Thursday, February 24, 2011

Who are the job killers?

So much for Republican claims of promoting job growth.

In a report to investors, Goldman Sachs is cautioning about slower growth next year due to Republican-led efforts to trim spending.
The modest spending cuts we assume in our own budget forecast would lead to renewed fiscal drag. Since spending cuts could be enacted no earlier than next month, when the current fiscal year will be nearly half over, $25bn in cuts would require spending in the second half of FY2011 to be reduced by $50bn at an annual rate. Since the cut would be phased in abruptly, it could result in a drag on growth in Q2 by as much as one percentage point (pp), but would quickly fade over the next two quarters as spending stabilizes at a lower level, with little effect versus current policy on the rate of real GDP growth by year end.

The spending cut package that passed the House of Representatives would have a deeper effect. Under the House passed spending bill, the drag on GDP growth from federal fiscal policy would increase by 1.5pp to 2pp in Q2 and Q3 compared with current law.
In the current weak recovery, a percentage point of economic growth is the difference between job gains and job losses. The Republican plan could retard growth by more and over a longer period.

Rep. Boehner has already said that if federal jobs are lost, "so be it." Apparently, the same attitude applies to the country's job growth.

Wednesday, February 23, 2011

Sliming federal workers

Senators Claire McClaskill and Tom Coburn have decided to call out federal workers about their delinquent taxes.
While millions of Americans continue to send back portions of their hard earned wages to Washington, many federal employees are failing to contribute their share.

...In 2009, the Internal Revenue Service (IRS) found nearly 100,000 civilian federal employees were delinquent on their federal income taxes, owing over $1 billion in unpaid federal income taxes.

In response to this overwhelming problem, the senators have introduced legislation that would fire any federal employee who doesn't pay his or her taxes.

How bad exactly is this problem? There were 2.8 million federal employees at the end of 2009. If 100,000 were behind or short on their taxes, that would imply a delinquency rate of 3.5 percent (the figure is actually lower because the Senators have rounded their number of federal tax delinquents up).

How does this compare to the rest of the population? At the end of 2009, there were 236.9 million noninstitutionalized civilians aged 16 or older. Let's use this as the tax-owing population (this adds lots of teenagers and people with very low incomes who don't pay taxes but also omits the military and some institutionalized people who might owe taxes). The IRS reports that there were 13.2 million delinquent tax returns in 2009. Subtracting out the federal workers and their delinquent taxes, this translates to a non-federal delinquency rate of 5.6 percent.

So, federal employees were 37 percent less likely to be delinquent on their taxes than other Americans. For this, they have the privilege of being slimed by Senators McClaskill and Coburn.

We can do better with parental leave

Human Rights Watch, which usually focuses on human rights issues in other countries, has weighed in on family work supports in the U.S.
Around the world, countries have responded to the massive growth of women in the workforce over the past century by crafting public policies to help reconcile work and family obligations. These supports, which workers and employers in most countries have come to accept as standard and necessary for working families, include paid leave for new parents, flexible scheduling, breastfeeding and pumping accommodations, paid sick days that can be used for family care, and prohibitions on workplace discrimination based on family responsibilities. One of the most common work-family supports, paid maternity leave, is practically universal: academic research covering 190 countries shows that as of 2011, 178 countries guarantee paid maternity leave under national law. In nine of the 190 countries, the status of paid leave for new mothers was unclear. Just three countries definitively offer no legal guarantee of paid maternity leave: Papua New Guinea, Swaziland—and the United States.

This lack of paid leave under law in America is at odds with a workforce revolution in which female participation in paid labor skyrocketed over the past century, especially among those with young children. In the US more than 19 million families with children now have a mother as the primary or co-breadwinner, and 70 percent of children live in households in which all adults are in the labor force. Married women with children under age six were almost four times more likely to be in the paid workforce in 2008 as they were in 1950.

Yet US law provides only the most meager supports to enable workers to fulfill their work and family obligations, leaving the availability of such provisions largely up to employers’ generosity. The idealized notion is that private markets will foster such supports as employers compete for good workers. In reality, however, huge swaths of the workforce have no such supports, and there are enormous disparities in access.
Parental leave policies have not evolved much in the U.S. since the passage of the 1993 Family and Medical Leave Act (FMLA). The FMLA gave workers the right to 12 weeks of unpaid leave following the birth or adoption of a child or to care for a sick family member. The FMLA was recently updated to add care for service members and to apply to domestic partners.

The FMLA is limited in several ways. Besides only providing unpaid leave, the law also only applies to companies that have at least 50 employees and workers who have worked at least 12 months and for at least 1,250 hours for the company. About 30 percent of U.S. private sector jobs are in firms with fewer than 50 employees, meaning that a substantial fraction of workers are not covered by the meager benefits of the FMLA.

Even with those limitations, the FMLA is burdensome to companies who have to come up with strategies for temporarily replacing the services of a worker. Leave policies might be even more burdensome to small businesses. Paid leave would make these policies even more costly.

Somehow 178 other countries make this work. We hear a lot from conservatives about American Exceptionalism; however, here America only seems exceptional in its inability to support working families.

In the current political climate, universal paid leave doesn't seem to be in the cards. However, policymakers could take two modest steps forward.

The first step would be to make the right to unpaid leave universal by extending the FMLA to all employers, regardless of size. The costs to such an extension seem modest, especially in the present slack labor market where so many people are available to pick up temporary assignments. At the same time, the extension would level the playing field between firms, especially those small firms that already responsibly offer leave benefits.

