Investigating the Dimensionality and Stability of Union Commitment Profiles over a 10-Year Period: A Latent Transition Analysis

Source: Alexandre J. S. Morin, Daniel G. Gallagher, John P. Meyer, David Litalien, Paul F. Clark, ILR Review, Volume 74 Issue 1, January 2021
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From the abstract:
The authors adopt a person-centered approach to the investigation of the dimensionality of the union commitment construct by capitalizing on a 10-year longitudinal study (from 1992 to 2002) of 637 union members in their first year of employment measured again 1 and 10 years later. Results reveal four distinct profiles of union commitment, presenting a stable structure over time. These profiles demonstrate consistency in commitment level across the three most common union commitment dimensions, thus questioning the necessity of adopting a multidimensional approach. Results show that union members became more similar to other members of their profiles over time, and that their union commitment became slightly less extreme as union tenure increased. Finally, results show that union commitment profiles predict union participation, in accordance with our expectations, and suggest that endorsing positive attitudes toward unions and their instrumentality was a stronger predictor of profile membership than was satisfaction with the actions of one’s own union.

Digital tools are helping employees mobilize the workforce

Source: Nicolás Rivero, Quartz at Work, December 13, 2020

Technology has already fundamentally changed the way that millions of people work. Now, it’s changing the way they unify to make demands of their employers.

Waning union power across industries and around the world has left workers with fewer formal structures for venting grievances. In some sectors, the rise of the gig economy and remote work means people aren’t meeting and forming relationships with co-workers like they used to. All of this has made it harder for rank-and-file employees to organize and collectively lobby their bosses for change.

But a spate of new digital tools offers a workaround, helping people to find far-flung peers, share grievances, and coordinate action.

Student Loans, COVID-19 and Reform Needs

Source: Martin Wurm, Regional Financial Review, November 2020
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Despite concerns that student loan delinquencies and defaults may spike once deferment under the CARES Act expires at the end of 2020, most student loan debt is owned by high-income households, which are not likely to default and do not need such subsidies. Policy reform should be aimed to benefit lower-income and minority households, which are targeted by low-quality, for-profit schools and are much more likely to default

Economic Challenges for Parents During COVID-19

Source: Ryan Sweet, Regional Financial Review, November 2020
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We explore how living with school-age children has affected decision-making during the pandemic. Households with children experienced sharper job and income losses than those whose children are not living at home, and female parents are more than twice as likely as men to reduce their work hours among couples living together.

U.S. State and Local Shortfall Update: December 2020

Source: Dan White, Emily Mandel, and Colin Seitz, Moody’s, December 17, 2020
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Will the money come from taxpayers over time funding federal debt or more immediately in tax hikes and austerity measures?

  • Without additional federal assistance we project states and local governments will be forced to raise taxes or cut spending by between $171 billion and $301 billion over the next year and a half.
  • Though nearly every state will see significant fiscal stress this year and next, the consequences of these shortfalls will vary even more than usual from one state to another.
  • How federal policymakers choose to react to these shortfalls will have significant implications for the economic outlook.

Fiscal Effects of COVID-19

Source: Alan Auerbach, Bill Gale, Byron Lutz, Louise Sheiner, The Brookings Institution, Brookings Papers on Economic Activity, BPEA Conference Drafts, September 24, 2020

The COVID-19 pandemic and the associated policy responses have had a significant impact on government budgets. Federal spending has skyrocketed. State and local governments, almost all of which face some form of annual balanced budget rule, confront fiscalshocks on both the revenue and spending sides that threaten to make the recession deeper and slow the recovery. This paper examines the impact of COVID on the fiscal status of the federal government and the states.

Section II provides new projections ofthe federal budget outlook, with five main results. First, we document that the pandemic and the policy responses to it rapidly and substantially raised federal deficits, but only on a temporary basis. Spending and revenue are projected to return to pre-COVID baseline values relatively quickly. Second, the long-term fiscal outlook through 2050 has deteriorated somewhat. Under the Congressional Budget Office’s (CBO 2020f) assumptions for GDP growth and interest rates, we project that the debt-to-GDP ratio, currently 98 percent, will rise to 190 percent in 2050 under current law, compared to a pre-COVID baseline projection of 180 percent. CBO (2020f) obtains a similar projection – 195 percent –using a slightly different set of assumptions.

Third, although the economic downturn and COVID-related legislation raise debt permanently, sharply lower projections of interest rates for the next dozen years help moderate future debt accumulation. Nevertheless, even during the period when interest rates are projected to be low, the projected debt-to-GDP ratio rises steadily due to substantial and rising primary deficits, driven largely by rising outlays on health-related programs and Social Security. As the economy grows and debt accumulates, interest rates are projected to rise and to exceed the nominal GDP growth rate by increasing amounts starting in the early 2040s.

Fourth, under a “current policy” projection that allows temporary tax provisions –such as those in the Tax Cut and Jobs Act of 2017 –to be made permanent, the debt-to-GDP ratio would rise to 222 percent by 2050 and would continuing rising thereafter. Fifth, the long-term projections are sensitive to interest rates. If interest rates remain low (that is, at their projected level for 2025), rather than rising as in the CBO projections, the debt-to-GDP ratio would equal157percent in 2050 under current policy.

We discuss several aspects of these results – including how the current episode compares to past debt changes, the role of historically low interest rates, and recent Federal Reserve Board policies. Because of the macro-stabilization effects of fiscal tightening, and because low interest rates create “breathing room” for fiscal policy, we do not see the large, short-run debt accumulation resulting from the current pandemic as necessitating any immediate offsetting response. But the long-term projections show that significant fiscal imbalances remain and will eventually require attention.

Section III discuss the effects on state and local governments. We examine several recent estimates of the effects of the pandemic on state and local budgets — some of which find relatively modest effects and others which find effects that dwarf those experienced during the Great Recession. We note that the very unusual nature of the current recession meansthat relying on the historical relationships between the state of the economy and state and local tax revenues may produce misleading results. We instead attempt to calculate the impact on state and local government using a “bottom-up” approach that accounts for the geographic variation in the distribution of unemployment and consumption declines, the fact that low-wage workers have been particularly hard hit this recession while higher-income workers have been much less affected, and the fact that the stock market has not responded to the economic downturn as it has in the past.

Our findings suggest that this pandemic is indeed having very unusual effects on state and local revenues. We estimate far smaller income tax losses than would have been expected on the basis of historical experience, which we attribute to the fact that employment losses have been unusually concentrated on low-wage workers, the unprecedented increases and expansions of unemployment insurance benefits and business loans, which will shore up taxable income in 2020, and the fact that the stock market has held up so far, unlike most of the prior economic downturns. On the other hand, our estimates of the losses in sales and other taxes and fees are much larger than one would have expected—the decline in use of transportation services alone seems likely to depress revenues by over $45 billion this year. In aggregate, we estimate that state and local own source revenues, excluding fees to public hospitals and institution of higher education — which we view as somewhat distinct —will decline $155 billion in 2020, $167 billion in 2021, and $145 billion in 2022. Including lower fees to hospitals and higher ed would bring these totals to $188 billion, $189 billion, and $167 billion.

We then turn to a discussion of federal aid. We estimate that the legislation enacted last spring provides about $212 billion in aid to state and local governments, excluding aid to public hospitals and higher ed, and $250 billion including that aid. While this appears to be larger than the total revenue declines expected thisyear, that doesn’t mean that the aid has been sufficient to preclude tough budget choices and poor macroeconomic outcomes. First, should the economy remain below its pre-COVID baseline for many years, as the CBO projections suggest, these governments will face significant shortfalls in coming years. Knowing that, they are likely to restrain spending somewhat this year, and make additional cuts in coming years. Second, the pandemic itself has likely increased the demands on state and local governments—for public health spending, virtual schooling, help for the elderly, etc. Simply maintaining pre-COVID levels of spending may not be enough to assure that necessary services aren’t cut. Finally, our analysis shows that smaller states got much more generous aid relative to their losses, and that states like New York and California will likely be facing budget shortfalls in the current year even without consideration of the spending demands brought on by COVID-19.

Section IV provides concluding remarks.

Related:
State and Local Fiscal Conditions and COVID-19: Lessons from the Great Recession and Current Projections
Source: Congressional Research Service, CRS INSIGHT, IN11394, Updated July 8, 2020

Without Another Massive Federal Stimulus, State and Local Governments Will Face Brutal Austerity
Source: Colin Gordon, Jacobin, November 10, 2020

States Grappling With Hit to Tax Collections
Source: Center on Budget and Policy Priorities, November 6, 2020

How the COVID-19 Pandemic is Transforming State Budgets

Source: Urban Institute, December 11, 2020

The COVID-19 pandemic and resulting recession have dramatically reshaped state economies and budgets. But the severity of the pandemic and economic downturn varies significantly across states, creating unique economic and political pressures. We collected health, economic, and fiscal data for all 50 states and the District of Columbia to show how each individual state has changed during this crisis and suggest what might be needed for recovery.

The Economic Consequences of Major Tax Cuts for the Rich

Source: David Hope, Julian Limberg, London School of Economics and Political Science (LSE), Working Paper 55, December 2020

This paper uses data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment. First, we use a new encompassing measure of taxes on the rich to identify instances of major reductions in tax progressivity. Then, we look at the causal effect of these
episodes on economic outcomes by applying a nonparametric generalization of the difference-in-differences indicator that implements Mahalanobis matching in panel data analysis. We find that major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pre-tax national income. The effect remains stable in the medium term. In contrast, such reforms do not have any significant effect on economic growth and unemployment.

Related:
Fifty Years of Tax Cuts for Rich Didn’t Trickle Down, Study Says
Source: Craig Stirling, Bloomberg, December 15, 2020

Walking the Walk: Does Perceptual Congruence Between Managers and Employees Promote Employee Job Satisfaction?

Source: Miyeon Song, Kenneth J. Meier, OnlineFirst, Published October 26, 2020
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From the abstract:
Public managers and employees should be on the same page for successful performance. Managers’ self-evaluations of their own management, however, often do not match employees’ evaluations. Despite the consistent findings of a discrepancy between managers’ and employees’ perceptions of management, little research has examined how this perceptual incongruence affects employee job satisfaction. The present study addresses this question using parallel surveys from both managers and employees in the context of public education. The findings suggest managers overestimate their management effectiveness in general. As the perceptual gap between managers and employees increases, employees are less likely to be satisfied with their organization and their profession. We also find that this relationship is nonlinear, and the negative effects of incongruence could be accelerated when employees have considerable consensus about management. This study highlights the role of perceptual congruence in creating a better work environment and promoting job satisfaction for public employees.