Has the momentum around paid leave reached a tipping point in the United States?

Posted on by Meghan Miller

The momentum around paid family and medical leave continues to grow across the United States. Local and state campaigns have pushed the debate around this issue in statehouses across the country. At the federal level, the Democratic Party recently moved to include paid sick and family leave as part of its “Better Deal” agenda of policy priorities. And in a sign of the times, some Republicans have also joined the fray, eschewing the questions of whether we should enact paid leave in order to focus on what an ideal policy looks like.

The push comes in response to the mounting realization that today’s workplaces do not address the fact that most of us at some point in our lives must take time off work because of our own physical health or to care for somebody else. The Family and Medical Leave Act guarantees 12 weeks of unpaid leave for qualified medical and family reasons, but only 60 percent of workers qualify under current guidelines. Only 12 percent of private sector workers have access to paid leave through their employers. And while some Americans are covered by state programs, the vast majority of U.S. workers face the impossible choice between the loss of wages—or even their job—during the birth of a child, a medical emergency, or the need to care for a sick family member.

The good news is that many states have taken matters into their own hands, which also gives policymakers examples of how a successful paid leave program might work on the national level. The success of programs in California, New Jersey, and Rhode Island has moved Washington state, New York, and Washington, DC, to pass their own policies—all within the past year. And for good reason: Mothers who take leave are more likely to breastfeed and ensure that their kids receive regular checkups and immunizations. Research on California’s program found that new mothers were more likely to remain in the labor force and worked more hours for more money one to three years after the birth of a child. This is good news considering that women’s labor force participation has stagnated, partially due to a lack of work-family supports. Paid leave also is associated with a decline in public assistance usage, which lessens the burden on taxpayers.

These programs also are good for men. Giving birth is an experience obviously unique to women, but medical ailments and the need to care for an infant or sick family member affects everyone, men and women alike. Well-designed paternity leave policies reduce discrimination against women and also encourage a more equitable division of childcare and housework, which can free up time for women to play a larger role in the labor market.

While all these things sound good, many policymakers are rightfully concerned about the costs for businesses, which could take a substantial financial hit if forced to shoulder the entire cost of workers’ wages when they take leave. That’s why any paid leave program should be financed through a social insurance program, as states with existing programs have done. Workers’ wage replacement while on paid leave is funded through small premiums collected into a trust fund, and in most states is paid for entirely by a small payroll tax on employees. New York’s new policy, for example, has employees paying around $1 per week. To date, there is no evidence that firms with higher rates of paid family leave usage are burdened by higher turnover or wage costs. According to a recent Pew Research Center study, paid leave also makes it substantially more likely that workers return to their original employer compared with those who take unpaid leave.

As wages have stagnated over the past three decades, quitting one’s job or taking unpaid time out of work for any reason—whether for the birth of a child, a personal medical issue, or to take care of a sick family member—can torpedo a family’s economic security, even among dual-earning households. The examples of existing state policies show that paid family leave based on a social insurance model can provide a critical benefit for everyone in the U.S. workforce that far outweighs the costs.

Must-Read: Matthew Yglesias: Senate Republicans’ approach to health care is bizarre and appalling

Posted on by Brad DeLong

Must-Read: Matthew Yglesias: Senate Republicans’ approach to health care is bizarre and appalling: “Nobody can tell exactly what Senate Republicans are doing with Americans’ health care, largely because they keep lying about it… https://www.vox.com/policy-and-politics/2017/7/27/16040284/senate-republicans-health-care-lies

…Five days ago, John McCain called on senators to pay more heed to governors’ words of caution about steep Medicaid cuts. Then he made a dramatic return to the Senate floor, denounced the entire process through which the Senate health care bill had been assembled, and then voted with leadership to continue the process. Nonetheless, he insisted that he opposed the underlying Better Care Reconciliation Act. But then when the BCRA came up for a vote, he voted for it, offering the excuse that the vote was procedural. But if denouncing both the process by which a bill has been assembled and the substantive ideas it contains doesn’t lead you to vote against leadership on procedural matters, then what do your words even mean?…

The health bill keeps shambling forward, since Republicans seem comfortable lying to the American people about essentially all aspects of the process, up to and including their own position on it…. The saga of the “skinny” repeal concept that emerged suddenly Tuesday morning with no hearings, stakeholder discussions, or public debate makes the point. In one interpretation, Republicans are now prepared to radically lower their horizons… skinny repeal would modestly cut taxes and blow up the exchanges while leaving Medicaid intact. In another interpretation, skinny repeal is… a placeholder and then go to a conference committee… [so] Senate Republicans will be faced with an up-or-down, no-joke binary choice between the hardline bill and no repeal at all, at which point they will presumably swallow the hardline bill…. Even as the Senate GOP caucus appears to be coalescing around the skinny repeal strategy, its members cannot agree as to which version of the strategy they are pursuing. The other is that neither interpretation accords at all with Senate Republicans’ stated public commitments…. And yet ahead they go.

At every step along the way, the argument that appears to propel Republicans forward is the notion that they have an obligation to fulfill their promise to repeal and replace Obamacare. In reality, everything they have done in pursuit of repeal is breaking promises…. Trump promised to protect Medicaid, lower premiums and deductibles, and cover everyone. Every single version of repeal that Republicans have considered does the opposite on every front…. Along the way, key senators have made up new tests to violate. Louisiana’s Bill Cassidy spent several weeks touting the “Jimmy Kimmel test” for legislation and then voted “yes” on a bill (ORRA) that the CBO says would cost 32 million Americans their health insurance coverage. Dean Heller did a joint press conference with his state’s Republican governor in which they promised to protect Medicaid expansion, and then he voted yes on the key procedural vote that has kept Medicaid at risk. Shelley Moore Capito from West Virginia, likewise, flip-flopped on the BCRA after changes were made that were totally irrelevant to her stated concerns….

This kind of up-is-down behavior where stated preferences are unrelated to underlying behavior is bizarre. After all, if Capito ends up eliminating West Virginia’s Medicaid expansion after promising not to, she isn’t going to be able to trick people into thinking it hasn’t been ended. Why pretend she was opposed to ending it if she actually wasn’t?… It’s striking how much the heaping piles of bullshit that surround the health care debate have nothing in particular to do with Trump. McConnell and his staff spent all of 2016 looking reporters in the eye and touting his commitment to “regular order” as a legislative approach. He sent a senior staffer to the Vox office who very seriously attributed 2015’s relatively productive legislative session to a return of regular order and promised that regular order would continue no matter who won the presidential election. McConnell and Paul Ryan then, entirely of their own volition, with no evident input from Trump, proceeded to enact the most fantastically irregular legislative process anyone has ever seen. And dozens of Republican senators proceeded to repeatedly bemoan the slipshod process even while continually voting to continue the process….

Since nobody involved can be trusted to keep a promise for even a full afternoon, nobody knows what they’re really thinking or what they’re genuinely trying to do. Millions of lives are at stake, and the best Republicans can do to explain what’s happening is to congratulate themselves on distracting some people with a piece of petty bigotry. It’s bizarre and, frankly, appalling.

Issue brief: U.S. antitrust and competition policy amid the new merger wave

Posted on by David Evans

Changes in merger enforcement policy have contributed to rising concentration and reduced competition

In a new paper in the Washington Center for Equitable Growth’s ongoing series on antitrust policy and its implications for the economic well-being of U.S. workers and consumers, John E. Kwoka of Northeastern University documents the rise in concentration and examines the evidence for one possible explanation: the change in merger enforcement policy at the Federal Trade Commission, or FTC, and the Antitrust Division of the U.S. Department of Justice.

Download File
Issue brief: U.S. antitrust and competition policy amid the new merger wave

Read the full PDF in your browser

Key findings

Examining FTC merger enforcement data from 1996 through 2011, Kwoka finds that merger enforcement narrowed its focus to mergers at the very highest levels of concentration and adopted a substantially more permissive stance toward mergers that consolidate industries up to that point. Specifically, his examination of the data reveals the following:

  • Enforcement rates for mergers that would result in four or fewer remaining significant competitors slightly increased from 1996 through 2011.
  • Enforcement for mergers that would result in more than four remaining significant competitors literally ceased after 2007: From 1996 through 2003, enforcement actions were taken in 36 percent of FTC merger investigations with five or more remaining competitors. By the 2008–2011 time period, that percentage had fallen to zero.

