Monday, February 24, 2020

Women's History Month: U.S. women's labor force participation



It's Women's History Month in the United States. What better time to discuss a key economic dynamic that both reflects and contributes to women's changing role in American society than their advances in the workplace? Specifically, how has women's labor force participation rate—the percentage of women engaged in the formal labor market by being employed or looking for work—changed over time? It's an important issue. When women join the labor force, economies tend to grow more. Indeed, there is a significant relationship between a country's per capita Gross Domestic Product and women's labor force participation rate. (See Figure 1.)

Figure 1

For women in the United States, labor force participation rates have not followed a straight path. It has been a complicated narrative, deeply affected by women's family roles, by discrimination, by the changing economy, by technological change, and by their own choices. And it is a continuing story, with surprising twists that economists continue to explore.

In a sense, this story begins with its first twist, in the 18th and 19th centuries. To be clear, this is a twist for us today, not for those who experienced it. From our modern perspective, we might assume that significant participation by women in the workforce was practically nonexistent until it began rising gradually in the 20th century. We would be wrong. A number of economists, and especially Claudia Goldin of Harvard University, have shown that women in the 18th and 19th centuries played a considerably more important role in the economy than we might have thought. They were critical to their families' economic well-being and their local economies, not in their rearing of children or taking care of household responsibilities but by their active participation in growing and making the products that families bartered or sold for a living.

But eventually, as the production of goods became mechanized and moved outside of the home, women's role in the market economy receded, and their labor force participation dropped substantially to its nadir near the end of the 19th century. Gradually, beginning after 1890 and very much into the 20th century, women had a growing place in the workforce. This path—declining from a high point in previous centuries, prior to the manufacturing economy, and then rising as the economy and society change over time—graphs as a U-shaped curve. One of Goldin's most significant contributions was to show that the U-shaped curve applied to the development of economies worldwide, though, as Boston College economist Claudia Olivetti has shown, the dip is less significant for economies that began significant development after 1950. (For an illustration of the global nature of this phenomenon, see this graph created by the IZA Institute of Labor Economics.)

Goldin cites four periods after the nadir of women's participation in the labor market, the first three of which she terms evolutionary and the final one revolutionary. In the first of these phases, from the late 19th century to the 1920s, it was primarily poor, uneducated single women who entered the workforce, often as piece workers in manufacturing or as employees in other people's homes. Married women largely stayed home, and the single women who worked generally exited the workforce upon marriage. In the 1910s, we see more women working in teaching and in clerical positions, which began a period of major growth.

From the 1930s to the 1950s, Goldin's second phase, married women entered the workforce in significant numbers, their rate rising from 10 percent to 25 percent. She notes that while 8 percent of employed women in 1890 were married, that figure rose to 26 percent in 1930 and 47 percent by 1950. These increases were the result of the rise of offices requiring clerical workers and new information technologies, along with tremendous growth in the number of women attending high school in the early 20th century. It's worth noting that women's workforce participation was negatively affected by their husbands' income. The higher his income, the less she would "need" to work outside the home. But that began to change during this period.

In the next phase, according to Goldin, women's labor force participation, driven by married women, rose substantially. And it continued to become more common for married women to continue working even as their husbands' income rose. One reason that married women worked more was the growing availability of scheduled part-time employment. In addition, societal barriers, and in some case legal barriers, to married women continuing to work were dropping.

Finally came what Goldin calls "the quiet revolution," the period from the late 1970s up to the very early 21st century. In this era, women's overall labor force participation rate rose but not by all that much. What did happen, however, was that the percentage of women of childbearing age with a child under the age of 1 in the workplace rose dramatically, from 20 percent to 62 percent. What Goldin refers to as the revolution are these changes: Young women in their late teens during the 1970s altered their "horizons" (their career expectations) so that they anticipated long, continuous careers that would not be cut short by marriage and children. This development, in turn, encouraged them to invest more in their education, with increasing numbers going to college and beyond, thus preparing them for careers that gave them status closer to men in the workplace.

