Category Archives: Economy

Governors and Public Education: A Trend Analysis Of Gubernatorial Messages 2004-2008

Source: Communities for Quality Education, 2008

From the press release:
A new report from Communities for Quality Education (CQE) analyzes State of the State gubernatorial addresses between 2004-2008 and highlights specific education policy trends. The report shows that between 2004 and 2007, every governor who delivered a State of the State address stressed the importance of education to economic growth. In fact, no issue surrounding education has been focused on as much by governors in their State of the State addresses as the link between education and economic prosperity.
See also:
Governors’ Statements

The Economic State of Young America

Source: Tamara Draut, Dēmos, Spring 2008

From the press release:
Today’s young adults are feeling the impact of a massive shift in the U.S. economy–changes that are documented in a new data report from Demos and an analysis of public opinion polling by The Center for American Progress.

The Demos report, “The Economic State of Young America,” is a comprehensive databook offering proof that a combination of declining incomes, growing debt, and high costs of education, homeownership and healthcare are conspiring to make this generation the first to not surpass the living standards of their parents.
The Progressive Generation: How Young Adults Think About the Economy
Center for American Progress

State Handbook of Economic, Demographic, and Fiscal Indicators 2008

Source: David Baer, AARP Public Policy Institute, Research Report, Pub ID: D19014, April 2008

From the summary:
As state and local economic conditions and demographic patterns change, policymakers may consider adjusting their policies on taxes and spending programs. These adjustments become more difficult when economic and demographic changes depart from historical trends.

Policymakers, public officials, policy analysts and others concerned about such issues will find useful state-level data on population, poverty rates, per capita state personal income, state and local revenues, expenditures, tax rates, and property tax relief programs in this seventh edition of the AARP Public Policy Institute’s biennial databook by David Baer. Since 1993, the reference book has been contributing to more informed public policy decisions by providing economic, demographic, and fiscal information.

The handbook facilitates state-by-state and state-national comparisons, featuring economic, demographic, and fiscal summaries of the entire United States, each state, the District of Columbia, the Virgin Islands, and Puerto Rico. Gender and age comparisons are provided for some of the data. Tables and maps of selected data are included.

Employer Health Costs In a Global Economy

Source: Len Nichols, Sarah Axeen, New America Foundation, May 2008

Although most Americans get health insurance through their employers, business leaders are increasingly united in their belief that rising health care costs threaten America’s competitiveness in the global economy. Business support for comprehensive health reform has been growing as a result.

However, economists generally believe that it is workers — rather than employers — who pay for health care through lower wages. Although this proposition may hold true in the long run, employers face a variety of constraints that may make it difficult for them to fully shift health costs in the short run.

Health care costs would not burden firms if they could be shifted to consumers through higher prices. But with globalization and increased competition in international markets, this is not feasible. If employers cannot fully shift health costs onto workers or into prices, then how much they pay matters.

As a percentage of payroll, the employer cost of health benefits has exploded over the past few decades. In addition, employer health costs for manufacturing firms in the United States, $2.38 per worker per hour, were much higher than the foreign trade-weighted average of $0.96 per worker per hour in 2005. Employer health costs make the United States less competitive than it could otherwise be.
See also:
Policy Paper: Employer Health Costs in a Global Economy
Issue Brief: Employer Health Care Burden

Towards Shared Recovery: Congress Must Do More to Reverse the Recession

Source: Prepared for the Emergency Campaign for America’s Priorities (ECAP) by the Coalition on Human Needs, April 11, 2008

A new report by the Coalition on Human Needs, titled “Towards Shared Recovery: Congress Must Do More to Reverse the Recession,” outlines a plan to restore the nation’s economic health and help low income people in need of assistance. In addition, more than 80 organizations have signed a letter urging Congress to quickly enact measures that will effectively counter the recession and stimulate the economy.

Greening the Economy: A Climate Change and Jobs Strategy That Works for All

Source: AFL-CIO Executive Council statement, March 04, 2008

A Green Economy should be tied to the goal of improving workers’ rights, fair trade rules, and rebuilding manufacturing with full employment goals.

There needs to be strong domestic investment to capture new green technologies for export.

We need to cut green house emissions from existing coal and other fossil fuels, while ramping up renewable energy, energy efficiency, advanced auto and other green technology.

Public policy should concentrate on building the full domestic supply chain in green technology, including upgrading training to create a supply of trained employees for new green industries.

See also:

Greener Pathways: Jobs and Workforce Development in the Clean Energy Economy

Source: Apollo in association with the Center on Wisconsin Strategy and the Workforce Alliance.

Good Buildings, Better Schools: An Economic Stimulus Opportunity With Long-Term Benefits

Source: Mary Filardo, EPI Briefing Paper, April 29, 2008

From the summary:
The nation’s 97,000 public school buildings comprise an estimated 6.6 billion square feet of space on over 1 million acres of land. And while states and local communities invested over $500 billion in K-12 school building improvements from 1995 to 2004, considerable additional investments are needed to ensure that the nation’s public schools are healthy, safe, environmentally sound, and built and maintained to support a high-quality education.

Today, many of the nation’s schools face the combined challenges of deteriorating conditions, out-of date design, and changing utilization pressures (including intense overcrowding in some communities and rapidly declining enrollments in others). These combined deficiencies impair the quality of teaching and learning and contribute to health and safety problems for staff and students. Building design and facility conditions have also been associated with teacher motivation and student achievement.
See also:
Press release

Understanding Stagflation and the Risk of Its Recurrence

Source: Congressional Research Service (via Open CRS)

The slowing of economic growth and the rising rate of inflation in early 2008 have given rise to concerns that the U.S. economy is at risk of an episode of stagflation. Stagflation describes an economy that is characterized by high rates of both unemployment and inflation. The term came into popular use in the 1970s to describe the economy at that time. The unemployment rate reached 9.0% in May 1975 and a high of 10.8% in November 1982. The rate of consumer price inflation reached 12.2% for the 12-month period ending in November 1974, and 14.6% for the 12-month period ending in May 1980. Inflation is currently about 4% and the unemployment rate is near 5%, both well below the rates in the 1970s that were cause for alarm. Nonetheless, higher oil prices and turmoil in financial markets have led some to warn that stagflation may be in our future.

The key to understanding the nature of stagflation is the natural rate of unemployment. That is the lowest rate of unemployment consistent with a stable rate of inflation. Below that rate, inflation tends to accelerate. In the view of the natural rate model, unemployment and inflation rates may be relatively high at the same time, and they may even rise simultaneously for a time, particularly if inflation and the natural rate of unemployment are rising at the same time. What is unlikely to happen, however, is for the unemployment rate to be high and for the inflation rate to continue accelerating. If the unemployment rate is above the natural rate, then cooling labor and product markets would be likely to reduce upward pressure on wages and prices. Stagflation in the 1970s coincided with two large “oil shocks.”

A large increase in the price of oil can have macroeconomic consequences in terms of higher inflation, higher unemployment, and lower output. Both the inflation and output effects of energy shocks are temporary, however. Once prices adjust, the economy returns to full employment and its sustainable growth path. It is not the level of energy prices that affects economic growth and inflation, but rather the change in energy prices. Thus, if policymakers are concerned with the effect of energy prices on output and inflation, they should focus more on rising energy prices than “high” energy prices, even if the high prices are permanent. Although stagflation is understood to be high rates of both inflation and unemployment, it is not clear how high those rates have to be to merit the designation. Whether or not rates less than those observed in the 1970s constitute stagflation may be a subjective matter.

Recent unemployment and inflation rates are not nearly as high as they were in the 1970s. Some economists, however, fear that the recent expansion in monetary and fiscal policy, at a time when unemployment is low but rising and energy prices are rising, could lead to a new bout of stagflation in the near future. Although policy may not be able to prevent episodes of stagflation from occurring, there may be enough understanding of the underlying causes to avoid making conditions substantially worse.

Full Report (PDF; 148 KB)

Food Price Inflation: Causes and Impacts

Source: Congressional Research Service (via OpenCRS)

U.S. food prices rose 4% in 2007 and are expected to gain 3.5% to 4.5% in 2008. Higher farm commodity prices and energy costs are the leading factors behind higher food prices. Farm commodity prices have surged because (1) demand for corn for ethanol is competing with food and feed for acreage; (2) global food grain and oilseed supplies are low due to poor harvests; (3) the weak dollar has increased U.S. exports; (4) rising incomes in large, rapidly emerging economies have changed eating habits; and (5) input costs have increased. Higher energy costs increase transportation, processing, and retail costs. Although the cost of commodities such as corn or wheat are a small part of the final retail price of most food products, they have risen enough to have an impact on retail prices. Generally, price changes at the farm level have a diminished impact on retail prices, especially for highly processed products. The impact of higher food prices on U.S. households varies according to income. Lower-income households spend a greater portion of their income on food and feel price hikes more acutely than high-income families. Higher food costs impact domestic food assistance efforts in numerous ways depending on whether benefits are indexed, enrollments are limited, or additional funds are made available. Higher food and transportation costs also reduce the impact of U.S. contributions of food aid under current budget constraints.

Full Report (PDF; 72 KB)

A Feeble Recovery – The fundamental economic weaknesses of the 2001-07 expansion

Source: L. Josh Bivens and John Irons, Economic Policy Institute, Briefing Paper #214, May 1, 2008

Evidence is mounting that the U.S. economy is in a recession. If this is the case, a complete business cycle from 2001 through the end of 2007 (or perhaps the start of 2008) is now on the books, and the economic performance of the current decade can be held up in comparison to that of past business cycles. By almost all measures, the most recent expansion was the worst since WWII.

A variety of recent economic data now show a pattern consistent with the start of a recession. Since 1951, three consecutive months of job declines have always been signals of a recession; the U.S. employment rate declined for the first three months of 2008. Furthermore, the unemployment rate rose from 4.4% in March 2007 to 5.1% in March 2008.