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Articles by Gary Burtless
Around the Halls: Should Congress extend enhanced unemployment compensation?
We need to adjust the unemployment insurance tax base for wage growth - Brad Hershbein Brad Hershbein, Non-resident Fellow in Economic Studies at Brookings and an economist at the W.E. Upjohn Institute for Employment Research Unemployment insurance (UI) is supposed to be exactly that—a social insurance program, like Social Security or car insurance that workers pay into from their wages and in return receive a lifeline of benefits if they lose their job through no fault of their own.
How does COVID-19 unemployment compare to the Great Depression?
The U.S. unemployment rate is now over 14%, according to the April jobs report, the highest it’s been since the Great Depression. Brookings Senior Fellow Gary Burtless explains what’s different this time around, from the unprecedented rapidity of job losses to the economic support for people who have lost their jobs, and why that relief is critical to avoiding the long, drawn-out suffering of the Great Depression. Related reading: Incomes have crashed. How much has unemployment insurance helped?
Unemployment insurance as social protection and stimulus during the coronavirus crisis
Unemployment compensation has long been the nation’s front-line program for providing timely aid to jobless workers and injecting countercyclical stimulus into a declining economy. It will play the same crucial role in the current coronavirus emergency. In the present crisis, however, it is not only necessary to insure workers against the risk of earnings loss, it is also important to encourage unemployed workers to maintain a safe social distance from others.
The work response to a guaranteed income: a survey of experimental evidence
Download full text from publisher File URL: http://www.bostonfed.org/economic/conf/conf30/conf30b.pdf Download Restriction: no Citations Blog mentions As found by EconAcademics.org, the blog aggregator for Economics research: When the Basic Income Guarantee Meets the Political Process by ? in Cato Unbound on 2014-08-08 12:55:00 Citations Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item. as Cited by: Holtzblatt, Janet & McCubbin, Janet & Gillette, Robert, 1994.
Workers’ Rights: Labor standards and global trade
Of all the debates surrounding globalization, one of the most contentious involves trade and workers’ rights. Proponents of workers’ rights argue that trading nations should be held to strict labor standards—and they offer two quite different justifications for their view. The first is a moral argument whose premise is that many labor standards, such as freedom of association and the prohibition of forced labor, protect basic human rights.
Comments on “Employment and training for mature adults: The current system and moving forward” by Paul Osterman
Paul Osterman gives us a clear, compact, and shrewd overview of the U.S. training system for mature adults. He does not focus on the implications or effects of automation per se. Instead he offers a timely assessment of the structure, strengths, and weaknesses of the current system. His focus is appropriate, because the training issues arising from automation are roughly the same as those arising from any other source of job loss or occupational change.
Experimental economists win Nobel Prize (and deserved to win)
Last week the Royal Swedish Academy of Sciences announced the winners of the Nobel prize in economics, known formally as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. The three winners were Abhijit Banerjee and Esther Duflo of M.I.T. and Michael Kremer of Harvard. Their distinctive contribution was to use experimental methods to learn about the effectiveness of small-scale policy interventions aimed at helping improve the lives of some of the world’s poorest citizens.
Experimental Economists Win the Nobel Prize, and They Deserved to Win
Last week the Royal Swedish Academy of Sciences announced the winners of the Nobel prize in economics, known formally as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. The three winners were Abhijit Banerjee and Esther Duflo of M.I.T. and Michael Kremer of Harvard. Their distinctive contribution was to use experimental methods to learn about the effectiveness of small-scale policy interventions aimed at helping improve the lives of some of the world’s poorest citizens.
Despite scary headlines, America’s elderly continue to prosper
You should be afraid, very afraid. Or so I’m told when I imprudently open email solicitations and read the news articles linked in those solicitations. Why should I be afraid? Because, if I’m like most Americans, I am approaching old age with too little savings to enjoy a secure and adequate retirement. The frequent warnings may contain a kernel of truth (see here, here, and here). Still, it’s hard to see much evidence for the scary headlines when we examine the relevant income statistics.
