Shawn Fremstad's blog

This is an excellent, concise explanation from Brad DeLong of one of the seeming paradoxes of parenting—despite being a highly skilled occupation, it doesn't pay well (or, pretty much, at all):

... looking after children is (a) physically demanding, (b) emotionally wearing, (c) mentally challenging, (d) easy to do badly with small lapses of attention, and yet (e) badly remunerated. In this it differs from nearly all other occupations that fit one or more of (a) through (d), which are relatively well paid because getting the work done is important and few people can do it well. But looking after children is different—very many people can do it well, not because it is easy to do but because it is one of our core human competences: we are driven to learn how to do it well at a deep, basic, powerful level to an even greater degree than we are driven to learn how to throw rocks to hit small moving animals. Thus looking after children is different from skilled occupations—it pays poorly because the supply of people who can do it is not small. And looking after children is different from unskilled occupations--it is hard to do because it is (a) physically demanding, (b) emotionally wearing, (c) mentally challenging, (d) easy to do badly with small lapses of attention.

One way to deal with this problem would be the medieval guild model, which still functions today in the professions, ie, restrict entry by requiring extensive training and certification for parenting; the number of people who could do most lawyering well is much larger than the existing poor of lawyers, but they have banded together to restrict entry to the profession. Since this seems unlikely to fly with regard to parenting, a better approach would be to publicly subsidize parenting to a greater extent than we do now.

Anne Alstott's proposal to create "caretaker resource accounts" is one of the more interesting attempts to address this issue:

With the creation of caretaker resource accounts, the caretaker parent of every child under age 13 would be given an annual grant of $5,000, which the parent could use to pay for child care, (his or her own) education, or (his or her own) retirement savings in the current year or in any future year. Each participant would receive an equal share of public resources per year, and each would decide for herself (or himself) how to divide the funds among the three alternative uses. The program would expand parents' options to give them maximum freedom to shape their own lives as they think best. Parents differ in their values, talents, and aspirations, and they would use their caretaker resource accounts in different ways—which is precisely the point.

....

The $5,000 voucher is significantly more generous than existing child-care subsidies. Tax subsidies for child care provide at most $1,500 to $1,800 per year, and they assist only a subset of families, excluding the poorest. They also vary by family income, sometimes arbitrarily. Working-class families can earn too much to qualify for the child-care subsidies for former welfare recipients and yet too little to benefit much from those for middle-class workers.

More immediately feasible are reforms like paid parental leave, turning the child tax credit into true child allowance, like those that exist in nearly all wealthy nations, and increasing support for public institutions like universal pre-K that would reduce child care costs.

This is a great idea:

Green Carts are mobile food carts that offer fresh produce in certain New York City areas. Local Law 9, signed by Mayor Bloomberg on March 13, 2008, establishes 1,000 permits for Green Carts.

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A total of 500 full-term permits will be available in 2008: 175 permits for Brooklyn, 175 for the Bronx, 75 for Manhattan, 50 for Queens, and 25 for Staten Island. Beginning in July, 2008, these permits will be issued to individuals who have applied to be on the Green Cart waiting lists. In 2009, 500 more Green Cart permits will be available.

The Guardian (UK) has an interesting new poll out that "contradicts the widespread assumption that environmental issues are seen by voters as a luxury to be put aside in tough economic times." Although the overall framing of poll, which pits the "economy" against "the environment", is problematic, the findings are still worth a look, particularly those on the greater priority working-class voters in the UK are giving to climate change:

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Environmentalists are constantly accused of being middle-class lifestyle faddists, who don't understand the day-to-day financial pressures faced by "ordinary" working people. But the number of people who thought that environment should be the government's priority rather than the economy was substantially higher (56%) among the lower income, less well-educated DE¹ demographic [Unskilled manual and unemployed] than among the better-off ABs [Managerial and professional] (47%). Lower-income social groups also have a much lighter environmental footprint overall: only 42% of DEs [ took a foreign holiday over the last three years, whilst 77% of ABs did. Better-off people also own more cars, as you might expect – only 5% of DEs have three or more cars, whilst 15% of ABs do.

.... The working-class people who they claim "can't afford to be concerned about climate change" actually care more about the future of the planet than the rich – and are doing a lot less damage to boot. So next time you hear someone defending motorway expansion or cheap flights on behalf of the British poor, ask yourself the question: whose side are they really on?

The NYT's Steven Greenhouse, author of the new book, The Big Squeeze: Tough Times for the American Worker, is blogging at TPM Cafe this week. In his initial post, he argues that "working-class voters want what Harry Truman was promising: A Fair Deal, or at least a Fairer Deal":

.... In talking with workers--be they software engineers or hotel housekeepers, factory workers or freelancers--I often sensed a frustration, even an anger, that unfairness has muscled aside fairness in America in recent decades and especially in recent years, and it goes far beyond stratospheric C.E.O. salaries. ....

....

Workers of course recognize there is no magic wand to make unfairness disappear, but my interviews around the country convinced me that workers are nonetheless eager for political leaders to take some serious steps to ease the big squeeze.

Make jobs less stressful--For many Americans, wages are so low that they need to work two jobs, and many women with children under three are working fulltime to help their families make ends meet. As my book explains, all of this is making it devilishly difficult to balance job and family. The United States is the only industrial nation that doesn't guarantee paid sick days, paid maternity leave or even paid vacation to its workers.

....

Increase opportunity and mobility--Many Americans who are not in the country club set worry that they won't be able to send their children to college, making it harder for their kids to move up in the world. ....
The college system is so skewed that at the nation's top 146 colleges, just 10 percent of the students come from the bottom half of households by income, and just 3 percent from the bottom quarter. Many working-class voters view America's promise of equal opportunity as largely an empty promise, and many are eager for government (and college administrators) to do far more to make college accessible and affordable for their children.

Ease the pain caused by globalization--Many workers rail against free-trade agreements because they see that globalization has destroyed many factory jobs and helped hold down wages, and they are searching for something, anything, to blame. While most workers recognize that globalization, offshoring and imports are inescapable facts of modern life, many would love to see the nation's political leaders do some high-visibility jawboning to discourage companies from reflexively moving jobs overseas, just as President John F. Kennedy once did some powerful jawboning to discourage the nation's steelmakers from raising their prices.

Many workers want better life preservers to prevent those hurt by globalization from being pulled under. Retraining programs for those who lose jobs to globalization are often poorly funded and poorly managed--and those programs are available only to laid-off factory workers, not laid-off software engineers and other white-collar workers whose jobs are offshored to India or other countries.

Strengthen the social safety net--After the Great Depression dragged down millions of Americans, Franklin Roosevelt, Congress, corporate America and organized labor built an impressive safety net of good wages, good health insurance, good pensions and strong job security. But nowadays with job security disappearing and many workers losing health coverage and pensions, the safety net has been falling apart. Many workers complain that it is hugely unfair that they and their children often lose health coverage when they lose their jobs. Little wonder that two-thirds of Americans say they want Washington to enact universal health coverage, even if means increasing taxes.

....

The retirement savings system is broken and badly needs fixing. In The Big Squeeze, I recommend creating a new universal savings system, like Germany's, that would be built on top of Social Security and would guarantee virtually every worker enough to retire on.

From my interviews across the country, I got the sense that many working-class voters would be delighted if this year's presidential candidates adopted a great Republican's--Teddy Roosevelt's--version of the Fair Deal: "Our aim is to promote prosperity and then to see that prosperity is passed around."

Mark Thoma explains:

.... If we had included, say, infrastructure spending as part of the initial stimulus package, then the effects would kick in on a sustained basis over time rather than as a one-time hit as with the tax cuts. Thus, this type of spending could have provided the continuous stimulus Shiller is calling for. And if we are wrong and there is no recession, how big a problem is that? Well, what's so bad about building new infrastructure repairing what we already have, don't we need to do that anyway? With a stronger economy, wouldn't it be easier to pay for it? Insurance that also has investment value seems like a good bet to me. ....

The graph below, from a post by Andrew Gelman, plots 48 states (sans Alaska, Hawaii, and DC) by the average economic and social ideology of adults within them. (I made a few minor design changes to Gelman's original graph, including adding the lines to divide the graph into four quadrants, but the data plots and scale are the same.) The more liberal a state in both dimensions, the closer it is to the bottom left corner (Massachusetts is the most liberal); the more conservative, the closer it is to the top right (Idaho is the most conservative).

A few interesting things to note: New Hampshire and Maine are both represented by two Republican Senators, yet both are in the Liberal/Liberal quadrant; my home state, Minnesota, is often perceived as a sort of Vermont of the midwest, but on economic issues, it skews slightly conservative (as does Wisconsin); Montana is one of seven Liberal Econ/Social Conservative states, which makes one wonder why Sen. Max Baucus (D-MT) tends to be a Social Liberal and Economic Conservative.

I know, I know, my ongoing beef with Alice Rivlin is starting to get as long in the tooth as the now-settled one between Nas and Jay-Z, but I just realized that I forget to mention her quote in that awful and error-plauged article on the budget in last Saturday's WaPo:

"I suspect that McCain will be more constrained and will have a veto power over the Democratic Congress," said Alice M. Rivlin, who served as the first director of the Congressional Budget Office, as well as one of Clinton's budget directors. "If it's Obama, the Democratic Congress is going to be pushing for spending and it's awfully hard to rein in your own folks. No Democrat is going to want to go to war with Congress."

The Brookings-Urban Tax Policy Center estimates that the McCain tax proposal would increase the national debt by a trillion more dollars over the next 10 years than Obama's plan. Some constraint.

Based on the results of MDRC's latest evaluation, Career Academies should be getting a lot more attention. As described by MDRC, Career Academies:

Typically serv[e] between 150 and 200 students from grades 9 or 10 through grade 12 [and] are defined by three distinguishing features: (1) they are organized as small learning communities to create a more supportive, personalized learning environment; (2) they combine academic and career and technical curricula around a career theme to enrich teaching and learning; and (3) they establish partnerships with local employers to provide career awareness and work-based learning opportunities for students.

The new MDRC evaluation looks at the relatively long-term--eight years after high-school graduation--results of Career Academies, finding:

• The Career Academies produced sustained earnings gains that averaged 11 percent (or $2,088) more per year for Academy group members than for individuals in the non-Academy group — a $16,704 boost in total earnings over the eight years of follow-up (in 2006 dollars).
• These labor market impacts were concentrated among young men, a group that has experienced a severe decline in real earnings in recent years. Through a combination of increased wages, hours worked, and employment stability, real earnings for young men in the Academy group increased by $3,731 (17 percent) per year — or nearly $30,000 over eight years.
• Overall, the Career Academies served as viable pathways to a range of postsecondary education opportunities, but they do not appear to have been more effective than options available to the non-Academy group. More than 90 percent of both groups graduated from high school or received a General Educational Development (GED) certificate, and half completed a postsecondary credential.
• The Career Academies produced an increase in the percentage of young people living independently with children and a spouse or partner. Young men also experienced positive impacts on marriage and being custodial parents.

The only really disappointing finding is the lack of results for young women. It's not clear from evaluation why women didn't benefit:

.... The evaluation did not find evidence that the Career Academy experience was systematically different for young women than for young men. Nor does it appear that the Career Academies had systematically different impacts on the high school experiences of young women and young men. One hypothesis, however, is that the lack of post-high school labor market impacts for young women may be an artifact of their somewhat shorter and more intermittent employment spells associated with having children or attending postsecondary education programs. This will be explored in nonexperimental analyses to be presented in a future paper.

Although reports have focused on employment and earnings gains for young men, the results on "family formation" are even more striking. Students who attended Career Academies were 13 percent more likely to be married and living with their spouse than non-attendees. Young men who attended academies were 33 percent more likely to be married and living with their spouse than male non-attendees.

Some conservative marriage promoters have argued that the correlation between marriage and earnings in the general population is evidence that marriage directly causes higher earnings. The Career Academies evaluation suggests that the casual link moves in the opposite direction, with higher earnings leading to more stable families.

In a thoughtful TPM Cafe post, Theda Skocpol argues that despite Obama's current lead, McCain is actually doing a better job of shaping the agenda:

Why isn't Obama getting his economic message across with a few bold symbolic gestures -- eyecatching programs (not necessarily really new) that he uses to feature what he proposes on gas prices, college access, family leave, etc? This whole area needs much more thought. The elite media find it boring and irrelevant to talk about the huge distributional consequences of an election like this—after all, most of them are rich and spend time talking to other rich folks and insider "analysts"—yet ordinary voters have to be able to wrap their minds around specific examples of what Obama and Demcorats can do to make life better. It up to Democrats to use eye-catching moves and message discipline (lots of surrogates at once) to get specific messages through on the economy. So far, little effectiveness here, yet this is what Democrats should have going for them in this election!

....

Creative thinking about better agenda-control needs to happen now, in his campaign, in the DNC, and in the Congressional leadership. Too much attention is focused on fighting the last war, preparing to avoid the Swift-boating-type attacks Kerry lost in August 2004, rather than on shaping this war, which is a new one on different but equally tough terrain! This election is an agenda-shaping war to focus on real-life economic concerns and convince ordinary voters that Obama and the Democrats CAN make a difference for them. If they don't believe that, voters, especially older ones, will take the safe course and install McCain for a while.

My former chief, CBPP's Bob Greenstein, has an impassioned defense of his former employee Jason Furman at the Huffington Post. Bob rightly skewers some of the reporting on Furman—particularly an erroneous report that he favored Social Security privatization.

I do have to gently disagree, however, with a two of Bob's arguments. First, he states that:

Everyone involved in the 2005 debate over Bush's privatization proposal knows it was Furman's devastating analyses shredding the Bush plan and skewering the arguments of privatizers that formed the intellectual core of the successful opposition. Democratic Members of Congress, unions, and grassroots campaigns against the Bush plan built much of their critiques on Furman's work.

The suggestion that "everyone involved" in the SS debate "knows it was Furman's" work that "formed the intellectual core of the successful opposition" is a bit of an overstatement. (Also, while saying "I'm the greatest rapper alive" is standard in hip-hop, it's somewhat out of place in policy analysis). Furman's work on SS at CBPP was great, but it was only part of a larger Team Progressive effort that formed the "intellectual core" of the defense. Ezra Klein is closer to the mark when he notes that Furman:

... was a staunch ally during the Social Security privatization fight, and did as much as any economist not named Dean Baker to push back on the then-pervasive idea that Social Security was in crisis and required conservative reform.

Second, Bob suggests that Furman's hire doesn't necessarily represent a "move to the political center":

.... several news accounts, including a Huffington Post column, portrayed Obama's hiring of Furman as a move to the political center now that Obama has wrapped up the nomination. This, too, is dubious. Prior to Furman's hiring, Obama's two top advisers on economic and fiscal policy were University of Chicago economist Austan Goolsbee and Harvard economist Jeffrey Liebman. Goolsbee, Liebman, and Furman are all moderately left of center. In fact, reading the work of all three (each of whom is considered a top-notch economists) leads one to put Furman modestly to the left, not the right, of the other two. In recent years, Furman's work has focused, in particular, on how to change government policies so the gains of economic growth are more evenly shared, with more gains going to low—and moderate—income working families and fewer to corporate profits than has recently occurred.

While it may be true that Furman is modestly to the left of Goolsbee and Liebman (the distinction isn't clear to me based on their written work), the real divide here involves Furman's views on fiscal policy as well as the role of economic institutions—particularly collective bargaining, new basic labor standards like paid leave, and other forms of market regulation—in creating an economy that works for all Americans.

Obama doesn't exactly have a boldly progressive economic agenda, but it includes many progressive elements—such as paid sick days and leave, indexing (not just increasing) the minimum wage, and expanding collective bargaining—that Furman, as far as I can tell, has never publicly endorsed. In my view, the biggest problem with Furman's infamous Wal-Mart paper is precisely his failure to include these reforms, as well as universal health care, as recommendations to "change government policies so the gains of economic growth are more evenly shared." In a subsequent online debate with Barbara Ehrenreich, he had a perfect opportunity to correct this imbalance, but failed to do so—instead, again quoting Ezra Klein, riding his initial argument "to a level of dogmatism that appears unwise."

Greenstein's case for Furman would actually have been strengthened if he had acknowledged the obvious: Furman is pretty much a 1990s-style "third way" guy with the pros and cons that ideology entails. Among the pros, Furman supports the current welfare state and would increase government transfers to low- and moderate-income folks: the cons, he wouldn't require much more from corporate American (other than an increase in the minimum wage). Moreover, he hasn't publicly made the same moves to the left as some others in the Rubin camp. Importantly, Obama is already on record supporting many of the key elements of a progressive economic agenda, one that does require more from business. It's our job to make sure he holds to those positions whoever his advisers may be.

A fascinating article by Steven Greenhouse on the case made by Ed Ott, chief of the NYC Central Labor Council, to do more for nonunionized workers:

Ed Ott, the executive director of the New York City Central Labor Council, an umbrella group for the city’s labor unions, has an unexpected and unnerving warning for New York’s more than one million union members.

He warns that their wages and living standards will be threatened unless the city’s unions do far more to lift the incomes and living standards of the city’s nonunion working poor, including restaurant workers, supermarket cashiers and taxi drivers.

“Going forward, if we don’t raise the standards for the lowest-paid workers in the city, and there are literally hundreds of thousands of them, our own levels that we achieved — of wages, pensions and time off — they’re not sustainable,” said Mr. Ott, whose group is a federation of 400 union locals. “For a working class that is going to be making minimum wage or slightly above, what’s going to happen is that as taxpayers, that will create a social base for an attack on our own standards.”

....

Mr. Ott is glad that many union members — for instance, construction workers, telephone workers and teachers — have achieved middle-class status. But he voiced frustration that many unions showed little concern about lifting the status of low-wage nonunion workers. He made his remarks at a time when the number of nonunion workers has soared in traditionally union-dominated industries like construction and hotels.

Mr. Ott sees two working classes in New York: a unionized one that is doing well and a nonunion one that is struggling to get by.

“You see a working class on the subway at 6:30 in the morning and you see them at 8:30 at night heading home,” he said. “They work in the back of restaurants, they clean buildings nonunion, they’re child care workers, they’re in retail. Frankly, I marvel that these guys can find a way to live in this city. They work very hard. Most of these workers who work outside a union setting, they work more than one job or they work one job many hours.”

Mr. Ott said the union movement needed to work closely with less-well-off groups of workers — taxi drivers, domestic workers, restaurant workers, even freelance writers and computer workers — to help raise their living standards, not just for moral reasons but also for their own self-interest. “Every time you go to the bargaining table now, there’s downward pressure,” he said. “Even in the public sector, it’s ‘Any improvements you want, you have to pay for with concessions.’ That’s downward pressure, too.”

....

Dean Baker explains why the Pete-Peterson-financed effort to cut Social Security has no political legs:

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The granny-bashers are arguing that the country is paying more than it can afford to support retirees. Therefore they want to cut Social Security and Medicare, the main benefits that these retirees receive.

However, the implicit assumption behind these cuts is that retirees will have enough money to support themselves, even if these programs are cut. While this would not have been especially true even before the collapse of the housing bubble (Social Security already provided more than half of the income for two-thirds of the people over age 62), it is certainly not true in the wake of the housing crash.

The crash of the housing bubble has already destroyed almost $5 trillion in housing bubble wealth, more than $60,000 per homeowner. As a result, the generation of workers who are approaching retirement will have almost nothing to support themselves in retirement other than their Social Security.

Working from the Federal Reserve Board's Survey of Consumer Finance, we found that if real house prices drop 10 percent from their March 2008 level, then the a typical family in the age group from 45 to 54, will have just $98,400 in wealth in 2009, counting the equity in their home. This is a falloff of 34.6 percent from 2004. (This number does not include wealth in defined benefit pensions.) Since the median income for this group is over $62,000, this will not go far toward maintaining living standards in retirement.

The basic problem is twofold. When these families saw their houses exploding in value, they didn't think they had to save. They assumed that house prices would just keep rising.

The other problem of course is that house prices not only didn't rise, they collapsed. This collapse was entirely predictable, and those who were concerned about the country's long-term financial situation should have been out in the forefront warning of the dangers posed by an $8 trillion housing bubble.

Unfortunately, these folks were too busy trying to cut benefits for the elderly to pay attention to such trivial developments. Well, now the collapse of this housing bubble should put cutting Social Security and Medicare off the table altogether.

....

It's sad to know that Pete Peterson is wasting so much of his hedge-fund wealth on a wrong-headed effort to scare people into thinking we have a Social Security/entitlement crisis. While Peterson and others missed the housing crisis, they could make up for it by deciding to tackle a real problem like global poverty, the U.S. health care crisis, or global warming.

That's Henry Aaron of Brookings who had the best testimony at this week's House Budget Committee meeting on the Pete Peterson-funded jihad against Social Security and legislation that would create a commission to come up with a proposal to cut Social Security. Aaron summarizes the case against this legislation as follows:

The bill mischaracterizes the source of [projected, long-term] deficits. They derive entirely from projected increases in national health care spending, not from problems peculiar to government health care or entitlement spending.

Materially slowing the growth of Medicare and Medicaid apart from general health system reform is impossible, unless the nation reneges on its commitment to assure the elderly, disabled, and poor health care roughly comparable to that available to the rest of the nation.

The specification of 'issues to address' and 'policy solutions' in section 3 of H.R. 3654 is unbalanced. For example, the draft bill specifies as a 'policy solution' limits on entitlement spending, but does not mention as a 'policy solution' curbing in tax expenditures that putatively serve the same general objectives as direct spending, but benefit different groups.

The draft bill virtually invites 'game playing,' as policymakers could avoid hard choices by manipulating long-term projections with artful assumptions, scoring methods, or other tactics for avoiding hard choices. Such practices were used extensively to subvert the Gramm-Rudman-Hollings targets in the 1980s. H.R. 3654 could actually obstruct desirable action to address projected long-term budget deficits.

Commissions never solve complex problems unless members of Congress are prepared to address the underlying source of those problems.

From a speech by Barack Obama in Albuquerque yesterday:

....

I’ll also stand up for paid leave. Today, 78 percent of workers covered by FMLA don’t take leave because it isn’t paid. That’s just not fair. You shouldn’t be punished for getting sick or dealing with a family crisis. That’s why I’ll require employers to provide all of their workers with seven paid sick days a year. And I’ll support a 50-state strategy to adopt paid-leave systems, and set aside $1.5 billion to fund it. I have a clear plan to expand paid leave and sick leave, Senator McCain doesn’t, and that’s a real difference in this election.

And at a time when folks are struggling with the rising price of everything from gas to groceries, I’ll provide working women with immediate relief. While Senator McCain wants to continue the Bush tax cuts for the wealthiest Americans who don’t need them and didn’t ask for them, I’ll pass a middle class tax cut of $1,000 for each working family. This will deliver tax relief for over 70 million working women. And we need to help folks at the bottom of the ladder. Almost 60 percent of Americans who benefited from raising the minimum wage were women. I won’t leave any working people behind. That’s why, unlike Senator McCain, I’ll index the minimum wage to inflation so that it goes up each year to keep pace with rising costs.

We can’t afford an economy where folks keep working harder for less. We can’t let the women in our workforce get paid even less for doing the same work. And we can’t keep pushing more and more of the burden on to the backs of working parents who are struggling to balance their jobs and their family. Because what binds us together, what makes us one American family, is that we stand up and fight for each other's dreams, and for the dreams of all of our children.

....

Alice Rivlin and John Kingdon argue that the next president should "tackle social security first" in early 2009 because it's--and I'm not making this up--an "easy" issue to "get out of the way." Here's why it's so easy: Democrats need only "accept benefit cuts" and Republicans a tax increase, and we're good to go.

Democrats have to accept future benefit cuts, but they need not be drastic and can spare current retirees and lower-income beneficiaries. The package could include future gradual increases in the retirement age and concentrate benefit cuts on higher income people.

As part of the compromise, both parties must agree to revenue increases, but they, too, can be modest and can spare low-income individuals. For example, the cap on income subject to social security tax can be raised in gradual steps.

Missing from Rivlin and Kingdon's op-ed is any reality-based account of why Social Security should even be on the list of problems that the next administration needs to tackle over the next four years. According to CBO, the Social Security surplus a decade from now will be around $250 billion. Moreover, Social Security is fully solvent, under current projections, until 2046.

There are real crises out there. Social Security just isn't one of them.