Do We Really Want Rising Wages?

Washington Post: Whether wages rise soon “depends on how much shadow unemployment is left. That’s everyone who’s not officially ‘unemployed’—not working, but actively looking for a job—but basically is.”

“The White House, as you can see above, calculates that about half the decline is due to aging, which is in line with other estimates. Another chunk is due to the crisis. And the rest is unexplained. (That’s the blue part of the graph).”

“It’s important to remember, though, that this whole time the Boomers have still been retiring, and in greater numbers than before. So if none of the shadow unemployed were coming back, the labor force would be shrinking right now. That’s why, as economist Scott Sumner argues, the labor force participation rate really is recovering even though it’s not going up: returnees are exactly balancing out retirees. It’s not as much of a recovery as we’d like, but a flat participation rate is still one.”

“The economy’s biggest problem is that workers’ wages have fallen, in inflation-adjusted terms, for 15 years now, but we kind of don’t want that to change right now. If it did, that would mean the Great Recession had pushed millions of people into early retirement. It’d be better if more of those people came back, and then wages started rising again.”

“That’s the best way to tell that the economy still has a ways to go before it’s back to normal. Higher wages should never be bad news in any sense.”

Obamacare Users Are a Savvy Group

Wall Street Journal: “About 1.2 million people who bought coverage on HealthCare.gov in 2014 dropped their health plan and picked a new one through the site for 2015, the Obama administration said Wednesday.”

“The extent of people’s willingness to consider shifting to a different insurance carrier came as a surprise to federal officials, said Andy Slavitt,” principal deputy administrator for the Centers for Medicare and Medicaid Services, who will become  acting administrator.

“This is a much more active consumer than anybody expected,” Mr. Slavitt said, noting that in other programs such as the federal employees’ health plan, or Medicare prescription drug benefits, as few as 10% of customers changed plans from year to year. ‘We wanted to create maximum choice while we had maximum consumer protection,’ he said.”

Huffington Post: “One number that didn’t seem to surprise many experts was the more than 4 million people, or about half the total using the federally run website, who were using it for the first time. The “non-group” insurance market — that is, the market for people buying coverage on their own, rather than through an employer — has always been fluid.”

The Suprising Success of an Anti-Obamacare State

Governing: “With the end of the second open enrollment period for the Affordable Care Act, the enrollment leader is not California, the largest state in the country by population with an insurance marketplace budget of about $400 million. Instead, Florida — a state where public officials have decided against using any public dollars toward enrollment — led the way.”

“The Sunshine State boosted enrollment between last year and this year by about 600,000 people to 1.6 million total, attracting the attention of national groups focused on expanding insurance coverage. To them, the state’s own strategies, a well-coordinated and data-driven approach, made the difference.”

“The fact that Florida has more people clustered in several urban areas … is a likely factor in the state’s success. The way Florida used its federal grant support also matters a whole lot, said Jessica Kendall, who directs enrollment assistance for the national group Families USA. ‘You can find those factors in other states, but Florida was able to coordinate in ways that I haven’t seen elsewhere,’ she said.”

Indifference About Obamacare Ruling From Many Governors

Politico: “The Supreme Court this June could cut off millions of Americans from affordable Obamacare coverage. The response from the nation’s governors gathering in Washington this week was an assortment of shrugs.”

“For some Republican governors it was a shrug of indifference. They say the onus falls on President Barack Obama and Congress to figure out what to do if the Supreme Court invalidates Affordable Care Act subsidies in their states. And if Obamacare falls apart, well, they say, good riddance.”

“For others — among them potential 2016 contenders Scott Walker of Wisconsin and John Kasich of Ohio — it’s a shrug of uncertainty.”

“Governors are largely on the sidelines of the subsidy fight — but in the center of the 2016 map. Administration allies doing Obamacare outreach worked hard to sign up millions of people in states like Florida, Ohio and Pennsylvania, the classic presidential battlegrounds, and homes to some of the likely contenders.”

“Although the issue primarily affects states with Republican governors — Democrat-led states largely built their own insurance exchanges — a handful of Democratic governors with Republican legislatures are also grappling with how to respond. Some would like to build their own exchanges but need to figure out how to pay for it and how to overcome likely Republican opposition.”

Put Aside the Obamacare Rhetoric and Examine the Facts

E.J. Dionne: “We don’t talk about it much, but by closing the ‘doughnut hole’ in the Medicare drug program, thus providing more help, the law has saved 8.2 million seniors over $11 billion since 2010. That comes to $1,407 per beneficiary. How many elderly Americans want that to go away? This is something else that “repealing Obamacare” would mean.”

“Are you a budget hawk? The slowdown in Medicare cost inflation between 2009 and 2012 saved the government $116.4 billion. Sylvia Mathews Burwell, the secretary of Health and Human Services, is way too careful a wonk to claim that all this was caused by the health-care law, but largely good things have happened — including, by the way, to employment — since it passed. Its critics predicted all sorts of catastrophes. They were wrong.”

“Oh, yes, and between the Medicaid expansion and the children’s health insurance program, 10 million people gained coverage. And that’s with two of the states with the largest number of uninsured, Texas and Florida, staying out of the Medicaid expansion.”

“I am sorry to burden you with all these numbers, but the arguments you usually hear about the law are remarkably fact-free. As Burwell says, they typically focus on a single word — that would be ‘Obamacare’ — not what the law does.”

“But it’s lots more fun for opponents of Obamacare to scream ‘socialism’ and make scary and groundless predictions.”

Economic Mobility Starts at the Local Level

Vox: “Here’s one basic reason we know localities matter when it comes to social mobility: rates vary drastically from city to city in the US.”

“The US has one of the lowest intergenerational mobility rates among advanced countries, according to the OECD. But as with unemployment or earnings or any other economic statistic, mobility isn’t uniform nationwide.”

“A study by  Raj Chetty and Nathaniel Hendren of Harvard and Emmanuel Saez and Patrick Kline of Berkeley found ‘that mobility varies widely by metro area — a child growing up in America may altogether have less economic opportunity than a child born in Norway, but you’re probably far more likely to climb the income ladder if you’re born in Iowa than in Alabama, as their map of mobility shows. The below map shows the average eventual income percentile rank of kids who grow up in homes below the median income.'”

Mobility by area

“As the New York Times’ David Leonhardt wrote in his dissection of these numbers, ‘fairly poor children in Seattle — those who grew up in the 25th percentile of the national income distribution — do as well financially when they grow up as middle-class children — those who grew up at the 50th percentile — from Atlanta.'”

Ruling Against Obamacare Would Cause ‘Massive Damage’

New York Times: “The Obama administration told Congress on Tuesday that it had no plans to help low- and moderate-income people if the Supreme Court ruled against the administration and cut off health insurance subsidies for millions of Americans.”

“Sylvia Mathews Burwell, the secretary of health and human services, said a court decision against the administration would do ‘massive damage’ that could not be undone by executive action.”

“The implicit message is that the White House has no contingency plans, so if the court strikes down subsidies, the justices will be responsible for causing hardship to lower-income people and chaos in insurance markets around the country.”

Burwell: “Millions of people would lose their health insurance subsidies and therefore would no longer be able to afford health insurance … Second, without tax subsidies, healthy individuals would be far less likely to purchase health insurance, leaving a disproportionate number of sick individuals in the individual insurance market, which would raise the costs for everyone else.”

Obamacare’s Positive Effect on the Uninsured Rate Nationwide

Greg Sargent in the Washington Post: “Gallup data sent my way shows that the ACA is also lowering the uninsured rate in states that have not set up their own exchanges … This strongly suggests the federal exchange is probably working in those states to lower the uninsured rate.”

“Gallup’s topline finding, to be sure, is that the uninsured rate is dropping more sharply in states that are fully participating in Obamacare by expanding Medicaid and setting up an exchange.”

“I asked Gallup to calculate the drop in the uninsured rate in the 34 states that are on the federal marketplace or are state/federal partnership states, all of which would lose subsidies and see major disruptions if the Court rules against the ACA.”

“Among adults in all those states, Gallup says, the uninsured rate has fallen by 2.8 percentage points.”

“There’s a high probability that the changes we see in these data reflect the federal or partnership exchanges’ efforts to expand healthcare coverage … The rates of uninsured are coming down nationally. They are not coming down uniformly in all states, but even those states that have not implemented the Medicaid expansion, and have defaulted to the federal marketplace or state/federal partnerships, have seen a statistically significant decline.”

Climate Skeptics Aren’t Ignorant. They’re Partisan

Yale Law School: “Deep public divisions over climate change are unrelated to differences in how well ordinary citizens understand scientific evidence on global warming, according to a new study published by Professor Dan Kahan.”

“In fact, members of the public who score the highest on a climate-science literacy test are the most politically polarized on whether human activity is causing global temperatures to rise.”

“These were the principal findings of a Yale-led study published recently in the journal Advances in Political Psychology.”

“Kahan said the results justify reassessing at least some popular common science-communication strategies. ‘One conclusion is that it’s misguided to fixate on what percentage of the respondents in an opinion survey say they ‘believe in’ climate change,’ said Kahan. ‘What people say they believe about global warming is not a measure of how much they know, or even how worried they are about it; it is an expression of their cultural identities.’”

“According to Kahan, the study also casts doubt on the value of social-marketing campaigns that feature the message that ‘97% of climate scientists’ accept human-caused climate change.”

“‘Republicans and Democrats alike already understand that climate scientists have shown we face huge risks from global warming,’ said Kahan. ‘Just telling people that over and over — something advocacy groups have been spending millions of dollars doing for over a decade — misses the point: Positions on climate change have become symbols of whose side you are on in a cultural conflict divorced from science.’”

Scrutinizing the Funding Behind Climate Studies

The Hill: “Sen. Ed Markey (D-Mass.) wants oil and coal companies to reveal the extent to which they have funded research questioning the causes of climate change.”

“He said he will soon write to various companies, trade organizations and others involved in fossil fuels in an attempt to find whether they are paying for skeptical climate research.”

“Markey’s comments came after The New York Times reported that Willie Soon, a prolific scientist questioning the human role in climate change, received more than $1.2 million from the industry and did not consistently report that funding when publishing his research.”

Meanwhile, the Guardian reports that “Richard Berman, a one-time lobbyist turned industry strategist, has zeroed in on another target: Barack Obama’s new power plant rules.”

Nicknamed “Dr. Evil” by Washington insiders, Berman “has secretly routed funding for at least 16 studies and launched at least five front groups attacking Environmental Protection Agency rules cutting carbon dioxide from power plants, the Guardian has learned.”

“The Employment Policies Institute, a tax-exempt organisation headed by Berman and operating out of his office according to tax filings, funded a series of reports by an ultra-conservative thinktank, the Beacon Hill Institute.”

“The reports, claiming the power plant rules would lead to rolling blackouts, send electricity prices skyrocketing, and devastate local economies, are being published in 16 states by a network of pro-corporate and ultra-conservative thinktanks.”

“Those familiar with Berman say he is a prime example of a new industry strategy of bypassing traditional lobbying organisations, and using thinktanks, foundations, experts, and social media to shape the public conversation and – ultimately – legislation.”

What is the Real Solution to Wage Stagnation?

Lawrence Mishel in the New York Times argues that the solution to wage stagnation – tax cuts – is not effective.

“What has hurt workers’ paychecks is not what the government takes out, but what their employers no longer put in — a dynamic that tax cuts cannot eliminate.”

“As wages continue to stagnate, it is impossible to continuously cut taxes and still pay for things like education and social programs for the growing population of older Americans.”

“The challenge is to ensure that a typical worker’s wages grow along with profits and productivity. There is no silver bullet, but the key is to make raising wages the central focus of economic policy making and to reverse decades of decisions that have undercut wage growth.”

“We need to start with monetary policy. In the next few years, the most important decisions being made about wages are those of the Federal Reserve Board as it determines the scale and pace at which it raises interest rates — and thereby slows job growth. Before raising rates, it is essential we achieve a robust recovery, with roughly 3.5 to 4 percent annual wage growth. This will ensure that wage growth matches productivity growth and that everyone can benefit from the rebounding economy.”

Mishel also recommends raising the minimum wage and protecting and expanding workers’ right to unionize and bargain collectively.

Obamacare’s Positive Impact on Uninsured Rates

Gallup: “Arkansas and Kentucky reported the sharpest reductions in their uninsured rates among adult residents since the healthcare law’s requirement to have insurance took effect at the beginning of 2014. Oregon, Washington and West Virginia round out the top five. Of the 11 states with the greatest reductions, 10 expanded Medicaid and established a state-based marketplace exchange or state-federal partnership. Montana, which is tied for 10th, is the only exception.”

States With Largest Reductions in Percentage Uninsured, 2013 vs. 2014

“While a majority of Americans continue to disapprove of the Affordable Care Act, it has clearly had an impact in reducing the uninsured rate in the U.S., which declined to its lowest point in seven years by the last quarter of 2014. This trend could be poised to continue, as 55% of Americans who remain uninsured plan to get health insurance rather than pay a fine.”

“States that have implemented two of the law’s core mechanisms — Medicaid expansion and state health exchanges — are seeing a substantially larger drop in the uninsured rate than states that did not take both of these actions. Consequently, the gap in uninsured rates that existed between these two groups in 2013 nearly doubled in 2014.”