Blog postings by CEPR staff and updates on the latest briefings and activities at the Center for Economic and Policy Research.

Let’s unpack the E&Y study.


Employment 

E&Y touts that the private equity industry supports 8.8 million jobs. You could mistakenly think this means that PE created 8.8 million jobs or that PE increased employment at the companies it took over. That may be the industry’s intention, and E&Y seems happy to create this misimpression, but it’s not true. 

A careful study of “The Economic Effects of Private Equity” by economists at Harvard and the University of Chicago looked at what happens to jobs when a PE firm buys out a Main Street company with offices, stores, warehouses, supermarkets, or other establishments and takes it over. The study found that, overall, when private equity takes over companies, employment in the establishments of those companies goes down by 4.4 percent in the first two years following the buyout. When private equity buys out big companies with lots of employees that trade on a stock market, the job loss is even more dramatic – 13 percent in the first two years. 

If you are a worker at a company that has been acquired by a private equity firm, these are the numbers that matter to you – these numbers reflect the probability that you or some of your colleagues will lose their jobs.

So, what is E&Y talking about? 

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With each passing day, President Trump’s criminal syndicate looks weaker. Until recently, hoping for defections on the scale we’re seeing now might have seemed like a pipe dream, but it turns out that several of Trump’s former associates do have limits on what they will tolerate (even if it is sometimes puzzling where exactly they draw the line). Unfortunately, while several of these figures have been able to provide valuable testimony, none have had the power to hold Trump accountable directly. And conveniently, Trump has incapacitated those corners of the administration, like the Federal Election Commission (FEC) — which currently lacks a quorum and therefore cannot function — that are outside of his direct influence and therefore would have the power to hold him to account in the event of partisan defections. 

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The research team that brought you a study that compared employment dynamics in companies taken over by private equity with similar companies not acquired by PE (“Private Equity, Jobs, and Productivity,” American Economic Review 2004) is out with a new paper. The news for workers, already troubling in their earlier report, is even worse this time around.

In the earlier study of employment effects of private equity buyouts (Davis, Haltiwanger, Handley, Jarmin, Lerner, and Miranda 2014), the researchers looked at what happened to employment following the private equity buyout in establishments owned by the target company at the time the buyout occurred   as well as what happened to employment in the target firm. The new study examines only what happens to employment in the target firm.

This is an important difference, and raises the question of why the employment effects in establishments is not part of the analysis in the just released paper.

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Today, the Revolving Door Project joined civil society partners to call on President Trump to rescind his Executive Order on Evaluating and Improving the Utility of Federal Advisory Committees. This recent Trump executive order calls for the elimination of one-third of existing Federal Advisory Committees (FAC) that are not statutorily mandated. The Order claims to offer a remedy for a problem — bloat in the FAC system — that does not exist. It does identify an actual problem for corporate America, though -- more input from civil society can indeed dilute corporate influence in the workings of the executive branch. The order is, therefore, nothing more than the latest in this administration’s string of attacks on independent expertise and the public interest.  

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When Nancy Pelosi announced the impeachment inquiry of Trump last Tuesday, CEPR’s Revolving Door Project (RDP) was already ahead of the news. RDP’s director, Jeff Hauser answered when reporters asked if Democrats would seek impeachment after the whistleblower allegations. Last year, he warned of then-Supreme Court nominee Kavanaugh’s proven willingness to rule “that the president is unreachable by the law while in office.”

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As we have previously highlighted, the federal government’s forty independent federal agencies receive too little attention relative to their importance to our collective safety and prosperity. The Revolving Door Project has worked through multiple channels to shed light on these overlooked agencies and the threats that they face. We hope public education will generate pressure to safeguard the independence of these agencies and ensure that they are staffed with advocates for the public interest rather than corporate insiders. 

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Impeachment proceedings are officially underway, meaning that the tedious debate over whether or not to open an inquiry is (at least, hypothetically) behind us. Following revelations last week that President Trump has taken Congress’ refusal to impeach as a blank check, it is even becoming plausible that the days of Nancy Pelosi’s ridiculous ongoing opposition to impeachment are numbered. This is not to say that the impeachment fight is over; questions about the substance and style of the inquiry remain. Democrats, however, have crossed a major milestone. With the majority of the caucus no longer tied up by whether to even open an  impeachment inquiry, it is time they turn their attention to the other, related oversight they have neglected. Only then will they begin to resemble the opposition party voters thought they were propelling to power last fall.

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Education Secretary Betsy DeVos testified before the House Education and Labor Committee five months ago. She sat down, cleared her throat, and proceded to dodge basic yes-or-no questions about everything from transgender rights to literacy programs to arming teachers for several hours. Through her evasiveness, and the many issues Democrats wanted to bring up, there was barely any discussion of the trillion dollar student loan crisis, a calamity chaining down a whole generation’s opportunity, and which is now larger than both credit card and auto loan debt. Over $1.4 trillion of the $1.5 trillion debt is part of the federal government’s student loan portfolio, which the Education Department oversees.

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Washington is awash with proposals for a new regulatory agency centered on Silicon Valley. Often lost in that important conversation is the fact that the executive branch already has some positions with a direct focus on the technology sector, though they are limited in scope and scattered across the alphabet-soup of agencies. Perhaps no tech-focused bureaucrat has the president’s ear quite like the Chief Technology Officer. The CTO is the White House’s top advisor on anything to do with technology and innovation, tasked with explaining the latest developments and guiding the thinking of the most powerful politician on earth.

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The FTC’s pittance of a settlement with Google over serious violations of children’s privacy laws came and went through the news cycle with little more than a shrug from the public last month. That’s understandable; folks following Silicon Valley’s relationship with Washington right now are singularly focused on the concurrent state and federal-level antitrust inquiries into the biggest four tech companies, Google included. Moreover, as I wrote in the American Prospect yesterday, Google shields itself particularly well from prying progressive eyes, thanks to a combination of think tank donations, overtures to Democratic elites, and just offering highly functional products whose creepy surveillance downsides are little understood by consumers.

But this is the Revolving Door Project, so we couldn’t let a corporate giveaway go by without looking at the personnel behind it. And as the aphorism, sometimes attributed to Mark Twain, goes: “history never repeats itself, but it often rhymes.” 

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Based on the decline in the unemployment rate and other recent trends, it is likely that the official poverty rate will fall from 12.3 percent in 2017 to around 12 percent in 2018. The Census Bureau will release those poverty estimates tomorrow, Tuesday, September 10.

Regardless of where the 2018 rate ends up, it will vastly understate the extent of economic and social deprivation in the United States. But, with a better measure of poverty, one more consistent with most Americans’ understanding of how much income it takes not to be poor, the poverty rate is about 17.7 percent. Roughly 17 million more Americans would be counted as poor than are currently counted as poor using the official measure.  

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Facebook fulfilled an old promise last month in the most Facebook way possible: by sounding nice on paper and glossing over the details. Their new privacy tools are a laughably inefficient and insufficient set of measures, because fundamentally, they’re not trying to actually solve the stated problem: Facebook’s surveillance-based business model. It’s more proof that forcing individuals to protect themselves from the abuses of giant corporations is a cruel fantasy. This collective problem will require a collective solution. It’s about time regulators stepped in to do something about it. 

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As we have previously highlighted, the federal government’s forty independent federal agencies receive too little attention relative to their importance to our collective safety and prosperity. The Revolving Door Project has worked through multiple channels to shed light on these overlooked agencies and the threats that they face. We hope public education will generate pressure to safeguard the independence of these agencies and ensure that they are staffed with advocates for the public interest rather than corporate insiders. 

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In May, Wesley Bricker, the Securities and Exchange Commission’s (SEC) Chief Accountant, announced that he was stepping down. Early last month, we learned where he had landed: PricewaterhouseCoopers (PwC), one of the “Big Four” auditors, as Vice Chair and Assurance Leader for the US and Mexico. With this move, Bricker has completed his fourth turn through the revolving door between PwC and the SEC. Although seemingly remarkable, his career trajectory is emblematic of the nearly nonexistent lines between regulators and those they are tasked with regulating. As this example makes clear, reforming agencies like the SEC so that they work for the public good will not just be a matter of choosing good commissioners, but of changing the culture and expectations for personnel throughout all echelons of these entities. 

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This week the Department of Homeland Security (DHS) officially published regulations that radically expand the definition of an archaic immigration law term, public charge, to include various non-cash benefits that supplement earnings and other income, but are impossible to live on in the absence of other income. The people most impacted include millions of working-class and middle-class US citizens who plan to marry or are married to foreign nationals.
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With both Social Security and Temporary Assistance for Needy Families (TANF) having anniversaries this month — August 14, 1935 and August 22, 1996, respectively — it’s a good time to compare and contrast what they do for children and youth. If you listen to Social Security’s critics, it’s easy to come away thinking that Social Security is a system of generational theft in which Boomer parents and grandparents steal from their children and grandchildren. At the same time, many of these same critics point to the TANF block grant as a model social program for families.

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As we have previously highlighted, the federal government’s forty independent federal agencies receive too little attention relative to their importance to our collective safety and prosperity. The Revolving Door Project has worked through multiple channels to shed light on these overlooked agencies and the threats that they face. We hope public education will generate pressure to safeguard the independence of these agencies and ensure that they are staffed with advocates for the public interest rather than corporate insiders. 

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The Revolving Door Project’s mission is to scrutinize the nexus of corporate power and the executive branch. In the United States, two agencies within the executive branch have the power to seek to break up a company: The Federal Trade Commission (FTC), and the Department of Justice’s (DOJ) Antitrust Division. That is why it is important that we research any entanglements undermining the FTC and DOJ Antitrust’s commitment to serving the public interest.

For decades, these agencies have mostly sat back and allowed the American economy to consolidate, consolidate, consolidate. But that might be changing. In June, reports swirled that the FTC and DOJ had begun investigating the so-called Big Four technology companies, with FTC looking into Amazon and Facebook while DoJ probes Apple and Google. 

The case for breaking up big tech has been growing for years. Many onlookers compare the likes of Bezos, Zuckerberg, and Cook to Vanderbilt, Rockefeller, and Carnegie — barons of the Second Gilded Age. But just because there’s a good case for action never means that the federal government will take it, especially when Silicon Valley has built an influence-peddling operation in Washington that may even surpass Wall Street’s.  

Ultimately, the decision of whether or not to bring an antitrust case comes down to a few key individuals across the two agencies. 

In the FTC, the final call will come from the Commissioners. There are five of them, three Republicans and two Democrats, who all assumed office within the last year. Amazon and Facebook will almost certainly try to directly influence the thinking of these Commissioners. Therefore, the public needs to know whether these decision-makers have taken meetings with either of these companies, in order to accurately judge each Commissioners’ performance and interpret their ultimate vote.

In the DOJ, only one man will make the final call on whether to bring cases against Apple or Google: Makan Delrahim, the Assistant Attorney General for the Antitrust Division. Notably, Delrahim has a history with one of his subjects. In 2007, he helped shepherd Google’s purchase of DoubleClick through the regulatory eyes of the FTC and DoJ, meaning he previously worked as exactly the sort of influencer who may now attempt to skew his own decision-making. 

DoubleClick was a particularly important acquisition for Google — it gave the company tools to expand into banner ads, and crucially, had developed some of the earliest behavioral advertising technology. This was the foundation for today’s targeted ads, which have helped Google to single-handedly control 38% of the online advertising market

Delrahim’s history with Google raises eyebrows. But he has been trying to counter any inference of a conflict of interest by adopting a public facing posture of independence, saying “We already have in our possession the tools we need to enforce the antitrust laws in cases involving digital technologies. US antitrust law is flexible enough to be applied to markets old and new.”

Still, just like the FTC Commissioners, it is important for the public to understand how Apple and Google may be attempting to sway Delrahim. That’s why the Revolving Door Project has sent Freedom of Information Act requests for the administrative calendars of both Delrahim and each of the FTC Commissioners, starting from when each official assumed office. 

We’ll also be using FOIA, as always, to follow how money and corruption grease the wheels of the American economy for industry’s benefit. That’s why we’re requesting a list of attorneys and staffers who’ve departed the FTC over the last five years. We’re curious how many ex-FTC attorneys have taken jobs working for the corporations they used to oversee. We’ve already identified one such case: Laura Berger, the former senior attorney at the FTC’s Division of Privacy and Identity Protection, who now works as LinkedIn’s Head of Privacy for the Americas. That’s why we’re requesting copies of her official email correspondence with LinkedIn while she was on the FTC’s payroll.

And that’s just the beginning — we will be filing several more FOIA in the coming weeks as we seek to uncover how and why corporate consolidation has reached current levels. If you have ideas for additional FOIA or other research topics, please do not hesitate to reach out at This email address is being protected from spambots. You need JavaScript enabled to view it.

The public deserves to understand how Silicon Valley’s influence machine impacts the policy choices that affect all of our digital lives. Whether or not the FTC or DOJ ultimately bring cases against any of these companies, simply seeing who these officials are meeting with will help onlookers assess their decisions. The voices in the ears of our top regulators inevitably affect their decision-making -- we at least deserve to know who those voices are.

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CEPR regularly publishes a curated collection of original research from academic institutions and nonprofits on the state of the US labor market. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people's lives.


Center on Budget and Policy Priorities (CBPP)

Policy Basics: How Many Weeks of Unemployment Compensation Are Available? 

The federal-state unemployment insurance system provides temporary income support for many people when they lose their jobs. But how many weeks of compensation are available for those that lose their job? It depends on the state. Most states offer the standard maximum of 26 weeks, but others may offer fewer or extended periods of compensation based on various criteria (e.g., unemployment rate). See how many weeks of unemployment compensation each state offers.

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This May, millions of new graduates found themselves torn between triumph and trepidation, as looming obligations to begin repaying student loans tempered celebrations nationwide. Still others had no cause to celebrate, having accrued debt without obtaining their desired degree or certification. Many of those in the latter group attended a for-profit college or university; students at these schools tend to accumulate more educational debt, and make up a disproportionate share of indebted dropouts. On average, they also have poorer educational and labor market outcomes than students who attend nonprofit institutions. Adding insult to injury, for-profit enterprises tend to target students from disadvantaged backgrounds.[1]

Closer examination reveals that private equity plays a pernicious and outsized role in generating these discrepancies. Private equity-owned colleges and universities have accounted for most of the increase in the for-profit share of student loan defaults since 2000. A groundbreaking new study examining the effect of private equity buyouts in higher education found substantial declines in graduation rates, earnings, and loan repayment rates after buyouts took place. These declines were accompanied by increases in per-student borrowing and receipt of federal grants. In some respects, such as student loan repayment rates, other for-profit colleges more closely resembled community colleges than they did their private equity-owned peers.

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As we have previously highlighted, the federal government’s forty independent federal agencies receive too little attention relative to their importance to our collective safety and prosperity. The Revolving Door Project has worked through multiple channels to shed light on these overlooked agencies and the threats that they face. We hope public education will generate pressure to safeguard the independence of these agencies and ensure that they are staffed with advocates for the public interest rather than corporate insiders. 

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