Category Archives: Economy

Why Retaining Older Women in the Workforce Will Help the U.S. Economy

Source: Amy Lui Abel and Diane Lim, University of Pennsylvania, Wharton School, Knowledge@Wharton, June 6, 2018

In this opinion piece, researchers Amy Lui Abel and Diane Lim of The Conference Board explain why demographic and economic trends provide an opportunity for older women to expand their role in the labor market. Several female-dominated occupations — especially in health care services — face shortages that will only grow. But given the unique needs and circumstances of older women, realizing their full economic contribution will hinge on employers providing them with more flexible work environments. If companies do this, the greying of America could become an opportunity rather than a threat.

FAQ: US state and local government exposure to rising trade tension

Source: Sunny Zhu, Patrick Liberatore, Ted Hampton, Denise Rappmund, Eric Hoffmann, Leonard Jones, Moody’s, Sector In-Depth, May 24, 2018
(subscription required)

Rising trade tension represents a major risk to the US and global economic outlook. Since 2017, the United States (Aaa stable) has withdrawn from the Trans-Pacific Partnership (TPP) and imposed tariffs on washing machines, solar panels, steel, and aluminum. The US continues to renegotiate the North American Free Trade Agreement (NAFTA) with Canada (Aaa stable) and Mexico (A3 stable), and has threatened substantial tariffs against China (A1 stable) following a US Trade Representative investigation. Despite the recent softening of the trade rhetoric between the US and China, risks of recurring trade tension remain as negotiations on specific measures proceed. ….

Poor People’s Campaign

Source: Economic Policy Institute, 2018

Fifty years ago, Martin Luther King, Jr. and the Southern Christian Leadership Conference organized the Poor People’s Campaign to demand economic justice and human rights for all Americans. On the 50th anniversary of the Poor People’s Campaign, EPI is producing a series of snapshots illuminating why poverty persists and how public policy has helped or fallen short in the goal of eradicating poverty.

Articles include:
50 years after the Poor People’s Campaign, poverty persists because of a stingy safety net and a dysfunctional labor market
Source: Elise Gould and Jessica Schieder, Economic Policy Institute, Economic Snapshot, May 24, 2018

Poverty persists 50 years after the Poor People’s Campaign: Black poverty rates are more than twice as high as white poverty rates
Source: Elise Gould and Jessica Schieder, Economic Policy Institute, Economic Snapshot, May 17, 2018

Is the U.S. Economy Growing Faster? Can It Grow Faster?

Source: Marc Labonte, Jeffrey M. Stupak, Congressional Research Service, CRS Insight, IN10897, May 8, 2018

The current economic expansion has been characterized by slower economic growth than the preceding 10 expansions. At 2.2%, average annual growth in this expansion has been slower than in the preceding 10 expansions (see Figure 1). President Trump has pledged to increase growth to 3%, an increase of 0.8 percentage points. This Insight examines recent economic growth and factors that could foster or hinder a higher rate in the future. ….

Related:
The Budget and Economic Outlook: 2018 to 2028
Source: Congressional Budget Office, publication no. 53651, April 2018

In CBO’s baseline projections, which incorporate the assumption that current laws governing taxes and spending generally remain unchanged, the federal budget deficit grows substantially over the next few years. Later on, between 2023 and 2028, it stabilizes in relation to the size of the economy, though at a high level by historical standards.

As a result, federal debt is projected to be on a steadily rising trajectory throughout the coming decade. Debt held by the public, which has doubled in the past 10 years as a percentage of gross domestic product (GDP), approaches 100 percent of GDP by 2028 in CBO’s projections. That amount is far greater than the debt in any year since just after World War II. Moreover, if lawmakers changed current law to maintain certain current policies—preventing a significant increase in individual income taxes in 2026 and drops in funding for defense and nondefense discretionary programs in 2020, for example—the result would be even larger increases in debt.

The Federal Budget: Overview and Issues for FY2019 and Beyond

Source: Grant A. Driessen, Congressional Research Service, CRS Report, R45202, May 21, 2018

The federal budget is a central component of the congressional “power of the purse.” Each fiscal year, Congress and the President engage in a number of activities that influence short- and long-run revenue and expenditure trends. This report offers context for the current budget debate and tracks legislative events related to the federal budget. …. Trends resulting from current federal fiscal policies are generally thought by economists to be unsustainable in the long term. Projections suggest that achieving a sustainable long-term trajectory for the federal budget would require deficit reduction. Reductions in deficits could be accomplished through revenue increases, spending reductions, or some combination of the two. ….

As Wisconsin’s and Minnesota’s lawmakers took divergent paths, so did their economies – Since 2010, Minnesota’s economy has performed far better for working families than Wisconsin’s

Source: David Cooper, Economic Policy Institute, May 8, 2018

From the summary:
Since the 2010 election of Governor Scott Walker in Wisconsin and Governor Mark Dayton in Minnesota, lawmakers in these two neighboring states have enacted vastly different policy agendas. Governor Walker and the Wisconsin state legislature have pursued a highly conservative agenda centered on cutting taxes, shrinking government, and weakening unions. In contrast, Minnesota under Governor Dayton has enacted a slate of progressive priorities: raising the minimum wage, strengthening safety net programs and labor standards, and boosting public investments in infrastructure and education, financed through higher taxes (largely on the wealthy).

Because of the proximity and many similarities of these two states, comparing economic performance in the Badger State (WI) versus the Gopher State (MN) provides a compelling case study for assessing which agenda leads to better outcomes for working people and their families. Now, seven years removed from when each governor took office, there is ample data to assess which state’s economy—and by extension, which set of policies—delivered more for the welfare of its residents. The results could not be more clear: by virtually every available measure, Minnesota’s recovery has outperformed Wisconsin’s.

The following report describes how Minnesota’s and Wisconsin’s economies have performed since 2010 on a host of key dimensions, and discusses the policy decisions that influenced or drove those outcomes.

Key findings include:
– Job growth since December 2010 has been markedly stronger in Minnesota than Wisconsin, with Minnesota experiencing 11.0 percent growth in total nonfarm employment, compared with only 7.9 percent growth in Wisconsin. Minnesota’s job growth was better than Wisconsin’s in the overall private sector (12.5 percent vs. 9.7 percent) and in higher-wage industries, such as construction (38.6 percent vs. 26.0 percent) and education and health care (17.3 percent vs. 11.0 percent).

– From 2010 to 2017, wages grew faster in Minnesota than in Wisconsin at every decile in the wage distribution. Low-wage workers experienced much stronger growth in Minnesota than Wisconsin, with inflation-adjusted wages at the 10th and 20th percentile rising by 8.6 percent and 9.7 percent, respectively, in Minnesota vs. 6.3 percent and 6.4 percent in Wisconsin.

– Gender wage gaps also shrank more in Minnesota than in Wisconsin. From 2010 to 2017, women’s median wage as a share of men’s median wage rose by 3.0 percentage points in Minnesota, and by 1.5 percentage points in Wisconsin.

– Median household income in Minnesota grew by 7.2 percent from 2010 to 2016. In Wisconsin, it grew by 5.1 percent over the same period. Median family income exhibited a similar pattern, growing 8.5 percent in Minnesota compared with 6.4 percent in Wisconsin.

– Minnesota made greater progress than Wisconsin in reducing overall poverty, child poverty, and poverty as measured under the Census Bureau’s Supplemental Poverty Measure. As of 2016, the overall poverty rate in Wisconsin as measured in the American Community Survey (11.8 percent) was still roughly as high as the poverty rate in Minnesota at its peak in the wake of the Great Recession (11.9 percent, in 2011).

– Minnesota residents were more likely to have health insurance than their counterparts in Wisconsin, with stronger insurance take-up of both public and private health insurance since 2010.

– From 2010 to 2017, Minnesota has had stronger overall economic growth (12.8 percent vs. 10.1 percent), stronger growth per worker (3.4 percent vs. 2.7 percent), and stronger population growth (5.1 percent vs. 1.9 percent) than Wisconsin. In fact, over the whole period—as well as in the most recent year—more people have been moving out of Wisconsin to other states than have been moving in from elsewhere in the U.S. The same is not true of Minnesota.

Status threat, not economic hardship, explains the 2016 presidential vote

Source: Diana C. Mutz (PNAS), published ahead of print April 23, 2018

From the abstract:
This study evaluates evidence pertaining to popular narratives explaining the American public’s support for Donald J. Trump in the 2016 presidential election. First, using unique representative probability samples of the American public, tracking the same individuals from 2012 to 2016, I examine the “left behind” thesis (that is, the theory that those who lost jobs or experienced stagnant wages due to the loss of manufacturing jobs punished the incumbent party for their economic misfortunes). Second, I consider the possibility that status threat felt by the dwindling proportion of traditionally high-status Americans (i.e., whites, Christians, and men) as well as by those who perceive America’s global dominance as threatened combined to increase support for the candidate who emphasized reestablishing status hierarchies of the past. Results do not support an interpretation of the election based on pocketbook economic concerns. Instead, the shorter relative distance of people’s own views from the Republican candidate on trade and China corresponded to greater mass support for Trump in 2016 relative to Mitt Romney in 2012. Candidate preferences in 2016 reflected increasing anxiety among high-status groups rather than complaints about past treatment among low-status groups. Both growing domestic racial diversity and globalization contributed to a sense that white Americans are under siege by these engines of change.

Significance:
Support for Donald J. Trump in the 2016 election was widely attributed to citizens who were “left behind” economically. These claims were based on the strong cross-sectional relationship between Trump support and lacking a college education. Using a representative panel from 2012 to 2016, I find that change in financial wellbeing had little impact on candidate preference. Instead, changing preferences were related to changes in the party’s positions on issues related to American global dominance and the rise of a majority–minority America: issues that threaten white Americans’ sense of dominant group status. Results highlight the importance of looking beyond theories emphasizing changes in issue salience to better understand the meaning of election outcomes when public preferences and candidates’ positions are changing.

Improving Economic Development Incentives

Source: Timothy Bartik, W.E. Upjohn Institute, 2018

From the Pew Charitable Trusts’ summary:
State and local governments commonly use economic development incentives such as tax credits and exemptions to try to boost their economies by encouraging businesses to relocate or expand within their borders. But such incentives can represent major budget commitments, costing these governments tens of billions of dollars every year. To make the best decisions about which policies to pursue, policymakers need reliable, high-quality tools and methods for evaluating their incentives and ensuring that they yield the intended results.

New research by Timothy J. Bartik of the W.E. Upjohn Institute for Employment Research offers practical guidance. In a recently released report, “Improving Economic Development Incentives,” the institute’s senior economist examines how policy design choices influence the economic impact of incentives and draws some conclusions to help state and local leaders assess and improve their policies.