Despite Scary Headlines, America's Elderly Continue to Prosper
You should be afraid, very afraid. Or so I’m told when I imprudently open email solicitations and read the news articles linked in those solicitations. Why should I be afraid? Because, if I’m like most Americans, I am approaching old age with too little savings to enjoy a secure and adequate retirement. The frequent warnings may contain a kernel of truth (see here, here, and here). Still, it’s hard to see much evidence for the scary headlines when we examine the relevant income statistics.
Putting a tax on wealth means we first must measure it
Presidential Candidate Elizabeth Warren wants to impose an annual wealth tax on the fortunes of rich Americans. The tax would be limited to households whose net worth is at least $50 million, in other words, to the wealthiest 0.1% of all families. The annual tax rate would start at 2% of a family’s net worth over $50 million and rise to 3% for families with wealth greater than $1 billion. Just 75,000 households would be required to pay the new tax, but Sen.
Putting a Tax On Wealth Means We Must First Measure It
Presidential candidate Elizabeth Warren wants to impose an annual wealth taxon the fortunes of rich Americans. The tax would be limited to households whose net worth is at least $50 million, in other words, to the wealthiest 0.1% of all families. The annual tax rate would start at 2% of a family’s net worth over $50 million and rise to 3% for families with wealth greater than $1 billion. Just 75,000 households would be required to pay the new tax, but Sen.
Life Expectancy and Rising Income Inequality: Why the Connection Matters for Fixing Entitlements
Nearly all indicators of inequality show American income disparities have increased since the late 1970s. The magnitude of change in inequality is sensitive to the particular income measure we use, but essentially all measures imply that income gaps are bigger today than they were three decades ago. Statisticians analyzing the most comprehensive income measures find that much of the jump in inequality was due to gains at the very top of the distribution.
When the next recession hits, will unemployment benefits be generous enough?
From the perspective of workers, the U.S. unemployment insurance (UI) system is one of the least generous in the industrialized world. This is not because weekly payments offered by the program are unusually low. In the case of American workers who earn average or below-average pay, the percent of lost earnings replaced by UI benefits is about average among the rich countries. The distinctive feature of the U.S. system is that benefits do not last very long.
When the Next Recession Hits, Will Unemployment Benefits Be Generous Enough?
When the Next Recession Hits, Will Unemployment Benefits Be Generous Enough? From the perspective of workers, the U.S. unemployment insurance (UI) system is one of the least generous in the industrialized world. This is not because weekly payments offered by the program are unusually low. In the case of American workers who earn average or below-average pay, the percent of lost earningsreplaced by UI benefits is about average among the rich countries.
Income data from the Census may not tell full story on trends
The Census Bureau published its annual report on household income and poverty on Wednesday. The report uses the latest data from the Current Population Survey (CPS), a nationally representative survey that has tracked household incomes since shortly after World War II. This year’s report, which covers incomes received in 2017, contains plenty of good news. Median income increased by 1.8 percent in 2017, after accounting for inflation.
Infrastructure investment lags even as borrowing costs remain near historic low
Voters and policy makers bemoan our crumbling roads, airports, and public transit systems, but few jurisdictions do much about it. The odd thing is that historically low interest rates now make it cheap to fix or improve our public facilities. The mystery is why decision makers have passed on this opportunity. The sorry state of the nation’s roads, bridges, and public infrastructure has been widely reported.
Throwing money at a problem can work, but we have to count the money we spend
A couple of weeks ago the Council of Economic Advisers released a report recommending tougher work requirements in the nation’s public assistance programs. Midway through the report, readers encountered a startling chart that tracked poverty since the late 1950s (see chart). The dark blue line in the chart traces the official poverty rate, which fell steeply between 1959 and 1973.
