Must Reads: Stanford's David Grunsky in the Chronicle of Higher Education discusses what he says are "four myths about poverty." In the Wall Street Journal, Michael Milken looks at the housing crisis and the middle class and argues government housing incentives are not the best path to achieve the American Dream. Meanwhile in the National Journal, Peter Beinart through a progressive lens considers the decline of "American exceptionalism" in three areas: "our belief in organized religion; our belief that America has a special mission to spread freedom in the world; and our belief that we are a classless society where, through limited government and free enterprise, anyone can get ahead." You also might want to check out this piece in the New York Times from celebrity chef Marcus Samuelsson on the gentrification of Harlem.
Check out this cartoon from Milt Priggee: In the Boston Review, Mike Konzal offers seven bipartisan reasons to raise the minimum wage, and here's one:
[I]t decreases the cost of welfare. One of the central goals of conservative policy in the past thirty years has been to reduce government spending on welfare by getting people into jobs. However, if wages are too low, workers still need government income support such as food stamps or tax credits. Because these income supports are phased out as people earn more, the programs function like a tax, discouraging lower-wage workers from taking jobs or from working as many hours as they otherwise might. The minimum wage, by contrast, provides income support but without the discouraging effects of welfare.
Can unions provide job security? Quartz's Allison Schrager says no:
Job tenure is down because unions can’t overcome the market forces that make jobs less secure: changing technology and globalization. Manufacturing work used to involve fairly routine tasks. Today, modern car manufacturing is extremely technical and has become more standardized across different car companies. The auto industry, especially auto-assembly, is one of biggest users of industrial robots. Robots have replaced many of the workers who did this job manually, but they also shift the demand to more skilled workers who compliment the robots. Meanwhile globalization has made the industry more competitive and several of the Chattanooga workers claimed they voted no to the union because they faulted UAW for making the American auto industry less competitive.
If you are a skilled worker in a competitive industry, job security may not be so valuable to you anyway. Skilled, technical workers often benefit from changing jobs regularly. If you work at several different firms you are exposed to different technologies and routines. The premium on having high-tech manufacturing skills has increased, which means these workers are in high demand. There are fewer of them. They are likely not unionized.
If even union members can’t count on their jobs like they used to, that undermines a large component of a union’s value. The benefits that remain may be not outweigh the dues and bureaucracy involved (which cuts further into their wages).
Jed Graham over at Investor's Business Daily says low-wage work is increasingly part-time:
This story in Bloomberg looks at how the jobs economy is putting recent college grads "in competition with high-school graduates for low-wage jobs that don’t require college." Still, according to Pew, millennials are not only the most educated generation in history in terms of college attainment, but they are also earning more than generations before despite reports of being underemployed:
Meanwhile in the New York Times, Cornell's Suzanne Mettler says that college education has gone from being a way to achieve economic mobility to part of the inequality problem:
Higher education is becoming a caste system, separate and unequal for students with different family incomes. Where students attend college affects their chances of graduating and how indebted they will become in the process. Private nonprofits, schools like Stanford or Vassar, list the highest “sticker prices,” but the average student pays less than half of full fare. Some nonprofits provide generous need-based aid to low- and middle-income students, supplementing their federal aid. Others devote their resources instead to merit-based aid, courting students with high SAT scores, typically from higher-income backgrounds. These colleges rise in the rankings, but they also provide a disadvantage to poorer students who would benefit from more need-based aid, who struggle financially to stay enrolled and who take out more student loans to do so. Nearly three-quarters of American college students attend public universities and colleges, historically the nation’s primary channels to educational opportunity. These institutions still offer the best bargain around, yet even there, tuition increases have bred inequality... The worst problems, though, occur at for-profit schools like those run by the Apollo Group (which owns the University of Phoenix), the Education Management Corporation or Corinthian Colleges. These schools cater to low-income students and veterans, but too often they turn hopes for a better life into the despair of financial ruin.
Ways and Means Chairman David Camp's tax overhaul plan continues to garner foes. New York Time economics writer Floyd Norris says in a big pivot for Republicans the plan would levy big taxes on the wealthy:
The proposal in question would force some high-income taxpayers to pay taxes on municipal bonds that have so far been tax-free. They would lose the tax break available to others when they sell their homes. They would have to pay taxes on the value of their employer-provided health insurance and would lose the deduction for contributions to 401(k) retirement plans.
Furthermore, everyone who has taken advantage of the “carried interest” tax dodge that lets private equity partners treat their pay as capital gains would lose it. That provision allowed Mitt Romney to pay an effective tax rate of less than 15 percent on millions of dollars.
This particular proposal would also hit high-income taxpayers by phasing out some deductions and other tax provisions for couples making more than $450,000. Other benefits would vanish for those making more than $517,500.
The interplay of all these complicated provisions would — for a few taxpayers — lead to marginal tax rates as high as 67 percent.
The Washington Examiner's Timothy Carney says the proposal could rile "special interests of every species and subspecies":
Camp's reform would gore powerful industries by taking away their carve-outs. He would kill the tax credit for electric vehicles (sorry, Tesla), disallow deductions for lobbying (sorry, lobbyists), end special tax treatment for film and television production (sorry, Hollywood), phase out the tax credit for wind and solar generation of electricity (sorry, GE), and kill dozens of other targeted tax breaks. You can imagine GE, Tesla, and Hollywood won’t stand by idly as Camp targets their tax breaks. But the biggest opponents of Camp’s reform will be from the real estate industry – builders, developers, realtors, and mortgage bankers. Homeownership is the source of the biggest tax deductions for the average taxpayer. Your property taxes and the interest you pay on your mortgage are both deductible, saving taxpayers about $100 billion in 2014, according to a congressional estimate. Camp’s bill would end the deduction for property taxes, and cap the mortgage-interest deduction at $500,000 in mortgage debt. Camp's proposal targets plenty of other tax breaks beloved by the real estate industry, such as credits for energy-efficient property, the first-time homebuyer credit, and low-income housing credits. Camp also proposes to tighten the boundaries around tax-preferred Real Estate Investment Trusts.
In American Banker, libertarian Cato's Loise Bennett calls the proposed bank tax "more destructive populism." Meanwhile, in Think Progress, progressive advocates Harry Stein and John Craig argue the proposal would harm the working poor while benefiting corporations and the wealthy:
Trickle-down adherents claim that corporate tax cuts, such as the ones found in Camp’s bill, will eventually benefit everyone. But researchers have found that the vast majority of the benefit would flow to the wealthiest Americans, who tend to own most of the stock in these companies. Instead of generating prosperity, trickle-down policies have increased inequality and held back economic growth. While Chairman Camp gives big businesses carefully disguised tax relief, he cuts the Earned Income Tax Credit (EITC), which low-income workers depend on to make ends meet. Overall, his bill would cut the EITC by $217 billion over ten years. But if Congress chose to continue the successful expansion of the EITC, which is scheduled to expire after 2017, Chairman Camp’s cut would actually become much larger. In the case of childless workers – for whom conservatives particularly claim to support a larger EITC – Chairman Camp would cut the maximum benefit from $496 to $100, or $200 for married couples. Many poor families would be hit by an even larger tax increase – sometimes thousands of dollars.
You also might be interested in this piece from Kyle Chayka in the Pacific Standard on whether the United States needs a "Robin Hood tax" aimed at financial transactions, which could generate hundreds of billions for social services.
Check out these charts form Emma Tomkinson on how the rest of the world stacks up on social impact bonds compared to the U.K.:
Social entrepreneurs have long been inventing solutions to problems that governments or businesses were unable to tackle–and in many instances had helped to create. But to solve the problems of our time at the scale and speed required, it is crucial to look beyond the traditional social and business sector divide... Almost 60% of the 150 most important economic entities in the world are companies, not countries. With such impressive influence and success, they have got a lot to teach social entrepreneurs. There are key strengths of the corporate sector that are valuable for the social sector, says [Stephanie Schmidt, Managing Director at Ashoka Europe]. “It is scale, but also efficiency in terms of operations, product development, distribution, as well as innovation.”
In the Huffington Post, Inside Philanthropy's David Callahan looks at the 15 most powerful women in the sector. In the Stanford Social Innovation Review, NYU's Erin Morgan Grove contends the growing "sharing economy's 'triple bottom line' (financial, environmental, and social) aligns well with the social sector, and there are a handful of nonprofit success stories." Also in the Stanford Social Innovation Review, Caroline Fiennes of Giving Evidence says funders should pivot from attempts to measure impact and instead focus on understanding performance.
The government issued a February jobs report this week, which according to the New York Times' Shaila Dewan, exceeded expectations. Still, the Center for Budget and Policy Priorities' Chad Stone says many unemployed folks remain at risk; check out this chart:
Nearly four out of every ten of the unemployed, and 2.5 percent of the labor force, have been out of work for six months or more. Before the Great Recession, the long-term unemployed never amounted to more than 26 percent of the unemployed, even during the deepest recessions since the end of World War II. Moreover, the long-term unemployed were never more than 1.3 percent of the labor force when any of the past seven emergency programs expired.
Quartz has twelve charts delving into the current labor situation, and here is a sample: