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PA Job Numbers Out, The War On Unemployment Insurance, and Inequality

8:36 am in Uncategorized by ThirdandState

By Mark Price, Third and State

A pile of rusty pennies.

Photo by Davidd

Happy Sunny Friday, people! Now for the not so good news. The job numbers for Pennsylvania came out Thursday, and the overall picture was somewhat disappointing. The unemployment rate edged down slightly to 7.4% and nonfarm payrolls declined by 600 jobs. Focusing on the jobs data, the biggest loser in April was construction, which shed an eye-popping 5,400 jobs. That is a big swing at a time of year when construction projects should be ramping up. Odds are that loss is driven by sampling error rather than real trends in construction activity. Another troubling stat was the loss of 1,700 jobs in the public sector.

Because monthly data are somewhat erratic, you shouldn’t make too much out of any one-month change in employment overall or within a sector. Looking at nonfarm payrolls since October, the jobs picture is somewhat brighter with Pennsylvania adding, on average, 3,900 jobs a month. So Pennsylvania’s labor market, like the national labor market, is continuing to recover.

Now for the bad news: if you were hoping the Pennsylvania economy would finally return to full employment by 2015 (remember, the recession started in December 2007), nonfarm payrolls need to grow by about 10,000 jobs a month. So by that metric, we are a long way from fully recovering from the worst recession since the Great Depression.

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A Recovery for the 1%

3:23 pm in Uncategorized by ThirdandState

By Jheanelle Chambers, Intern, Third and State

Even in a Down Year, Top 1% Have More Total Income Than Bottom 50 Percent CombinedWhile many middle-class Americans are still struggling in a down economy, the 1% is doing quite well.

The Center on Budget and Policy Priorities has an eye-popping chart (right) showing that in 2009, despite the weak economy, the top 1% of households captured $1.32 trillion in gross income while the bottom 50% earned $1.06 trillion.

Economist Chuck Marr explains further at Off the Charts:

The long-term trend in the United States has been towards much greater income concentration at the top. But the trend isn’t perfectly smooth: high-income people tend to benefit more from economic expansions than other income groups but tend to get hit harder by recessions. The swings are particularly pronounced in financial booms and busts…

At the height of the previous expansion, in 2007, the top 1 percent had 87 percent more total [adjusted gross income] than the bottom 50 percent. But even the 2009 gap of “only” 25 percent — the difference between the $1.32 trillion earned by the top 1 percent and the $1.06 trillion earned by the bottom 50 percent — is pretty staggering.

Income Concentration at the Top Rose in 2010The news gets even better for the 1% in 2010, as the Center on Budget and Policy Priorities’ Chad Stone explains in another Off the Charts post. After seeing a dip in income in 2009, the 1% was well on the road to recovery a year later, Stone writes, citing new data compiled by economists Thomas Piketty and Emmanuel Saez:

The Piketty-Saez data paint a clear picture of faster income growth and rising income concentration at the top over the past few decades. The dot-com collapse proved to be nothing more than a speed bump, and the financial crisis and Great Recession may turn out to have had similarly transitory effects.

With Tax Day approaching next week, maybe it’s time to call on lawmakers to take a page from the 1930s and 1940s and enact tax policies to slow down the growing income gap between the 1% and the rest of us that is so common today even in the worst of economic conditions.

PA Must Reads: Government Spending, Top Incomes and adultBasic

11:49 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

Paul Krugman this morning caps off a series of blog posts over the last week with a column comparing government spending in the recovery following the deep 1981 recession and government spending in the recovery following the 2007 recession. The bottom line: the employment situation now would have been much better if the federal government had done more to provide aid to state and local governments.

One way to dramatize just how severe our de facto austerity has been is to compare government employment and spending during the Obama-era economic expansion, which began in June 2009, with their tracks during the Reagan-era expansion, which began in November 1982.

Start with government employment (which is mainly at the state and local level, with about half the jobs in education). By this stage in the Reagan recovery, government employment had risen by 3.1 percent; this time around, it’s down by 2.7 percent.

Next, look at government purchases of goods and services (as distinct from transfers to individuals, like unemployment benefits). Adjusted for inflation, by this stage of the Reagan recovery, such purchases had risen by 11.6 percent; this time, they’re down by 2.6 percent.

And the gap persists even when you do include transfers, some of which have stayed high precisely because unemployment is still so high. Adjusted for inflation, Reagan-era spending rose 10.2 percent in the first 10 quarters of recovery, Obama-era spending only 2.6 percent.

Why did government spending rise so much under Reagan, with his small-government rhetoric, while shrinking under the president so many Republicans insist is a secret socialist? In Reagan’s case, it’s partly about the arms race, but mainly about state and local governments doing what they are supposed to do: educate a growing population of children, invest in infrastructure for a growing economy.

Economist Emmanuel Saez has updated his time series (PDF) on top incomes with new data for 2010, which has just been released by the IRS. Mike Konczal walks you through the new data. The most shocking figure in the new data is the following from Saez:

The top 1% captured 93% of the income gains in the first year of recovery.

The Delaware County Daily Times this morning explores the impact of the end of Pennsylvania’s adultBasic program a little over a year ago.

One year after 42,000 working Pennsylvanians lost adultBasic, a state program designed to provide low-cost health insurance for low-income residents ages 19 through 64, many are still struggling to get health care, according to health care access advocates.

“Unfortunately I have heard countless stories over the last year from people across the state unable to gain access to the care they need. It’s been especially troubling for people with chronic conditions,” said Athena Ford, spokesperson for the Pennsylvania Health Access Network.

More than 1,700 Delaware County residents relied on adultBasic before the program ran out of money Feb. 28, 2011 and more than 17,400 Delaware County residents were on the waiting list for the low-cost health insurance.

The figure above comes from a new report by John Schmitt, Health-insurance Coverage for Low-wage Workers, 1979-2010 and Beyond (PDF):

The last three decades have seen substantial erosion in employer-provided coverage across workers at all pay levels. Low-wage workers saw the biggest decline in own-employer coverage – about 17.0 percentage points between 1979 and 2010. But, coverage losses were almost as large for workers in the second quintile (down 13.8 percentage points) and the top quintile (down 13.3 percentage points).

PA Must Reads: High Unemployment Strains the Safety Net and Underwater Mortgages

7:50 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette reports this morning on the continued strain that high unemployment is putting on the safety net in Pennsylvania.

There are 1.8 million people in Pennsylvania so short of cash that they qualify for food stamps. That translates to 14.4 percent of the state’s population receiving at least part of their food budget from the Supplemental Nutrition Assistance Program.

The slow economic recovery from the Great Recession is not yet translating into personal recoveries…

Pennsylvania does not keep unemployment trend records on a month-by-month basis but in the fourth quarter of 2011, 33 percent of the state’s unemployed had been out of work for more than six months and the state’s labor force participation rate was 62.8 percent, lower than in the fourth quarter of any of the previous three years…

When Just Harvest advertised a part-time job paying $12 an hour to help people apply for food stamps, the agency was inundated with applications — including people with doctorates seeking a job that just required some education past high school.

Laura Tobin Goddard, executive director of the Pennsylvania Hunger Action Center in Enola, Cumberland County, said food pantries around Harrisburg are still reporting seeing a lot of new faces even 2 1/2 years after the recovery began.

Her agency, which is also a nonprofit that helps people access government programs and directs them to food pantries, received 500 calls in 2007 from people seeking assistance. Now it receives 100 calls a month.

Those of you betting that 2012 will mark the year the housing market in Pennsylvania came roaring back need to pay up. The Pocono Record reports on the percentage of borrowers that owe more on their homes than those homes are worth if they were put up for sale.

Almost half the homes in Monroe County are worth less than what homeowners owe on their mortgages, according to a recent study.

That’s the highest “underwater” rate in the state, according to data from RealtyTrac.

The data show nearly one-third of all Monroe County homes are seriously underwater. That’s where borrowers owe at least 25 percent more on their mortgages than their property is worth…

By comparison, about 27 percent of homeowners across the state are, on average, underwater.

PA Must Reads: Soup Kitchens & Self Sufficiency Programs Under Pressure & Marcellus Public Health Issues

10:11 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Erie Times-News reports this morning that Governor Tom Corbett’s decision to implement an asset test for food assistance in Pennsylvania is expected to drive more people to seek help in already overburdened soup kitchens.

In other news this morning, it has fallen to charitable foundations to fund programs to help identify the public health impacts of Marcellus Shale development.

When Sister Mary Miller took over Emmaus Ministries in 1980, she dreamed of one day being able to close the agency’s soup kitchen, hoping the need would no longer be there.

In 1980, the kitchen served about 100 people a day.

Today, the facility … serves close to 200 people daily, feeding a city racked by a skyrocketing poverty crisis.

The soup kitchen’s numbers are likely to rise even more in the coming months, Miller believes, when major changes in the state’s food-stamp program will eliminate some area residents from those eligible to receive the government benefits.

On May 1, the Pennsylvania Department of Public Welfare will reinstate asset testing for people seeking to qualify for food stamps, known as the Supplemental Nutrition Assistance Program…

Critics of the asset test, like Miller, insist the move will hurt thousands of people who are already struggling, penalize those who save money, and burden food pantries, soup kitchens and social-service agencies that are already overwhelmed.

“To think, I once hoped there would be a time where we wouldn’t need the soup kitchen,” the Erie Benedictine nun and director of Emmaus said. “Now, with this, the door of the soup kitchen will only have to become wider.”

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End of Mortgage Assistance Could Undermine Economic Recovery

8:12 am in Uncategorized by ThirdandState

Chances on mortgages not looking good

A blog post by Mark Price, originally published at Third and State.

Economic forecasters predicting strong economic growth in the next several years rest those hopes on a robust recovery in residential construction. In light of that, The Philadelphia Inquirer has some troubling news this morning in a story about a surge in foreclosure filings over the last 12 months.

The rise in foreclosure filings may be the result of lenders moving forward with long planned foreclosures rather than a worsening of economic conditions. More troubling is the rise in 90-day delinquencies, which could be the result of the end of Pennsylvania’s Homeowners Emergency Mortgage Assistance Program (HEMAP). The permanent end to HEMAP also means rising costs for future taxpayers.

The rise in 90-day delinquencies in Pennsylvania during 2011 coincided with the end of the state’s highly touted Homeowners Emergency Mortgage Assistance Program (HEMAP), which provided loans to borrowers behind on their mortgages that were repaid either when their financial crises ended or within 24 months.

In 2010, 13,654 homeowners applied for the assistance, and 2,798 were approved, said John Dodds, director of the Philadelphia Unemployment Project.

“All of those who applied were informed of housing counseling, and many probably had their mortgage modified or were otherwise able to save their homes,” Dodds said Wednesday.

Funding for HEMAP, which began in 1983, ended in August, as did the Act 91 requirement that defaulting borrowers be sent notices by lenders informing them of the program and available counseling assistance, Dodds said. Read the rest of this entry →

PA Must Reads: Hard Times, Unemployment Insurance and Marcellus Arm Twisting

10:18 am in Uncategorized by ThirdandState

(photo: wisaflcio/flickr)

(photo: wisaflcio/flickr)

A blog post by Mark Price, originally published at Third and State.

Although the economy is recovering, it is important to remember that unemployment remains high and that means many households are struggling to make ends meet. WITF this morning reports on non-food aid from a Central Pennsylvania charity.

NPR’s Morning Edition had a very good story on the national controversy surrounding food assistance.

Meanwhile, the Allentown Morning Call reports that a bill required to enable 17,000 Pennsylvania workers to qualify for federally-funded unemployment insurance has cleared an important hurdle.

The state House has advanced Legislation that would restart the flow of extended unemployment benefits for 17,000 jobless Pennsylvanians. A final vote, which would send it to Gov. Tom Corbett’s desk, is expected Wednesday …

… the bill was quickly moved to third, and final consideration, with Speaker Sam Smith’s announcement that all amendments to the bill had been pulled. …

Some House Republicans, with the backing of business leaders, had sought to tie approval of the bill to shoring up the long-term solvency of a system that owes $3 billion to Washington — courtesy of historic levels of unemployment.

The Philadelphia Inquirer reports on hard ball politics aimed at boosting support for a weak Marcellus Shale drilling fee. Read the rest of this entry →

PA Must Reads: State of The Union, Stimulus and Austerity Economics PA Style

8:10 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

Tonight President Obama will deliver his State of the Union Address to Congress. We are expecting the President to recommend an extension through the end of 2012 of extended unemployment insurance benefits and the payroll tax credit. It looks as though a major theme in the address — besides the catch phrase “built to last” — will be conventional policies aimed at reducing inequality, such as increased spending/tax credits for education and training.

Education and training are important and fruitful means of reducing inequality, but they fall well short of what’s needed to reduce the degree of inequality we now face.  A more forceful step in the direction of reducing inequality would include raising the minimum wage and making it easier for workers to form and join unions. We don’t expect to hear the President call for either of those changes.

The President will propose paying for his new initiatives with higher taxes on wealthy households. As with education and training, restoring some sense of fairness to the tax code is a laudable goal but longer-lasting reductions in inequality will only come from policies that allow the pre-tax wages of more Americans to rise as the size and wealth of our economy grows.

Manufacturing, energy, job training and middle-class growth will be the cornerstones of President Barack Obama’s speech tonight as he takes to the nation’s grandest political stage for the annual address on the state of the union, according to senior advisers.

We are slowly getting details of a settlement of allegations of fraud by banks during the housing bubble. Dean Baker notes this morning that the deal is said to include immunity from prosecution for banking executives in exchange for mortgage relief paid for by investors (not the banks). It’s good to be a banker.

The Philadelphia Inquirer reports this morning that the association that represents construction contractors who mainly compete for work in the non-residential construction sector is expecting essentially no change in the number of workers they will employ in 2012. Non-residential construction makes up roughly two-thirds of all construction employment in Pennsylvania. Also of note in the article: 62% of Pennsylvania contractors surveyed reported relying on some stimulus-related work. Remember that factoid next time you hear someone claim stimulus spending had no effect on the economy.

Construction employment will go up — very slightly — in 2012, contractors predicted in a survey released Monday by the Associated General Contractors of America…

The survey notes that many contractors relied on stimulus-funding projects over the past years, but few expect to perform much stimulus-funded work in 2012.

In Pennsylvania, for example, 62 percent of those surveyed had stimulus work, with most of them assigning the majority of their workers to those projects. But in 2012, only one in five expects stimulus work.

More news of property tax hikes, teacher layoffs and larger class sizes — this time out of Dauphin County.

The Central Dauphin School Board Monday night approved a $155.4 million preliminary budget for 2012-13 that could mean higher taxes, larger class sizes or furloughs of as many as 50 district employees.

The Patriot-News Editorial Board notes that the asset tests for food stamps proposed by the Corbett administration are unwise and likely to punish many rural families.

Creating an asset test for food stamps in Pennsylvania is the wrong approach…

Given the economic woes many families are facing with at least one parent — sometimes both — out of a job, the car rule hardly makes sense. This is especially true in rural parts of the state. Reliable transportation is critical to achieving financial independence, and in many families that means parents having two decent cars to drive.

The other issue is the $2,000 limit in savings. Families struggling to get out of poverty are likely to be trying to save money, build up funds to help them pay off bills, make a security deposit on an apartment or catch up on mortgage payments. It makes no sense to compel people to potentially liquidate funds to be able to put food on the table.

Hunger is a problem in our state, and many people rely on food stamps to solve it.

PA Must Reads: The Failure of School Choice and the Food Industry Eats Your Tax Dollars

8:12 am in Uncategorized by ThirdandState

Today's typical public school lunch (Photo: .imelda, flickr)

Today's typical public school lunch (Photo: .imelda, flickr)

A blog post by Mark Price, originally published at Third and State.

An op-ed in The New York Times this morning points out that “school choice” has increased educational inequality.

If you want to see the direction that education reform is taking the country, pay a visit to my leafy, majority-black neighborhood in Washington. While we have lived in the same house since our 11-year-old son was born, he’s been assigned to three different elementary schools as one after the other has been shuttered. Now it’s time for middle school, and there’s been no neighborhood option available.

Meanwhile, across Rock Creek Park in a wealthy, majority-white community, there is a sparkling new neighborhood middle school, with rugby, fencing, an international baccalaureate curriculum and all the other amenities that make people pay top dollar to live there.

Such inequities are the perverse result of a ‘reform’ process intended to bring choice and accountability to the school system. Instead, it has destroyed community-based education for working-class families, even as it has funneled resources toward a few better-off, exclusive, institutions.

On Sunday, another op-ed detailed how food manufacturers and food service companies are allegedly fleecing taxpayers while delivering food with little or no nutritional content.

How Much Does Child Poverty Cost the Economy?

6:20 am in Uncategorized by ThirdandState

A blog post by Chris Lilienthal, originally published at Third and State.

At a conference this week, a presenter posed an important question that doesn’t get asked very often: How much does child poverty cost our economy?

Based on an analysis of the U.S. Census Bureau’s 2006 American Community Survey data, researchers estimated that child poverty costs the nation $500 billion annually in foregone earnings, involvement in crime, and the costs associated with poor health outcomes. In Pennsylvania, the cost is $17.5 billion annually, based on the 2006 data showing 465,000 (or 17%) of children living in poverty.

In effect, this is money that would accrue to the U.S. and Pennsylvania economies if we took steps now to end child poverty once and for all, such as investing in education, health care and other vital family needs. And with poverty rates higher today in the wake of the recession, the benefits of doing so would be that much greater.

We have long grappled with the social costs of poverty and what it means for families across Pennsylvania and the nation. It’s also critical to look at poverty as a huge economic and jobs issue.

Lori Pfingst of the Washington State Budget and Policy Center, who took the national data and broke it down by state, explains:

The social and economic costs associated with childhood poverty are a powerful argument for policymakers to develop poverty reduction campaigns at both the federal and state level. Several states have developed poverty reduction campaigns and some have implemented new anti-poverty policies. … In light of these numbers, poverty reduction should be viewed as a social investment that generates billions of dollars in returns to society in the form of increased economic productivity, reduced expenditures on health care and the criminal justice system, and improvements to multiple dimensions of children’s well-being.