Tag Archives: economics

The charts that are shaping U.S. economic policy. April Fool.

My oldest son has big plans to switch my toothbrush with my husband’s today, so we’ll see how that works out. Hijinks, people, big time.

But nothing compared to the surreal experience of watching policymakers make economic policy based, apparently, on fairly little understanding of actual economic realities.

If you haven’t seen them already, take a look at the Economic Policy Institute’s ‘top charts’ for 2012. These are the sets of economic information that, in a perfect world, would be driving U.S. policy decisions about social spending, infrastructure, entitlements, and, of course, tax policy. Of course, I think life would be better if the good folks at EPI got to run a lot more of our social policy.

Here are some of my favorites:

What are we going to do to get these lost generations reengaged in the labor market? What does this mean for my graduating students? For the concept of ‘retirement’ in the years to come?

Seriously. We make way less than $250,000 per year, and I still feel super economically privileged. I know my kids will be able to go to college. We own a home. I can buy something ridiculous at Target without flinching, for crying out loud. Economic security for the real middle class, and let’s be real about who we’re talking about.

A social problem we don’t define as ‘problematic’. There is such a thing as ‘too much’, not just ‘too little’. Both extremes matter. A lot.

Cuts in government spending aren’t victimless. More efficiency doesn’t necessarily yield a stronger economy.

It’s going to take a long time to claw back from this kind of devastation. And, the subtitle: those who started with less end up with…way less.

And here’s the not foolish part: we need to advocate to shift the policy conversation so that these are the figures that are animating the debate. We need economic policies that don’t make us slap our foreheads.

We need to not feel like April fools.

2011 in Charts, and What they mean for real people

I do love a good chart.

And these, from the Economic Policy Institute’s 2011 year-in-review, tell a very important story.

But, since I’m a social worker, it’s the human side of that story that interests me the most.

So I looked through these charts with an eye towards how they would look if they could walk into our offices and ask for help.

Because, in some way, they do.

So that “job seekers ratio” becomes the person with what used to be an adequate level of education (maybe a high school diploma, maybe a few years of college, maybe even a college degree) who now finds him/herself competing against three other people, some more experienced, for the same job, and who, in the meantime, struggles to support a family. And the desperation and depression that sets in after months of unsuccessful job searching.

The more than 18% of kids who had at least one parent unemployed or underemployed in 2011? Those are the kids wearing clothes that don’t fit, and staying after in our recreation programs in hopes of some extra food. They’re the kids with anxiety attacks because they’re worried about how their parents are going to make the rent, and the ones who have a dim view of the future, already, at age 9.

The data on too few job openings? Those reflect the mothers receiving TANF who have to go through the motions of searching for jobs that just aren’t there, in order to receive the money on which their children depend. They’re the ones we’re sending the message that jumping through hoops is more important than spending time with their kids.

When your clients tell the story of their own economics, what statistics do they represent? And how can we help people to see their fortunes as connected to economic structures, and forces, in which they are absolutely not complicit? And why does untangling those data–making them visible and making them real–matter?

What can we do, in this new year, to make these charts breathe, so that policymakers understand the urgency of the lives they represent?

We’re all on welfare: a look at tax expenditures

I like to start many of my social policy semesters by asking my students what kind of welfare they receive (I figure they might as well know, from the beginning, how it’s going to be!). When I inevitably get some uncomfortable looks in response, I start in on the welfare that my own household receives, most of it in the form of tax expenditures, those nearly-invisible ways in which the U.S. government and the state of Kansas subsidize my family’s most important economic activities.

After all, the generosity of the federal government and my fellow taxpayers makes it possible for us to:

  • Own a home, deducting all of the interest we pay on our mortgage
  • Save for my kids’ college educations, deducting our 529 college savings plan contributions from our state taxes
  • Save for retirement, excluding all of our 401(k) contributions AND deducting our Individual Retirement Account savings
  • Pay for medical care with pre-tax dollars
  • Take child credits for our three children
  • Deduct our state and local property taxes for the home for which (see above) we’re already receiving a subsidy
  • Support our favorite charitable causes, with favorable tax treatment for all of those contributions

    Pretty nice, hunh?

    And we’re not alone. The 2008 Tax Expenditure Budget looked like this.

    All of those economic activities are things the government has an interest in us continuing–as a nation, we want people to save for their retirement, and for college, and to support nonprofit organizations, and to have health insurance. We do, and we are quite richly rewarded for it, in terms of serious reductions in the taxes we would otherwise pay.

    The big problem, of course, is in the framing: while two-thirds of tax expenditures go to American households in the top 20% of incomes, there’s still a perception that it’s low-income people who receive the most “subsidy” from the federal treasury. And it’s not small change we’re talking about here: we spend about $900 billion each year on tax expenditures (and it really is “spend”–we’d otherwise be collecting all of that in taxes and then turning around and allocating it to other spending).

    Because tax expenditures are not refundable, for the most part, one only benefits if the taxpayer has a tax obligation; that’s why the vast majority go to those with over $50,000/year in income. Those tax expenditure subsidies, of course, are above and beyond the many benefits we receive from the tax system just by living in this society, which are substantial. This is actually money put in our pockets and, so, if we’re going to call means-tested benefits for low-income households “welfare”, it’s only fair to own up to the ways in which the government enriches the welfare of our own households, too.

    So, this year, when you complete your taxes and notice all of the places you get to subtract, think about the message that sends to you, as a taxpayer, and about the ways in which we use federal tax and spending policy to provide incentives for certain behaviors (the Earned Income Tax Credit is the primary example of a tax expenditure that, while much smaller in size than the ones listed above, is targeted at lower-income families who are working), whether through the tax code or through direct entitlement or discretionary spending.

    I own the fact that we’re, in so many ways, on welfare, that there’s really no such thing as being completely “self-sufficient”, and even that our family would have a hard time sustaining the lifestyle we do without these considerable tax benefits. And, so, if anyone ever asks me what kinds of welfare I receive, I’ll be ready with a list. It’s right there, on my 1040.

    Happy Tax Day!

  • Of silver linings–the policy ‘good’ that may come from all the recession ‘bad’

    Because I don’t in any way wish to give the impression that I’m celebrating the pain that the current recession is bringing to individuals, organizations, and entire communities in the United States and around the world, maybe the title for this post should instead be, “Things I’m Really Glad We’re Not Talking So Much About Anymore.”

    But I really do believe that there may be some long-term good, in terms of the shifting of policy priorities in the country, to come from this widespread, deeply-felt, and sustained period of economic downturn. That’s one of the lessons that we should take from the social reforms achieved in the last, still worst, economic depression this country has seen.

    The whole “personal responsibility crusade”, while certainly a seed of inspiration for the Tea Party folks and some other anti-Obama campaigners, has fallen quite dramatically from favor. We don’t have to read one news story after another about various proposals for Social Security privatization. No one’s credibly talking about replacing Medicare with health savings accounts. Being unemployed is no longer assumed to be code for being uneducated, unmotivated, or criminal.

    There is an understanding, not insignificantly, that bad economic things happen to really “good people”, and, even more importantly, that government should play a role in cushioning the blow when people fall victim to these economic forces and, even, (!) seek to prevent some of the falls in the first place.

    Sound familiar?

    So, in addition to health care reform that addresses many (but not all) of the concerns Hacker outlines in the chapter on “Risky Health Care”, we have student loan reform that makes college more affordable (and loan repayment more feasible), and a push for financial reforms that would curb some of the banking practices that heightened the risks Americans face.

    Those are obviously big things, and we can and must work very hard over the next few years to achieve more legislated “bricks” in a secure economic foundation.

    But I’m perhaps even more hopeful about some of the changes in attitudes about the appropriate relationship between a government and its people–more questions asked about how 401(k)s are supposed to provide retirement security when so many have lost so much in their accounts, more student protests against tuition increases in higher education, more recognition that health care should be a basic right rather than a chance happening.

    And, while I certainly wish that we could undo the economic damage we’ve sustained in these past 3 years, I celebrate the beginning of the reversal in the inward-looking, self-blaming, isolating exaltation of personal responsibility, and believe that this is our best chance in quite awhile to dispel the idea that we deserve to shoulder all of the risks and yet receive few of the spoils associated with economic life in 21st century America.

    But those clouds are lifting, so we must find ways to harness this shared sense of vague insecurity and turn it into a strong movement for social change, if we are to weave a safety net that will actually catch us the next time we fall. Because this surely won’t be the last recession, but it can be the last one that Americans have to weather alone.

    When is a social problem not a “problem”?

    I spend more time than most people, probably, thinking about what makes us define certain conditions as social problems, or not, and about the impact of that problem definition on the development of a policy agenda that, ultimately, we hope will lead to significant change in those same social problems.

    So it was with considerable chagrin and great interest that I read The Great Risk Shift, which is basically a couple hundred pages of compelling personal stories, strong economic trend data, and fairly detailed legislative and ideological analysis that, collectively, puts a name to a social problem that is undeniably such, but which I’ve never really spent much time contemplating:

    Economic Insecurity

    Distinct, then, from economic inequality, which I actually use as an example of when problematic conditions are not broadly accepted as social problems, but which Jacob Hacker argues is actually far more debated than the more insidious nature of economic insecurity (and he has a good point–we do talk about rising executive pay, at least a little, but who really contests the replacement of pensions with defined-contribution plans anymore?). Distinct, too, from poverty, which, despite being a seemingly intractable part of our economic structure (and on the rise, as the 2010 Census data will no doubt show), is universally recognized as a bad thing that deserves our attention (although that’s about where the agreement ends).

    Economic insecurity, on the other hand, has become such a part of what we accept about economic life in the United States that, while we may recognize and even bemoan its effects–longer work weeks to compensate for stagnant wages; an increase in work activity among retirement-aged older adults; middle-class Americans saddled with their own student loan debt into middle age, and unable to save for their children’s education; workers who stay in dead-end jobs because they’re afraid to lose their health insurance; the rise in bankruptcies associated with health care costs; the tragic incidence of home foreclosures related to risky subprime loans–we still seldom pinpoint the cause at the foundation: a conscious decision on the part of policymakers and corporate leaders to shift the risks inherent with life and, especially, productive activity, onto ordinary families.

    Social workers talk about the broken social contract, about how Aid to Families with Dependent Children has become a block grant and the safety net is really more like a tattered scarf that, if you’re lucky, you might use to keep a little warm in a storm…and, I think, that this idea of economic insecurity, the idea that no matter of work effort or personal initiative or all-around ‘goodness’ can really protect us against devastating loss, is part of what we’re railing against. After all, the welfare reform bill was called the “Personal Responsibility and Work Opportunity Reform Act”, and Hacker calls this whole dismantling of the social insurance system part of the “personal responsibility crusade”.

    But, when it comes to our own lives, this social problem has become so much a part of the fabric of “the way things work” that we lack some of the language, let alone the organizing strategy, with which to name and attack it. The personal responsibility movement has, at its heart, a message that “we’re all in this alone”, and that’s part of its danger–that same message pushes people to turn inward in the face of economic threats, and, when we’re looking to ourselves to find the fault, we’re less likely to get mad and join with our neighbor to make things right.

    The health care debate over the past two years has brought some of these issues into focus, and the recession certainly provides an opportunity to organize around almost-universal experiences of uncertainty and doubt, if not outright panic and deprivation, but we have to start from a common understanding of what the problem is, how we got here, and how fundamentally our own lives and the workings of our economy will need to change in order to make economic security a strong foundation for the economic opportunity about which our country claims to be concerned.

    Some of the pages that I marked as I read, that I think could be part of our journey to identify the problem of economic insecurity, mobilize the vast majority of Americans who know its consequences intimately, and bring about the change that we know only concerted action can:

  • I show a chart in my Advanced Policy class about wage stagnation over the past 3 decades, and we talk about the social and economic changes (increase in women’s labor participation, increased work effort, etc…) that has wrought in U.S. families. Hacker illustrates wage volatility, which spikes in economic downturns but is alarmingly high as a baseline, and discusses the economic and emotional effects of such dramatic dips and fluctuations in pay from year to year.
  • I also spend some time comparing the U.S. welfare state to that of other developed economies (and we’re always on the low end of investments and outcomes), but Hacker points out that, including private expenditures and tax incentives, the U.S. spends a lot on health care, retirement, and disability insurance. The problem is that, increasingly, these are not secure guarantees of any kinds but a hodgepodge of mostly employer-based benefits that lack portability, universality, adequacy, and stability.
  • Precisely because economic insecurity is a problem that cuts across economic classes, we have to address classism in our society in order to fight it. Hacker doesn’t talk about this; I’m not sure why, but it jumped out at me at several points. College-educated professionals have actually seen greater wage volatility over the past two decades than those workers with less education, and many of the foreclosures and bankruptcies associated with this recession have happened in households that were previously middle-class or even upper-income earners. But, of course, classism rages in the U.S., and so many of these well-educated, previously “successful” individuals are loathe to acknowledge that their performance in the “self-reliant” category has been less than stellar, and that, indeed, they are vulnerable and victimized by many of the same economic forces that afflict those less well-positioned. Everyone likes to look to those below and say, “at least I’m not….” and, as long as we’re dividing ourselves like that, we’ll blame ourselves or those lesser others, rather than the real culprits, for the strains we experience separately, yet together. This would, of course, affect anti-poverty policy, too, since the reality is that ALMOST 60% of Americans will spend at least a year in poverty between 20-75, even controlling for those cash-poor college years. Imagine if we had an anti-poverty policy based on that picture of who’s poor (most of us!).
  • It’s economic insecurity, even more than actual income level, that’s associated most strongly with psychological distress. We social workers know that we spend a lot of time dealing with the fallout from the way that policies harm our clients. These new insights help us to better understand precisely what’s inflicting these wounds–the stress of not knowing what tomorrow will bring to our finances is, quite literally, making us sick.
  • We’re NOT doing this to ourselves. Myself, I know that I’ve been guilty of that whole “policy analysis by anecdote”, shaking my head at a friend’s purchase of a house she really can’t afford or a relative’s purchase of television so huge it scares (really) my children. My husband and I don’t buy very much, not as much because of a grand plan to provide for our economic security as because we don’t want really want very much, and so it’s easy to look at others’ decisions and raise our eyebrows. But Hacker cites data from Elizabeth Warren that illustrates pretty definitively that the income gains of the past few decades have been eaten up by the rising cost of basic household expenses–housing, health care, transportation, taxes, education, and childcare–not by our expanded expectations.

    And perhaps it’s that last point that can serve as the starting point for implementing Hacker’s three-point plan of “get wise, get mad, get even”. We do need to know what we can do to protect ourselves in the current “fend for oneself” environment–the whole “secure your oxygen mask before helping others” idea. But we can’t stop there. If we’re not responsible for this mess (as I often tell my kids!), we shouldn’t have to clean it all up. We need to agitate and organize, and build the kinds of policy structures that will bring an equitable and adequate measure of economic security to all Americans.

    In other words, let’s call it a problem and then solve it.

  • Economic Insecurity, as seen from the sandbox

    photo credit, manyeyes, via flickr

    So I’ve obviously been thinking a lot lately about economic insecurity.

    And I spend a lot of time at the park with my kids, so I’ve noticed many signs of the impact of this insecurity on young families, like mine.

    And that’s got me thinking about kids and working parents and economic policy and what it would take to build a structure of economic security, and what that would look like from my perch on the edge of the sandbox, listening to kids shout “Mommy, watch me!” in English, Mandarin Chinese, and Spanish.

    I see more fathers at the park these days, and they’re not there spending a day off with their kids–they’re unemployed, or working only part-time, or handing out business cards to other parents, trying to get customers for a remodeling business or website design or software consulting. And I wonder what’s happening to their savings accounts, and to their mental health.

    I hear moms talking about sales and coupons and how to save money, a lot more than I used to. And many “stay-at-home” moms really aren’t, totally. Many families, like my own, are balancing shifts of sorts, with both parents earning and both caring for children, in order to reduce costs and increase income. One mom brings the jewelry that she makes to the park to sell. I get at least 3 invitations a month to some ‘party’ where a mom is trying to earn extra income by selling stamps or housewares or clothing.

    And then there’s the strain. Certainly some of the parents that I see and hear snapping at their children or staring absently into space are comparatively economically secure, but I wonder, especially now, how much of the stress that manifests itself in difficult interactions between parents and kids stems from the underlying pressures of trying to raise those children–the U.S. Department of Agriculture estimates raising a single child to age 18 will cost a middle-income family almost $237,000, or 37% of income per year, in addition to reducing income as one caregiver reduces hours or changes schedules to meet childcare demands.

    As Hacker concludes his chapter on “Risky Families”, “when Americans build strong families, it has profound benefits for society as a whole: stronger neighborhoods, more productive workers…(the costs) are paid for through the sacrifices that families must make, the risks that families must bear, usually without much compensation or assistance” (108).

    And that’s what I see most, from my spot under the tree, watching my daughter stuff sand in her pants and my sons race the dump trucks–families trying their best, to do the hard work of parenting so that their kids will grow up happy and healthy and a credit to their families and an asset to the world.

    And, as any parent knows, there’s a lot of insecurity in the business of raising kids even under the best circumstances: will my son make it through quiet rest at school? Will my daughter’s language development pick up? Will my kids survive high school with the embarrassment of their mom’s letters to the editor appearing in the paper every month? (all of these are, um, obviously just hypothetical)

    We can’t legislate all of those potentialities away–that’s part of what we sign on for when we become, through whatever path, “parents”. But we can, and should, and must, do something about the other. Because working parents should be able to plan for the future, with some guarantee against devastating income plunges. And every family should have health care. And disabilities shouldn’t bankrupt. And, after working hard at both “jobs”–paid work and unpaid parenting–for decades, everyone deserves to retire.

    With that kind of foundation, imagine the sand castles we could build to the sky.

    “Creative destruction” and nonprofit consolidation

    photo credit, dhnieman, via flickr

    Let’s start summer right, folks!

    This week, I’m doing three posts related to concepts in Robert Egger’s book, Begging for Change. He has become one of my very favorite writers, speakers, and thinkers on topics related to nonprofit organizations and social change work, and I find myself continually challenged by his perspectives, going through an entire pack of sticky notes to mark pages I want to remember. If you haven’t read the book, you should, but, first, do me a favor and read the posts this week and share your thoughts about how I’ve connected his ideas (from 2004) to today’s not-for-profit landscape. And, you know, you can enjoy the sunshine, too.

    Almost every semester, I am struck by the inclusion in at least several students’ career goals of something related to “start my own nonprofit organization”. This semester, I had students express interest in starting adoption agencies and drug treatment programs and mentoring projects for at-risk youth. I also receive relatively regular inquiries from former students exploring starting their own nonprofits. Myself, I honestly don’t have an entrepreneurial bone in my body; I’d never want to start my own organization, and I have even turned down a few promotions because I’d have to spend more time paying attention to payroll and less time generally agitating.

    But it would certainly appear that the desire to be one’s own boss, combined with passion about the social problems we face, leads at least many within the social services sphere to dream of setting up their own shop. Now, you know that I don’t believe that duplication of effort is, necessarily, an evil. All things being equal, two excellent organizations working on the same social challenge should mean that, together (or apart, but headed towards the same goal), they reach victory more quickly than one would alone. And I like to win.

    But Egger’s book, and my conversations with my students, and some discussion in the blogosphere (see, in particular, Lucy Bernholz’s awesome post on peer-reviewed nonprofits) and the traditional media have me thinking about what it would take to really change the game in terms of the ‘marketplace’ for nonprofit organizations. I mean, why does it often seem easier to start a nonprofit than a for-profit business, when, most of the time, our goals are much more ambitious (making success, therefore, seem more elusive)? Why are there nonprofit organizations still in business long after they ceased to really meet a compelling social need? Why do our current organizations often fail to capture the imagination of bright and talented graduates, pushing them to envision charting their own path instead (especially when we have a near-crisis in executive leadership in the sector)? Why is the recent uptick in nonprofit mergers seen as a sign of doom, when for-profit mergers are often hailed?

    Egger calls for “creative destruction”, hence the title of this post–the consolidation or collapse of the most ineffective and wasteful organizations. He acknowledges that such a recommendation creates more questions than it answers: where would one draw this line? How do we define success? Without good benchmarks or a good roadmap to outcomes, how can we measure waste? How can we promote social enterprises that bring more social value to the for-profit sector, and are there places and ways in which such an approach is inappropriate? Questions that he doesn’t ask, but which must be addressed, include how to balance between consolidation and the sustenance of ‘niche’ organizations that effectively serve small, particular constituencies; and how long organizations should have to try innovative (but failing) approaches to entrenched problems. Should all nonprofit organizations be held to the same standards, once we can figure out what these standards should be? Or should they be more locally defined, taking into account differences in contexts and inputs? What are the responsibilities of donors, who give for all kinds of ‘illogical’ reasons, to stop supporting organizations that are failing in their missions?

    I read Egger’s discussion of creative destruction with a different lens, I expect, than that through which it was written: that was 2004 and this is 2010, and some even excellent nonprofit organizations are collapsing because of the dramatic dropoff in foundation and corporate giving, in particular. But, also, perhaps because I just finished my class on macro systems, I thought back to a lecture early in the semester when we talked about the role of stress in social systems, and how stress can provide the impetus for real transformation, as systems struggle to adapt to new and harsher realities.

    And that’s where I conclude this post, with questions, a little bit of despair, and some hope thrown in. I’d greatly appreciate others’ thoughts as I muddle through this–where do we go from here? Since we don’t have a ‘market’, per se, how do we make these decisions in a way that respects our shared values as a social service sector? How do we understand and communicate the stakes involved in perpetuating the status quo? And how do we use the current economic climate as the