Dean Baker
Truthout, September 11, 2017

C. Adam Bee and Joshua Mitchell, two economists at the Census Bureau, recently released an analysis of retirement income that qualitatively changes our understanding of the well-being of retirees. The analysis matched administrative data (essentially tax filings) with the reported income in the Current Population Survey (CPS), which has been the standard basis for the measurement of household income, including retirement income.

Bee and Mitchell found that the income of households in the administrative data was substantially higher than what was reported in the CPS. The overall median for households over age 65 in the administrative data was $44,371 in 2012 (the year that was the basis of their analysis), 30.4 percent higher than the $34,037 reported in the CPS for the same households. Their analysis found sharply higher incomes at all points along the income distribution than what was reported in the CPS. They also show a corresponding reduction in poverty rates among older households.

This is good and important news. While there is much room for additional analysis based on the Bee and Mitchell findings, there are two points that jump out. First, defined benefit (DB) pensions have been more effective in supporting retirement incomes than we had realized. This is good news. The second point is not good. There is nothing in the Bee and Mitchell analysis that suggests we had been overly pessimistic about the extent to which defined contribution (DC) pensions will provide adequate income to future retirees.

On the first point, by far the largest single source of the gap between the income as measured in the administrative data and income as measured in the CPS is uncounted income from DB pensions. This is due to both the fact that many people who receive a DB benefit do not report it on the CPS and also that many people who do receive a DB benefit under-report the amount.[1] Bee and Mitchell find that DB pensions make a large contribution to the income of older households for the 3^rd decile and above in the income distribution. Their results are shown in the table below.

 

	Administrative Data				CPS Data
Income Decile	Income	DB	DB		Income	Retirement	Retirement
		Income	Share			Income	Share
First	$7,518	$376	5%		$6,630	$332	5%
Second	$13,046	$652	5%		$11,620	$465	4%
Third	$18,841	$2,073	11%		$15,381	$923	6%
Fourth	$25,171	$4,531	18%		$19,604	$1,960	10%
Fifth	$32,505	$7,151	22%		$25,075	$4,012	16%
Sixth	$41,819	$11,291	27%		$31,757	$6,987	22%
Seventh	$52,646	$14,214	27%		$40,793	$10,606	26%
Eighth	$67,436	$20,231	30%		$54,286	$15,200	28%
Nineth	$92,249	$25,830	28%		$76,677	$21,470	28%
Tenth	$230,579	$46,116	20%		$172,800	$32,832	19%

 

Source: Bee and Mitchell 2017, Table 9.

An interview with Dean Baker, György László-Oláh Dániel
Makronóm.Mandiner, September 10, 2017

Mark WeisbrotThe Nation, September 7, 2017

Two years ago, in August of 2015, the national unemployment rate stood at 5.1 percent. This was at or below widely accepted estimates of the non-accelerating inflation rate of unemployment or NAIRU. This meant that if these estimates were right, the inflation rate would start to increase if the unemployment rate fell further or possibly even if it stayed at its 5.1 percent level.

As it turns out, the unemployment rate has continued to fall and stood at 4.3 percent in August of 2017. Inflation has remained steady or even fallen slightly. By all measures, it is below the 2.0 percent rate targeted by the Federal Reserve Board.

Many economists, including some at the Fed, wanted to raise interest rates enough to prevent any further decline in unemployment out of concerns over inflation. Fortunately, the Fed did not go along with this position.

September 2017, Eileen Appelbaum and Rosemary Batt

September 7, 2017

Dean Baker
Truthout, September 4, 2017

Mark WeisbrotALAI, 8 de septiembre, 2017

It must be great to be able to read people's minds. Most of us lack that ability, but thankfully the Washington Post was able to find a reporter who could tell us Emmanuel Macron's motives in moving to weaken France's labor laws in a way that gives businesses more power and workers less. Those of us who lack mind reading ability might have thought that Macron was motivated by a desire to give businesses more power and workers less. After all, he is a wealthy person who made a fortune in investment banking. He also won without much support from France's labor unions.

But the Post can tell us Macron's true motives:

"...to stimulate economic growth and lower unemployment, now over 9 percent."

This is especially not obvious since the most effective way to boost growth and reduce unemployment would be to increase spending, something that Macron is not planning to do. It is far from obvious that the labor market reforms described in this piece will have the effect of boosting growth and lowering unemployment, so it seems that Macron is badly confused.

The piece also makes many assertions that are wrong or misleading. It tells readers in the second sentence:

"Find one of those golden tickets and you basically cannot be fired, even if you stop performing."

This is a Washington Post invention, like the claim that Mexico's GDP quadrupled between 1987 and 2007 due to NAFTA (the actual growth figure was 83 percent, according to the I.M.F.). It is simply not true, employers absolutely can fire workers in France if they can show they are not doing their jobs.