An even more modest second step would be to create tax-deferred savings accounts for families to save and eventually pay for their own leave, if their employers don't offer this benefit. The accounts would work much the same way that IRAs or HSAs work with payments not being taxed until they are withdrawn from the accounts. The accounts would be portable, meaning that employees wouldn't be locked into a particular employer. At retirement, proceeds from the accounts could be transferred to IRAs or HSAs, so workers wouldn't face "use or lose" incentives.

A family that regularly put aside five percent of one of its earners' salaries would accumulate enough to cover a 12-week "paid" leave within five years. With the tax break, the up-front cost to the family might be much lower.

The policy would effectively create defined-contribution family leave benefits.

While the second step would be much more modest, look for howls of protest from businesses who would face the prospect of more workers actually being able to take the leaves they're entitled to. Look also to derisive cries of the "nanny state" from the Tea-party cranks. For any intellectually consistent conservative, however, support for HSAs or more generally personal responsibility should imply support for family leave accounts.

Helping families to finance their own family and medical leaves seems like a sound middle-of-the-road policy. Is America really so exceptional that it even rejects win-win solutions?

Monday, February 21, 2011

Wisconsin public workers already under-compensated

A new report from the Economic Policy Institute concludes that Wisconsin public employees are under-compensated.
Comparisons controlling for education, experience, organizational size, gender, race, ethnicity, citizenship, and disability reveal that employees of both state and local governments in Wisconsin earn less than comparable private sector employees. On an annual basis, full-time state and local government employees in Wisconsin are undercompensated by 8.2% compared with otherwise similar private sector workers. This compensation disadvantage is smaller but still significant when hours worked are factored in.
Conservatives love to point out that the average compensation for public workers typically exceeds that of private workers. This is no different in Wisconsin where the report indicates that full-time public workers cost their employers just over $63,000 per year on average compared to just under $62,000 for full-time private workers.

However, public workers tend to have significantly more education (the proportion of public workers with college degrees is double the proportion of private sector workers with degrees). Within education groups, the report finds that public sector employees in Wisconsin receive less compensation than private employees, except for those with less than a high school education.

The report also uses regression methods to adjust for other measurable differences between employees, including education, experience, gender, race, citizenship, and employer size. Once those controls are included, average annual compensation for public workers is 8.2 percent less than for comparable private workers. Average hourly compensation is 4.8 percent less.

Like many other states, Wisconsin faces serious and real budget problems. Difficult and painful choices are required. One problem, however, that Wisconsin does not face is over-compensated public employees. Describing them as such is misleading, and treating them as such will ultimately be self-defeating.

Monday, February 14, 2011

NC Republicans gaming the public

It hasn't taken long for NC's new Republican legislature to start wallowing in the sleaze. Last week, Republicans from the General Assembly used a state building to hold a closed-door meeting with video gambling lobbyists.
House Republicans, who for years have complained about government secrecy, took in a three-hour briefing Thursday from special interests and lobbyists advocating both sides of the video gambling issue.

But they shut the media out, saying the gathering in the Legislative Office Building was only for Republicans and their invited guests.
Okay, bad enough.

But guess who set up the closed door meeting, er, we should say "policy-committee caucus?" The News & Observer reports
The state lawmaker who led a closed-door committee meeting last week for House Republicans to hear from lobbyists and special interests on video gambling is, himself, in the gambling business.

Rep. Mike C. Stone, a Sanford Republican, owns a small grocery where customers can play a variety of sweepstakes games on four desktop computer terminals. The games mimic the spinning wheels of a slot machine. Until this weekend, customers could also take their chances on four video-poker-style stand-up machines that lined a wall near the canned vegetables.

Stone said he removed the video-poker-style machines Friday night after repeated phone calls from an N&O reporter.

State law currently prohibits "electronic machines and devices used for sweepstakes purposes" across North Carolina, the result of a high-profile ban passed last year that was the third attempt by lawmakers in the past decade to wipe out all forms of video gambling. A first offense is a misdemeanor, but repeated violations are felonies.
The News & Observer goes on to report that two of the pro-gaming speakers that Rep. Stone invited to the closed-door session had made personal donations to his last campaign.

To be clear, there are bipartisan advocates for relaxing restrictions on gaming. Gov. Perdue is studying the idea as a way to close the budget gap. More locally, Democratic Rep. Earl Jones (who has also taken gaming lobbyists' money) has submitted legislation to legalize video sweepstakes machines. And you don't have to go too far back in the legislative history to find other Democrats, like former Speaker Jim Black, who were out-and-out corrupted by the video gaming industry.

It's too bad that Republicans now want to bring us back to that era.

Tuesday, February 1, 2011

Half-million dollar mistake

Paperwork problems in North Carolina's Medicaid program from 2004 and 2007 will cost the state $541,000 in lower federal reimbursements in the coming years. The News & Observer reports
The state owes the federal government more than $541,000 for improperly reporting how much it paid for birth control drugs under the Medicaid program.

According to a federal audit of the Medicaid family planning program, the state underreported how much it had received in drug company rebates. The federal government pays most of the state's Medicaid costs, and because the rebates were reported inaccurately, the federal government paid too much.

The state Department of Health and Human Services acknowledged that it made mistakes. In a December letter, DHHS secretary Lanier Cansler agreed to the repayment and said the problem uncovered in the audit would be fixed.
While half a million might appear to be small change in a $20 billion state budget, the amount works out to as many as 12 entry-level teachers.

Regrettably, these problems are all too common in state and local governments where individual employees have few if any incentives to actually collect money that is owed to them.