At the same time, women began postponing marriage and childbearing. This was almost certainly, as shown by Goldin and by the University of Michigan's Martha Bailey and her co-authors, due in part to the introduction and growing popularity of the birth control pill, the reliable contraceptive that gave women more control over the timing of childbearing. The pill had the effects of both increasing female labor force participation and narrowing gender pay inequality. And women began to see their lives and their identities differently, with their professional selves becoming as important as their families.

And then something else happened. Beginning around 2000, the advances in women's labor force participation stopped. The rate flattened and then began to decline. To be sure, the decline is relatively small, a few percentage points, but it is real and it is unique among developed countries, according to the Organisation for Economic Co-operation and Development. (See Figure 2.)

Figure 2

We still don't know the reasons for this reversal, but we have some clues. Sandra Black of the University of Texas at Austin and her co-authors note that men's labor force participation rate has been declining for several decades. Until 2000, this caused a significant, though not nearly complete, convergence between women's and men's labor force participation rates. Since 2000, however, the relative decline for women has actually outpaced that of men. Between 2000 and 2016, prime-age women's labor force participation fell by 4.2 percent, from 78 percent to 74 percent. During the same period, prime-age men's labor force participation fell by 3.7 percent, from 91 percent to 88 percent. The decline in men's labor force participation is a trend generally attributed to poor labor market opportunities, particularly for low-skilled men. A question, therefore, is whether women's rate began to decline for the same reason. Some evidence points in that direction, but the story is not necessarily a simple demand-side tale.

As previously noted, this decline in women's labor force participation is not replicated in other OECD economies, where the rate continues to rise. Black and her co-authors point out that while the U.S. labor market is among the most flexible in its ability to accommodate changes in technology and other factors that change the nature of work, it is also among the least supportive in providing unemployment, job-search, and training benefits that could help both men and women adjust to change.

Those researchers also point to the potential positive impact of implementing paid family leave and expanded access to childcare on prime-age women's labor participation rates. It is clear from recent research by Olivetti and Barbara Petrongolo of the London School of Economics that national family policies can have a significant positive impact on women's labor force participation. The researchers examined family policy across high-income Western European countries, Canada, and the United States. What they found was that investments in childcare and early childhood learning had significant impacts on women's labor force participation. They also found a positive impact, though less pronounced, for maternity leave policies of up to 50 weeks. Interestingly, separate research finds that family policies that benefit only women can undermine their potential impact, as they might affect employers' attitudes toward female employees.

Unfortunately, what the OECD has also reported is that as of 2012, the United States ranked 33rd of 36 countries in investing in early childhood care and education, relative to overall income. This country is also the only developed country without a national paid leave program.

Another promising area for legislation to support women's ability to participate in the workforce is scheduling stability. Over the past decade, researchers have documented instability and unpredictability in the schedules of retail workers, and they are increasingly showing that providing greater stability and predictability for schedules can not only improve employer profits and strengthen the economy but also improve the health of their workers.

It seems clear that a change in direction for U.S. policies related to childcare and early education, along with a strong national paid leave policy for family leave could help to reverse the downward trend of U.S. women's labor force participation and put it back on the same path that most other developed countries are on. We have seen that while the 20th century saw a restoration of women's strong participation in the workforce, the 21st century has seen a disturbing reversal. Policymakers can do something about this, and it would benefit families and the nation's economy.

Dani Rodrik: The Changing Face of Economics [feedly]

Rodrik's take on abandoning the ideas and ideological culture contributing to austerity economics.

The Changing Face of Economics

Economists necessarily lack evidence about alternative institutional arrangements that are distant from our current reality. The challenge is to remain true to empiricism without crowding out the imagination needed to envisage the inclusive and freedom-enhancing institutions of the future.

Cambridge – Responding to pressures from within and without, the economics profession is gradually changing for the better. Not surprisingly, the populist backlash sweeping advanced democracies in recent years has produced some soul searching in the discipline. After all, the austerity, free-trade deals, financial liberalization, and labor market deregulation that caused it rested on the ideas of economists.

But the transformation extends beyond economic-policy tenets. Within the discipline, there is finally a reckoning with the hierarchical practices and aggressive seminar culture that have produced an inhospitable environment for women and minorities. A 2019 survey carried out by the American Economic Association (AEA) revealed that nearly half of female economists felt discriminated against or treated unfairly on account of their gender. Nearly a third of non-white economists felt treated unfairly based on their racial or ethnic identity.

These failings may be related. A profession that is less diverse and less open to different identities is more likely to exhibit groupthink and hubris. If it is to generate ideas to help society achieve inclusive prosperity, it will have to start by becoming more inclusive itself.

The new face of the discipline was on display when the AEA convened for its annual meetings in San Diego in early January. There were plenty of panels of the usual type on topics such as monetary policy, regulation, and economic growth. But there was an unmistakably different flavor to the proceedings this year. The sessions that put their mark on the proceedings and attracted the greatest attention were those that pushed the profession in new directions. There were more than a dozen sessions focusing on gender and diversity, including the headline Richard T. Ely lecture delivered by the University of Chicago's Marianne Bertrand.

The AEA meetings took place against the backdrop of the publication of Anne Case and Angus Deaton's remarkable and poignant book Deaths of Despair, which was presented during a special panel. Case and Deaton's research shows how a particular set of economic ideas privileging the "free market," along with an obsession with material indicators such as aggregate productivity and GDP, have fueled an epidemic of suicide, drug overdose, and alcoholism among America's working class. Capitalism is no longer delivering, and economics is, at the very least, complicit.

A panel called "Economics for Inclusive Prosperity" (EfIP), organized by a network of the same name which I co-direct, discussed several strands of new thinking taking over the discipline. One is the need to expand economists' focus from "average" levels of prosperity to distributive aspects and to non-economic dimensions that are equally fundamental to wellbeing, such as dignity, autonomy, health, and political rights. How economists talk about, say, trade agreements or deregulation may well change when they take such additional considerations seriously. This will require new economic indicators. One proposal that goes part of the way is for government agencies to produce distributional national income accounts.

As Samuel Bowles and Wendy Carlin argued in a paper presented in the same session, every policy paradigm embeds a set of ethical values – about what the good life entails – along with a view of how the economy works. Neoliberalism presumes individualistic, amoral individuals and a free market that delivers efficiency, thanks to complete contracts and a relative paucity of market failures. What we need, according to Bowles and Carlin, is a new paradigm that integrates egalitarian, democratic, and sustainability norms with a model of the economy as it really operates today. This paradigm would place community alongside the state-market dichotomy and would include policies such as wealth taxes, broader access to insurance to reduce risk exposure, workplace rights and voice, corporate governance reform, and substantial weakening of intellectual "property rights."

Speaking in the same session, Luigi Zingales faulted economists for foisting their own preferences on the body politic. This happens because economists tend to place greater value on certain outcomes (such as efficiency) than others (such as income distribution), and because they fall prey to groupthink and fetishize particular economic models over others. Part of the solution is to value diversity and exhibit greater modesty. Another part, according to Zingales, is to pay more attention to research in other social sciences, including history, sociology, and political science.

The implication of all these perspectives is that economics must be open to institutional alternatives and to institutional experimentation. Fostering such thinking is one of the major aims of the EfIP network. The institutional basis of a market economy is largely indeterminate. We can stick with institutional arrangements that sustain privilege and restrict opportunity. Or we can devise institutions that, in the words of Bowles and Carlin, are consistent with the pursuit of not only shared affluence but also an expanded concept of freedom.

Empirical methods – especially of causal inference – will help, and they have become much more central to the profession in recent decades. This is a very good thing insofar as real-world evidence, with all of its necessary messiness, displaces ideology. But the focus on evidence also risks creating its own blind spots. Evidence about what does and does not work can be obtained only from actual experience. We necessarily lack data on alternative institutional arrangements that are distant from our current reality.

The challenge for economists is to remain true to their empiricism without crowding out the imagination needed to envisage the inclusive and freedom-enhancing institutions of the future.



Dani Rodrik is Global Policy's Executive Editor and a Professor of International Political Economy at Harvard University's John F. Kennedy School of Government, is the author of Straight Talk on Trade: Ideas for a Sane World Economy.

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Sunday, February 23, 2020

How Technology Is Changing the Future of Higher Education [feedly]

How Technology Is Changing the Future of Higher Education

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How Many Hidden Thresholds of Soft Authoritarianism have we Already Crossed?

Tom Pepinski, who wrote a terrific post on the banality of life under soft authoritarian regimes, has a new piece entitled "If American Democracy Collapsed, You Almost Certainly Wouldn't Notice It." Democracy, in fact, makes it particularly challenging to know if democracy has collapsed. That is because when democracy functions, challenges to it are usually …

If Only it was this Obvious

Tom Pepinski, who wrote a terrific post on the banality of life under soft authoritarian regimes, has a new piece entitled "If American Democracy Collapsed, You Almost Certainly Wouldn't Notice It."

Democracy, in fact, makes it particularly challenging to know if democracy has collapsed. That is because when democracy functions, challenges to it are usually hidden, and when they emerge in the open, they are processed through a system that presumes that challenges can be handled democratically. Political actors invoke laws and Constitutions as if they were binding constraints. Stresses that pose questions about the stability of the regime over time, therefore, are fundamentally ambiguous. They may be regime-altering, or not. And the responses to them by those who hold power may be regime-altering. Or not.

And that is why, if American democracy were to collapse, you almost certainly wouldn't notice it. Not right away, at least.

This question of democratic collapse is a different phenomenon than the suite of problems frequently labeled "democratic decline" or "democratic erosion" or "democratic dysfunction." It may be that governments perform poorly, or govern in illiberal or biased ways, or that citizens are apathetic, demobilized, "hunkering down" and turning to blind obedience and loyalty rather than embracing rights and exercising voice. But what I mean by collapse is that it no longer is the case that one follows widely-accepted practices for securing political authority by prevailing in competitive elections that enfranchise most people. It is an open question whether or not the symptoms of decline and dysfunction predict the illness of collapse.

Although the mechanisms are slightly different, I think the same general point can be made about some classes of transformations in other political orders. For example, aspects of liberal international ordering have already substantially unravelled – but it seems like many international-affairs experts either don't realize it or, at the other extreme, think that ongoing mutations in international order presage some kind of collapse into multipolar chaos.

In general, our tendency to think in "all or nothing" terms – to expect that significant transformations are always accompanied by explosions, flashing neon lights, and sirens – obscures a great deal of alteration in political orders. Even the kinds of events – such as impeachment – that I once thought would change this dynamic seem to be resolving into collective anticlimax. Meanwhile, Trump has transformed, in a way unlike any other modern president, the Republican party into his own personal patrimony. And the self-abasement of Senators before the Mad Emperor now just seems like par for the course.

Of course, Trump's acquittal slides us further down the road. There's absolutely nothing to stop him from weaponizing the executive branch to persecute his opponents and shield himself and his family. Indeed, Rand Paul's systematic efforts to intimidate the whistleblower who called out the Ukraine Shakedown seem particularly sinister in this context.

But it's worth noting that many of the most vulnerable people already live in an illiberal state, and Trump's policies have overall broadened and deepened the extent of American pocket authoritarianismTo wit:

The strangers trying to arrest his mom's boyfriend weren't wearing uniforms or badges, and they didn't have a warrant. So 26-year-old Eric Diaz did the only thing he could think of: Outside his front door, on the otherwise quiet Brooklyn street, he confronted the plainclothes officers.

Then, one of them shot him in the face — just below his right eye.

"He literally points the gun at my brother and didn't even hesitate," Kevin Yañez Cruz, who witnessed the scene on Thursday morning, told WABC. "Just pulled the trigger."

Immigration and Customs Enforcement confirmed that agents discharged "at least one firearm" in the altercation, which landed two officers and two others in the hospital, agency officials said in statements to local news outlets. Diaz and the man they were targeting are now in their custody in the hospital, activists say.

Not surprisingly, the situation is intertwined with New York's refusal to cooperate with Trump's ethnic cleansing. This leads to policies that put due process considerations first, as they should be. But, of course, ICE blames respect for basic civil liberties for what happened in this case.

Gaspar Avendano-Hernandez, the longtime boyfriend of Diaz's mother, had been deported back to Mexico twice, ICE officials said.

On Monday, he was stopped by New York police for allegedly driving with a forged Connecticut license plate, a felony criminal charge, WABC reported.

Upon the man's arrest, immigration officials issued a detainer request, asking that Avendano-Hernandez be held in jail past his release date so that they could take him into custody. New York, like other "sanctuary cities," does not comply with these orders, which many courts have said violate due process.

"This forced ICE officers to locate him on the streets of New York rather than in the safe confines of a jail," ICE spokeswoman Rachael Yong Yow said in a statement to the Wall Street Journal.

A team of officers tracked him down to a residential street in Gravesend, an ethnically diverse neighborhood in south Brooklyn, arriving around 8 a.m. Thursday to try to arrest him.

He would not budge.

"He resisted because they didn't show him no papers, like, 'Oh, I'm the police,' no badge, no nothing, no warrant, no nothing," Yañez Cruz told WABC.

They Tasered him. At that point, two sons of his live-in girlfriend, including Diaz, stepped outside, unarmed, to check on what was happening. The officers didn't say anything at all, Yañez Cruz told the station.

According to ICE, that's when the two agents were "physically attacked." The ICE spokeswoman did not identify Diaz or say whether he was among the attackers.

Speaking of abuses of federal power, how many of you live in New York and were planning on getting, or renewing, Global Entry?

Saturday, February 22, 2020

Fascist attacks on democracy [feedly]

Fascist attacks on democracy

The hate-based murders of at least nine young people in Hanau, Germany this week brought the world's attention once again to right-wing extremism in Germany and elsewhere. The prevalence of right-wing extremist violence in Germany today is shocking, and it presents a deadly challenge to democratic institutions in modern Germany. Here is the German justice minister, quoted in the New York Times(link):
"Far-right terror is the biggest threat to our democracy right now," Christine Lambrecht, the justice minister, told reporters on Friday, a day after joining the country's president at a vigil for the victims. "This is visible in the number and intensity of attacks."
Extremist political parties like the Alternative for Germany and the National Democratic Party (linklink) have moved from fringe extremism to powerful political organizations in Germany, and it is not clear that the German government has strategies that will work in reducing their power and influence. Most important, these parties, and many other lesser organizations, spread a message of populist hate, division, and distrust that motivates some Germans to turn to violence against immigrants and other targeted minorities. These political messages can rightly be blamed for cultivating an atmosphere of hate and resentment that provokes violence. Right-wing populist extremism is a fertile ground for political and social violence; hate-based activism leads to violence. (Here is an excellent report from the BBC on the political messages and growing political influence of AfD in Germany (link).)

Especially disturbing for the fate of democracy in Germany is the fact that there is a rising level of violence and threat against local elected officials in Germany over their support for refugee integration. (Here is a story in the New York Times (2/21/20) that documents this aspect of the crisis; link.) The story opens with an account of the near-fatal attack in 2015 on Henriette Reker, candidate for mayor of Cologne. She survived the attack and won the election, but has been subject to horrendous death threats ever since. And she is not alone; local officials in many towns and municipalities have been subjected to similar persistent threats. According to the story, there were 1,240 politically motivated attacks against politicians and elected officials (link). Of these attacks, about 33% are attributed to right-wing extremists, about double the number attributed to left-wing extremists. Here is a summary from the Times story:
The acrimony is felt in town halls and village streets, where mayors now find themselves the targets of threats and intimidation. The effect has been chilling. 
Some have stopped speaking out. Many have quit, tried to arm themselves or taken on police protection. The risks have mounted to such an extent that some German towns are unable to field candidates for leadership at all. 
"Our democracy is under attack at the grass-roots level," Ms. Reker said in a recent interview in Cologne's City Hall. "This is the foundation of our democracy, and it is vulnerable." 
This is particularly toxic for the institutions of democratic governance, because the direct and obvious goal is to intimidate government officials from carrying out their duties. This is fascism.

What strategies exist that will help to reduce the appeal of right-wing extremism and the currents of hatred and resentment that these forms of populism thrive on? In practical terms, how can liberal democracies (e.g. Germany, Britain, or the United States) reduce the appeal of white supremacy, nationalism, racism, and xenophobia while enhancing citizens' commitment to the civic values of equality and rule of law?

One strategy involves strengthening the institutions of democracy and the trust and confidence that citizens have in those institutions. This is the approach developed in an important 2013 issue of Daedalus (link) devoted to civility and the common good. This approach includes efforts at improving civic education for young people. It also includes reforming political and electoral institutions in such a way as to address the obvious sources of inequality of voice that they currently involve. In the United States, for example, the prevalence of extreme and politicized practices of gerrymandering has the obvious effect of reducing citizens' confidence in their electoral institutions. Their elected officials have deliberately taken policy steps to reduce citizens' ability to affect electoral outcomes. Likewise, the erosion of voting rights in the United States through racially aimed changes to voter registration procedures, polling hours and locations, and other aspects of the institutions of voting provokes cynicism and detachment from the institutions of government. (McAdam and Kloos make these arguments in Deeply Divided: Racial Politics and Social Movements in Postwar America.)

Second, much of the appeal of right-wing extremism turns on lies about minorities (including immigrants). Mainstream and progressive parties should do a much better job of communicating the advantages to the whole of society that flow from diversity, talented immigrants, and an inclusive community. Mainstream parties need to expose and de-legitimize the lies that right-wing politicians use to stir up anger, resentment, and hatred against various other groups in society, and they need to convey a powerful and positive narrative of their own.

Another strategy to enhance civility and commitment to core democratic values is to reduce the economic inequalities that all too often provoke resentment and distrust across groups within society. Justin Gest illustrates this dynamic in The New Minority; the dis-employed workers in East London and Youngstown, Ohio have good reason to think their lives and concerns have been discarded by the economies in which they live. As John Rawls believed, a stable democracy depends upon the shared conviction that the basic institutions of society are working to the advantage of all citizens, not just the few (Justice as Fairness: A Restatement).

Finally, there is the police response. Every government has a responsibility to protect its citizens from violence. When groups actively conspire to commit violence against others -- whether it is Baader-Meinhof, radical spinoffs of AfD, or the KKK -- the state has a responsibility to uncover, punish, and disband those groups. Germany's anti-terrorist police forces are now placing higher priority on right-wing terrorism than they apparently have done in the past, and this is a clear responsibility for a government with duty for ensuring the safety of the public (link). (It is worrisome to find that members of the police and military are themselves sometimes implicated in right-wing extremist groups in Germany.) Here are a few paragraphs from a recent Times article on arrests of right-wing terrorists:
BERLIN — Twelve men — one a police employee — were arrested Friday on charges of forming and supporting a far-right terrorism network planning wide-ranging attacks on politicians, asylum seekers and Muslims, the authorities said. 
The arrests come as Germany confronts both an increase in violence and an infiltration of its security services by far-right extremists. After focusing for years on the risks from Islamic extremists and foreign groups, officials are recalibrating their counterterrorism strategy to address threats from within. 
The arrests are the latest in a series of episodes that Christine Lambrecht, the justice minister, called a "very worrying right-wing extremist and right-wing terrorist threat in our country." 
"We need to be particularly vigilant and act decisively against this threat," she said on Twitter. (link)
The German political system is not well prepared for the onslaught of radical right-wing populism and violence. But much the same can be said in the United States, with a president who espouses many of the same hate-based doctrines that fuel the rise of radical populism in other countries, and in a national climate where hate-based crimes have accelerated in the past several years. (Here is a recent review of hate-based groups and crimes in the United States provided by the Southern Poverty Law Center; link.) And, like Germany, the FBI has been slow to place appropriate priority on the threat of right-wing terrorism in the United States.

(This opinion piece in the New York Times by Anna Sauerbrey (link) describes one tool available to the German government that is not available in the United States -- strong legal prohibitions of neo-Nazi propaganda and incitement to hatred:
"There is the legal concept of Volksverhetzung," the incitement to hatred: Anybody who denigrates an individual or a group based on their ethnicity or religion, or anybody who tries to rouse hatred or promotes violence against such a group or an individual, could face a sentence of up to five years in prison.
Because of virtually unlimited protection of freedom of speech and association guaranteed in the First Amendment of the Bill of Rights, these prohibitions do not exist in the United States. Here is an earlier discussion of this topic (link).)

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Friday, February 21, 2020

The US Rental Housing Market [feedly]

The US Rental Housing Market

The US rental housing market is in the middle of some major shifts, as outlines by the Joint Center for Housing Studies of Harvard University in its report "America's Rental Housing 2020" (January 2020). Here are some of the changes.

The "rentership rate"--the share of households renting--rose sharply from about 2004 to about 2016, before leveling out the last few years.

From 2000 to 2010, most of the growth in the housing rental market was coming from those with relatively lower incomes. But in the last decade, most of the growth in the rental housing market is coming from those with relatively higher incomes. "But at 22 percent in 2019, rentership rates among households earning $75,000 or more are at their highest levels on record. Even accounting for overall income growth, rentership rates for households in the top decile jumped from 8.0 percent in 2005 to 15.1 percent in 2018 as their numbers more than doubled."
Rent is a big burden for many. The report looks at renters who are "cost burdened," referring to those who pay more than 30% of their income in rent. "Thanks to strong growth in the number of high-income renters, the share of renters with cost burdens fell more noticeably from a peak of 50.7 percent in 2011 to 47.4 percent in 2017, followed by a modest 0.1 percentage point increase in 2018. ... Meanwhile, 10.9 million renters—or one in four—spent more than half their incomes on housing in 2018." Another big shift is that there is a rise in the "cost-burdened renters" in middle-income groups (say, $30,000-$75,000 per year in annual income), especially in  "larger, high-cost metropolitan areas."

Vacancy rates for rentals are down, and are especially low for lower-cost, lower-quality rentals.
Meanwhile, rents are consistently rising faster than inflation.
The value of apartment properties has risen quickly, too.

Some background factors are also shifting. In the market for rental properties, stock of rentals rising in two areas  over last 15-20 year: single-family homes, and multi-family buildings with 20 or more units. These changes represent a shift in the rental housing market away from individual landlords and toward corporate ownership of rentals. In the area of single-family homes, for example, a number of institutional investors bought houses as rental properties in the aftermath of the drop in housing prices around 2010. The report notes:
Ownership of rental housing shifted noticeably between 2001 and 2015, with institutional owners such as LLCs, LLPs, and REITs accounting for a growing share of the stock. Meanwhile, individual ownership fell across rental properties of all sizes, but especially among buildings with 5–24 units. Indeed, the share of mid-sized apartment properties owned by individuals dropped from nearly two-thirds in 2001 to about two-fifths in 2015. Given that units in these structures are generally older and have relatively low rents, institutional investors may consider them prime candidates for purchase and upgrading. These changes in ownership have thus helped to keep rents on the climb.
Another shift is that many renters seem happier being renters, and less likely to view a rental as a short-term stop on the path to homeownership. Renters are staying in place longer, too. The report notes:
Changes in attitudes toward homeownership may lead some households to continue to rent later in life. The latest Freddie Mac Survey of Homeowners and Renters reports that the share of genX renters (aged 39–54 in 2019) with no interest in ever owning homes rose from 10 percent in March 2017 to 17 percent in April 2019. ... Fully 75 percent of renters overall, and 72 percent of genX renters, stated that renting best fits their current lifestyle. ...
[M]any renters are staying in the same rental units for longer periods. Between 2008 and 2018, the share of renters that had lived in their units for at least two years increased from 36 percent to 41 percent among those under age 35, and from 62 percent to 68 percent among those aged 35–64. Similarly, the National Apartment Association reported a turnover rate of just 46.8 percent in 2018— the lowest rate of move-outs since the survey began in 2000.
The US rate of homeownership has often been in the range of 63-65%, going up above that range during the housing boom around 2006, back down after that, and then rebounding a bit in the last few years.  Looking at long-run trends of aging, marriage/parenthood, and income, the US Department of Housing and Urban Development organized a pro-and-con symposium a few years ago on the question of whether the US homeownership rate will have fallen to less than 50% by 2050. Homeownership rates for young adults and for blacks are especially low. The US rate of homeownership was about average by international standards 20-25 years ago, but now is below the average. For earlier posts on these themes, see:

With regard to the broader social issue of rental prices being so high for so many people, the economic answer is straightforward. For those with very low incomes, help them afford the rent. But for the market as a whole, the way to get lower prices is to raise supply. For example, it's an interesting question as to why the individual landlord has been in such decline, and the extent to which this drop has been due to additional administrative, regulatory, and zoning costs being imposed at the state and local level. It seems to me possible that we are in the middle of a social shift in which many households at a variety of income levels put less emphasis on homeownership--which in turn means greater public attention to conditions of supply and demand in housing rental markets  

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Thursday, February 20, 2020

Resources to Help Gig Workers Understand Taxes [feedly]

Resources to Help Gig Workers Understand Taxes

The gig economy has grown to about a quarter of all workers, but their participation in it varies widely: while 1 in 10 workers relies on gig work for their primary income, most gig workers are active just a few months in a year. Such employment can have complicated tax implications, which is why CBPP's Get It Back campaign offers an online tax tool to help these workers understand how they can file a correct tax return and reduce their tax liability.

Aimed at transportation workers, who dominate what's known as the online platform economy, this tool — the Roadmap to Rideshare Taxes — is a helpful guide with step-by-step information on how to pay taxes when the IRS treats you like a business. The site covers tricky self-employment tax topics, including:

There's also a one-page cheat sheet that guides rideshare workers through carefully tracking their deductions, paying taxes quarterly, and filing their tax returns annually. Tax deductions for driving expenses (like the mileage deduction) are the best way to reduce the amount of income subject to both income and self-employment taxes.

In addition, self-employed workers need to pay taxes throughout the year because, unlike with an employer, platform companies don't withhold a portion of workers' taxes from their paychecks. Anyone expecting to owe more than $1,000 in taxes (which is anyone with roughly $5,000 in self-employment income) must pay estimated taxes quarterly. The amount owed can be hard to calculate without outside assistance, and our tool helps with that, too.

Gig work offers important benefits for many, including flexible hours, a low barrier to entry, and immediate work. But filing taxes from such work can be stressful and complex. The Roadmap to Rideshare Taxes is designed to help.

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