Guidance on Medicaid Work and Community Engagement Requirements Raises Many Important Questions [feedly]

Guidance on Medicaid Work and Community Engagement Requirements Raises Many Important Questions
https://www.urban.org/research/publication/guidance-medicaid-work-and-community-engagement-requirements-raises-many-important-questions The Centers for Medicare & Medicaid Services (CMS) issued guidance on Jan. 11, 2018, allowing states to require Medicaid beneficiaries to engage in "work or other community engagement" activities to maintain their coverage. This is a dramatic departure from Medicaid policy over the past 50 years. Given that CMS is approving work and community engagement requirements through waivers designed to test new provisions in Medicaid, we propose important questions for careful consideration by states and CMS. Since most Medicaid enrollees are already working or would likely be exempt from the new requirements, it will be important to consider the full costs and benefits of the policy change.

 -- via my feedly newsfeed

Beginning to Gauge Maria’s Effect on Puerto Rico’s Economy [feedly]

Beginning to Gauge Maria's Effect on Puerto Rico's Economy
http://ritholtz.com/2018/01/beginning-gauge-marias-effect-puerto-ricos-economy/

Beginning to Gauge Maria's Effect on Puerto Rico's Economy

January 16, 2018 5:00am by Guest Author

Beginning to Gauge Maria's Effect on Puerto Rico's Economy
Jason Bram and Lauren Thomas
Liberty Street Economics, January 12, 2018

 

 

 

Just two weeks after most of Puerto Rico dodged the proverbial bullet, missing the brunt of Hurricane Irma, the island was devastated by Maria—one of the ten strongest Atlantic hurricanes on record. Making landfall on September 20, 2017, the storm caused not only massive physical destruction and tragic loss of life but also widespread and persistent power outages, shortages of potable (and even nonpotable) running water, and disruptions to telecommunications and travel, among other issues. With the storm boosting costs and disrupting activity, the short-term economic impact is clearly significant. But an even greater concern is that the adverse short-term effects of the storm, overlaid on an already shrinking economy, may evolve into long-term adverse effects. In this post, we focus on the magnitude, duration, breadth and nature of the economic disruptions, as measured mostly by employment.

Based on what we've learned from past natural disasters in other regions, we consider how Puerto Rico's economy might be affected in the longer run. Still, it is important to note a few unique features of this disaster that complicate comparisons with other natural disasters. First, while electricity has gradually been restored to parts of the island, the power outage has lasted much longer than has been the case after comparable disasters. Second, Puerto Rico's dire fiscal situation, heading into the storm, is somewhat unprecedented. Third, while the economies of most islands in the hurricane-prone Caribbean are driven by tourism, Puerto Rico's is much more diversified. These and other issues make it harder to predict Puerto Rico's post-hurricane prospects based on history.

Damage to Infrastructure and Capital
When we talk about the economic "cost" of a disaster, we are usually thinking of two components: physical damage and lost (forgone) economic output. Estimates of the physical (capital) damage wrought by Maria—to infrastructure, businesses, homes, and personal property—vary widely at this point. In late September, Moody's estimated the capital loss at up to $55 billion, part of an overall cost estimate ranging from $45-95 billion. In contrast, the Puerto Rican consulting firm Estudios Técnicos has estimated the capital loss in the range of $16-20 billion. In short, while capital losses are in principle clearly defined and measurable, it often takes a good deal of time to tally them up with any degree of accuracy—especially after a disaster of this magnitude. We will not address these costs further in this blog post.

Lost Economic Output
The other major loss component, lost economic output (or income), is harder to define but can be roughly estimated based on incoming economic data. Moreover, history shows that short-term trends in a local economy after a major disaster can give us a clue about the long-term economic impact. Usually, preliminary estimates of the economic fallout from such disasters have turned out to be overly pessimistic—as noted in this 1994 study. A more recent example of initial economic cost estimates turning out to be too high occurred after Hurricane Sandy. Such disasters—including numerous hurricanes that have devastated Caribbean islands—have rarely derailed a regional or local economy for more than a year.

However, one exception to this was New Orleans following Hurricane Katrina. That disaster does appear to have had a long-lasting adverse effect on the local economy—employment in the New Orleans metro area fell by roughly 30 percent after Katrina and even now, more than a decade later, has only made up three-quarters of that drop, with employment still more than 7 percent below its pre-Katrina level.

Now that Puerto Rico is struggling to rebound from Maria, many are concerned about its long-term prospects. This concern is amplified by the fact that the Commonwealth had already been struggling with a weak economy and a fiscal crisis before the storm. While the U.S. Virgin Islands and many other Caribbean islands have seen comparable devastation from hurricanes, Puerto Rico has not—at least not in modern times. Hurricane Georges in 1998 caused significant damage in Puerto Rico but barely had a measurable effect on the overall economy.

