“Low Wage Jobs Endanger Nothing”: Wall Street’s 2013 Bonuses Were More Than All Workers Earned Making The Federal Minimum
Purveyors of Ferraris and high-end Swiss watches keep their fingers crossed toward the end of each calendar year, hoping that the big Wall Street banks will be generous with their annual cash bonuses.
New figures show that the bonus bonanza of 2013 didn’t disappoint. According to the New York State Comptroller’s office, Wall Street firms handed out $26.7 billion in bonuses to their 165,200 employees last year, up 15 percent over the previous year. That’s their third-largest haul on record.
That money will no doubt boost sales of luxury goods. Just imagine how much greater the economic benefit would be if that same amount of money had gone into the pockets of minimum-wage workers.
The $26.7 billion Wall Streeters pocketed in bonuses would cover the cost of more than doubling the paychecks for all of the 1,085,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour.
And boosting their pay in that way would give our economy much more bang for the buck. That’s because low-wage workers tend to spend nearly every dollar they make to meet their basic needs. The wealthy can afford to squirrel away a much greater share of their earnings.
When low-wage workers spend their money at the grocery store or on utility bills, this cash ripples through the economy. According to my new report, every extra dollar going into the pockets of low-wage workers adds about $1.21 to the national economy. Every extra dollar a high-income American makes, by contrast, only adds about 39 cents to the gross domestic product (GDP).
And these pennies add up.
If the $26.7 billion Wall Streeters pulled in on their bonuses last year had instead gone to minimum wage workers, our economy would be expected to grow by about $32.3 billion — more than triple the $10.4 billion boost expected from the Wall Street bonuses.
This immense GDP differential only speaks to one price we pay for Wall Street’s bonus reward culture. Huge bonuses, the 2008 financial industry meltdown made clear, create an incentive for high-risk behaviors that endanger the entire economy.
And yet, nearly four years after passage of the Dodd-Frank financial reform, regulators still haven’t implemented the modest provisions in that law to prohibit financial industry pay that encourages “inappropriate risk.” Time will tell whether last year’s Wall Street bonuses were based on high-risk gambles that will eventually blow up in our faces.
Low-wage jobs, on the other hand, endanger nothing. The people who harvest, prepare and serve our food, the folks who keep our hotels clean, and the workers who care for our elderly all provide crucial services. They deserve much higher rewards.
By: Sarah Anderson, Moyers and Company, Bill Moyers Blog, March 12, 2014; This post originally appeared at Other Words
“Surprise, Surprise”: The Real Numbers On ‘The Obamacare Effect’ Are In, Now Let The Crow Eating Begin
After years of negative speculation on the part of the opponents of Obamacare, hard data is finally coming in with respect to the anticipated negative side-effects of the law.
The results are guaranteed to both surprise and depress those who have built their narrative around the effort to destroy the Affordable Care Act.
Let’s begin with the meme threatening that healthcare reform will lead to a serious decline in full-time employment as employers reduce workforce hours to below 30 per week in the effort to avoid their responsibility to provide health benefits to their employees.
It turns out that there has, in fact, been no such rush to reduce work hours. Indeed, numbers released last week reveal that precisely the opposite is taking place.
According to the Bureau of Labor Statistics (BLS), the number of part-time workers in the United States has fallen by 300,000 since March of 2010 when the Affordable Care Act was passed into law. What’s more, in the past year alone—the time period in which the nation was approaching the start date for Obamacare—full-time employment grew by over 2 million while part-time employment declined by 230,000.
And it gets even more interesting.
Despite the cries of anguish over the coming destruction of private sector work opportunities at the hands of Obamacare, it turns out that the only significant ‘cutter’ of work hours turns out to be in the public sector where cops, teachers, prison guards and the like are experiencing cuts in work time as cities, states and universities seek to avoid the obligations of the health reform law.
Correct me if I am wrong, but is it not the very same folks who strenuously oppose Obamacare who are constantly screaming for smaller government? Are these not the same people who have, for as many years as I can recall, been carping about swollen government payrolls?
But the false narrative that has been peddled to make us believe that the private sector can’t wait to lower our hours of employment turns out not to be the only false note being played by anti-Obamacare forces.
For months now, we have been pounded with the story of the millions of Americans who have lost their non-group, individual health insurance policy due to cancellations forced by Obamacare.
Yet, a new study just out by Lisa Clemons-Cope and Nathaniel Anderson of the Urban Institute tells a very different story.
How many times have readers, along with television and radio audiences, read or heard me point out that few ever expected to hang onto their individual insurance policy for longer than a year or two following date of purchase? Long before there was Obamacare, it was always clear that when someone purchased an individual health instance policy, it was pretty much a given that they would either be moving on to an employer provided group plan when they get a job or that their policy would respond to the ordinary, pre-Obamacare changes that occurred from year to year and result in the consumer having to purchasing a new plan after a short period of time.
Indeed, it was this very reality that made it clear to those who follow the health insurance industry that Obama’s “If you like your policy you can keep your policy” proclamation was a near impossibility for those participating in the individual marketplace. This simply wasn’t the way the individual market worked.
The Urban Institute study bears this out, noting that “the non-group market has historically been highly volatile, with just 17 percent retaining coverage for more than two years.”
While Obamacare foes have been quick to jump on this statistic when it comes to condemning the President for uttering his promise that you could keep your insurance if you are happy with your policy, the same people have somehow managed to miss the reality that a huge percentage of those who received cancellation notices last year were going to get that notice even if the Affordable Care Act had never existed.
But that is not all that critics have been missing as they’ve sought to exploit the supposed high number of cancellations they claim are due to Obamacare.
To find out just how many people have really been put into an insurance fix, the Urban Institute’s Health Reform Monitoring Survey, in December of 2013, asked people between the ages of 18 and 64 the following question:
“Did you receive a notice in the past few months from a health insurance company saying that your policy is cancelled or will no longer be offered at the end of 2013?”
The following bar published in Health Affairs provides the results—
Note that the number of people who saw their policy cancelled because it did not meet the Obamacare minimum requirements was 18.6 percent—dangerously close to the 17 percent of individual policyholders who were losing their individual market policies pre-Obamacare.
Also note that the 18.6 percent equates to roughly 2.6 million people whose plans were cancelled as a result of Obamacare—a number well below the estimates of 5 million or considerably more being tossed about by Obamacare opposition.
So, what happens to these folks who saw their health insurance policy cancelled?
According to the Urban Institute researchers :
“While our sample size of those with non-group health insurance who report that their plan was cancelled due to ACA compliance is small (N=123), we estimate that over half of this population is likely to be eligible for coverage assistance, mostly through Marketplace subsidies. Consistent with these findings, other work by Urban Institute researchers estimated that slightly more than half of adults with pre-reform, nongroup coverage would be eligible for Marketplace subsidies or Medicaid.”
So what does this data tell us?
As a result of at least half of those cancelled being able to either enroll in a Medicaid program or receive subsidies on the healthcare exchanges, many—if not most—will now find health care coverage at a price lower than previously paid while greatly improving the quality of coverage.
Still, roughly one million people will have to replace their cancelled policy with something that may cost them more. This is not a good thing but it is far, far less dramatic than what we’ve been hearing. It is also a part of the expected upheaval that has always—and will always—result from the passage of reforms designed to benefit the greatest number of people. Traditionally, those who are disadvantaged in this way find that things are sorted out in amendments to the initial legislation, amendments that can only result when Republicans in Congress stop playing politics and begin the serious work of making the law better for Americans.
There is another problem noted in the study—
Because of the amount of focus placed on scaring the you-know-what out of people when it comes to the alleged dire effects of Obamacare rather than educating them, people remain in the dark as to what is available on the exchanges or via the state Medicaid programs.
Per the Urban Institute study—
“Yet making the best enrollment choice may be difficult for consumers. HRMS findings show that many people are not aware of the new state Marketplaces, few know whether their state is expanding Medicaid, and many lack the confidence to enroll, make choices, and pay their premiums.”
Once again, politics trumps policy and the critical needs of those our elected officials are sworn to serve.
I highly encourage everyone—whether friend or foe of healthcare reform—to take a look at the study cited above and the BLS statistics. While most all would agree that there are some repairs that need to be made to the Affordable Care Act, workable fixes designed to benefit the public and improve American healthcare cannot happen so long as politicians, pundits and special interests are devoted to lying about what Obamacare means and what it does not mean to the American public.
Facts matter—even when they screw up an effective disinformation campaign.
UPDATE: Monday, 12:15pm EST:
The news just keeps on coming.
The Gallup-Healthways Well-Being Index is out this morning and reveals that 15.9 percent of American adults are now uninsured, down from 17.1 percent for the last three months of 2013 and has shown improvements in every major demographic group with the exception of Hispanics who did not advance.
That translates roughly to 3 million to 4 million people getting coverage who did not have it before.
According to Gallup, the number of Americans who still do not have health insurance coverage is on track to reach the lowest quarterly number since 2008.
This is one statistic that is going to be tough for Obamacare critics to overcome.
By: Rick Ungar, Op-Ed Contributor, Forbes, March 10, 2014
“The ‘Texas Miracle’ Fraud”: Turns Out It Involves Taxing The Poor To Help The Rich Get Richer
Remember “The Texas Miracle”? It was the story of how Rick Perry was going to be president because his state, Texas, was doing so much better than all the other states. Texas was doing so well, we were told, because it was very conservative: Low taxes, light regulation, and few pesky unions. We were supposed to compare Texas to California, which, we were told, was an apocalyptic mess because it was run by liberals.
Then we sort of stopped hearing about The Texas Miracle for a while, because Rick Perry forgot how to count and it no longer seemed like he was personally responsible for managing the economy of his vast state, but conservatives still enjoy telling themselves that Texas proves that their economic policy preferences are objectively superior to those of liberals. Except, well, maybe Texas isn’t that miraculous.
At Washington Monthly, Phillip Longman argues that Texas’ growth is fueled primarily by the energy boom and by population growth. And that population growth is not happening because people from other states are fleeing to Texas to avoid high taxes and onerous regulations, but because of immigration from Mexico and a high birthrate. More importantly (and probably obviously, to people who care about such things), the spoils of the Texas miracle have not been shared equally: Economic mobility is higher in California’s major urban areas than in those of Texas. Plus: “Texas has more minimum-wage jobs than any other state, and only Mississippi exceeds it with the most minimum-wage workers per capita.” Texas is falling behind various states in terms of per capita income.
As Longman concludes:
But regardless of its sources, population growth fuels economic growth. It swells the supply and lowers the cost of labor, while at the same time adding to the demand for new products and services. As the population of Texas swelled by more than 24 percent from 2000 to 2013, so did the demand for just about everything, from houses to highways to strip malls. And this, combined with huge new flows of oil and gas dollars, plus increased trade with Mexico, favored Texas with strong job creation numbers.
But for some, the good news on Texas continues apace. J.D. Tuccille, at the libertarian magazine Reason’s Hit & Run blog, points to a paper from the Federal Reserve Bank of Dallas showing that Texas created more high-wage jobs than low-wage ones between 2000 and 2013. Tuccille also points out that “in 2012, ’63,000 people moved from California to Texas, while 43,000 in Texas moved to California.’” (That… actually seems pretty statistically insignificant when we’re talking about the two most populous states in the union, each with more than 25 million residents, but ok, sure.)
Even if it is the case that the Texas miracle is driven primarily by a resource boom and population growth, conservatives and libertarians could still argue that Texas is booming because of their preferred policies. They support exploiting natural resources, and libertarians, at least, support open borders. To use another example, while it’s a fact that North Dakota’s economic boom is happening almost solely because North Dakota happens to be on top of tremendous amounts of very valuable natural resources that recently became easier to extract, conservatives would argue that they are the ones who support drilling that oil, damn the environmental consequences.
But here’s one important fact that Texas’ conservative and libertarian boosters reliably fail to mention (perhaps because they don’t know it): If you’re not rich, Texas is not actually a low-tax state. In fact, most Texans pay more taxes than most Californians. That seems strange and incorrect at first — Texas doesn’t even have an income tax! — but it’s true. Thanks to sales and property taxes, Texas is among the states with the ten most regressive tax systems. Texans in the bottom 60 percent of income distribution all pay higher effective tax rates than their Californian counterparts. Texas’ top one-percent are the ones enjoying the supposed low-tax utopia, paying an effective rate of 3.2 percent. The rate for the lowest 20 percent is 12.6 percent. Kevin Drum has a helpful chart.
This is not unusual for a conservative state. As the Institute on Taxation and Economic Policy says: “States praised as ‘low tax’ are often high tax states for low and middle income families.” So… is this part of the conservative policy package that we are supposed to introduce everywhere to spur growth? Slash taxes for the rich and raise taxes on… the poor and middle class? It seems like it might be difficult to campaign on that.
When “growth” is its own self-justifying goal, creating an economy that only delivers for a privileged few doesn’t really seem like a problem. Still, don’t move to Texas expecting a better life, unless you own a petrochemical refinery.
By: Alex Pareene, Salon, March 7, 2014
“Paul Ryan And The Brown Bag”: Once Again, The Congressman Just Doesn’t Get It
House Budget Committee Chairman Paul Ryan (R-Wis.) covered a fair amount of ground in his speech this morning at the Conservative Political Action Conference (CPAC), but there was one story in particular that stood out.
“This reminds me of a story I heard from Eloise Anderson. She serves in the cabinet of my friend Governor Scott Walker. She once met a young boy from a poor family. And every day at school, he would get a free lunch from a government program. But he told Eloise he didn’t want a free lunch. He wanted his own lunch – one in a brown-paper bag just like the other kids’. He wanted one, he said, because he knew a kid with a brown-paper bag had someone who cared for him.
“That’s what the Left just doesn’t understand.”
I’ve read this a few times, hoping Ryan had some other subtle subtext, but I’m afraid the congressman really is as confused as his anecdote suggests.
The child may have wanted a lunch in a brown-paper bag, but – and I hope Ryan pauses to really think about this – his family is poor. The boy “didn’t want a free lunch,” but – and this is key – he didn’t want to be hungry, either.
It’s true that Republican policymakers could take away that free lunch the child received at the school, but that doesn’t mean the boy’s family will suddenly have more money to pack a healthy lunch in a brown-paper bag.
What’s more, it’s also true this kid may come from a struggling family, but it doesn’t mean he lacks “someone who cares for him”; it means he and his family lack the resources needed to send him to school with a good meal. Robert Schlesinger added, “A kid with a brown paper bag does have someone who loves them; but the kid without the brown paper bag, the one whose parent either won’t or can’t – because they’re working hard to get ahead and give themselves and their families better lives – deserves a society that loves and cares for them too.”
That’s what Paul Ryan just doesn’t understand.
In the same speech, the Wisconsin Republican added:
“The reason [Democrats[ keep talking about income inequality is because they can’t talk about economic growth. They have spent five, long years in power, and all they have to show for it is this lousy website.”
That’d be a good point, just so long as one overlooks the Recovery Act that ended the Great Recession, the millions of new jobs, health care reform that brought coverage to millions, the rescue of the auto industry, Wall Street reform, the end of the war in Iraq, counter-terrorism successes, the repeal of “Don’t Ask, Don’t Tell,” and student-loan reform, among other things.
Oh, and the health care website was fixed a few months ago.
Other that, though, Ryan’s on strong ground.
Update: In the school-lunch anecdote, I falsely assumed Ryan had the basic details of the story right. He didn’t: “Via Wonkette, the school lunch story appears to have been recycled from a story and altered beyond recognition in the process. The original story had nothing to do with a child turning down a free lunch. It’s about a kid, Maurice, who met a private benefactor, Laura, asking to literally have his lunch placed in a brown paper bag.”
By: Steve Benen, The Maddow Blog, March 6, 2014
“Almost Anything Would Be More Important”: Memo To Fiscal Hawks, The Long-Term Deficit Doesn’t Matter
Over the weekend I got in a long argument with some ally of the deficit hawk group Fix the Debt on Twitter, and while most of the conversation turned on who should be blamed for mass unemployment, it did reach an interesting place in one respect. This person took as a given that long-term deficit reduction is a policy priority of the first rank — a belief that is very common among America’s elite.
This priority is misguided both in detail and in general. Here’s why.
There are two points to make here: First, long-term deficits are entirely about the rising cost of health care. Centrist elites insist that this is a reason to make our social insurance programs less generous, but the reality is that America’s high prices are driven by inefficient service provision, not by excessively generous programs. American health care is unfair, monopolistic, and captured by specialist doctors, and our policies are designed poorly, which is why we pay about half again as much as the next-most-expensive developed nation for what is in fact a pretty threadbare safety net.
This point is crucial. What it means is that making our social insurance more stingy, by raising the Medicare eligibility age for example, will accomplish almost nothing. Unless you tackle the skyrocketing cost problem, the budgetary headroom created by benefit cuts will be eaten almost immediately by rising prices. In other words, no matter how many grannies you put into the poorhouse, on predicted trends eventually a single ibuprofen will cost the entire federal budget. (Unless, of course, you just repeal all social insurance altogether and let sick, poor, and old people go bankrupt and die in the hundreds of thousands per year.)
Fortunately, we just passed a gigantic health care reform package. You might have heard of it: It’s called ObamaCare, and it seems to be helping slow health care inflation.
Second, even if we set that issue aside and talk about the Platonic ideal of long-term deficits, there again the case for action is weak at best. The political problem is that America does not actually have the consensus necessary to reduce deficits on a long-term basis, despite the constant whining about it one hears all the time on cable news. One of our two political parties is composed of total hypocrites on this issue — just look at Paul Ryan. It is a near-certainty that any long-term work on the deficit would be immediately squandered on tax cuts for the rich the moment Republicans got a chance — it’s what happened in 2001.
But even on the merits, if you actually run through the economic reasoning (PDF), the case for worrying about the long-term deficit is weak at best. The U.S. is indebted in its own sovereign currency and cannot go bankrupt. Inflation could be a worry, but given current mass unemployment it’s a hypothetical concern at best.
So don’t worry about the deficit in 2050 or whatever. People ain’t got no jobs. People ain’t got no money. That’s what matters.
By: Ryan Cooper, The Week, March 3, 2014
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