This week the Census Bureau announced the fortunes of most Americans rose slightly ending a decade of stagnation reports, the Wall Street Journal:
Tuesday’s income and poverty report is drawn from an annual survey asking detailed questions about annual incomes—including wages, dividends, child support and government benefits. The survey, collected in March with results released in September, is sent to around 95,000 households that are representative of the U.S. population.
Income gains were spread across nearly all age groups, household types, regions and racial or ethnic groups. One exception: Incomes didn’t rise for households living outside metropolitan areas.
The largest increases in incomes last year were for the bottom fifth of all earners, which could reflect rising state and local minimum wages. As a result, the ratio between incomes at the 90th and the 10th percentiles narrowed.
But as the Journal and others note, these gains largely stayed within metropolitan areas. Over at Politico, Danny Vinick notes this really highlights the growing gap between the voters who are at the base of the two main presidential candidates: "Clinton voters are concentrated in cities, in the nation’s denser and more diverse areas; Trump voters dominate rural areas and America’s wide-open landscapes." He offered this:
A growing body of evidence, however, indicates that looking just at income levels masks a larger story about the economic state of Trump supporters. In August, Jonathan Rothwell, of Gallup, released a major new survey of 85,000 Trump supporters that found that they have relatively high household incomes but live in areas with lower mobility, lower health, and lower educational levels. They are no more likely to live in areas negatively affected by trade but at all income levels, Trump supporters report higher feelings of economic anxiety.
Also in Politco, [F]our scholars discuss the Donald Trump voting block and whether poor, largely rural whites feel left behind by globalization and immigration or resentful of an elite political class that seems to ignore them. This is a terrific read. Here is part of one take:
[W]hen you’re talking about the angst and anxiety and feeling of being stifled and that kind of despair, what I see is that, as African-Americans advance in this society in terms of gaining their citizenship rights, that there is a wave of what I’ve been calling “white rage,” which are the movements within legislative bodies and within the judicial sector in terms of policies and laws and rulings that undercut that advancement. We saw it after Reconstruction, during Reconstruction. We saw it during the Great Migration, then with the wave that we’re looking at right now, after Barack Obama’s election.
In the New York Times, Seth Stephens-Davidowitz discusses an anxious America and how anxiety seems higher in some rural areas:
Google searches for anxiety tend to be higher in places with lower levels of education, lower median incomes and a larger part of the population living in rural areas. While the state of New York does have above-average anxiety, it is actually higher in upstate New York than it is in New York City.
Searches for panic attacks are overwhelmingly concentrated in less educated, poorer parts of the country, particularly Appalachia and the South. Test-taking anxiety is highest in Arkansas. Searches for “anxiety about death” are highest in Kentucky. The epicenter of anxiety, according to Google, is Presque Isle, Me., where fewer than 20 percent of adults hold a bachelor’s degree.
You may also be interested in this piece from FiveThirtyEight's Farai Chideya interviewing folks in Trumbull County Ohio on their views about Trump and their desire for a future America that looks a bit like the past economy. And the New York Times editorial board argues that neither candidate really has a comprehensive anti-poverty agenda:
The failure to talk frankly about poverty is especially regrettable in light of this week’s Census Bureau report. As the figures show, we know what works...
The data also illustrate how much worse conditions would be without existing federal programs. Using the “supplemental” measure of poverty that is more nuanced than the official measure, the poverty rate in 2015 was 14.3 percent. Without Social Security, it would have been 22.6 percent, with nearly 27 million more people in poverty. Without the earned-income tax credit and low-income provisions on the child tax credit, the rate would have been 17.2 percent, adding 9.2 million people. Without food stamps, the rate would have been 15.7 percent, adding 4.6 million people.
The statistics give the candidates all the evidence they need to make the case to voters that anti-poverty policies work.
In the Washington Post, White House economic adviser Larry Summers says the next president should prioritize major infrastructure improvements for economic progress:
Economists and politicians of all persuasions are increasingly concluding that higher infrastructure investment can create quality jobs and provide economic stimulus without posing the risks of easy-money monetary policies in the short run. They are also recognizing that infrastructure investment can expand the economy’s capacity in the medium term and mitigate the enormous maintenance burden we would otherwise pass on to the next generation.
The case for infrastructure investment has been strong for a long time, but it gets stronger with each passing year, as government borrowing costs decline and ongoing neglect raises the return on incremental spending increases. As it becomes clearer that growth is not going to return to pre-financial-crisis levels on its own, the urgency of policy action rises. Just as the infrastructure failure at Chernobyl was a sign of malaise in the Soviet Union’s last years, profound questions about America’s future are raised by collapsing bridges, children losing IQ points because of lead in water, an air-traffic control system that does not use GPS technology and chipping paint in thousands of schools.
In the NYT, Harvard economist Gregory Mankiw looks at the battle over the estate tax and what fairness is:
It is easy to understand the appeal of the estate tax. We live in a time of great economic inequality, and the tax is levied only on the very wealthy. The tax helps fund government programs (though it raised only $19 billion last year, 0.6 percent of federal receipts).
But the estate tax is only one of many policy tools that can be used to make sure those at the top pay their fair share. Another would be to limit itemized deductions, as the Bowles-Simpson commission appointed by President Obama proposed in 2010. We could also reform the tax treatment of carried interest, which hedge fund managers use to reduce their tax burden to extraordinarily low levels.
From my perspective, the estate tax is a bad way to tax the rich because it violates a principle that economists call horizontal equity. The basic idea is that similar people should face similar tax burdens.
But we do have a progressive tax policy and many of the folks at the bottom not only do not pay taxes but often receive a subsidy. The Washington Post's Jeff Guo discusses these subsidies after Mitt Romney's 2012 presidential race gaffe decrying that 47 percent of Americans pay no taxes resurfaced:
The so-called “47 percent” are not some permanent underclass of dependents. A large fraction of them quickly get back on their feet again. “The tax system is providing insurance,” Fullerton said. “In good years you're paying income taxes. But if you have a bad year — say you get laid off — you get a break from the government.”
Before digging into the data, it’s worth recognizing that the real figure is somewhat smaller than 47 percent. Romney took that figure from a Tax Policy Center estimate for 2009, a year when many Americans were still reeling from the recession. In more typical times, the data suggests that about 39 percent of American households don’t pay the income tax in a given year.
Of those households, about 18 percent started paying taxes the very next year. Five years out, about 40 percent of them have begun earning enough to pay the tax. Who are the rest? Some of them are students and retirees (in the data, about half of people over 55 did not pay income tax in a given year). And some, of course, are the chronically poor.
Lets have a cartoon:
Presidential candidates continue to spar over who has the better jobs plan but in the New York Times Michael Lind asks whether policy should used to provide good jobs or good lives:
Looking back over the last half-century, we can discern a long-term trend in which the United States government at all levels has been gradually responding to the decline of high-wage, high-benefit jobs, by methods such as gradually socializing benefits (state-run retirement plans) and partly subsidizing wages (the earned-income tax credit). Is this a trend to be welcomed or feared?...
Even if center-left and center-right policy wonks agree that the goal should be good lives for all workers, even those with bad jobs, many Americans do not agree, to judge from the rhetoric of politicians, who know their audiences well. The replacement of a world in which one or a few lifetime jobs in a paternalistic company that provided benefits during your working life and a pension after your retirement by a future in which individuals struggle to survive by piecing together “gigs” and “tasks” with a bewildering variety of federal, state and local social programs may strike many workers as a dystopian nightmare. The price of increased flexibility may be increased stress.
You also might be interested in this piece from Capital and Main on the darkside of having school teachers moonlight as Uber drivers:
Uber has hailed this arrangement as an “opportunity” for teachers, a chance to boost their earnings while “dedicating their lives to shaping students’ futures.” It’s supposedly a prime example of the “sharing economy” at work. Yet stripped of their gloss of generosity, Uber’s teacher/driver campaigns also share in a more twisted Silicon Valley fantasy: low taxes, good schools—and your kid’s teacher might drive you home after your expense-account meal with a venture capitalist!
Meanwhile the AP takes a snapshot on pay equity and childcare: "While the U.S. economy has improved, women and their families are still struggling to make the numbers work." Deloitte gave employees 16 weeks of paid family leave, acknowledging not just the needs of parents but of all adult caregivers. Also in the social-safety-net debate, FiveThirtyEight's Andrew Flowers looks at why so few poor families receive housing assistance:
For many of these families, the issue isn’t that they don’t qualify for help. It’s that the help they need isn’t available. That’s because unlike some other parts of the social safety net — such as food stamps — affordable housing is not an entitlement. Once the money appropriated by Congress runs out, the aid stops, no matter how much need there might be. According to the Center on Budget and Policy Priorities, 3 in 4 renting families that qualify for government housing programs don’t receive any assistance.
Over at OpenDemocracy, Megan Tomkins-Stange asks why Bill Gates and other philanthropists should get to decide how our children are educated:
[E]ducation is a public good: a fundamental human right to which citizens in a democratic society are entitled. It isn’t a private good that can be negotiated with, or directed by, private interests. This distinction is particularly important in low-income communities that are populated predominantly by people of color, where foundations have long concentrated efforts to pursue unproven innovations. These communities are often those most in need of support, where philanthropists feel they can make the biggest impact. That’s why cities in crisis like Detroit and New Orleans have become central sites for charter schools, many of which are low in quality.
However, while foundations may want to catalyze innovation on behalf of poor children, they must be careful to avoid treating schools and communities as laboratories, particularly when poor families are so susceptible to the threat of uninformed consent. In fact, citizens are beginning to push back against foundation funding of ‘proof points’ in their districts, arguing that schools are not testing grounds for wealthy philanthropists to conduct their social experiments.
On a more positive note Laurene Powell Jobs, widow of the Apple giant Steve, is giving two California teachers $10 million over five years to ensure homeless kids don't have their education disrupted by their circumstance, reports the LA Times:
The idea is to have three to four physical sites sharing space with existing nonprofits as well as an online learning system. A bus will also be turned into a “mobile resource center,” to bring Wi-Fi, a washer/dryer and homework help to the neediest students.
That way, if a student suddenly moves or can’t get to school, he or she will have various options to get tutoring or the day’s lesson.
The GIIN's Amit Bouri opines in Institutional Investor about why impact investing has to incorporate the UN's Sustainable Development Goals:
Impact investing is no longer just a feel-good footnote to an investor’s portfolio. Nine years on from when the term was coined, impact investing has become a vibrant industry, offering proven financial returns and demonstrable social and environmental progress. These efforts aren’t philanthropy, although they can be a powerful complement to philanthropy, and philanthropic organizations are increasingly looking for impact investment opportunities that put more of their money to work. This approach is a new way to think about the role of capital and investment while maintaining the principles that have made capitalism an incredible engine for growth. Impact is about investing in more than just financial returns. It is investing in the future of our children, our communities and our planet...
Despite this surging popularity and demand for impact investing, they are not enough. Changing our world to meet the Sustainable Development Goals is a monumental effort. Collective action will be needed if these aspirational goals are to see progress in the ambitious time frame established. We ask that every investor not already involved make at least one SDG-focused impact investment — and get started on this effort immediately.
You might be interested in this video from The Impact on impact investing: