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

Building on recent posts by Dean Baker in his Beat the Press Blog (responding to NYT and Washington Post here and Ross Douthat here) that debunk the idea that there is a “demographic crisis” in China, there’s also an important family justice aspect to fertility in China. 

Although Douthat attributes China’s fertility rate (1.6 births per woman) to “cruel policy choices,” particularly the one-child policy, he doesn’t mention that these choices include widespread discrimination against unmarried mothers. As NPR recently reported, unmarried parents in China are often “stuck in a legal gray zone where they are unable to access basic public services for themselves and their children.” In many Chinese provinces, unmarried mothers have to pay fines for having a child, and/or face barriers to “hukou, or household registration, akin to a social security number allowing them to go to school and access services such as health care.” Beyond these legal barriers and penalties, unmarried mothers face severe social stigma in China. 

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Until 1968, the minimum wage not only kept pace with inflation, it rose in step with productivity growth. The logic is straightforward; we expect that wages in general will rise in step with productivity growth. For workers at the bottom to share in the overall improvement in society’s living standards, the minimum wage should also rise with productivity. 

The distinction between inflation and productivity is an important one. If the minimum wage rises in step with inflation, we are effectively ensuring that it will allow minimum wage earners to buy the same amount of goods and services through time, protecting them against higher prices. However, if it rises with productivity that means that as workers are able to produce more goods and services per hour, on average, minimum wage earners will be able to buy more goods and services through time.

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During the January 14th Democratic Presidential Debate, as part of the discussion of whether tuition at public college should be free for all, Pete Buttigieg had this to say

“There is a very real choice about what we do with every single taxpayer dollar that we raise, and we need to be using that to support everybody whether you go to college, or not, making sure that Americans can thrive....Investing in infrastructure — and something that hasn’t come up very much tonight, but deserves a lot of attention: poverty.”

As part of his response, Buttigieg mentioned the Poor People’s Campaign, some of whose members had demonstrated outside before the start of the debate. 

But it’s worth pointing out that the Poor People’s Campaign has specifically called for “free tuition at public colleges and universities and an end to profiteering on student debt.” Similarly, PPC supports single-payer universal health care for all and a broad range of other social security policies. Finally, PPC doesn’t have a particularly minimalist or narrowly targeted conception of poverty and economic insecurity. In their demands, they highlight the bottom 43 percent of income distribution (people with incomes under 200 percent of the supplemental poverty line in 2017, or roughly $56,000 for a family of four) not, say, the bottom 10 percent. 

This is consistent with other research finding that roughly 40 percent of Americans are poor, at risk of poverty, or otherwise economically insecure. To be successful, a progressive plan to substantially reduce poverty and insecurity needs to build solidarity among them and with people who are securely in the middle-class, but feel stressed by the cost of child care, health care, higher education, and potential threats to their security. 

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On January 13, the Revolving Door Project and the Demand Progress Education Fund called on the Chairs and Ranking Members of the House Financial Services and Senate Banking Committees to "open an investigation into the Securities and Exchange Commission’s review of WeCompany’s aborted Initial Public Offering (IPO) and the integrity of its investigation into potential securities fraud within that same company." 

The letter highlights, "Former senior SEC officials have represented WeCompany in each of these two stages of SEC scrutiny —John White, former Director of the SEC’s Division of Corporation Finance in the first instance, and Andrew Ceresney, the Director of the SEC’s Division of Enforcement in the second — casting doubt on the integrity of the agency review process in both cases."

"In the face of such doubts, it is impossible for the public to have full confidence in the SEC’s ability and willingness to safeguard securities markets. We ask that you work to restore that confidence by conducting a thorough investigation."

Read the full contents of the letter here

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To: CNN, The Des Moines Register, and the moderators of the January 14th Democratic debate

We, the undersigned organizations, urgently request that you ask each Democratic presidential candidate about how they would wield powers specific to the executive branch at the next debate on January 14th. In particular, we request that you ask about what qualifications each candidate will prioritize in making key nominations and appointments to the various departments and independent agencies that will fall under the next president’s purview. 

In prior debates, the presidential candidates have enjoyed the opportunity to propose their ideal legislative fixes for several issues. However, while presidents often help guide their party’s legislative efforts, it is their ultimate duty to veto or sign the laws that Congress passes, and then to execute the laws of the land.

Chief among the president’s tools for executing the law is the power to appoint personnel. Indeed, most of the executive branch activity with tangible impacts on voters’ lives, such as rulemaking and enforcement activity, takes place not from the Oval Office directly, but from within the departments and agencies whose leadership the president installs.

If candidates were asked to articulate how they intend to use the powers of the presidency, especially the power to appoint personnel, voters could gain new insight into the ways each potential president thinks about the executive branch they hope to lead. After all, implementing both existing (e.g., the Clean Air Act) and new legislation successfully requires a talented, driven team.

Moreover, as The American Prospect recently highlighted, the executive branch already has the legal power to accomplish a great many of the stated goals of several candidates. Through executive action directed by wisely-chosen political appointees, the next president could fight climate change, lower drug prices, and combat monopolies, to name but a few examples. 

By now, candidates have gone on the record to say whether they want to tackle these and other problems legislatively. Most have not spoken about whether they plan on using the powers of the executive branch to accomplish these goals.

The nature and efficacy of executive branch actions depend on the integrity and competence of the appointees tasked with carrying them out. Unfortunately, this power has too often been treated as an afterthought on the campaign trail only to take center stage once the votes have been cast and there is no going back. 

The Trump administration has made it clearer than ever that presidential appointments are often the site of legal, but nonetheless damaging, political corruption. However, the Trump administration did not invent the practice of major campaign donors receiving presidential appointments to cushy or influential jobs for which their credentials range from shaky to nonexistent. The so-called “revolving door” between powerful industries and the executive-branch regulators who oversee them is an all too common source of corruption, and has been exploited by presidents of both parties in the recent past. 

Particularly in light of Trump’s highly public misuse of the nomination power, however, voters would gain valuable insight into the ways each candidate is approaching their potential presidency by hearing questions about the qualities each candidate will value the highest when staffing their administration. Moreover, if candidates are pressed to make commitments about certain minimum qualifications, this would oblige candidates to stick to their words. If some candidates refuse to pledge that their top appointees will meet certain qualifications, this too would be valuable information for voters to consider before voting in the primaries.

For these reasons, we urge you to ask the candidates concrete, specific questions about executive actions they would take and personnel they would hire at the next Democratic debate. Thank you for your time and consideration.


Signed:

Action Center on Race and the Economy

Americans for Financial Reform

Center for Popular Democracy

Consumer Action

CREDO Action

Demand Justice

Demand Progress

HedgeClippers

National Fair Housing Alliance

National LGBTQ Task Force

Open Markets Institute

People For The American Way

Progressive Change Campaign Committee

Progressive Change Institute

Public Citizen

Revolving Door Project

Strong Economy For All Coalition

Student Defense

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In a new National Bureau of Economic Research (NBER) working paper, Richard Burkhauser and his coauthors argue that only 2.3 percent of Americans lived in poverty in 2017, if we define poverty in the way they claim “President Johnson defined it.” By comparison, the OECD put the US poverty rate at 17.8 percent using the standard international measure of poverty, which sets the poverty line at half of median disposable income (about $34,000 a year for a family of four in 2017).  

To reach this conclusion, Burkhauser et al. make a long list of changes to the official poverty measure. Some of these adjustments are sensible. For example, they follow the international practice and use disposable income (including taxes and near-cash, in-kind benefits) to measure poverty. At least two other changes they make are controversial and problematic. First, they make inflation adjustments that have the effect of pushing down the value of the poverty line, compared to other relevant poverty lines, over the last half-century (to about $18,800 in 2017 for a family of four). Second, they count the dollar value of public and employer-sponsored health insurance as income. 

What does it mean to say only 2.3 percent of Americans live in poverty today, as LBJ supposedly defined it? Imagine two adults raising two children in 2017 on a disposable income of $19,000 without receiving any public or employer-provided health insurance. According to most Americans and any modern poverty measure, this family would not only be poor, they would fall substantially below the poverty line. Yet, according to Burkhauser et al., they are not living in poverty, as Johnson defined it.

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This is the second part in a series of posts. You can read the first post here.

Writing in the New York Times, family sociologist Christina Cross notes that “America has a long and troubled history of viewing racial inequality primarily through the lens of family structure.” She cites her own and others’ research in concluding that “what deserves policy attention is not black families’ deviation from the two-parent family model but rather structural barriers such as housing segregation and employment discrimination that produce and maintain racialized inequalities in family life.”

In a Mother Jones commentary posted shortly after Cross’ piece was published, Kevin Drum goes on the attack by 1) asserting that single-parent families are a “big deal” (by which he means a big problem); 2) accusing Cross of “special pleading” and “desperately try[ing] to make a case that really can’t be made;” and, 3) implying that “we liberals” are hypocrites who are afraid to “say anything that even remotely sounds like a criticism of black family lives.” 

This is quite the tirade for a senior blogger at a liberal publication to so quickly throw down in response to an op-ed by an up-and-coming scholar. (Cross is currently a Postdoctoral Fellow at Harvard University and starting as an Assistant Professor there next year.) So one might assume Drum is well-informed about the state of research on family structure, takes care to cite evidence, and is not just echoing social-conservative talking points and Twitter posts

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To: Judy Woodruff, Tim Alberta, Amna Nawaz, Yamiche Alcindor, PBS NewsHour, Politico, and the organizers of the December 19th Democratic debate

We, the undersigned organizations, urgently request that you ask each Democratic presidential candidate about how they would wield powers specific to the executive branch at the next debate on December 19th. In particular, we request that you ask about what qualifications each candidate will prioritize in making key nominations and appointments to the various departments and independent agencies that will fall under the next president’s purview. 

In prior debates, the presidential candidates have enjoyed the opportunity to propose their ideal legislative fixes for several issues. However, while presidents often help guide their party’s legislative efforts, it is their ultimate duty to veto or sign the laws that Congress passes, and then to execute the laws of the land.

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This is the first part in a series of posts. You can read the second post here.

In a recent New York Times’ column, Thomas Edsall defends progressives against Attorney General William Barr and other social conservatives who charge them with wanton destruction of the family. Edsall is right to call out Barr and others for “marketing apocalyptic hogwash” to get Trump reelected, but his argument concedes too much to social conservatives. 

According to Edsall, “liberals are as deeply disturbed by familial dysfunction as conservatives...” This isn’t saying much because liberals and conservatives don’t agree on what is and isn’t dysfunctional when it comes to families. Social conservatives are particularly disturbed by cohabitation, divorce, same-sex relationships, children being raised by unmarried parents, and women who have children without a male spouse or partner. In other words, they are mostly concerned about the structure of family living arrangements and their legal status (who lives with who, what genitals they have, and whether or not they’re married).

Liberals are much more concerned about the quality of family relationships. The familial dysfunctions they are most deeply disturbed by include violence, ill-treatment, and various forms of inequality within the family, as well as unfair public and private discrimination against certain types of families based on their structure. Unlike conservatives, relatively few liberals today view cohabitation, divorce, same-sex relationships, or unmarried women who have children as immoral or dysfunctional. 

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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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Lawmakers sold opportunity zones as a solution for this country’s poorest communities but, two years into the program, that claim does not seem to be holding up. Rather than infusing poor communities with much-needed cash, it seems that many zones are padding the already bursting pockets of some of the country’s wealthiest individuals. No story has better embodied the mismatch between the program’s intent and actual outcome than ProPublica’s report, out last week, detailing how a luxury apartment development in a superyacht marina came to qualify for the tax break. 

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To: Moderators Rachel Maddow, Andrea Mitchell, Kristen Welker, Ashley Parker, MSNBC, and The Washington Post


We, the undersigned organizations, urgently request that you ask each Democratic presidential candidate about how they would wield powers specific to the executive branch at the next debate on November 20th. In particular, we request that you ask about what qualifications each candidate will prioritize in making key nominations and appointments to the various departments and independent agencies that will fall under the next president’s purview. 

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TO: INTERESTED PARTIES

FROM: Revolving Door Project & Demand Progress Education Fund

RE: Dems Must Confront GOP Attacks on Dem Seats at the Independent Agencies 

Date: 11/13/19

 

Trump & McConnell’s Stealth Nuclear Attack on Independent Agencies

It is no secret that President Donald Trump and Senate Majority Leader Mitch McConnell will abandon the basic norms that govern our democracy whenever it serves their interests. However, one important breach has gone largely undetected. 

Quietly, Trump and McConnell have undermined statutorily-mandated political balance on many independent agency boards by refusing to nominate Democrats, and slow-walking or blocking them in the Senate. 

By effectively undermining statutory guarantees of partisan diversity across many disparate agencies, Trump and McConnell have ruined an important avenue by which the party not in the White House exerts influence over a president’s administration. Having trampled a pillar of bipartisanship, McConnell should be made to feel the consequences now and in the future. 

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Rep. Ayanna Pressley introduced legislation last week to require the CEOs of the country’s largest banks to testify before Congress at least once per year. While this might seem a perfectly run-of-the-mill measure from an outside vantage point, it is a marked departure from this Congress’ aversion to most oversight (especially of corporations). Indeed, most members of Congress have shown no appetite for the type of populist, corporate oversight for which we at the Revolving Door Project have advocated. Pressley, along with a handful of other freshman Democrats (and Rep. Maxine Waters) are notable exceptions. It is long past time that their approach became more mainstream. 

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For over half a century, the United States has measured income poverty by comparing a family’s income to a standardized dollar amount (a “poverty line”) that varies by family size. For a family of four, this poverty line was initially set at $3,104 in 1963. The current official poverty line — $25,701 for a family of four in 2018 — is simply the base-1963 poverty line adjusted for nothing but inflation over the last 55 years. Today the United States is the only country in the world that measures present-day poverty by using a poverty line set over half a century ago and since then only adjusted for inflation. 

Our idiosyncratic approach to measuring poverty is deeply flawed for at least two reasons. First, poverty lines are social standards, not merely technical or mathematical ones. A poverty line set over half a century ago will reflect a very different set of assumptions, social conventions, political considerations, and body of social-science research than a poverty line first set in 2019. The initial 1963 poverty line was based on food expenditure data from 1955 and a set of assumptions that haven’t aged well, including that family meals are all prepared at home by a “frugal housewife.” (See more on this here.)

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One of the tasks that are keeping economists employed these days is explaining the drop in labor’s share of Gross Domestic Product (GDP). This is supposed to be a major cause of concern since the vast majority of people get most or all of their income from working. 

A wide variety of theories have been put forward to explain the decline. However, there is a big problem these theories; it is not clear that there has been much of a drop in the labor share. 

Much of the decline in shares, before recent revisions, was simply due to an increase in the share of depreciation in GDP. Depreciation is the portion of output that is needed to replace worn-out capital. This is output that is neither profit nor wages; but the greater the depreciation share, other things being equal, the lower will be the labor share.

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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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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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