Category Archives: Economy

Temporary Layoffs during the Great Recession

Source: Erica L. Groshen, Federal Reserve Bank of New York, Liberty Street Economics, April 6, 2011

In this post, I show that despite the depth of the Great Recession, U.S. employers did not use temporary layoffs much to cut costs. Just as they did during the previous two recessions, when firms laid workers off, they usually severed ties completely. This prevalence of permanent layoffs during the recession could slow the employment rebound over the coming months. It also raises questions about why the behavior of employers during recessions has changed.

Unions Make the Middle Class

Source: David Madland, Karla Walter, Nick Bunker,Center for American Progress Action Fund, American Worker Project, April 2011

From the summary:
Unions give workers a greater voice not only by promoting political participation among all Americans–ensuring that more of the middle class vote and get involved in politics–but also by being an advocate on behalf of the middle class in the daily, inner-workings of government and politics.
See also:
Interactive Map
Introduction and summary

How State Tax Policy Responds to Economic Recessions

Source: Ron Snell, National Conference of State Legislatures, NCSL Fiscal Brief, January 5, 2011

From the summary:
This report examines state tax policy in response to national recessions and recoveries from 1988 to the present. It tracks changes in three major state taxes, the personal income tax (PIT), the general sales tax (GST) and the corporate income tax (CIT) as the United States has cycled through recession and recovery. This introduction explains state budget and tax practices that provide the background for the discussion that follows. Three subsequent sections examine state practices regarding the PIT, GST and CIT in the course of the business cycle. An appendix addresses methodological issues.

This report includes:
* A general introduction of how state tax policy responds to economic recessions.
* Why year-end balances fall before the beginning and after the end of a recession.
* Personal income tax policy changes and recessions.
* General sales tax policy changes and recessions.
* Corporate income tax policy changes and recessions.
* A discussion of methodology.

Help on the Horizon: How the Recession Has Left Millions of Workers Without Health Insurance, and How Health Reform Will Bring Relief–Findings from The Commonwealth Fund Biennial Health Insurance Survey of 2010

Source: Sara R. Collins, Michelle M. Doty, Ruth Robertson, and Tracy Garber, Commonwealth Fund, March 2011

From the summary:
Using data from The Commonwealth Biennial Health Insurance Survey of 2010 and prior years, this report examines the effect of the recession on the health insurance coverage of adults between the ages of 19 and 64 and the implications for both their finances and their access to health care. The survey of 3,033 adults, conducted by Princeton Survey Research Associates International from July 2010 to November 2010, finds that in the last two years a majority of men and women who lost a job that had health benefits became uninsured. Adults who sought coverage on the individual insurance market over the past three years struggled to find plans they could afford and many were charged higher premiums, had a health condition excluded from their coverage, or were denied coverage altogether because of a preexisting condition. Meanwhile, Americans with health insurance had higher deductibles and consequently greater exposure to medical costs. And millions were struggling to pay medical bills, facing cost-related barriers to getting the care they need, or skipping or delaying needed care, including prescription medications, because of the cost.

Governors are Proposing Further Deep Cuts in Services, Likely Harming Their Economies / Less-Harmful Alternatives Include Revenue Increases and Rainy Day Funds

Source: Michael Leachman, Erica Williams and Nicholas Johnson, Center on Budget and Policy Priorities, March 21, 2011

All of the 48 states releasing initial budget proposals for fiscal year 2012 (which begins July 1 in most states) have done so, and for the fourth year in a row, these budgets propose deep cuts in education, health care, and other important public services — in many cases, deeper than previous cuts. These cuts will delay the nation’s economic recovery and undermine efforts to create jobs.

– Nearly all states are proposing to spend less money than they spent in 2008 (after inflation), even though the cost of providing services will be higher
– The majority of states — at least 39 of 48 — are proposing major cuts in core public services
– Seven governors are balancing deep spending cuts with significant revenue-raising measures
– At the same time, seven governors facing shortfalls are proposing large tax cuts, mostly for corporations; the loss of revenue from these tax cuts in 2012 means that those states would have to enact even deeper spending cuts to balance their budgets
– Eight states with budget shortfalls still have large reserves that they could use to reduce the need for deep spending cuts
See also:
Governors’ Budgets Are Out, and They Aren’t Pretty

Reforming the United States’ Economic Model after the Failure of Unfettered Financial Capitalism

Source: Richard Freeman, Chicago-Kent Law Review, Vol. 85 no. 2, 2010

From the abstract:
This Article is based on the 2009 Kenneth M. Piper Lecture at the Chicago-Kent College of Law. The 2008-2009 financial meltdown and ensuing economic developments have shown three things about modern capitalism: First, that unfettered financial markets remain the Achilles heel of capitalism with the capability of destroying economic stability and bringing misery to all. Second, that high-powered incentives paid to “talent” in finance are a fundamental cause of the excessive risk-taking, chicanery, and financial fraud that contributes to instability. Without a new compensation system that rewards banking and finance for contributing to sustainable economic progress rather than for economic rent-seeking and a renewed regulatory system that punishes chicanery and financial crime and near-crime, there is unlikely to be any change in the behavior of the financial world. And finally, that in the wake of the implosion of laissez faire finance, labor and allied groups have to participate in rewriting the rules and regulations governing banking and finance so that finance serves the real economy rather than the reverse. Accordingly, if Wall Street insiders continue to make the key policy decisions alone, banking and finance will remain a loose cannon on the good ship Capitalism, sure to crash the ship yet again.

Economic Report of the President (2011)

Source: Executive Office of the President, Council of Economic Advisers, February 2011

The Economic Report of the President is an annual report written by the Chairman of the Council of Economic Advisers. It overviews the nation’s economic progress using text and extensive data appendices.

Small businesses, the foundation of the American economy, are critical to economic growth and job creation. Entrepreneurs, in part because of their reliance on commercial banks, were especially hard hit during the financial crisis and subsequent recession. A swift and comprehensive policy response was thus essential. The Administration has advanced important initiatives to lower taxes and make health insurance more affordable for small businesses, to increase their access to credit and capital, and to provide stronger incentives for job creation and investment. Taken together, these steps have stabilized the small business economy and placed it on a stronger footing for future growth.

States Cutting Jobs, Hurting Economic Recovery

Source: Center on Budget and Policy Priorities, February 7, 2011

Cuts in services at the state and local level continue to act as a drag on economic growth, and will continue to do so in the coming year – unless there is a significant course correction by policymakers.

Friday’s jobs report from the Bureau of Labor Statistic provides the latest evidence. BLS estimates that states, cities, counties, school districts, and other units of government cut another 12,000 jobs in December, bringing to 426,000 the number of jobs lost since August 2008. Here’s the breakdown:

* Local school districts have cut 154,000 education jobs since August 2008.
* Cities, counties, and other local governments have cut 202,000 jobs.
* State governments have cut 69,000 jobs.

State of Working America 2011

Source: Economic Policy Institute, February 14, 2011

The State of Working America has been the Economic Policy Institute’s flagship publication since 1988. The comprehensive economic data that has in the past been in book form is now available on this Web site for the first time in a searchable and highly user-friendly format. The data will be more accessible than ever before to academics, policy makers, the media, and the public. Unlike in the past, this year’s The State of Working America will not be published in book form (the next biennial print edition will appear in January 2013).

The State of Working America Web site presents data in eight broad issue areas: income, economic mobility, wages, jobs, wealth, poverty, health, and international comparisons. Providing a comprehensive examination of critical trends and economic measurements, the data on this site is presented to give readers a deep understanding of the effect of the economy on low- and middle-income American workers and their families.