So how can we estimate a storm's economic cost? Economic output, as well as income, typically declines more sharply than employment in the immediate wake of major disasters and disruptions—for example, a manufacturer, wholesaler, or restaurateur that has to shut down for a week or two is unlikely to lay off most or any of their workers. But what happens to businesses that have to stay closed longer, because of severe damage or a persistent lack of electricity? Only time will tell. Nevertheless, employment is probably the most timely and accurate indicator of sustained drops in activity. Thus, analyzing incoming employment data and comparing them with historical benchmarks (employment data after past hurricanes) can give us a sense of how bad the economic fallout has been, and may even provide a clue as to how quickly Puerto Rico's economy is likely to recover. Will it look like post-Katrina New Orleans or will it follow the more usual pattern?

Employment Trends in October and November
In October, Puerto Rico's payroll employment is estimated to have fallen by about 4 percent (seasonally adjusted)—a huge drop, but not unusually large after a hurricane. Encouragingly, employment rebounded about 1 percent in November. To put this in perspective, we compare it with three somewhat similar precedents: the U.S. Virgin Islands after Hurricane Hugo (1989) and again after Hurricane Marilyn (1995), and metro New Orleans after Hurricane Katrina (2005). As shown in the chart below, Puerto Rico's recent job loss appears comparable in magnitude to the Virgin Islands' in 1995, but somewhat less severe than the Virgin Islands' in 1989 and significantly less than New Orleans' in 2006 and beyond.

A look at the profile of job losses by industry also reveals close similarities with these earlier hurricanes. As is typically the case, the sharpest job losses have occurred at restaurants, bars, hotels, and retailers. In normal economic rebounds from disasters, employment in those same industries tends to recover gradually over the course of the next nine to twelve months, while other industries bounce back more quickly. There were also steep job losses in wholesale trade and health and education services, whereas sectors like professional and business services, manufacturing, construction, and finance did not see significant declines. If history is any guide, construction employment is likely to rise sharply in the months ahead, partially offsetting lingering weakness in some sectors. While the available employment data exclude Puerto Rico's farm sector, it should be noted that extensive crop damage has reportedly taken a huge toll on the island's farmers and $1 billion agricultural industry.

One might understandably be skeptical of the monthly employment numbers cited above, figures based on a survey of businesses. It is conceivable that many of the hardest-hit businesses were unable to respond to the October and even November surveys, in which case the employment data may understate the true severity of the job losses. However, a look at weekly initial unemployment insurance claims—a complete count, not a survey—seems to confirm the rough magnitude of the initial job loss. Specifically, the total number of incremental claims (over and beyond pre-Maria levels) filed since late September add up to about 39,000 or just under 4.5 percent of employment, which is quite comparable to the net job loss reported from August to October.

Another source of timely information comes from the the Institute of Statistics' monthly survey of purchasing managers in Puerto Rico's manufacturing sector. That survey showed a steep drop-off in production activity in September and October but a fairly sturdy rebound in November.

Which Parts of Puerto Rico Were Hit Hardest?
Partly owing to the trajectory of the storm, the northern and eastern parts of the island tended to be hit somewhat harder (headwinds) than the southern and western parts (tailwinds). The local employment data within Puerto Rico do not show dramatic local differences but do indicate somewhat steeper losses in the San Juan area (northeast) than in the Mayaguez (west) or Ponce (south) areas.

Perhaps the most problematic lingering issue has been widespread power outages across the island. Given that lights are sometimes used as a proxy measure of economic activity, data on the intensity of nighttime light emissions (recorded daily by satellites) provide a particularly useful tool for monitoring the recovery across the island. The maps below show night lights across Puerto Rico in August (pre-Maria), October, and November. The relative dimness throughout the island in October underscores the severity and breadth of the power outage. The moderate improvement in November—more notable in the south and west than in the north and east—illustrates that the power situation has improved somewhat, though it remains fairly dire over much of the island.

Puerto Rico is divided into 78 municipios of varying sizes, with populations ranging from 400,000 (San Juan) to just under 2,000 (Culebra). Among the twenty brightest (and therefore the most densely populated) municipios, the change in brightness between August and November ranged from a 10 percent drop in Hormigueros, in the west, to a 74 percent decline in Humacao, on the southeastern coast. The reduction in night lights varied widely across the island; the areas with the quickest recoveries were found in the south and west of Puerto Rico, including Ponce and Mayaguez, whereas the eastern coast saw the greatest fall in lighting. Thus, Puerto Rico's local variation in night lights recovery closely parallels both the losses in employment found across the island and the trajectory of the storm—as Maria passed from east to west, the north received the stronger headwinds while the south and west experienced less severe tailwinds. A notable exception can be found in and around San Juan—despite being hit hard by the storm, these municipiosfell near the middle in terms of light loss; as the capital and largest city in Puerto Rico, electricity may have been restored more quickly there than in more rural areas.

The Outlook
While the initial economic fallout from a disaster is not necessarily a predictor of the long-term effect, historically the two do seem to have been correlated. That is, the steeper the initial loss of jobs (and population), the longer it tends to take a local economy to recover. Puerto Rico's population had already been trending down at about 2 percent per year before Maria. Given Maria's huge adverse effect on the general quality of life—power outages, shortage of potable water, health issues, transportation and communication disruptions—there has been much concern that the rate of population loss could accelerate sharply and create a vicious spiral: people emigrating, businesses closing, tax base shrinking, cuts in services and tax hikes leading to still more out-migration, and so on. In spite of the storm's devastating initial impact, that worst-case scenario for the island's economy appears to have been averted—at least thus far. We will continue to monitor the situation.

Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors. 

---

Jason Bram is a research officer in the Federal Reserve Bank of New York's Research and Statistics Group.

Lauren Thomas is a senior research analyst in the Bank's Research and Statistics Group.

 -- via my feedly newsfeed

Democracy in question [feedly]

Democracy in question
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/01/democracy-in-question.html

Nigel Farage and Arron Banks are starting to agree with many Remainers that there should be a second referendum. Both sides, of course, do so for the same motive – the belief they would win.

What this misses is that the first referendum was, as Robert Harris said, "the most depressing, divisive, duplicitous political event of my lifetime." It was dominated by lies and by ignorance of basic facts. The result in effect went simply to the highest bidder. There's no reason to suppose that a second referendum will be any better.

Worse still, the result conveyed very little information. What sort of Brexit did voters want? Why did they want it? Was it because they regarded increased sovereignty as an intrinsic good for which they are willing to sacrifice some income? Or did they believe that Brexit would make them better off? Or did they regard Brexit as a means of controlling immigration? If so, why did they want such controls. Was it as a means of raising wages in which case might there be better ways of achieving that goal? Or was it because of cultural concerns? If so, are these justified and are they worth paying for? Or was Brexit just a way of signalling discontent with elites? If so, are there more effective ways of getting elites to change, if change they should?

The referendum told us nothing about these questions, though opinion polls might have. We learned less from it than Tesco learns from a shopper's most quotidian visit to one of its stores.

Before having a second referendum we should ask: how can decisions be better informed and more informative? This poses important questions. What organizational changes do we need to reduce plutocracy and achieve the democratic ideal of equal say? How can we get better decisions, informed by evidence? How can we ensure that experts are respected servants of the people rather than (seen as?) out-of-touch elites? How can we get a better media? (The BBC falls far short here, not just because it makes a fetish of a deformed conception of impartiality but because too many of its current affairs shows are merely the bantz of posh mediocrities – people who are the problem not the solution.)

And underpinning these questions is a deeper one: is healthy deliberative democracy even compatible with (actually-existing) capitalism?

With the very honourable exceptions of people like Paul Cotterill and Paul Evans, however, hardly anybody is asking these questions.

Politics has become like a game of football in which the only thing that matters is that our side wins and nobody cares about the quality or even basic honesty of the game. Most of us have forgotten that we are citizens as well as partisans.

In this sense, we are all neoliberals now. For me, one feature of neoliberalism is the elevation of what MacIntyre called external goods – power, wealth and fame – over internal goods of excellence. Almost everybody wants the external good of winning power to the neglect of the internal one of arriving at good decisions. Even many people who claim to oppose neoliberalism have, paradoxically, unthinkingly accepted one of its tenets.

The stakes here might be higher than generally supposed. As Steven Levitsky and Daniel Ziblatt point out, we cannot take the survival of democracy for granted. Democracies, they say, "die slowly, in barely visible steps." Constitutions and institutions are insufficient protection against this. What we also need, they say, are "norms of mutual toleration." These, though, are weakening. As Edward Luce writes, democracy "is only as good as the people who uphold it." And we must question whether they (we) are good enough.

 -- via my feedly newsfeed

Economic Update - Capitalism and Addiction: The Opioid Epidemic - 01.14.18 [feedly]

Economic Update - Capitalism and Addiction: The Opioid Epidemic - 01.14.18
http://economicupdate.podbean.com/e/economic-update-capitalism-and-addiction-the-opioid-epidemic-011418/

 -- via my feedly newsfeed

TimTaylor:Some Economics for Martin Luther King Day

Some Economics for Martin Luther King Day

On November 2, 1983, President Ronald Reagan signed a law establishing a federal holiday for the birthday of Martin Luther King Jr., to be celebrated each year on the third Monday in January. As the legislation that passed Congress said: "such holiday should serve as a time for Americans to reflect on the principles of racial equality and nonviolent social change espoused by Martin Luther King, Jr.." Of course, the case for racial equality stands fundamentally upon principles of justice, not economics. But here are a few economics-related thoughts for the day from the archives:

_________________________
1) Inequalities of race and gender impose large economic costs on society as a whole, because one consequence of discrimination is that it hinders people in developing and using their talents. In "Equal Opportunity and Economic Growth" (August 20, 2012), I wrote:

--------
A half-century ago, white men dominated the high-skilled occupations in the U.S. economy, while women and minority groups were often barely seen. Unless one holds the antediluvian belief that, say, 95% of all the people who are well-suited to become doctors or lawyers are white men, this situation was an obvious misallocation of social talents. Thus, one might predict that as other groups had more equal opportunities to participate, it would provide a boost to economic growth. Pete Klenow reports the results of some calculations about these connections in "The Allocation of Talent and U.S. Economic Growth," a Policy Brief for the Stanford Institute for Economic Policy Research.

Here's a table that illustrates some of the movement to greater equality of opportunity in the U.S. economy. White men are no longer 85% and more of the managers, doctors, and lawyers, as they were back in 1960. High skill occupation is defined in the table as "lawyers, doctors, engineers, scientists, architects, mathematicians and executives/managers." The share of white men working in these fields is up by about one-fourth. But the share of white women working in these occupations has more than tripled; of black men, more than quadrupled; of black women, more than octupled.


Moreover, wage gaps for those working in the same occupations have diminished as well. "Over the same time frame, wage gaps within occupations narrowed. Whereas working white women earned 58% less on average than white men in the same occupations in 1960, by 2008 they earned 26% less. Black men earned 38% less than white men in the typical occupation in 1960, but had closed the gap to 15% by 2008. For black women the gap fell from 88% in 1960 to 31% in 2008."

Much can be said about the causes behind these changes, but here, I want to focus on the effect on economic growth. For the purposes of developing a back-of-the-envelope estimate, Klenow builds up a model with some of these assumptions: "Each person possesses general ability (common to
all occupations) and ability specific to each occupation (and independent across occupations). All groups (men, women, blacks, whites) have the same distribution of abilities. Each young person knows how much discrimination they would face in any occupation, and the resulting wage they would get in each occupation. When young, people choose an occupation and decide how
much to augment their natural ability by investing in human capital specific to their chosen
occupation."

With this framework, Klenow can then estimate how much of U.S. growth over the last 50 years or so can be traced to greater equality of opportunity, which encouraged many in women and minority groups who had the underlying ability to view it as worthwhile to make a greater investment in human capital.

"How much of overall growth in income per worker between 1960 and 2008 in the U.S. can be explained by women and African Americans investing more in human capital and working more in high-skill occupations? Our answer is 15% to 20% ... White men arguably lost around 5% of their earnings, as a result, because they moved into lower skilled occupations than they otherwise would have. But their losses were swamped by the income gains reaped by women and blacks."

At least to me, it is remarkable to consider that 1/6 or 1/5 of total U.S. growth in income per worker may be due to greater economic opportunity. In short, reducing discriminatory barriers isn't just about justice and fairness to individuals; it's also about a stronger U.S. economy that makes better use of the underlying talents of all its members.

____________________________
2) The black-white wage gap--and the share of the gap that is "unexplained"-- is rising, not falling. Here's part of what I wrote about in "Breaking Down the Black-White Wage Gap (September 6, 2017):

---------
Mary C. Daly, Bart Hobijn, and Joseph H. Pedtke set the stage for a more insightful discussion in their short essay, "Disappointing Facts about the Black-White Wage Gap," written as an "Economic Letter" for the Federal Reserve Bank of San Francisco (September 5, 2017, 2017-26). Here are a couple of figures showing the black-white wage gap, and then seeking to explain what share of that gap is associated with differences in state of residence, education, part-time work, industry/occupation, and age. The first figure shows the wage gap for black and white men; the second for black and white women.






Here are some thoughts on these patterns:

1) The black-white wage gap is considerably larger for men (about 25%) than for women (about 15%). Also, the wage gaps seem to have risen since the 1980s.

2) The three biggest factors associated with the wage gap seem to be education level, industry/occupation, and "unexplained."

3) The "unexplained" share is rising over time time. As the authors explain: "Perhaps more troubling is the fact that the growth in this unexplained portion accounts for almost all of the growth in the gaps over time. For example, in 1979 about 8 percentage points of the earnings gap for men was unexplained by readily measurable factors, accounting for over a third of the gap. By 2016, this portion had risen to almost 13 percentage points, just under half of the total earnings gap. A similar pattern holds for black women, who saw the gaps between their wages and those of their white counterparts more than triple over this time to 18 percentage points in 2016, largely due to factors outside of our model. This implies that factors that are harder to measure—such as discrimination, differences in school quality, or differences in career opportunities—are likely to be playing a role in the persistence and widening of these gaps over time." The authors also cite this more detailed research paper with similar findings.

4) In looking at the black-white wage gap for women, it's quite striking that this gap was relatively small back in the 1980s, at only about 5%, and that observable factors like education and industry/occupation explained more than 100% of the wage gap at the time. But as the black-white wage gap for women increased starting in the 1990s, an "unexplained" gap opens up.

5) It is tempting to treat the "unexplained" category as an imperfect but meaningful measure of racial discrimination, but it's wise to be quite cautious about such an interpretation. On one side, the "unexplained" category may overstate discrimination, because it doesn't include other possible variables that affect wages (for example, one could include previous years of lifetime work experience, or length of tenure at a current job, scores on standardized tests, or many other variables). In addition, the variables that are included like level of education are being measured in broad terms, and so it is possible that, say, a blacks and whites with a college education are not the same in their skills and background. On the other side, the "unexplained" category could easily understate the level of discrimination. After all, education levels and industry/occupation outcomes don't happen in a vacuum, but are a result of the income, education, and jobs of family members. For this reason, noting that a wage gap is associated with some different in education or industry/occupation may reflect aspects of social discrimination. The kinds of calculations presented here are useful, but they don't offer final answers.

In short, the black-white wage gap is rising, not falling. The wage gap is also less associated with basic measures like level of education or industry/occupation than it was before. I can hypothesize a number of explanations for this pattern, but none of my hypotheses are cheerful ones.

___________________

3) The patterns in which speeding tickets are given for those just a little over the speed limit can  reveal discrimination. I discuss some evidence on this point in "Leniency in Speeding Tickets: Bunching Evidence of Police Bias" (April 5, 2017):

--------
Imagine for a moment the distribution of speed for drivers who are breaking the speed limit. One would expect that a fairly large number of drivers break the speed limit by a small amount, and then a decreasing number of drivers break the speed limit by larger amounts.

But here's the actual distribution of amount over the speed limit on the roughly 1 million tickets given by about 1,300 officers of the Florida Highway Patrol between 2005 and 2015. The graph is fromFelipe Goncalves and Steven Mello, "A Few Bad Apples? Racial Bias in Policing," Princeton University Industrial Relations Section Working Paper #608, March 6, 2017. The left-hand picture shows the distribution of the amount over the speed limit on the speeding ticket given to whites; the right-hand picture shows the distribution the amount over the speed limit on the speeding tickets given to blacks and Hispanics.



Some observations:

1) Very few tickets are given to those driving only a few miles per hour over the speed limit. Then there is an enormous spike in those given tickets for being about 9 mph over the speed limit. There are also smaller spikes at some higher levels. In Florida, the fine for being 10 mph over the limit is substantially higher (at least $50, depending on the county) compared to the fine for being 9 mph over the limit.

2) The jump at 9 mph is sometimes called a "bunching indicator" and it can be a revealing approach in a number of contexts. For example, if being above or below a certain test score makes you eligible for a certain program or job, and one observes bunching at the relevant test score, it's evidence that the test scores are being manipulated. If being above or below a certain income level affects your eligibility for a certain program, or whether you owe a certain tax, and there is bunching at that income level, it's a sign that income is being manipulated. Real-world data is never completely smooth, and always has some bumps. But the spikes in the figure above are telling you something.

3) Goncalves and Mello note that the spike at 9 mph is higher for whites than for blacks and Hispanics. This suggests the likelihood that whites are more likely to catch a break from an officer and get the 9 mph ticket. The research in the paper investigates this hypothesis in some detail ...

In the big picture, one of the reminders from this research is that bias and discrimination doesn't always involve doing something negative. In the modern United States, my suspicion is that some of the most prevalent and hardest-to-spot biases just involve not cutting someone an equal break, or not being quite as willing to offer an opportunity that would otherwise have been offered.

____________________

4) Many of the communities that suffer the most from crime are also the communities where the law-abiding and the law-breakers both experience a heavy law enforcement presence, and where large numbers of young men end up being incarcerated. Here are some slices of my discussion from "Inequalities of Crime Victimization and Criminal Justice" (May 20, 2016):

----------
And law-abiding people in some communities, many of them predominantly low-income and African-American, can end up facing an emotionally crucifying choice. One one side, crime rates in their community are high, which is a terrible and sometimes tragic and fatal burden on everyday life. On the other side, they are watching a large share of their community, mainly men, becoming involved with the criminal justice system through fines, probation, fines, or incarceration. Although those who are convicted of crimes are the ones who officially bear the costs, in fact the costs when someone needs to pay fines, or can't earn much or any income, or can only be visited by making a trip to a correctional facility are also shared with families, mothers, and children. Magnus Lofstrom and Steven Raphael explore these questions of "Crime, the Criminal Justice System, and Socioeconomic Inequality" in the Spring 2016 issue of the Journal of Economic Perspectives. ...


It's well-known that rates of violent and property crime have fallen substantially in the US in the last 25 years or so. What is less well-recognized is that the biggest reductions in crime have happened in the often predominantly low-income and African-American communities that were most plagued by crime. Loftrom and Raphael look at crime rates across cities with lower and higher rates of poverty in 1990 and 2008:

"However, the inequality between cities with the highest and lower poverty rates narrows considerably over this 18-year period. Here we observe a narrowing of both the ratio of crime rates as well as the absolute difference. Expressed as a ratio, the 1990 violent crime rate among the cities in the top poverty decile was 15.8 times the rate for the cities in the lowest poverty decile. By 2008, the ratio falls to 11.9. When expressed in levels, in 1990 the violent crime rate in the cities in the upper decile for poverty rates exceeds the violent crime rate in cities in the lowest decile for poverty rates by 1,860 incidents per 100,000. By 2008, the absolute difference in violent crime rates shrinks to 941 per 100,000. We see comparable narrowing in the differences between poorer and less-poor cities in property crime rates. ... "

It remains true that one of the common penalties for being poor in the United States is that you are more likely to live in a neighborhood with a much higher crime rate. But as overall rates of crime have fallen, the inequality of greater vulnerability to crime has diminished.

On the other side of the crime-and-punishment ledger, low-income and African-American men are more likely to end up in the criminal justice system. Lofstrom and Raphael give sources and studies for the statistics: "[N]nearly one-third of black males born in 2001 will serve prison time at some point in their lives. The comparable figure for Hispanic men is 17 percent ... [F]or African-American men born between 1965 and 1969, 20.5 percent had been to prison by 1999. The comparable figures were 30.2 percent for black men without a college degree and approximately 59 percent for black men without a high school degree."

I'm not someone who sympathizes with or romanticizes those who commit crimes. But economics is about tradeoffs, and imposing costs on those who commit crimes has tradeoffs for the rest of society, too. For example, the cost to taxpayers is on the order of $350 billion per year, which in 2010 broke down as "$113 billion on police, $81 billion on corrections, $76 billion in expenditure by various federal agencies, and $84 billion devoted to combating drug trafficking." The question of whether those costs should be higher or lower, or reallocated between these categories, is a worthy one for economists. ... Lofstrom and Raphael conclude:

"Many of the same low-income predominantly African American communities have disproportionately experienced both the welcome reduction in inequality for crime victims and the less-welcome rise in inequality due to changes in criminal justice sanctioning. While it is tempting to consider whether these two changes in inequality can be weighed and balanced against each other, it seems to us that this temptation should be resisted on both theoretical and practical grounds. On theoretical grounds, the case for reducing inequality of any type is always rooted in claims about fairness and justice. In some situations, several different claims about inequality can be combined into a single scale—for example, when such claims can be monetized or measured in terms of income. But the inequality of the suffering of crime victims is fundamentally different from the inequality of disproportionate criminal justice sanctioning, and cannot be compared on the same scale. In practical terms, while higher rates of incarceration and other criminal justice sanctions may have had some effect in reducing crime back in the 1970s and through the 1980s, there is little evidence to believe that the higher rates have caused the reduction in crime in the last two decades. Thus, it is reasonable to pursue multiple policy goals, both seeking additional reductions in crime and in the continuing inequality of crime victimization and simultaneously seeking to reduce inequality of criminal justice sanctioning. If such policies are carried out sensibly, both kinds of inequality can be reduced without a meaningful tradeoff arising between them."

______________

5) An "audit study" of housing discrimination involves finding pairs of people, giving them similar characteristics (job history, income, married/unmarried, parents/not parents) and sending them off to buy or rent a place to live. In "Audit Studies and Housing Discrimination" (September 21, 2016), I wrote in part:

______________

Cityscape magazine, published by the US Department of Housing and Urban Development three times per year, has a nine-paper symposium on "Housing Discrimination Today" in the third issue of 2015. The lead article by Sun Jung Oh and John Yinger asks: "What Have We Learned From Paired Testing in Housing Markets?" (17: 3, pp. 15-59). ...

There have been four large national-level paired testing studies of housing discrimination in the US in the last 40 years. "The largest paired-testing studies in the United States are the Housing Market Practices Survey (HMPS) in 1977 and the three Housing Discrimination Studies (HDS1989, HDS2000, and HDS2012) sponsored by the U.S. Department of Housing and Urban Development (HUD)." Each of the studies were spread over several dozen cities. The first three involved about 3,000-4,000 tests; the 2012 study involved more than 8,000 tests. The appendix also lists another 21 studies done in recent decades.

Overall, the findings from the 2012 study find ongoing discrimination against blacks in rental and sales markets for housing. For Hispanics, there appears to be discrimination in rental markets, but not in sales markets. Here's a chart summarizing a number of findings, which also gives a sense of the kind of information collected in these studies.


However, the extent of housing discrimination in 2012 has diminished from previous national-level studies. Oh and Yinger write (citations omitted): "In 1977, Black homeseekers were frequently denied access to advertised units that were available to equally qualified White homeseekers. For instance, one in three Black renters and one in every five Black homebuyers were told that there were no homes available in 1977. In 2012, however, minority renters or homebuyers who called to inquire about advertised homes or apartments were rarely denied appointments that their White counterparts were able to make

--

John Case
Harpers Ferry, WV

The Winners and Losers Radio Show

7-9 AM Weekdays, The Enlighten Radio Player Stream, 

Sign UP HERE to get the Weekly Program Notes.

Check out Socialist Economics, the Enlighten Radio website, and 

The Poets and Mechanics Quaker Worship Group

Links; more on heating vs. overheating. [feedly]

Links; more on heating vs. overheating.
http://jaredbernsteinblog.com/links-more-on-heating-vs-overheating/

Medicaid is a highly efficient program (see figure below), delivering health coverage to 70 million low-income persons while conveying many ancillary benefits on its beneficiaries, as Hannah Katch and I point out in the NYT oped.

So, of course, Republicans want to lay waste to it. They were blocked from doing so through their ACA repeal, they did a bit of it in their tax plan, and now they're going after Medicaid through the waiver process (which skirts Congress), by adding a work requirement. As Hannah and I stress, you can't feed or house your family on health coverage, so the incentive to work is already built into the program, which is why most able-bodied beneficiaries already work.

At any rate, it's going to take action at the state level to block this latest attack.

Turning to other current events, I wrote about jittery bond markets yesterday, trying to emphasize that heating is not overheating. We should expect to see inflation and interest rates on the rise, given how low they've been and the stage we're at in the expansion. Though granted, the Fed must try to look around corners, I don't see much evidence of real resource constraints building up.

Yet, bond rates spiked when the core CPI came out this AM at 0.3% over the month instead of 0.2%. Note that yr/yr core CPI came in at 1.8%, which, given that the CPI runs ~30bps hotter than core PCE, is much like the growth rate of the core PCE, which last come in at 1.5% (Nov/Nov). Both are well below the Fed's target rate.

As the next figure shows, breakeven rates, a measure of inflation expectations measured as the spread between rates on 10-yr TIPS and 10-yr Treasuries, have spiked a bit in recent days, as has the 10-year yield. But they're only back to levels from about a year ago, and, as noted, CPI core inflation itself remains well below target (which is 2.3-2.5 for core CPI).

This all comes down to a few key questions:

Q: Are resource constraints building in the economy?

A: Not that you'd see in inflation (realized or expected), interest rates, or wage growth. As for employment, the jobless rate is low but employment rates may have room to run.

Q: Have the benefits of the recovery reached deeply enough into all corners of the country?

A: It's getting there, but wage growth is under-performing and there are areas where the job market has not yet firmed up.

Perhaps most importantly:

Q: Are the risks to the Fed hitting the growth brakes symmetric or asymmetric?

A: They are asymmetric. Since inflation has been below target for years on end, achieving the Fed's 2% target, on average, requires some period of  being above the target rate. Similarly, the least advantaged don't catch a buzz from the recovery until we hit and stay at chock-full employment. Both of these factors point to the likelihood of greater damage from pushing back too hard on growth right now than from maintaining a largely accommodative stance.

 -- via my feedly newsfeed

Fighting for public sector union rights 50 years after MLK’s assassination [feedly]

Fighting for public sector union rights 50 years after MLK's assassination
http://www.epi.org/blog/struggling-for-public-sector-union-rights-50-years-after-mlks-assassination/

The night before his assassination in April 1968, Dr. Martin Luther King spoke before a group of striking sanitation workers in Memphis, Tennessee as they prepared for a march for civil rights, union recognition, and economic justice. The movement behind the strike started earlier that year, when two Memphis garbage collectors, Echol Cole and Robert Walker, were sucked in by a malfunctioning compactor mechanism on a garbage truck and crushed to death. On the same day, when a heavy rainstorm hit, the city sent 22 black sewer workers home without pay while their white supervisors were retained with a full-day's pay. 12 days later, more than 1,100 black men from the Memphis Department of Public Works went on strike, demanding recognition of their union, better safety standards, and a decent wage. The sanitation workers were led by garbage-collector-turned-union-organizer, T. O. Jones, and supported by the American Federation of State, County, and Municipal Employees (AFSCME).

Memphis Mayor Henry Loeb fought to break the workers' strike, and "refused to take dilapidated trucks out of service or pay overtime when men were forced to work late-night shifts. Sanitation workers earned wages so low that many were on welfare and hundreds relied on food stamps to feed their families." As Michael K. Honey writes in Going Down Jericho Road: The Memphis Strike, Martin Luther King's Last Campaign, one of the things Loeb was most fervent about opposing was the dues-checkoff provisions that the sanitation workers wanted in their union contract. The workers on strike in Memphis knew that a dues checkoff—whereby union members voluntarily authorize the employer to make regular deductions from an employee's wages to pay their union dues—was crucial to the union's survival, especially given that Tennessee had passed a so-called "right-to-work" law, which allowed nonunion members to refuse to pay their fair share of dues but still collect the same benefits as union members. Loeb surely knew that the powers conferred to workers in the union contract—including an increase in black sanitation workers' wages, protections for black workers from race-based employment discrimination, and a procedure for the black sanitation workers to file grievances against their white supervisors—would become wholly ineffective if the union could not collect dues to support its basic operations. More than once, the city had offered to settle the strike on the condition that dues checkoff be prohibited from their contract—but workers persisted, knowing that the "dues checkoff remained crucial, for without it, the union would not survive." One of the cofounders of the Community on the Move for Equality, Reverend Malcom Blackburn, even embodied dues checkoff in his call to action.

Our Henry, who art in City Hall,

Hard-headed be thy name.

Thy kingdom C.O.M.E.

Our will be done,

In Memphis, as it is in heaven.

Give us this day our Dues Checkoff,

And forgive us our boycott,

As we forgive those who spray MACE against us.

As lead us not into shame,

But deliver us from LOEB!

For OURS is justice, jobs, and dignity,

Forever and ever. Amen. FREEDOM!

—"Sanitation Workers' Prayer,"

Recited by Reverend Malcom Blackburn

The day after King arrived in Memphis the night of April 3, 1968, to speak to the group of sanitation workers, he was shot and killed stepping out of his room at the Lorraine Motel. On April 8, Coretta Scott King, the Southern Christian Leaderships Conference, and union leaders led approximately 42,000 people on a silent march through Memphis in Dr. King's honor, demanding that Loeb recognize the sanitation workers' requests. On April 16, the city finally recognized the sanitation workers' union and negotiated a contract, which included a dues checkoff.

Now, fifty years after Martin Luther King's efforts to help the sanitation workers gain union recognition, corporate interests are still fighting to undercut public-sector unions by crippling their financial support. On February 28, 2018, the Supreme Court will hear oral arguments in a case called Janus v. AFSCME. Just as the funding for the sanitation workers union was at issue in their battle over a dues-checkoff provision in their contract, the financial stability of public-sector unions at issue in the Janus case.

Janus v. AFSCME could profoundly affect the ability of public-sector workers to improve their wages and working conditions. The case threatens the right of the majority of workers, through their democratically elected union, to bargain a contract with their public employer that requires every employee covered by the contract to pay their fair share of the costs of negotiating it, administering it, and enforcing it. The Supreme Court decided this issue forty years ago in Abood v. Detroit Board of Education and it has been the law of the land since.

Janus is nothing more than the latest attack on workers' rights to organize and bargain collectively. The Supreme Court considered this issue in its 2016-2017 term in Friedrichs v. California Teachers Association, which resulted in a 4-4 split decision upholding a lower court decision that permits public employee unions to assess fees on non-members who benefit from collective bargaining and union representation and who unions are required to represent. In any other circumstance, it would be outrageous to demand the benefits of a common enterprise without paying one's fair share. Union representation is no different. Eliminating fair share fees protects people who want to get something for nothing and as a result, starves unions. It is also profoundly undemocratic to elevate the objections of a minority over the democratically determined choices of the majority of workers.

This principle is what Dr. Martin Luther King, Jr., was fighting for on the day he was killed, and it is what's at stake in Janus. The decision in this case will determine the future of effective unions, democratic decision making in the workplace, and the preservation of good, middle class jobs in public employment.

 -- via my feedly newsfeed