These findings are all the more interesting in light of earlier research that Kwoka has done. He has examined the level of concentration at which anti-competitive outcomes become nearly certain, finding that prices rose in nearly 95 percent of instances of mergers that resulted in six or fewer remaining significant competitors. It is in precisely this range of five to seven significant competitors where enforcement policy has shifted so dramatically over the past 20 years.

Explanations for the change in enforcement rates

  • Kwoka lists several possible explanations for these observed changes in merger enforcement policy, including agency budget constraints.
  • He focuses on changes in antitrust policy’s presumptions about the competitive consequences of increases in concentration. Over the past 50 years, those presumptions shifted from a viewpoint that held that even modest increases in concentration would result in above-competitive prices and profits to one in which it was believed that tougher merger standards sacrificed cost efficiencies, which presumably would be passed along to consumers.
  • While antitrust policy has moderated somewhat from that “Chicago school” view, the FTC enforcement data from 1996 through 2011 nonetheless demonstrate that there has continued to be a shift away from merger enforcement actions in all but the most concentrated markets.

Policy implications

  • Merger guidelines should be re-examined to ensure that policy hasn’t diverged from the evidence: When considering merger proposals, the thresholds used for the number of remaining significant competitors should reflect the point at which a merger might be presumed to increase an industry’s concentration to the point that it would lessen competition.
  • Agency budgets should be expanded to ensure they have the necessary resources to vigorously pursue the merger cases that raise these concerns.

For more information

Please see “U.S. antitrust and competition policy amid the new merger wave,” by John E. Kwoka of Northeastern University for the Washington Center for Equitable Growth.

Should-Read: Mike Bird and Christopher Whittall: The Speech That Transformed European Markets—Five Years Later

Posted on by Brad DeLong

Should-Read: Mike Bird and Christopher Whittall: The Speech That Transformed European Markets—Five Years Later: “European Central Bank chief Mario Draghi…. ‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro and believe me: It will be enough’… https://www.wsj.com/articles/the-speech-that-changed-european-marketsfive-years-later-1501061404

…The speech is seen as pivotal…. Perceptions that a country would exit the eurozone in short order never returned to the heights that they reached in the summer of 2012. (And the ECB has never used the “outright” tools it developed.)… “‘Whatever it takes’ was a defining moment for the market, the turning point in terms of fighting the crisis, when the redenomination risk was priced out of government bonds,” said Matthew Cairns, senior strategist at Rabobank. “But even now, growth has really yet to pick up to the levels that the ECB would like to see it at”…

Will the United States give up on data collection?

Posted on by Meghan Miller
Former Census Bureau Director Robert Groves announces results for the 2010 U.S. census at the National Press Club, December 21, 2010, in Washington.

Federal data collection isn’t an exciting political topic, but it is critically important to running the country. Data collection by the U.S. government has often led the rest of the world. Two examples are the first U.S. decennial census in 1790, which predates the comparable census in the United Kingdom by 11 years, and the National Income and Product Accounts, one of the world’s first attempts—in 1937—at creating a comprehensive system of national accounts, which are now conducted by virtually every nation. Today, however, the federal statistical agencies that collect these data are threatened by insufficient funding proposed by the Trump administration and approved by the House and Senate appropriations bills after the Senate Appropriations Committee yesterday approved legislation that provides inadequate funding.

Timely and accurate data are critical to diagnose and respond to a wide variety of policy problems across the nation—and increase efficiency and effectiveness in the government. Speaker of the House Paul Ryan (R-WI), when announcing the Evidence-Based Policymaking Commission, discussed how the collection of data gives government “the tools to make better decisions and achieve better results.” Insufficient funding means insufficient data—and programs that don’t reflect the reality for families across the United States.

The threat of less funding is already hampering the ability of the U.S. Census Bureau to conduct a robust 2020 decennial census. The Census Bureau already cut two of its test sites for a 2018 “dress rehearsal,” leaving just one site that may not be representative of the many challenges faced by the agency in different areas of the country. The agency’s former director resigned unexpectedly shortly after sparring with Congress over the Census Bureau’s budget, which is $300 million too low, according to some estimates.

The importance of the decennial census cannot be overstated. It plays many roles in the administration of the U.S. government, most notably in the reapportionment of the 435 seats in the House of Representatives to the states. The census and several ancillary surveys produced by the Census Bureau also are commonly used in academia in varied fields that include economics and epidemiology, which in turn help inform the policymaking process in these and other critical areas. Further, the allocation of federal funding to states is based on formulas that rely on accurate population counts. Inaccurate reporting means that the programs are not providing support where they are needed.

The Census Bureau is not the only statistical agency facing cuts. Both the administration and the House appropriations bills are calling for a 10 percent cut to the budget of the U.S. Bureau of Economic Analysis, or BEA, compared with 2017. The BEA is best known for producing the National Income and Product Accounts, which include a measure of the nation’s gross domestic product and quarterly growth of the economy. The Obama administration was slowly increasing funding for the agency in hopes of improving some of the its economic indicators. The funding cuts will put those improvements on hold.

U.S. statistical agencies perform an important role in steering the U.S. economy. In the 1930s and 1940s, as the nation weathered the Great Depression and prepared for war, policymakers leaned on the nation’s economists and statisticians to devise a means of tracking the economy’s progress and potential. Other nations adopted similar systems of national accounts soon after. The National Income and Product Accounts played a critical role in World War II by helping planners estimate maximum feasible military output by the economy.

Today, the nation continues to see weak wage growth in the wake of the Great Recession, but the agency that collects this data, the U.S. Bureau of Labor Statistics, will have its funding frozen at fiscal year 2017 levels in the House Labor, Health and Human Services, Education, and Related Agencies appropriations bill as reported out of committee. According to an analysis by the Council of Professional Associations on Federal Statistics, the agency needs another $30 million per year just to perform the duties that are mandated of it. An increasingly complex and data-driven world requires strong national statistics. The Trump administration and Congress would be wise to re-examine these cuts against the need for the accurate and empirical work of these critical statistical agencies.

Must-Read: Martin Feldstein: How Would Health-Care Reform Affect Patient Health?

Posted on by Brad DeLong

Must-Read: Naughty, naughty, Marty…

You know better.

You say: “Patients in the Oregon Medicaid study show no significant improvement in clinical physical health outcomes”. You know as well as I do that you should say: “Patients in the Oregon Medicaid study showed the expected and clinically significant improvement in physical health outcomes, but the study had low statistical power, and so the researchers could not dismiss, at conventional levels of statistical significance, the possibility that the improvement was due to chance.”

Back in the early 1980s you used to try very hard to teach your students not to confuse statistical significance with economic significance.

What has happened?

Martin Feldstein: How Would Health-Care Reform Affect Patient Health?: “People who qualify for Medicaid do receive substantially more care than those without formal insurance… https://www.project-syndicate.org/commentary/us-health-care-reform-medicaid-cuts-by-martin-feldstein-2017-07

…have substantially lower out-of-pocket medical costs… much less likely to skip paying other bills because of medical debts or to have nonmedical bills sent to collection. If reform legislation reduces Medicaid benefits, the individuals who lose benefits would continue to receive free care in outpatient departments, emergency rooms, and as hospital in-patients…. Individuals who are billed for services understand that providers generally do not attempt to collect from low-income patients. Moreover, those who are no longer in the Medicaid program do not lose care from the many doctors who now refuse to serve Medicaid patients because of the low fees allowed in the program. The most important fact to bear in mind is that enrollees in Medicaid show no significant improvement in clinical physical health outcomes. This was the main finding of a large “natural experiment” supported by the federal government…

Should-Read: Leigh Ann Caldwell and Vaughn Hillard: Senate Considers ‘Skinny’ Repeal of Obamacare in Tuesday’s Voting

Posted on by Brad DeLong

Should-Read: This is not even sausage-making: this is taking an intestinal casing, putting nothing in it, and saying that you are going to add the meat by-products later:

Leigh Ann Caldwell and Vaughn Hillard: Senate Considers ‘Skinny’ Repeal of Obamacare in Tuesday’s Voting: “The plan… is for senators to… a ‘skinny’ repeal… eliminat[ing] Obamacare’s individual mandate penalty, the employer mandate penalty, and the tax on medical devices…. The Senate would then go to conference…. Conferees would work out a final bill. Both chambers would then have to vote…” http://www.nbcnews.com/politics/congress/senate-sets-sights-skinny-repeal-obamacare-tuesday-s-voting-n786296

Must-Read: John F. Cogan, Glenn Hubbard, John B. Taylor, and Kevin Warsh: On the Prospects for Higher Economic Growth

Posted on by Brad DeLong

Must-Read: The quick and careful Justin Fox is unhappy with—and makes me aware of—this.

All I can say is: unprofessional

I would not have thought that it was an argument that could be maintained by any economist of reputation—even though, as John Stuart Mill once said, “what was affirmed by Cicero… [of] philosophy…may be asserted without scruple of the subject of political economy—that there is no opinion so absurd as not to have been maintained by some person of reputation”. I don’t think that this is an opinion. And the cost to your reputation—I’m looking at you, John Taylor, and you, Glenn Hubbard, and you Kevin Warsh—may well exceed whatever your current positive balance is plus your available credit limit:

John F. Cogan, Glenn Hubbard, John B. Taylor, and Kevin Warsh: On the Prospects for Higher Economic Growth: “Productivity growth declined in the 1970s, rose markedly through the 1980s and 1990s, and fell again sharply in recent years. The data are not supportive of the popular contention that the United States is in the midst of a long-term decline in productivity growth…” http://www.hoover.org/sites/default/files/research/docs/on_the_prospects_for_higher_economic_growth_0.pdf

Here is the post-WWII quarterly productivity growth rate scatter:

2017 07 23 U S Labor Productivity

Here is the nonparametric smoothed lowess trend:

2017 07 23 U S Labor Productivity

Let’s take a closer look at that:

2017 07 23 U S Labor Productivity

Yes, the U.S. experience since World War II is best characterized as one of a long-term decline in productivity growth, with a recovery triggered by the Information Age that turned out to be (a) temporary and (b) minor. Even if you (for some reason) do not think this, you do not say that you do not think this, lest other people (rightly) conclude that you are a loon.

And if you don’t like the nonparametrics? The linear trend says the same thing:

2017 07 23 U S Labor Productivity

And, of course, Justin has his own fish to fry.

I, however, want to draw a simple line: economists who grossly misrepresent what the basic data say are not economists of reputation.

How do Cogan, Hubbard, Taylor, and Warsh make their case? They don’t do any form of estimation: they simply draw arrows—arrows that do not match any trends that could be estimated—to make you think the data trends are other than they are:

Www hoover org sites default files research docs on the prospects for higher economic growth 0 pdf

iPython Notebook File: http://delong.typepad.com/2017-07-23-u.s.-labor-productivity.ipynb

Should-Read: Kenneth P. Brevoort, Daniel Grodzicki, and Martin Hackmann: Medicaid and Financial Health

Posted on by Brad DeLong

Should-Read: Medicaid expansion vs. non-expansion and household financial adversity:

Kenneth P. Brevoort, Daniel Grodzicki, and Martin Hackmann: Medicaid and Financial Health https://www.fdic.gov/news/conferences/consumersymposium/2016/documents/brevoort_presentation.pdf:

Https www fdic gov news conferences consumersymposium 2016 documents brevoort presentation pdf

Plus state government nullification or non-nullification and insurer competition:

Hannah Recht: Health Insurance Marketplaces: Looking Forward to 2018: “Most of the 12 million people who got health insurance through Obamacare’s individual marketplaces will have the same number of companies to choose among next year as they did in 2017…” https://www.bloomberg.com/graphics/health-insurance-marketplaces-for-2018/:

Health Insurance Marketplaces Looking Forward to 2018

Where state governments want to diminish the threat of medical bankruptcy, medical bankruptcy is diminished. Where state governments want individuals to see competition for their business from health insurers, individuals see competition for their business from health insurers.

Must- and Should-Reads: July 22, 2017

Posted on by Brad DeLong

Interesting Reads: