Author Archives: afscme

The Old Boys’ Club: Schmoozing and the Gender Gap

Source: Zoë Cullen – Harvard Business School, Ricardo Perez-Truglia – University of California, Berkeley, This Draft: September 2020.

From the abstract:
Offices are social places. Employees and managers take coffee breaks together, go to lunch, hang out over drinks, and talk about family and hobbies. In this study, we provide evidence that employees’ social interactions with their managers can be advantageous for their careers and that this phenomenon can contribute to the gender pay gap. We use administrative and survey data from a large financial institution. We conduct an event-study analysis of manager rotation to estimate the causal effect of managers’ gender on their employees’ career progressions. We find that male employees assigned to male managers were promoted faster in the following years than male employees assigned to female managers; female employees, on the contrary, had the same career progression regardless of their managers’ gender. These differences were not accompanied by any differences in effort or performance, and they explain a third of the gender gap in promotions at this firm. Then, we provide evidence suggesting that these effects were mediated by the social interactions between male employees and male managers. First, we show that the effects were present only among employees who worked in close proximity to their managers. Second, we show that the effects coincided with an uptick in the share of breaks taken with the managers. Third, we estimate the impact of social interactions on career progression using quasi-random variation induced by smoking habits. When male employees who smoke transitioned to male managers who smoke, they took breaks with their manager more often and were subsequently promoted at higher rates than male smokers who transitioned to non-smoking managers. The boost in socialization and promotion rates closely mirrors the pattern among male employees assigned a male manager.

Institutional Investors and Hedge Fund Activism

Source: Simi Kedia, Laura Starks, Xianjue Wang, The Review of Corporate Finance Studies, Advance Articles, December 30, 2020
(subscription required)

From the abstract:
Hedge fund activists have ambiguous relationships with the institutional shareholders in their target firms. While some support their activities, others counter their actions. Due to their relatively small holdings in target firms, activists typically need the cooperation of other institutional shareholders that are willing to influence the activists’ campaign success. We find the presence of “activism-friendly” institutions as owners is associated with an increased probability of being a target, higher long-term stock returns, and higher operating performance. Overall, we provide evidence suggesting the composition of a firm’s ownership has significant effects on hedge fund activists’ decisions and outcomes.

State Employee Health Insurance: Assessing the Scale of State Purchasing Power

Source: John Kaelin, Jim DeWan, Rockefeller Institute of Government, December 2020

From the introduction: https://rockinst.org/issue-area/state-employee-health-insurance-assessing-the-scale-of-state-purchasing-power/
Across the nation, state governments are major purchasers of health insurance for their employees. According to the US Census Bureau, 100 percent of state governments offered health insurance benefits to their employees in 2018. The Census Bureau further reported that state governments provided health insurance benefits to 67.6 percent of their 5.4 million employees in 2018. This total of approximately 3.7 million employees does not include the number of dependents, retirees, or enrollees of local governments, and other public employers that also participate in states’ health insurance programs. In 2012, based on a report published by Pew Charitable Trusts and MacArthur Foundation, total spending exceeded $30 billion covering 2.7 million households.

Between employee benefits and Medicaid programs, states’ spending on health insurance represents a major budgetary item. In 2018, the federal Center for Medicare and Medicaid Services (CMS) reported that health insurance spending for all state and local governments totaled $433.6 billion and that spending has experienced an average annual increase of 3.9 percent over the past five years. In Fiscal Year 2019-20, the state of New York itself spent $22.1 billion on Medicaid and $4.3 billion on employee and retiree health insurance costs. To alleviate these escalating costs, some states have examined options to coordinate purchasing across state programs in an attempt to achieve economies of scale. Recently, California proposed policies to leverage their purchasing of prescription drugs by combining employee health insurance programs with other state programs such as Medicaid and Correctional Health.

The purpose of this policy brief is to examine the extent to which the states in their role of purchasers drive the evolution of the healthcare delivery system. This brief examines the availability of basic financial and cost data relating to state employee insurance programs. It assesses the scale of state health insurance purchasing using existing data and presents results from a preliminary survey of states. We also review the degree to which employee purchasing decisions are coordinated with other state health policy purchasing goals such as Medicaid and the Affordable Care Act (ACA) insurance marketplaces.

COVID-19: The Potential Role of TANF in Addressing the Economic Effects

Source: Congressional Research Service, Insight, IN11241, Updated: December 4, 2020

The Temporary Assistance for Needy Families (TANF) block grant provides grants to the 50 states, District of Columbia, American Indian tribes, and certain territories with the broad purpose of ameliorating and addressing root causes of childhood economic disadvantage. States may use TANF funds in any way they reasonably calculate could achieve the block grant’s statutory purpose. Some of the flexibility the block grant affords to states, tribes, and territories was used to address the fallout from Hurricane Katrina and the deep economic recession of 2007-2009.

Fiscal Survey of the States: Fall 2020

Source: National Association of State Budget Officers, December 2020

From the overview:
State general fund spending in fiscal 2021 is projected to decline for the first time since the Great Recession, based on enacted budgets. After nine consecutive years of budget growth, states saw revenue fall in fiscal 2020, and greater declines are expected in fiscal 2021. Weakening revenue projections resulting from the COVID-19 recession led states to reduce general fund spending by 1.1 percent compared to fiscal 2020 and by 5.5 percent compared to governors’ budgets proposed before the pandemic.

Other key findings from the report:
• State general fund revenue is projected to decline by 4.4 percent in fiscal 2021 compared to already depressed fiscal 2020 levels, or by 10.8 percent compared to revenue projections in governors’ pre-pandemic budget proposals, based on the most current estimates available when data were collected.
• Fiscal 2020 general fund revenues declined 1.6 percent compared to fiscal 2019, or by as much as 2.9 percent when only counting the 45 states that operated on a July to June fiscal year. 35 states reported general fund collections for fiscal 2020 from all sources came in lower than original budget projections.
• The tax deadline shift from April to July affected fiscal 2020 revenue collections in 19 states that counted these delayed payments as fiscal 2021 revenue. Among these states, 17 were able to provide estimated deferral amounts totaling $10.2 billion, revenue that would have otherwise been collected in fiscal 2020.
• Rainy day fund and total balances were at record highs before the pandemic hit but are now on the decline as states turn to reserves to address budget shortfalls. Total balances are already projected to decline by $33.3 billion in fiscal 2021 compared to fiscal 2019 levels.

Note: The fiscal 2021 data in this report represent a point in time, as spending and revenue projections continue to be moving targets. State-by-state data also reflect differing points in time depending on when a state enacted its budget for fiscal 2021 and how often a state revises its revenue forecast.

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Disenfranchisement: An American Tradition

Source: Julilly Kohler-Hausmann, Dissent, Winter 2021

Invoking the specter of voter fraud to undermine democratic participation is a tactic as old as the United States itself. …. Fair elections require clear regulations and standards, but bureaucratic hurdles inevitably depress participation by disadvantaged groups. And they have often been deliberately constructed—as an appeals court found in 2016—to “target African-Americans with almost surgical precision.” ….

Related:
Dozens of states see new voter suppression proposals
Source: Russell Contreras, Stef W. Kight, Axios, February 10, 2021

There are at least 165 proposals under consideration in 33 states so far this year to restrict future voting access by limiting mail-in ballots, implementing new voter ID requirements and slashing registration options.

Public Work Provides Economic Security for Black Families and Communities

Source: Michael Madowitz, Anne Price, and Christian E. Weller, Center for American Progress, October 23, 2020

….
Public sector jobs provide economic security for Black households

Public jobs provide good wages, better benefits, and greater job security, all of which are critical components of economic security and help families build wealth. Moreover, the wealth gap in the public sector is much smaller. For example, in the private sector, white households have as much as $10 of wealth for each $1 Black households hold; in the public sector white households hold closer to $2 for every $1 of wealth for Black families.

Public employment can provide greater economic security for Black workers for several reasons:

  • Public sector hiring is more accountable to citizen influence than private sector hiring, providing stronger checks on employment discrimination.
  • Public sector jobs are more likely to provide a defined benefit pension, which guarantees lifetime benefits upon retirement.
  • Public sector jobs offer more stable employment, providing economic security otherwise available only to households with wealth.
  • Public sector jobs are more likely to be unionized. Unionized jobs are highly beneficial to workers, and Black workers in particular.

Responsibilities and Rights of Employers and Employees During the COVID-19 Pandemic

Source: Joseph Maya, Julia Audibert, Zachary Sipala, Caroline Vandis, Calvin Carson, and Emily Prudente, Labor Law Journal, Vol. 71, Issue No. 4, Winter 2020
(subscription required)

The Occupational Safety and Health Administration (OSHA), Fair Labor and Standards Act (FLSA), Equal Employment Opportunity laws (which encompass the Americans with Disabilities Act and the Rehabilitation Act), and Title VII of the Civil Rights Act of 1964 are long-standing pillars of employment law in this country. Collectively, they aim to ensure individual privacy, safe work environments, and equal treatment free from discrimination in the workplace. Given their appealing and sensical nature, it seems axiomatic that these statutes and agencies operate in concert. However, complying with their provisions during a global pandemic requires navigating murky waters. In practice, these laws present sometimes competing demands for many employers and employees trying to understand the new reality imposed by COVID-19. Striking an effective balance between these rights and responsibilities during the upheaval caused by COVID-19 incurs a host of relatively novel challenges. In this article, the attorneys at Maya Murphy, P.C. demystify how to serve the best interests of employers and employees and offer a comprehensive analysis of legal guidelines, both old and new, to inform our readers how to best achieve that balance.

Age Discrimination in Employment: What Is Legally Permissible May Not Be Managerially Wise

Source: Dexter R. Woods, Jr., and David M. Savino, Employee Relations Law Journal, Vol. 46, No. 4, Spring 2021
(subscription required)

Determining whether or not to hire or retain older workers is a critical issue for employers and employees. In this article, the authors consider the issue from both a legal perspective and a managerial perspective.