Category Archives: Economy

Poverty and Education: Finding the Way Forward

Source: Richard J. Coley, Bruce Baker, Educational Testing Service (ETS), ETS Center for Research on Human Capital and Education, July 2013

From the press release:
While the United States is among the 35 richest countries in the world, it also holds the distinction of ranking second highest in child poverty, according to a new report from Educational Testing Service (ETS). Such poverty comes with a price — $500 billion per year in lower earnings, less taxes paid, and other long-term economic and educational outcomes. … [The report] provides an overview of how poverty is measured, describe how various levels of government attempt to address poverty through education, and review the relationship between poverty and student outcomes. The report also offers seven recommendations that are necessary to ensure that the public education system prepares every student to be successful in an increasingly competitive world…

…According to the report, 46.2 million Americans (15 percent of the population) were in poverty in 2011. Other data show:
– While White Americans comprise the largest number of people in poverty, the poverty rate for Hispanics and Blacks is significantly higher.
– Twenty-two percent of the nation’s children are in poverty.
– While 6 percent of married-couple families were poor, the poverty rate for families headed by a single female was 31 percent.
– 2.8 million children were in “extreme poverty,” surviving on less than $2 or less per person per day in a given month….

….The report documents the negative effects of poverty on later life outcomes. For example:
– Children growing up in poverty complete less schooling, work and earn less as adults, are more likely to receive public assistance, and have poorer health.
– Boys growing up in poverty are more likely to be arrested as adults.
– Girls growing up in poverty are more likely to give birth outside of marriage.
– Costs associated with child poverty are estimated to total about $500 billion per year….

Capitalism on Trial: Explorations in the Tradition of Thomas E. Weisskopf

Source: Jeannette Wicks-Lim and Robert Pollin (eds.), Political Economy Research Institute (PERI), July 2013
(purchase required)

From the abstract:
In Capitalism on Trial, edited by Jeannette Wicks-Lim and Robert Pollin twenty-nine economists reflect on and explore the range of Thomas Weisskopf’s research. Chapters cover the economics of developing countries, U.S. imperialism, Marxian crisis theory, contemporary economic history and institutional development, affirmative action, and the potential of socialism as an alternative to capitalism. In addition, the book includes a chapter by Weisskopf in which he reflects on his career in economics and the state of the U.S. and global economies.
See also:
Download the working papers from the Weisskopf Festschrift Conference

Working papers include:
Social Structures of Accumulation, the Rate of Profit, and Economic Crises (Thomas Weisskopf Festschrift Conference Paper) – David M. Kotz
How Big Is Too Big? On the Social Efficiency of the Financial Sector in the United States (Thomas Weisskopf Festschrift Conference Paper) – Gerald Epstein and James Crotty
Confronting Those Affirmative Action Grumbles (Thomas Weisskopf Festschrift Conference Paper) – William Darity
Screening for Honesty and Motivation in the Workplace: What Can Affirmative Action Do? (Thomas Weisskopf Festschrift Conference Paper) – Elaine McCrate
A Stimulus for Affirmative Action? (Thomas Weisskopf Festschrift Conference Paper) – Jeannette Wicks-Lim
The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okun’s Law (Thomas Weisskopf Festschrift Conference Paper) – Michael Reich
Reducing Growth to Achieve Environmental Sustainability: The Role of Work Hours (Thomas Weisskopf Festschrift Conference Paper) – Kyle Knight, Eugene A. Rosa, Juliet Schor
The Wealth-Power Connection (Thomas Weisskopf Festschrift Conference Paper) – Arthur MacEwan
The Rise and Decline of Patriarchal Capitalism (Thomas Weisskopf Festschrift Conference Paper) – Nancy Folbre
Economic Growth: The Great Slowdown (1980-2000) and Recovery (2000-2010) (Thomas Weisskopf Festschrift Conference Paper) – Mark Weisbrot

The United Front Against Austerity

Source: United Front Against Austerity, 2013

From about UFAA:
…Occupy Wall Street named the right enemy, but lacked the methods and will to defeat them. Our methods are simple: 1) A United Front representing a defined set of broadly popular demands; 2) A Program of economic demands, starting with a 1% Wall Street Sales Tax and Nationalization of the Federal Reserve System; 3) Leadership and an Organization that continually develop as the United Front grows.

Who will be the victims of this crisis – poor and working families, or the financial parasites who stole our jobs, our homes, our government and our future? The choice is yours. The United Front Against Austerity has the methods, program and resources you need. Spread the word – No Austerity, Make Wall Street Pay!

Pages include:
Organizing Reports
Articles and Podcasts
Meetups
Downloads

Programs include:
1. Emergency Measures
2. National Banking
3. Economic Protections
4. Economic Rights

In Climbing Income Ladder, Location Matters

Source: David Leonhardt, New York Times, July 22, 2013

A study finds the odds of rising to another income level are notably low in certain cities, like Atlanta and Charlotte, and much higher in New York and Boston…. The study — based on millions of anonymous earnings records and being released this week by a team of top academic economists — is the first with enough data to compare upward mobility across metropolitan areas. These comparisons provide some of the most powerful evidence so far about the factors that seem to drive people’s chances of rising beyond the station of their birth, including education, family structure and the economic layout of metropolitan areas. Climbing the income ladder occurs less often in the Southeast and industrial Midwest… By contrast, some of the highest rates occur in the Northeast, Great Plains and West …The team of researchers initially analyzed an enormous database of earnings records to study tax policy, hypothesizing that different local and state tax breaks might affect intergenerational mobility. … he researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region. But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods. …
Related:
The Economic Impacts of Tax Expenditures: Evidence From Spatial Variation Across the U.S.
Source: Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, Harvard University, UC Berkeley and NBER, Revised Draft: July 2013

From the abstract:
This paper develops a framework to study the effects of tax expenditures on intergenerational mobility using spatial variation in tax expenditures across the United States. We measure intergenerational mobility at the local (census commuting zone) level based on the correlation between parents’ and children’s earnings. We show that the level of local tax expenditures (as a percentage of AGI) is positively correlated with intergenerational mobility and that this correlation is robust to introducing controls for local area characteristics. To understand the mechanisms driving this correlation, we analyze the largest tax expenditures in greater detail. We find that the level and the progressivity of state income taxes are positively correlated with intergenerational mobility. Mortgage interest deductions are also positively related to intergenerational mobility. Finally, we find significant positive correlations between state EITC policy and intergenerational mobility. We conclude by discussing other applications of this methodology to evaluate the net benefits of tax expenditures.

Upward Mobility
Source: Tom Ashbrook, On Point, July 23, 2013
(audio)

County gets creative with resourceful development

Source: Christopher Johnson, County News, Vol. 45 No. 14, July 15, 2013

​Envisioning ways to create jobs and revitalize businesses in communities usually doesn’t involve stormwater or sewage projects. However, planners in Martin County, Fla. realized that a stormwater and sewer project could spur private investment that would not only provide vital infrastructure but also create jobs and revitalize a neighborhood.

…Its goal was to increase the availability of basic sewer services in the county’s Golden Gate neighborhood, which relied heavily on septic tanks. The construction required a near-complete replacement of the area roads, so the CRA conducted extensive public outreach to find out improvements the residents would want to see incorporated into a new design…. The finished product included roads featuring wider sidewalks, pedestrian medians, landscaping and additional on-street parking. The new features made the streets better to accommodate everyone using the road, including pedestrians of all ages and abilities, cyclists, transit users and drivers….The redesigned streetscape is intended to draw private reinvestment and business activity to this underutilized area, while improving local infrastructure and stormwater treatment capabilities….The BCD project was made possible through a Community Development Block Grant (CDBG). This provides communities around the country with resources to address a wide range of unique community development needs.

A Bagful of Cash: How the U.S. Chamber of Commerce Orchestrated a Corporate Takeover of Government

Source: Carl Gibson, ShuttheChamber.org, July 16, 2013

From the abstract:
The US Chamber of Commerce– a 101 year-old organization formed as corporations’ first union—is the chief agent behind Congress’ kowtowing to corporate interests, the Supreme Court’s favorability to corporations in its rulings, and presidents of both parties’ insistence on accommodating the wishes of multinational corporations at the expense of working-class people all over the world. This report outlines how the Chamber first formed, their blueprint for ultimate success as revealed in the confidential Powell Memo, how that blueprint has been realized in the 40 years since its writing, and the devastating effects of that agenda on small business. Despite the US Chamber purporting to be pro-jobs, pro-small business, and pro-growth, they have consistently lobbied for policies that kill jobs, stall economic growth, and take competitive advantages away from small businesses to enrich their corporate members. The Chamber of Commerce’s unchecked power over government will only continue to worsen unless the American people build a movement to mobilize against them.

The Inequality of Declining Wages During the Recovery

Source: National Employment Law Project, Fact Sheet, July 2013

A previous NELP analysis found that while job losses during the recession were heavily concentrated in mid-wage occupations, the early recovery was led by employment growth in lower-paying occupations. This fact sheet turns from analyzing employment to analyzing occupational wage trends during the recovery to date. For the period 2009 to 2012 we find the following:
– Averaged across all occupations, real median hourly wages declined by 2.8 percent.
– Lower-wage and mid-wage occupations saw significantly bigger declines in their real median wages than did higher wage occupations.
– Real median wages fell by 5.0 percent or more in five of the top ten lower-wage occupations: restaurant cooks, food preparation workers, home health aides, personal care aides, and maids and housekeepers

State Economic Monitor: Quarterly Appraisal of State Economic Conditions

Source: Benjamin H. Harris, Yuri Shadunsky, Tax Policy Center, Issue 1, July 2013

From the abstract:
The inaugural edition of the state economic monitor reviews the health of various aspects of state economies, including employment, housing, state finances, and economic growth. This monitor documents key economic conditions through June 2013 in all 50 states, and also serves as a valuable collection of various state-level economic data. One key finding in this monitor is the remarkable breath of the economic recovery, with all but six states showing gains over the past three months and past year in indices of economic activity.

Slashed Public Payrolls Make the Unemployment Problem Worse

Source: Center for Effective Government, June 18, 2013

…Although the private sector is recovering, recent government policies have not been helping. The jobs situation would be substantially better if local, state, and federal governments were not cutting their payrolls. Since the start of the recession, about 528,000 government jobs have been eliminated, and a smaller percentage of the employed workforce works in government. The public sector added some jobs during the official period of the recession, but cut back more steeply since it technically ended. “Since the recovery began in June 2009, the public sector has lost nearly three-quarters-of-a-million jobs (737,000),” the Economic Policy Institute’s Heidi Shierholz pointed out. “These losses are an enormous drain on the recovery.”

The crunch in the public sector job market is exacerbating the substantial employment needs in the U.S. that are not being met. There are 11.8 million unemployed people; some 4.4 million (37 percent) have been searching for work for more than six months. Some 7.9 million are “involuntary part-time workers” – meaning they work part-time but want full-time work – and 780,000 have stopped searching for work altogether; these people are not counted in the official 7.6 percent unemployment rate….

…There is a legitimate debate about the best way government can create jobs – whether indirectly through greater spending on infrastructure and other investments that increase private sector hiring or through direct public sector hiring (school teachers, clean-up crews, etc.) – but in the last few years, the nation has not been having that debate. Instead, austerity-oriented politicians have been entirely focused on cutting down the size of government and immediate deficit reduction….While the economy has begun to slowly recover in the private sector, reductions in public sector spending over the last three years have held back growth and allowed unemployment to remain unconscionably high. The conversation should change. One of the best things we could do to reverse course is to end the slash-and-burn approach to government so prevalent since 2010….

The Asset Price Meltdown and the Wealth of the Middle Class

Source: Edward N. Wolff, US2010 Project, May 2013

After rising sharply through 2007, the collapse of the stock market and the sudden collapse in home prices took and immense toll on the assets of the middle class. This report summarizes what happened and why.

The most telling finding is that median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969. moreover, inequality of net worth, after almost two decades of little movement, rose sharply between 2007 and 2010. Inequalities rose by income class, by race/ethnicity, and across age groups.

The middle class benefited from very rapid asset appreciation during the 2001-2007 period (6.0 percent per year). But the steep drop in asset prices during the recession, particularly housing, hit the middle class harder than more affluent Americans and was the main cause of increasing wealth inequality after 2007. Similar trends are found for racial and age inequalities. Blacks and Hispanics increased their net worth relative to whites during 2001-2007 as did young adults in relation to older Americans, mainly because so much of their assets were tied up in home ownership. But these gains were wiped out durung the recession.

Key findings:
– Median wealth plummeted over the years 2007-2010.
– Middle class debt exploded from 1983 to 2007, already creating a highly fragile middle class. The situation worsened during the Great Recession. As a result inequality of net worth, after almost two decades of little movement, rose sharply between 2007 and 2010.
– The racial and ethnic disparity in wealth widened considerably in the years between 2007 and 2010. Blacks and especially Hispanics lost in net worth and equity in their homes.
– Young households (under age 45) also were pummeled by the Great Recession, as their wealth declined sharply in both absolute terms and in comparison with other households.

Related:
The Asset Price Meltdown and the Wealth of the Middle Class
Source: Edward N. Wolff, National Bureau of Economic Research, NBER Working Paper No. 18559, November 2012