn new skills, increase the length of their commute, or take a pay cut to escape unemployment (a large share would).



CEPR News September 2011 Print
Written by Dawn Lobell   
Monday, 03 October 2011 08:45

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

CEPR on Social Security

While Social Security was spared during the latest round of budget negotiations, those who want to cut Social Security continue to assert their fallacious claims about the program’s solvency. CEPR provided Social Security allies with additional ammunition in September, releasing three papers on Social Security.

The Impact of Cutting Social Security Cost of Living Adjustments on the Living Standards of the Elderly,” by CEPR Co-director Dean Baker and Economist David Rosnick, looks at similar changes in the past and finds that workers would likely not be able to raise their savings in response to lowering the measure of inflation used to calculate cost of living adjustments for Social Security benefits (a change that was proposed by President Obama during the debt ceiling negotiations), leading to significantly reduced living standards of retirees.

Who's Above the Social Security Payroll Tax Cut?” by CEPR Director of Domestic Policy Nicole Woo, Research Assistant Janelle Jones, and Senior Economist John Schmitt examines the most recent Census Bureau data available from the American Community Survey to determine how raising the cap would affect workers based on gender, race or ethnicity, age, and state of residence. Raising the cap from its current level of $106,800 to a new level of $250,000 would affect only a small share of workers, but would strengthen the program and avoid increases in contributions from the middle-class and the poor.

In "The Social Security Benefits of Sitting Senators Revisited," CEPR Program Assistant Kris Warner, Domestic Communications Coordinator Alan Barber and Dean Baker updated CEPR'sprevious paper (incorporating the newest CBO projections) to show the scheduled Social Security benefit for each current member of the Senate. As CEPR’s Congressional Social Security Accuracy Campaign has shown, many members of Congress (and some presidential candidates) need a refresher course on Social Security. In the month of September, Dean Baker sent letters to Senator Saxby Chambliss and Representatives Paul Ryan and Mike Coffman, correcting misstatements they made about the program.

Dean’s August letter to Republican presidential candidate Rick Perry was mentioned in the New York Times’ “The Caucus” blog. His letter to Representative Ryan was reprinted in the Madison Capital Times, and an earlier letter to Senator Marco Rubio was reprinted in the Palm Beach Post. Since February 2011, 31 members of Congress and two Republican presidential candidates have received similar letters.



Rich Lowry and the Heritage Foundation Need to Get their Stories Straight Print
Written by Shawn Fremstad   
Friday, 30 September 2011 10:45

Via Harold Pollack, here's the National Review's Rich Lowry on the economic struggles of workers who make "only" $250,000 a year:

[Warren Buffett] should give all his wealth away .... come move to Westchester County. Move to McLean, Virginia. Move to the suburbs of San Francisco with his wife. Adopt a couple of young kids, so he has a young family again. Make arrangements so that he only makes $250,000 every year. ... And see how he feels about seeing his taxes increased, when he actually has to worry about expenses, again.

McLean, Virgina and Westchester County are very wealthy places, with median incomes more than triple national median income. But Lowry need not worry about Buffet's ability to make ends meet in either place on $250,000 a year, at least as long as Buffet continues to avoid the intemperateness and profligacy that plague too many of America's elite today. Even in these places, $250,000 is a decent income—in fact, it's higher than the income of at least 90 percent of families living in Westchester, and $100,000 more than the median family in McLean County. 

Lowry would feel even better if he perused some of the Heritage Foundation's reports on the opulent living standards that prevail in today's America, even among families with much lower incomes. According to Heritage's Robert Rector, most American families living on less than $25,000 a year, one-tenth of les pauvres riches of Westchester and McLean, are able to meet what he calls "all essential expenses" and even have many luxuries like color TVs, VCRs, and coffee makers. Unfortunately, Rector doesn't provide similar statistics for families making over $250,000 a year. But given that they have incomes more than 10 times the amount of the families Rector focuses on, Lowry shouldn't waste too much time fretting about their ability to make ends meet.

Power/Knowledge/Framing Print
Written by Shawn Fremstad   
Thursday, 29 September 2011 09:45

In a recent post, Jared Bernstein notes that he doesn't "put a whole lot of weight on the importance of how issues are framed" arguing instead that "underlying power dynamics are what matters most, and history is littered with carefully, compellingly framed arguments that lost because one side had deeper pockets and greater access than the other." Relying in part on a NYT op-ed by Stan Greenberg from earlier this year, he concludes that progressives must "re-establish faith in the institution of government ... and that has to come from explanation, evidence, and effective implementation of government programs." 

A fair amount of what goes under the heading of "framing" these days is facile and I'm not really a fan of the word (a better description might be "constructing compelling narratives that are based on progressive values and don't just throw a lot of numbers at people" but that's a lot to say). I imagine Jared has some of the more facile stuff in mind when he critiques framing, but I can't say that I'm persuaded that "explanation, evidence, and effective implementation" are any more effective. Don't get me wrong, I love doing careful policy analysis and hope it makes a difference, but I also think doing it without paying as much (or more) attention to framing is folly for progressives. 



Strong Increase for the Case-Shiller Index in July, But How Long Will it Last? Print
Written by Dean Baker   
Tuesday, 27 September 2011 11:30

The Case-Shiller 20-City Index saw another strong increase in July, this time rising 0.9 percent. The index rose 1.1 percent in June and has now increased at a 13.1 percent annual rate over the last three months; although it is still down by 4.1 percent over the last year. But unlike in June, when all 20 cities showed house price increases, 18 of the 20 cities had price increases in July, with only Phoenix and Las Vegas showing modest price declines (0.1 percent and 0.2 percent, respectively).

The strongest factor pushing up prices is the reversal of the sharp price declines in bottom-tier home prices in the period immediately following the end of the first-time buyers tax credit. Recent extraordinarily low interest rates will provide a boost to the market — though the scaling back of Fannie and Freddie’s higher mortgage limits will be a factor going in the other direction — but this upward bounce is surely coming to an end. The inventories of new and existing homes for sale remain above normal levels. In addition, there is a large amount of inventory not showing up on the market, which is best demonstrated by the near-record vacancy rate nationwide.

For more, read the newest Housing Market Monitor.

Nobody Gets Rich On Their Own: Richard Posner Edition Print
Written by Shawn Fremstad   
Tuesday, 27 September 2011 08:10

In a recent column, Paul Krugman cites Elizabeth Warren to make the important point that today's libertarian conservatives:

... miss[] the point that all of us live in and benefit from being part of a larger society. Elizabeth Warren, the financial reformer who is now running for the United States Senate in Massachusetts, recently made some eloquent remarks to this effect that are, rightly, getting a lot of attention. "There is nobody in this country who got rich on his own. Nobody," she declared, pointing out that the rich can only get rich thanks to the "social contract" that provides a decent, functioning society in which they can prosper.

In the National Review Online, Rich Lowry refers to the idea of an underlying social contract as "Elizabeth Warren's piffle" and "folly." Lowry's dismissal of what he calls the "supposed" social contact is worth contrasting with the views of a more substantive conservative intellectual, the jurist and legal theorist Richard Posner. Here's what Posner had to say in his 1990 book, Problems of Jurisprudence

In a state of nature people would not have much in the way of life, liberty, or property to protect. The long life, spacious liberties, and extensive property of the average American citizen are the creation not of that American alone but of society—a vast aggregation of individuals, living and dead—and of geographical luck (size, topography, location, natural resources, climate). Assuming two equally able and hard-working people, one living in a wealthy society and the other in a poor one, the former will almost certainly have more income and wealth than the latter, and the difference will be due to the efforts of other members, living and dead, of the wealthier society, as well as to the accidents of geography. Human nature being what it is, the employment of the government's taxing and spending powers to redistribute the "social" component (as one might call it) of a person's income will adversely affect the incentives of both the taxpayer and the welfare recipient. But there is no necessary breach of the social contract. The taxed person is still much better off than he would be in the state of nature. ...

The point can be made in slight different terms, with the help of the Hegelian insight that the idea of individual rights—indeed of individuality—is socially constructed rather than presocial. Men's natural state is not one of equality and sturdy independence; it is one of dependence on more powerful men. Economic freedom in the classic liberal sense is one of the luxuries made possible by social organization. The individual's right to property is not "natural." His possessions are a product of social interactions rather than of his skills and efforts alone. Moreover, these skills may be, at least in part, a social product too. American workers are paid more than South Korean workers; are they better workers? Better people?

Of course, Posner's assertion that redistribution of the social component "will" adversely affect the incentives of both the "taxpayer and the welfare recipient" is simplistic, too sweeping, and empirically incorrect.  (Most "redistribution" happens between "taxpayers and taxpayers" and between "taxpayers and corporations that don't pay taxes," and incentives can be affected either positively or negatively depending on the specifics of the redistribution.) But other than this misstatement, there isn't much in Posner's account to argue with.

On the other hand, while Lowry is willing to acknowledge that "the average earnings of the typical man working full time are beneath 1978 levels," he (and today's libertarian conservatives in general) have no serious program for doing anything other than making things worse. As the legacy of the Bush tax cuts have shown, reducing the federal income taxes of the fabulously wealthy—those "lucky duckies" who have benefitted so much from, in Posnerian terms, the efforts of others living and dead and the accidents of geography—has failed to create more good jobs for most Americans. 

Krugman Notes That Low Inflation Is a Problem Print
Written by Dean Baker   
Sunday, 25 September 2011 07:32

For far too long economists and economics reporters have fixated on the prospect of deflation, as though something really bad happens if the inflation rate falls below zero and becomes negative. This is another one of the ungodly silly things that otherwise intelligent people are inclined to believe.

Of course there is zero magic to zero. The problem is not a negative inflation rate per se, the problem is an inflation rate that is too low.

Given the weakness of the economy, we would like a large negative real interest rate. The federal funds rate is zero, which is as low as it could go, and even the long-term rate is approaching its lower limits. (People holding long-term bonds at very low interest rates risk large capital losses if interest rates rise at some future point.) This means that to get the real interest rate down, we need to get the inflation rate up.

One can dispute how large a negative real interest rate we would want (according to some measures of the Taylor Rule, it should be as high as - 6.0 percent), but the basic story is the higher the better. In this context a prolonged period of very low inflation is bad, even though a period of low deflation would be even worse. However, crossing zero is just a difference of quantity, not quality. There is no reason to be more upset about a drop in the inflation rate from 0.5 percent to -1.5 percent, than a drop from 1.5 percent to 0.5 percent.

Krugman essentially makes this point in his blogpost yesterday. Hopefully this will help to end the obsession with deflation. The point being that everything is not okay as long as the inflation rate just stays positive. Some of us have been saying this for a while (e.g. here, here and here), but it helps hugely to have Krugman making this point.

Labor Market Policy Research Reports, Sept. 19 – 23, 2011 Print
Written by Alexandra Mitukiewicz   
Friday, 23 September 2011 14:45

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

Center for American Progress

The Jobs Case for Conservation: Creating Opportunity Through Stewardship of America’s Public Lands
Jessica Goad, Christy Goldfuss and Tom Kenworthy

A Better, More Diverse Senior Executive Service in 2050: More Representative Leadership Will Improve the Effectiveness and Efficiency of the Federal Government
Jitinder Kohli, John Gans and James Hairston

Center for Law and Social Policy

American Jobs Act: New Work and Learning Opportunities for Low-Income, Unemployed Adults and Youth

Employment Policy Research Network

The Continued Collapse of the Nation’s Teen Summer Job Market: Who Worked in the Summer of 2011?
Andrew Sum, Ishwar Khatiwada and Sheila Palma

National Employment Law Project

Coming Back for More: Michigan Lawmakers Aim to Cut Unemployment Insurance for Second Time in Six Months
Mike Evangelist and Rick McHugh

The Rights of Migrant Workers and Their Families in an Irregular Situation
Rebecca Smith

Why is Elaine Kamarck So Hung Up on Defending Conservative Social Policy? Print
Written by Shawn Fremstad   
Friday, 23 September 2011 10:10

In a recent Washington Monthly blog post, Elaine Kamarck argues that the conservative 1996 law that eliminated AFDC and replaced it with a block grant (known as TANF) is a success. Kamarck is quite right when she argues that "TANF is not, nor was it meant to be, the central pillar of the social safety net"—but she then goes on to effecitvely make TANF the central pillar of "welfare reform."

This is both an analytical and political error. As I argued previously here, it conflates the progressive welfare reform efforts that took place in the late 1980s and early 1990s—including the large-scale expansion of the EITC in 1993, increases in the federal minimum wage, and successful demonstration programs like New Hope and the Minnesota Family Investment Project—with the "truly conservative" hijacking of progressive reform in the 1996 block grant law. Making TANF the central pillar of welfare reform as Karmarck does only bolsters conservative arguments for more block grants, and makes it harder to reform TANF along the lines of previous progressive initiatives that have been shown to be successful based on hard data.

The question that Karmack needs to ask is: of the various policies that fell under the banner of "welfare reform" in the 1990s, which ones are working (or worked, if they were demonstrations), which ones have failed, and which ones do we not know enough about to judge whether they have been a success or failure?



Operation Twisted Print
Written by Dean Baker   
Wednesday, 21 September 2011 20:31

The Republican congressional leadership took the unusual step of sending Federal Reserve Board Chairman Ben Bernanke a letter warning against "additional monetary stimulus."This drew an outraged response from many Washington pundits, although for the wrong reasons.

Many in the pundit class expressed outrage that politicians would dare to influence the policy decisions of the "independent Fed." This is the high priest theory of central bankers. In this worldview, the Fed and other central banks are run by people who get the truth directly from the economy and make their judgements after carefully meditating on the latest economic data and connecting it to the sacred texts of the economics profession.

The high priest theory always warranted ridicule, but after the economic collapse of 2008 no self-respecting person should ever be associated with this view. The housing bubble that wrecked the economy was cleaarly visible from at least 2002. If the central bankers had any superior knowledge of the economy, they would have been shooting at the bubble at that point rather than allowing it to grow large enough so that its collapse would wreck the economy.

Note that shooting at the bubble does not mean raising interest rates. Note that shooting at the bubble does not mean raising interest rates [corrected -- thanks Sandwichman]. (Sorry, I had to say that twice for the economists who might be reading this.) It meant first documenting the bubble, showing that house prices had grown far out of line with historical trends and with rents. This information should have been at the center of every public appearance by Greenspan and other Fed officials. The Fed also should have used all its regulatory authority to crack down on the fraudulent mortgages that were being issued.



Why Do the Bankers Decide How Many People Will Be Unemployed? Print
Written by Dean Baker   
Wednesday, 21 September 2011 14:02

The Federal Reserve Board's Open Market Committee (FOMC) met today and decided on a modestly expansionary monetary policy. It decided to unload $400 billion worth of short-term assets over the next 9 months and replace them with longer term government bonds. The idea is that this would place some downward pressure on long-term interest rates.

The effect on interest rates and the economy is likely to be very modest. It is unlikely that long-term rates would fall by even 20 basis points (0.2 percentage points) as a result of this action and more likely the effect would be closer to 10 basis points, but at least it is a step in the right direction. This will make it cheaper for people to buy a car or refinance a mortgage. It will also be cheaper for firms to borrow to invest. It would have been good to see stronger action, but this is what the FOMC was prepared to do.

However what was most striking about this decision was the breakdown on the vote. Five of the people voting were members of the board of governors. (There are 7 positions, but 2 are currently vacant.) The governors are appointed by the president and approved by Congress for 14-year terms. Of the 5 sitting governors, 3 were appointed by President Obama, 1 was appointed by President Bush, and 1 governor (Chairman Ben Bernanke) was appointed by both.

The other members of the FOMC are the presidents of the 12 district banks. These presidents are essentially appointed by the banks in the district. All 12 district bank presidents sit in on the FOMC meeting, but only 5 vote at one time.



What Skills Shortage? Print
Written by John Schmitt   
Wednesday, 21 September 2011 09:30

I remember well the gas shortages of the 1970s. Long lines at the pumps, and gas prices through the roof. Higher prices are, of course, the textbook free-market response to a shortage.

Some economic analysts argue that an important reason we have high unemployment today is because we have a shortage of skilled workers. Employers have good jobs to fill, but they can’t find qualified workers to fill them.

If there really is a shortage of skilled workers, though, we’d expect to see skilled workers’ wages rising. Back in the late 1990s, for example, when the economy experienced four years of sustained low unemployment, and employers really were beating the bushes to fill vacancies, inflation-adjusted wages for workers at all skill levels rose faster than they have during any period in  the last three decades.

Journalist David Wessel has posted a magnificent graph at the Real Time Economics blog that shows almost the exact opposite of what we’d expect if there were a shortage of skilled workers.


Source: Matthew Slaughter via David Wessel.



Why I'm Not Surprised by Heritage's "Surprising" Poverty Facts Print
Written by Shawn Fremstad   
Wednesday, 21 September 2011 08:30

At the Inequalities blog, Brendan Saloner, citing a perennial report from the Heritage Foundation, notes: "… many of the so-called poor appear to be living at a more middle-class standard. Most of them have fridges, microwaves, televisions, and even air conditioning and game systems. There are data that support this point, and it needs to be addressed. I have not heard a clear response from leftwing commentators."

There's actually no dearth of responses, including ones from Stephen Colbert and the Center for American Progress. Here's Colbert: 

And you would not believe some of the stuff poor people have in their homes! Luxuries like ceiling fans, DVD players, answering machines, and coffee makers. I don't have those things. I have central air, a Blu-Ray player, voicemail, and I go to Starbucks every day. Must be nice. Must be pretty nice.

I also recently had the chance to respond to Heritage's Robert Rector in a public radio debate with him. Rector's message is that we shouldn't be too concerned about economic insecurity and declining real incomes among the working class and middle class. In support of this message, he points to data showing that among households with income below the federal poverty line in 2005—an austere $19,806 for a family of two parents and two children that year, less than half of the income most Americans say such a family needs to "get along" at a basic level—most have refrigerators and cars, and some have computers and even own homes.



Someone Remind Cato's Michael Cannon That Private Health Insurance is Expensive Print
Written by David Rosnick   
Monday, 19 September 2011 14:30
Over at Cato, Cannon pimps for the Ryan Plan, but leaves out all the most important facts to make his case. Citing the Dartmouth Atlas, he writes, "one third of Medicare spending is pure waste. Since the amount of the [Ryan Plan] vouchers would be based on per-enrollee Medicare spending, they would essentially give Medicare enrollees 50 percent more money than they would need to purchase all the beneficial medical care that Medicare currently provides." Actually, this would be true only if they could use the voucher to buy back into Medicare, rather than purchasing private health insurance. According to the Congressional Budget Office, Medicare-equivalent health care spending is 12 percent larger when going through private insurance than through Medicare itself. CBO projects that private insurance will perform worse over time, so that by 2022 when Ryan's plan would go into effect, total spending through private insurance would be 52 percent higher than through Medicare.

Furthermore, the Ryan Plan increases the age of eligibility from 65 to 67 — greatly increasing the costs to those who would have been covered by Medicare. Combined with the higher prices, the Ryan Plan would raise individual spending on Medicare-equivalent health care by $256,000 over 20 years for each the first beneficiaries (currently age 54). In order save any money under the Ryan Plan, these first beneficiaries would have to cut their medical coverage by half. The problem only gets worse over time, so that today's 14 year olds would have to cut their coverage by nearly three-quarters.

Two Health-Care Graphs Print
Written by John Schmitt   
Monday, 19 September 2011 08:56

Lane Kenworthy has posted two extremely helpful graphs that try to gauge the efficiency of the US health-care system relative to those of other wealthy countries. The first shows life expectancy in each country, in 2007, against per-capita health expenditures in the same year.


Source: Lane Kenworthy.

The United States is a huge outlier. We spend the most –by far– and yet we also have the lowest life expectancy.

But, as Kenworthy notes, the US could be an outlier for reasons that don’t have to do with the efficiency of our health-care system. Our life expectancy might be lower because we have a much higher murder rate or a much higher incidence of obesity, for example. So, he offers a second graph that, for the same group of countries, traces out the relationship over time between life expectancy and per-capita health expenditures. In this graph, we can see to what extent additional health expenditures help to reduce life expectancy within each country.

Life expectancy versus health expenditures, 1970-2008

Source: Lane Kenworthy.

The United States is still a substantial outlier. In every other country in the sample, extra health-care spending is associated with much higher increases in life expectancy than we see in the United States.

Neither graph proves causality, but both –and especially the second graph– suggest that the US health-care system is expensive and inefficient relative to the systems in place in other rich countries.

This post originally appeared on John Schmitt's blog, No Apparent Motive.

Labor Market Policy Research Reports, Sept. 5 – Sept. 16, 2011 Print
Written by Alexandra Mitukiewicz   
Friday, 16 September 2011 14:45

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

Center for American Progress

Workers and Their Health Care Plans: The Impact of New Health Insurance Exchanges and Medicaid Expansion on Employer-Sponsored Health Care Plans
Alan Reuther

Center on Budget and Policy Priorities

Letting Payroll Tax Cut Expire Would Shrink Worker Paychecks and Damage Weak Economy
Chuck Marr and Brian Highsmith



Workers of Color Less Likely to Have Pensions Print
Written by John Schmitt   
Friday, 16 September 2011 11:40

Workers of color are substantially less likely to participate in an employer-sponsored retirement plan than white workers are. Over the years 2003-2009, for example, almost half of white workers (49.0 percent) participated in an employer-sponsored retirement plan, compared to only 42.6 percent of Asian American and Pacific Islander (AAPI) workers, 41.3 percent of black workers, and 26.6 percent of Latino workers.


Women (43.7 percent) are also generally less likely than men (45.4 percent) are to be in an employer-sponsored retirement plan. This holds true for white, AAPI, and black workers. Latino men, however, are less likely (25.3 percent) than Latino women (28.5 percent) to participate in an employer-sponsored plan.

retirement-race-fig2(Data note: All data are from the March Current Population Survey for the years 2004 through 2010, covering calendar years 2003 through 2009. The sample is all workers ages 18 to 64. Participation in an employer-sponsored plan requires both that the employer has a plan and that the employee participates in the plan. Participation does not require that the employer make a financial contribution.)

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