Must-Read: Elise Gould and Tanyell Cooke: By the Numbers: Income and Poverty, 2014

Posted on by Brad DeLong

Must-Read: I must say, I am struck anew by how great a disaster the 5-4 2000 election was, in terms of changing the socio-economic trajectory of America from the generally-hopeful and positive 1990s:

Elise Gould and Tanyell Cooke: By the Numbers: Income and Poverty, 2014: “Median [real] earnings for men working full time fell 0.7 percent from 2000 to 2013…

…In 2014 men’s earnings fell 0.9 percent, to $50,383. Median earnings for women working full time rose 5.4 percent from 2000 to 2013. In 2014 women’s earnings rose 0.5 percent, to $39,621…. Median non-elderly household income fell 11.2 percent from 2000 to 2013. In 2014 household income fell 1.3 percent, to $60,462…. Median income for African American households fell 13.8 percent from 2000 to 2013. In 2014 it fell 1.4 percent, to $35,398…. The poverty rate rose 3.2 percentage points between 2000 and 2013. In 2014 it remained unchanged at 14.8 percent. The child poverty rate rose 3.7 percentage points between 2000 and 2013. In 2014 it fell 0.2 percentage points, to 21.1 percent…. The African American poverty rate rose 4.7 percentage points between 2000 and 2013. In 2014 it rose 1.0 percentage point, to 26.2 percent…. The number of people without health insurance fell 2.9 percentage points from 2013 to 2014. In 2014, 10.4 percent of the population was uninsured….

Social Security kept 25.9 million people out of poverty in 2014. Food stamps (SNAP) kept 4.7 million people out of poverty in 2014. Unemployment insurance kept just under 1 million people out of poverty in 2014.

Thank you–non-ironically–Franklin Delano Roosevelt, Lyndon Baines Johnson, Barack Hussein Obama, and company.

Thank you–ironically–Ralph Nader, William Rehnquist, Nino Scalia, Clarence Thomas, and Anthony Kennedy.

Putting the new U.S. Census data on income and poverty in context

Posted on by Nick Bunker

Earlier this morning, the U.S. Census Bureau released new data on the state of incomes in 2014. According to the new data, the share of income going to the top 5 percent of American households is at 21.9 percent, a 0.3 percentage point decrease from 2013. Similarly, the Gini coefficient (a broad measure of income inequality) was essentially unchanged at 0.480. The official poverty rate stood still at 14.8 percent.

The important new data released today, however, are far from the only source of data on income and poverty trends in the United States. Other datasets paint a different story of family economic wellbeing. For instance, the flat levels of income inequality over the course of 2014 in the Census data diverge from evidence of rising inequality in other data on family incomes. Using tax data, University of California-Berkeley economist Emmanuel Saez finds that the share of income going to the top one percent increased by 1.1 percentage points in 2014. Understanding the state of income inequality and poverty in the United States means we have to be aware of what the Census data can and cannot tell us about the broader trends.

Case in point: it’s important to keep in mind what the Census Bureau considers as “income,” which can be defined in a number of ways. It could focus on income that’s earned strictly from work or investments (“market income”), or it could focus on income after accounting for the effects of government spending programs and taxes (“after-tax-and-transfer income”). The Census takes a third route with its preferred measure, called “money income.”

Money income includes some government programs (such as Social Security or unemployment compensation) but not all of them (such as in-kind transfers including the Supplemental Nutrition Assistance Program, also known as food stamps). It doesn’t include the value of some market income (such as employer-provided health insurance). And it doesn’t include the effects of taxation.

The difference between the Census’s definition of money income and data sources that use a different definition can paint different pictures of what’s happening to the U.S. economy.

Consider trends in income for the median household (the household that’s directly in the middle of the distribution of income in the United States). According to the Census Bureau data using money income, median household income dropped by 8.7 percent from 2000 to 2011. But Congressional Budget Office data on after-tax-and-transfer income shows a much different picture. Over the same time period, that data set shows median household income increasing by 13 percent. The CBO data on market income show a decline of only 4.3 percent. (See Figure 1.)

Figure 1

Something similar happens when we look at the poverty rate in the United States. The Census Bureau’s official poverty rate shows an essentially flat trend over the past few decades, rising only from 14 percent in 1967 to 15 percent in 2012. But the official rate doesn’t include the effects of many anti-poverty programs that aren’t straight cash transfers.

Researchers at Columbia University created a series that accounts for these additional programs among other factors, and the trend is quite different from the official series—poverty starts much higher at 26 percent in 1967 and then declines to 16 percent in 2012. So while this trend shows a decline in the poverty rate over the years (due mainly to an expanded social safety net), it also illustrates the significant share of the population still in poverty. In 2014, the supplemental poverty measure was slightly above the official poverty rate.

The Census has its own preliminary alternative measure of poverty (the “Supplemental Poverty Measure”) that takes into account the research communities’ findings on how best to measure poverty. Like the Columbia University team’s measure, the Supplemental Poverty Measure also includes many anti-poverty programs that offer “in-kind” support rather than cash benefits. Today’s Census data using the Supplemental Poverty Measure pegs poverty at 15.3 in 2014.

The data released today are an important update on the state of income and poverty in the United States. The Census data fill out a picture of a U.S. economy where too many families are struggling, and where the typical family’s income remains 6.5 percent lower than it was prior to the Great Recession. While the Census figures certainly aren’t the final word on the issue, this release is a key addition to our ability to understand some of the most important trends—inequality and poverty—in the U.S. economy today.

Why U.S. tax credits and tax deductions for higher education don’t work

Posted on by Nick Bunker

The ever-rising cost of a college education in the United States is causing policymakers across the United States to consider ways to reduce those costs. With good reason. The amount of student debt has ballooned in recent years while new research shows that the students struggling the most with student debt are those who attended for-profit schools and community colleges many of whom were on the edge of attending or not. The federal government tries to encourage students to pursue higher education by providing loans —a subject for another day—but it also offers a number of incentives through the tax code via credits and deductions to lower the perceived price of college.

But looking at the research on these programs, federal policymakers would do well to rethink them. Tax credits and deductions could plausibly increase attendance at college and universities by reducing the price individuals face when paying for college. Think of it this way: If college applicants find out they will receive a deduction for going to school then the price of tuition seems to be lower and should spark more prospective students to “buy” college.

Of course, there’s the possibility that prospective students treat the tax credits and deductions as an increase in their income that doesn’t affect their schooling decisions. Rather, the credit just acts as a tax cut for people who already were planning to attend college. This second reaction is what happens more often than not, according to a clutch of recent research.

A working paper published earlier this week by the National Bureau of Economic Research finds that the federal tax deduction for college tuition has essential no effect on college attendance or a variety of other metrics on investment in higher education. Economists Caroline Hoxby of Stanford University and George Bulman of the University of California-Santa Cruz use a technique called “regression discontinuity” to determine if the tax deduction has any causal effect by comparing the actions of taxpayers just above and just below the income cut-off for the deduction.

What they find is not encouraging for those policymakers who hope the deduction increases investments in human capital via higher college attendance. The two researchers find no causal effect on “attending college (at all), attending full- versus part-time, attending four- versus two-year college, the resources experienced in college, the amount paid for college, or student loans.” In other words, it’s hard to see how the tax deduction does anything but act as a tax cut for those already set on attending college. The tax deduction studied by Hoxby and Bulman also has important distributional element: It is most valuable to tax filers with higher tax rates, but these are not the students who need the most support. Research from earlier this year by Hoxby and Bulman show very similar results for tax credits as well. Credits also appear to have no causal effect on investment in higher education.

Perhaps these results shouldn’t be too surprising. In a variety of areas of public policy, tax credits and deductions are used as backdoor means to promote diverse ends, including efforts to increase homeownership and retirement savings. Of course, there are very successful tax credits, among them the earned income tax credit, though even in this case some economists argue employers capture a significant amount of the value of the credit.

The reflex among policymakers to reach for the tax code as a means of providing greater access to important goods and services is a behavior they might want to change.

Must-Read: Jon Chait: How Jeb Bush’s Tax Cuts Suckered the Media<

Posted on by Brad DeLong

Must-Read: Jon Chait gets one wrong. Scott Horsley, Alan Rappaport, Matt Flegenheimer, Patrick O’Connor, John D. MacKinnon, Tal Kopan, and Ashley Killough were not “suckered” by the JEB! campaign. Rather, they are in the business not of informing their readers but of pleasing their sources, and this leads to a situation in which–as one newspaper honcho once told me about his paper and its competitors–“on an average day, you learn more from reading Ezra Klein than from reading the entire output of the national news staff of the New York Times. Put aside Josh Barro at The Upshot (and Matt O’Brien at Wonkblog), and it is still true:

Jon Chait: How Jeb Bush’s Tax Cuts Suckered the Media: “If you have heard about Jeb Bush’s new tax plan by reading political reporters…

…you have probably heard that it is a ‘proposal to reform the tax code’ that will ‘crack down on hedge fund managers’ (CNN), that it is ‘mainstream and ordinary’ with ‘a populist note’ (NPR), that it ‘challenged some long-held tenets of conservative tax policy’ (the New York Times), and has ‘a nod to the populist anger roiling both parties’ (The Wall Street Journal)… the same sort of coverage George W. Bush received when he unveiled his tax cuts in 1999…. If you have learned about the tax plan from some of the new policy-focused writers, you… [learned] is a ‘large tax cut for the wealthiest’ (the Upshot) and a reprise of the Bush tax cuts, but ‘with more exclamation points’ (Wonkblog). The difference lies between journalists who write narratives drawn from quotes from campaign sources and those who build their coverage on data. George W. Bush was fortunate that data-based journalism barely existed 16 years ago. His brother is counting on the power of narrative to obscure the data…

Noted for Your Afternoon Reading on September 15, 2015

Posted on by Brad DeLong

Must- and Should-Reads:

Might Like to Be Aware of:

Must-Read: Tim Duy: Why the Fed Is Likely to Stand Pat This Week

Posted on by Brad DeLong

Must-Read: Tim Duy: Why the Fed Is Likely to Stand Pat This Week: “The Federal Reserve is looking for a time with minimal downside risks…

…to raise interest rates. The wavering global economy is likely creating enough downside risk to defer that first hike to a later meeting. But the Fed still wants to begin normalizing policy, and it will signal that it remains committed to a rate hike this year. Regardless of the global situation and the inflation picture, I suspect it will feel increasingly compelled to do just that as the unemployment rate drifts below 5 percent.

The Arguments Being Put Forward for Raising Interest Rates Now Are Very Weak Indeed

Posted on by Brad DeLong

The arguments for raising interest rates right now are of appallingly low-quality.

Consider, for example, Bloomberg View:

Brad Brooks: Why the Fed Should Raise Rates Now: “Although the Fed hasn’t raised interest rates in almost 10 years…

…sympathetic pundits say it’s still too soon to raise them…. How did our financial system weaken to the point where a quarter of a percent increase in rates is more than it can handle?

Stop right there: it is not that “our financial system [is] weaken[ed] to the point where a quarter of a percent increase in rates is more than it can handle”. No interest-rate dove says it is. The reason interest-rate doves oppose rate increases right now is not that the financial system cannot handle them, but that they come with a cost–lower employment and slower growth–and no compensating gain in the form of an appropriate curbing of excess inflationary pressures, since there are no excess inflationary pressures visible either her and now or as far out as the horizon we can see.

The process started… when Alan Greenspan… lower[ed interest] rates to 1 percent… then… tighten[ed] policy… with agonizing slowness… set[ting] the table for the subprime housing debt mess…

Suppose, for the sake of argument, that Greenspan were to have pushed the short-term safe interest rate 200 basis points below its “proper” level–whatever that is–and kept it there for three years. By how much would that have boosted the amount that a subprime borrower could have paid for a house? The answer is simple: 2% x 3 = 6%. Even if you buy that Greenspan made an error in monetary policy in the mid-2000s, it accounts for only one-tenth of the runup in housing prices. And it accounts for a correspondingly-small share of the “subprime housing debt mess”. Greenspan’s policy errors were mighty–but they were all in the arena of lax supervision of lending standards and lending fraud. Bernanke’s policy errors were mighty–but they were all in the area of not cleaning up the supervision-and-fraud mess and not understanding the seriousness of the situation he was handed.

We’re likely to see a serious correction in the U.S. equity market… trigger[ed by]… hundreds of billions of dollars worth of bad debt in the energy sector… made to finance the fracking frenzy…. Perhaps the most disturbing statistic is that American corporations have announced dividends and share buybacks for this year that total more than a trillion dollars… at the expense of long-term capital investment…. Another area for concern is the burgeoning private market for investments, where companies are finding it relatively easy to raise capital…. The Fed has to finally take away the punch bowl. The economy may not be in top shape, but it’s strong enough to handle an equity correction of 20 percent to 25 percent…. Another mild recession would not be the end of the world…. Writedowns can be painful, but they instill a sense of responsibility…. Lift[ing] overnight rates back up to the 2.5 percent range years ago… would generate at least a trillion dollars annually, if not more, for [short-duration] fixed-income investors–and a possible boost of 6 percent to GDP…

Ummm… The purpose of raising interest rates is to shrink the economy, not grow it by “6 percent” or some other imaginary number pulled out of the air without any analysis. The extra trillion a year of income to short-duration fixed-income investors is offset by a ten-trillion loss to the portfolios of long-duration fixed income investors, plus an extra trillion dollars a year of payments by enterprising and consuming borrowers to rentiers.

So when Brooks writes:

So let’s end the era of the “Greenspan put” and Bernanke’s quantitative easing, and return to basics…

I, speaking as a Brad, find myself completely and totally humiliated by the low quality of these arguments.

The “basics” are that the Federal Reserve (i) engages in prudential regulation to curb the growth of systemic risk and reduce fraud, and (ii) sets interest rates so that planned investment is equal to desired savings at full employment and there are neither unanticipated inflationary or deflationary pressures on the economy. Labor-market indicators are confusing: the unemployment rate suggests that deflationary pressures are now gone, while the prime-age labor-force participation rate suggests deflationary pressures are still here. Inflation indicators are not confusing: inflationary pressures aren’t here, and aren’t expected to emerge in the near future. Financial asset prices suggest an overheated economy if the Federal Reserve is about to embark on a full tightening cycle, but are justifiably high if the new normal is one of Summers’s “secular stagnation” or Bernanke’s global savings glut. High financial asset prices do indeed raise the risks from lax macroprudential supervision. But why isn’t the appropriate policy response to make sure that macroprudential supervision is not lax?

Comments on proposed U.S. overtime regulation

Posted on by Nick Bunker
Photo of clock by A. Strakey, flickr, cc

In the Notice of Proposed Rulemaking (NPRM) RIN 1235-A111, DOL proposes to increase and automatically update the salary threshold for exemptions from overtime protections under the The Fair Labor Standards Act (FLSA). I observe in the comments below that DOL understates the economic benefits of the proposed threshold and that the proposed level is consistent with the historical growth in prices and economic output.

In its analysis of the effect of the proposed rule on hours worked, DOL understates the benefits to the workforce by failing to account for employers’ tendency to hire additional workers and to schedule non-overtime work in response to the rule change. Footnote 120 of the NPRM acknowledges that the substitution of overtime hours to non-overtime hours is a possibility, and that DOL understandably “did not have credible evidence to support an estimation of the number of hours transferred to other workers.” Yet it should be noted that this possibility is actually an implication of the fixed-wage model that partially underlies DOL’s analysis.

Ignoring this consequence of the economic model underlying DOL’s analysis causes the NPRM to overestimate the total reduction in economy-wide hours due to the proposed rule, at least in the short run. In particular, when the overtime premia threshold is raised, employers will substitute away from overtime hours and either hire additional workers or schedule additional hours for workers below the 40-hour threshold. Indeed, the fact that there is a spike of 40 hours in the distribution of weekly hours is consistent with the idea that firms substitute away from overtime hours. Moreover, private-sector analyses such as those by the National Retail Federation (2015) and Goldman Sachs (2015) predict increases in employment as employers hire additional workers to work non-overtime hours. This substitution toward non-overtime hours is necessarily implied by the fixed-wage model when output is constant, say in the very short run or in an economy with a large degree of excess capacity. Any offsetting increase in non-overtime hours will be smaller over the medium- to long-term, when both output and capital adjust more easily.

The possibility that some individuals will see increased employment through the extensive or intensive margins has important welfare considerations ignored by the NPRM. Based on empirical evidence describing the extent of overwork in the United States, the NPRM correctly concludes that the proposed rule may improve welfare because it “may result in increased time off for a group of workers who may prefer such an outcome.” At the same time, although many workers in the United States are overworked, a sizable portion of the labor force does not work as many hours as desired (Golden and Gebreselassie 2007; Jacobs and Gerson 2005). Footnote 135 of the NPRM states that the lack of existing scholarly studies precludes quantifying any increase in employment or hours due to the rule, but DOL should make clear that under certain conditions the fixed-wage model underlying their analysis implies that some workers will see an increase in hours. If these workers are under-employed, the shift in the composition of those hours from over-worked to under-worked employees will be a welfare-improving consequence of the proposed rule.

In its calculation of the monetary benefits of reducing hours, the NPRM fails to account for significant externalities associated with high levels of hours worked. The NPRM approximates the benefit an affected worker receives for an hour of additional leisure by the average hourly wage, but this approximation understates the social benefits when the social and private costs of work differ. Some empirical work calculates that longer work hours entail greater energy consumption and consequentially more environmental damage (Rosnick and Weisbrot 2006). And economic theory suggests that long work hours may be detrimental both within and outside of the household (Gersbach and Haller 2005; Folbre, Gornick, Connolly, and Muzni 2013). In a separate section on health benefits of the proposed rule, the NPRM also effectively acknowledges the existence of these externalities cited above, stating that the rule will not only benefit the worker’s welfare through its positive health effects but also “their family’s welfare, and society since fewer resources would need to be spent on health.” Although the NPRM states that its wage-based approximation may overestimate the social benefits of fewer hours worked because not all workers will prefer to reduce their hours, the exclusion of important externalities causes the NPRM to underestimate some benefits of reducing hours.

The NPRM also understates benefits by excluding the possibility that an updated salary threshold will improve pay for hourly workers who are not paid overtime, even when they should be. Rohwedder and Wenger (2015) find that 19 percent of hourly workers are not paid a premium for working overtime hours. While it is unclear if all of these workers are legally required to receive overtime payments (due to occupational exemptions), many of them are not receiving pay promised under the FLSA. The proposed, transparent update to the salary threshold will provide employers an opportunity to revisit whether their employees are paid according to the law.

Finally, the proposed threshold for the overtime weekly salary exemption appears to be consistent with a range of economically appropriate levels. The NPRM proposes raising this threshold to approximately $921, or the 40th percentile of the weekly earnings distribution of salaried employees working full-time. This level is appropriate because it is similar to the exemption threshold that already applied in 1975, after adjusting for inflation ($250 in 1975 dollars, or approximately $1,000 per week in 2014 dollars.). Yet if the labor market’s capacity to bear this regulation is determined by productivity, then this threshold is almost certainly too low. Since 1975, real productivity has grown by more than 72 percent, suggesting an overtime weekly salary threshold of at least $1,720, well exceeding the proposed rule.

 

Ben Zipperer

Research Economist

Washington Center for Equitable Growth

1333 H St., NW

Washington, DC  20005

 

References

Folbre, Nancy, Janet Gornick, Helen Connolly, and Teresa Munzi. 2013. “Women’s Employment, Unpaid Work, and Economic Inequality,” in Janet Gornick and Markus Janti, editors, Income Inequality: Economic Disparities and the Middle Class in Affluent Countries, Redwood City CA: Stanford University Press.

Golden, Lonnie and Tesfayi Gebreselassie. 2007. “Overemployment mismatches: the preference for fewer work hours.” Monthly Labor Review. April.

Gersbach, Hans and Hans Haller. 2005. “Beware of Workaholics: Household Preferences and Individual Equilibrium Utility.” IZA Discussion Paper. February. http://ftp.iza.org/dp1502.pdf

Goldman Sachs Global Macro Research. 2015. “The New Federal Overtime Rules: A Greater Effect on Payrolls than Pay.” July 7.

Jacobs, Jerry, and Kathleen Gerson. 2005. The Time Divide: Work, Family, and Gender Inequality. Cambridge MA: Harvard University Press.

National Retail Federation. 2015. “Rethinking Overtime.” https://nrf.com/sites/default/files/Documents/Rethinking_Overtime.pdf

Rohwedder, Susann and Jeffrey B. Wenger. 2015. “The Fair Labor Standards Act: Worker Misclassification and the Hours and Earnings Effects of Expanded Coverage.” http://www.rand.org/content/dam/rand/pubs/working_papers/WR1100/WR1114/RAND_WR1114.pdf

Rosnick, David and Mark Weisbrot. 2006. “Are Shorter Hours Good for the Environment? A Comparison of U.S. & European Energy Consumption.” Center for Economic and Policy Research. December. http://www.cepr.net/documents/publications/energy_2006_12.pdf

Keep an eye on changes to U.S. corporate income tax proposals

Posted on by Nick Bunker

The current U.S. presidential election process not surprisingly features a number of tax reform idea, some well thought out and others not so much. More concrete ideas about overhauling the U.S. tax system are drawing attention, as the recent conversation around former Florida Governor Jeb Bush’s plan shows. The focus is often on the individual tax system, however, with more detailed proposed changes to the corporate tax system often overshadowed.

There are two big areas in the debate about the U.S. corporate tax system: the rate and the coverage. When it comes to the rate, there’s an important distinction to be made. You’ll hear some claim that the United States has the highest corporate income tax among developed economies. That’s statement is strictly true. The statutory corporate income tax, or the rate that’s on the books, 39.1 percent, is the highest among the developed and leading developing economies in the Organisation for Economic Co-operation and Development.

Yet the statutory rate is quite different from the effective tax rate, or the rate corporations actually pay. The difference is due to the variety of deductions and loopholes present in the current system. Estimates of the effective rate differ, but according to the U.S. Congressional Budget Office the effective rate averaged 25.4 percent from 1987 to 2008, or about the current average of 24.8 percent for the other 33 economies in the OECD.

What’s more, there is some evidence that points to a much lower effective tax rate. Research by economist Patrick Driessen at Bloomberg Government points out that models used by the Congressional Budget Office and others calculate the effective tax rate by looking at how the capital gains tax that individuals paid on realized capital gains from investments in corporations. This method ends up missing the significant amount of earnings held by U.S. corporations abroad. Driessen pegs that number at about $400 billion. After accounting for these deferred foreign earnings, Drissen gets a much lower effective rate: about 14 percent,

These foreign earnings bring up the second area of discussion when it comes to the corporate income tax. The U.S. corporate income tax system is currently a worldwide system, where theoretically the profits of a U.S. corporation earned anywhere are taxed at the U.S. rate. But if profits earned elsewhere are kept outside of the United States, then they remain untaxed by the federal and states government. This large stash of profits kept overseas and untaxed is one of the trends highlighted by economist Gabriel Zucman at the London School of Economics in his book, “The Hidden Wealth of Nations.”

Some politicians and economists propose that the United States should deal with these untaxed offshore profits by switching to a “territorial” system, where only profits earned in the United States would be taxed. But there remains the possibility that corporations would figure out how to make profits earned in the United States looks like they were earned elsewhere, as they do now under the current corporate tax system.

Which is all to say that the complexities of the U.S. corporate income tax system are one reason why it often receives less attention than the more-well understood individual tax system, with which citizens have a more visceral relationship. Given the amount of money at stake and the distributional effects of reform, let’s hope the current election cycle sparks a serious debate about the current system.

Must-Read: Mike Konczal: Student Loan Distress Goes Beyond Default

Posted on by Brad DeLong

**Must-Read: I do not think it is an accident that “student debt activists… put forward people defrauded by the for-profit industry, the media prefers to talk about poetry majors with outrageous debt balances…” The Graham family conglomerate, remember, included both The Washington Post and Stanley Kaplan University–the second-worst for-profit student-loan grifter–before its break-up. I think that mattered…

Mike Konczal: Student Loan Distress Goes Beyond Defaults: “Adam Looney and… Constantine Yannelis… [say] that there is no…

…general student loan default crisis. Instead there is a serious, though limited, problem concentrated in for-profit schools and, to a lesser extent, community colleges… made far worse by the Great Recession…. I agree…. Student loans defaults from for-profit schools are a genuine problem, and the media often fails to recognize this. As Astra Taylor notes, when student debt activists in the wake of Occupy put forward people defrauded by the for-profit industry, the media prefers to talk about poetry majors with outrageous debt balances….

For-profits were allowed to expand rapidly in the 2000s, and they’ve done a remarkable job in maximizing their profits…. The yearly net tuition increase for students attending a community college is up around $950 a year between 2000 and 2010. If the public policy is to shift costs from states to individual students, we shouldn’t be surprised when it goes perfectly to plan…. Poor communities have very large debt balances relative to income, forcing such distress that the results are large default rates. But there’s another issue, and that’s the life effects of student debt. And default rates won’t catch this…