Throwing Money at the Poverty Problem Only Works To a Point
A couple of weeks ago the Council of Economic Advisers released a report recommending tougher work requirements in the nation’s public assistance programs. Midway through the report, readers encountered a startling chart that tracked poverty since the late 1950s. One line in the chart traced the official poverty rate, which fell steeply between 1959 and 1973. Since then we’ve seen fluctuations in poverty, but the long-term trend unmistakably pushed the poverty rate up from its low point in the‘70s.
The good and bad news about the US job market
Senior Fellow Gary Burtless discusses what the most recent jobs report can tell us about unemployment, job openings, wages, and the health of the economy.
Teacher salary hikes face major headwinds - politics and pension underfunding
In recent months teachers in five states have struck for better pay or benefits. Perhaps unsurprisingly, the five states—Arizona, Kentucky, North Carolina, Oklahoma, and West Virginia—spend less than the national average on each pupil enrolled in public schools. They pay their teachers substantially less than the nationwide average salary, which in the 2015-2016 school year was $58,064.
The Plight of Teacher Salaries Is Traceable to a Few Key Developments
In recent months teachers in five states have stuck for better pay or benefits. Perhaps unsurprisingly, the five states—Arizona, Kentucky, North Carolina, Oklahoma, and West Virginia—spend less than the national average on each pupil enrolled in public schools. They pay their teachers substantially less than the nationwide average salary, which in the 2015-2016 school year was $58,064.
Brookings experts reflect on the legacy of Dr. Martin Luther King Jr., 50 years after his assassination
To mark the 50th anniversary of Dr. Martin Luther King Jr.’s assassination, Brookings experts weighed in on his contributions to the civil rights movement, his legacy, and the state of race relations in America today. Their thoughts and related research are highlighted below.
50 years later: Black America since MLK
On April 4, 1968, Reverend Dr. Martin Luther King, Jr.’s life was tragically cut short. A tireless civil rights and anti-poverty advocate, Dr. King’s work energized, empowered and influenced African-Americans and other advocates for civil rights domestically and internationally. Fifty years after his assassination, his legacy remains as relevant as ever.
America’s aging population could worsen the federal budget problem
Senior Fellow Louise Scheiner discusses America's aging population and the long-term effects it will have on the federal budget.
The Trend Toward Inequality Has Slowed, But So Has Income Growth
Every couple of years the Congressional Budget Office publishes estimates of the trend in federal tax burdens and the distribution of U.S. incomes. CBO’s newest estimates, published last week, show that income inequality continues to rise, but at a sharply slower pace compared with the three decades ending in 2007. Unfortunately, the upward trend in real income has also slowed sharply.
The trend toward inequality has slowed, but so has income growth
Every couple of years the Congressional Budget Office publishes estimates of the trend in federal tax burdens and the distribution of U.S. incomes. CBO’s newest estimates, published last week, show that income inequality continues to rise, but at a sharply slower pace compared with the three decades ending in 2007. Unfortunately, the upward trend in real income has also slowed sharply.
How Do Stock-Market Fluctuations Influence Retirement Patterns?
Stock market prices as measured by the S&P 500 reached an all-time peak on January 26. Less than two weeks after the peak, stock prices plunged more than 10 percent, erasing about $2.6 trillion of wealth. For purposes of comparison, the drop in stock market values represented a bit less than one-seventh of last year’s GDP. It is natural to wonder about the impact of such a large wealth loss on the economy. As many analysts have pointed out, the effects of such a drop are ordinarily small.
Public Investment Will Decline Under the Republican Tax Plan | RealClearMarkets
The GOP tax package is anti-growth in at least one respect: It’s likely to cut public spending devoted to investing in the future. The bills passed by the House and Senate eliminate or sharply curtail the federal income tax deduction for state and local income and property taxes. In addition, both plans would cut some current tax preferences that make college and graduate school more affordable.
Drop in public investment picks up steam under GOP tax plan
The GOP tax package is anti-growth in at least one respect: It’s likely to cut public spending devoted to investing in the future. The bills passed by the House and Senate eliminate or sharply curtail the federal income tax deduction for state and local income and property taxes. In addition, both plans would cut some current tax preferences that make college and graduate school more affordable.
The Washington Post Paints a False Picture of Elderly Americans | RealClearMarkets
Last week the Washington Post offered a harsh portrait of the “new reality of old age in America.” Its reporters described the pinched circumstances of older couples searching for temporary work in order to top up their meager Social Security checks. A 74-year-old tells readers “I’m going to work until I die, if I can, because I need the money.” The Post reports the stories of these struggling job seekers with warmth and compassion.
College Is Not a Ludicrous Waste of Money
A couple of weeks ago former Secretary of Labor Robert Reich published an article under the unfortunate and misleading headline “College Is a Ludicrous Waste of Money.” Readers who did not finish the article might have assumed Reich was arguing that a college degree is vastly overpriced, offering graduates little in the way of an economic return. As a well-informed observer of U.S. labor markets, Reich knows this frequent complaint about American colleges is flatly untrue.
It’s time to end Social Security for the rich
The long-term finances of Social Security are in bad shape. Its reserves are expected to run out in less than 20 years, and under current law that will force cuts in benefits. Some experts argue that the best way to get the system’s finances back in shape would be to raise the full retirement age above the scheduled 67. That would bolster the program’s finances in two ways. First, by increasing payroll tax revenues, because people would work longer.
Millennials don’t save for enough retirement - but Congress can help
“Young people are not saving enough.” “They will have to double their savings to retire at a reasonable age.” These quotes represent the conventional wisdom about our nation’s millennials, the more than 80 million Americans between the ages of 20 and 36. However, the savings picture for millennials has become more complex, according to recent data. This cohort of young people is saving more, though for short-term goals instead of retirement.
Warts and all, Obamacare could win a popularity contest that matters
GOP lawmakers may eventually throw in the towel on their campaign to repeal the Affordable Care Act. If so, the road to surrender will have been marked by a strange reversal. Less than nine months ago voters elected a Republican President and Congress pledged to reverse Democrats’ signature achievement in the Obama years. Fierce public opposition has so far prevented conservative majorities in Congress from acting on the pledge.
Warts and All, Obamacare Could Win a Popularity Contest that Matters | RealClearMarkets
GOP lawmakers may eventually throw in the towel on their campaign to repeal the Affordable Care Act. If so, the road to surrender will have been marked by a strange reversal. Less than nine months ago voters elected a Republican President and Congress pledged to reverse Democrats’ signature achievement in the Obama years. Fierce public opposition has so far prevented conservative majorities in Congress from acting on the pledge.
What Are the Costs and Benefits of Social Security Investing in Equities?
What Are the Costs and Benefits of Social Security Investing in Equities?IB#17-10 The brief’s key findings are:One option for helping address Social Security’s long-term financial health is to shift a portion of its trust fund reserves into equities.Of course, equities would expose the program to greater financial risk.However, in terms of financial risk, both retrospective and prospective analyses suggest that equities would improve Social Security’s finances.In terms of critics’...
New analysis turns up surprise on long-term wage trends | Brookings Institution
Earlier this month four economists released a study of income trends based on an under-used data source, Social Security wage records. These earnings reports are submitted by employers for the purpose of calculating workers’ tax payments and, eventually, Social Security benefits. The income amounts are quite accurate and cover a full career of wage income. The new study confirms that average male earners have seen scant wage gains over the past generation. The study also turned up a surprise.
New Analysis Turns Up Surprise on Long-Term Wage Trends | RealClearMarkets
Earlier this month four economists released a study of income trends based on an under-used data source, Social Security wage records. These earnings reports are submitted by employers for the purpose of calculating workers’ tax payments and, eventually, Social Security benefits. The income amounts are quite accurate and cover a full career of wage income. The new study confirms that average male earners have seen scant wage gains over the past generation. The study also turned up a surprise.
The road to national retirement security goes through the states | Brookings Institution
In its March 20 editorial “DOL can’t have it both ways,” Pensions & Investments opined against state automatic retirement savings arrangements, which are already being implemented by California, Oregon, Illinois, Connecticut and Maryland, and are under consideration by more than a dozen other states. Instead, P&I argues, we should wait until Congress enacts a national program — something it has failed to do for over a decade.
How to increase retirement savings of 60 million employees | Brookings Institution
Senate Republicans are voting to repeal the Labor Department’s recent rules that would have expressly allowed states and cities to sponsor a type of individual retirement account, called an automatic IRA. These votes will rescind those rules, because they already have been rejected by House Republicans and the administration supports rescinding them.
Let’s give workers a retirement savings plan at work | Brookings Institution
Automatic payroll withholding to help workers save for retirement should be a no-brainer. Both conservatives and liberals worry that Social Security will lack funds to pay for promised benefits after 2030. At the same time, about one-third of workers are “not too confident” or “not at all confident” they will have enough money to live comfortably when they retire. Under these circumstances it seems sensible to make it as easy as possible for workers to save for retirement in the workplace.
Let's Give Workers a Retirement Savings Plan at Work | RealClearMarkets
Automatic payroll withholding to help workers save for retirement should be a no-brainer. Both conservatives and liberals worry that Social Security will lack funds to pay for promised benefits after 2030. At the same time, about one-third of workers are “not too confident” or “not at all confident” they will have enough money to live comfortably when they retire. Under these circumstances it seems sensible to make it as easy as possible for workers to save for retirement in the workplace.
Three, two, or only one cheer for 401(k)s? | Brookings Institution
When an economist from AEI and journalists associated with places as varied as National Review and Mother Jones all say there isn’t a retirement crisis, can they possibly be wrong?
Job gains continued in 2016, but slow rebound in participation rate will limit future gains | Brookings Institution
Employers in the U.S. boosted payrolls again in 2016, giving the nation its seventh consecutive year of solid job gains. For the fifth year in a row employment gains topped 175,000 a month. In the 12 months ending in November, public and private payrolls increased 188,000 a month, or about 1.6 percent over the year. As usual, virtually all the growth was in the private sector, which added more than 2 million jobs.
Don't Expect the Jobs Gains of 2016 to Continue | RealClearMarkets
U.S. employers boosted payrolls again in 2016, giving the nation its seventh consecutive year of solid job gains. For the fifth year in a row employment gains topped 175,000 a month. In the 12 months ending in November, public and private payrolls increased 188,000 a month, or about 1.6 percent over the year. As usual, virtually all the growth was in the private sector, which added more than 2 million jobs.
Rise in dollar shows short-term support of Trump’s pro-business platform | Brookings Institution
In the aftermath of Donald Trump’s election to the presidency, the value of the dollar has ascended in international markets, and the trade-weighted exchange rate rose by 3.5 percent during the month of November alone. Not only did most analysts not anticipate Trump’s victory, the general expectation was that dollar exchange rate would fall in that event.
Income Inequality & Social Mobility
Income Inequality & Social Mobility Reports Get daily updates from Brookings
Can America Afford to Grow Old? | Brookings Institution
Henry J. Aaron is a senior fellow in Economic Studies at the Brookings Institution, where he holds the Bruce and Virginia MacLaury Chair. Among his many books are Can We Say No? The Challenge of Rationing Health Care, with William B. Schwartz and Melissa Cox (Brookings, 2006), and Reforming Medicare: Options, Tradeoffs, and Opportunities, written with Jeanne Lambrew (Brookings, 2008).
Census report of big jump in income is a little too good to be true
The Census Bureau recently released new statistics on the trends in poverty and household income. In contrast to the dismal numbers the Bureau published last year, the latest statistics show robust gains up and down the income distribution. They also show a sizeable drop in the poverty rate. The headline number in the new report was the surge in median household income, which increased $2,800 (or 5.2 percent) between 2014 and 2015.
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