economy

National Coalition for Literacy Issues Action Alert on H.R. 3630

/ The Old Crank

(updated below)

Update on my post from this past Saturday on H.R. 3630, (“The Middle Class Tax Relief & Job Creation Act of 2011″), a Republican-sponsored House bill that, among other things, denies UI benefits to individuals who lack a high school diploma unless they are enrolled in classes that will lead to a GED or another “state-recognized equivalent.”

First, and most importantly, the National Coalition for Literacy (NCL) has issued an Action Alert for those of you interested in contacting your member of the House of Representative about this bill. The vote is scheduled for tonight, so if you want to do so, there isn’t much time. While there is very little chance that this bill would pass in the Senate, it’s still important to raise objections if  you are concerned about this bill’s approach to extending UI. Some kind of UI extension is going to pass this week, and while I have no reason to expect this high school/GED requirement to make it into whatever bill eventually is approved, it’s worth raising objections now if you want to increase the odds  that it does not return. (I serve on the board of NCL and worked with others in the coalition on the alert—if you have any questions or comments about it, feel free to let me know.)

Also, in my earlier post, I focused in on the high school diploma/GED requirement in the bill, but it’s worth pointing out that other groups have objected to many other provisions in the bill. If you are interested in those other issues, you may want to read this legislative update from the National Employment Law Project (NELP) on the bill.

NELP did raise a point in their analysis of the high school diploma/GED requirement that I did not think of, which is that unemployment insurance eligibility is supposed to be driven solely by loss of employment and employer payments into the applicable unemployment insurance trust funds on behalf of their employees—and not based on income level, educational attainment, or other characteristics of the unemployed worker. That’s a good point, and we included it in the NCL talking points.

I disagree slightly with NELP’s analysis of the waiver provision (see my earlier post). While the authors of this paper agree that the lack of clarity to the waiver provision makes it ineffectual, they assume that the burden referred to is the burden on an individual applying for benefits—not on the state in administrating the provision. I actually don’t think it’s clear at all. If anything, I think the language suggests the burden to be considered is the state’s administrative burden, which offers no protection to individuals at all.

All of which is to say I think this provision in the bill is even worse than the folks at NELP do, and they really hate this bill.

UPDATE (12/14/11): The House passed the bill last night, 234-193. Again, there is little chance this bill in its present form will pass into law. Senate Majority Leader Harry Reid (D-Nev.) has already vowed to reject it, and the President has said he would veto it anyway.

The Skills Mismatch: What Employers Say vs. What They Do

/ The Old Crank

Speaking of Jared Bernstein, (who I quoted in my previous post), yesterday he weighed in on the skills mismatch debate. In short, he thinks employers are full of it:

[T]he consensus among economists tends to be that there’s a large skills mismatch between employers’ demands and the skills of the workforce.  I don’t buy it.  The data from the BLS on occupational skill demands now and in the future actually matches up pretty cleanly with the supply of skill, at least at the level of educational attainment.  Yes, employers constantly say they can’t find skilled workers, but that’s kind of the point… they constantly say it. If it were true, you’d see it in a more quickly rising compensation premium to workers with higher levels of education.  And you don’t really see that type of acceleration.  (Note: the emphasis on “acceleration” is important here—the fact that college workers are paid more than high workers isn’t the issue—unmet skill demands imply an increasingly rising premium, and the college premium has actually decelerated in recent years, as this slide from EPI reveals–it shows the regression-adjusted college premium as flat since the latter 90s for women and rising more slowly for men.)

He does think that increasing higher levels of educational attainment is good for the economy in general — in that smarter people are better workers in whatever job they are doing — but that’s not the same argument the skills mismatch folks are making.

Are Education Investments Enough?

/ The Old Crank

Yesterday, Jared Bernstein highlighted a new paper on income mobility by Katherine Bradbury, from the Boston Federal Reserve, which bolsters the argument that the rate of family income mobility—the ability of families to move up and down the income scale—has been gradually diminishing for the last several decades, while income inequality has grown over the same period. This is important, Bernstein explains, because there are some who argue that the increase in income inequality in this country is offset by greater mobility—in other words, they argue that while the gap between rich and poor is widening, at least more people are able to move up and down the income scale more quickly.

Bradbury’s paper has a great chart showing that this does not appear to be the case—that in fact, there appears to be a decline in the rate of mobility across the last several decades.

Bernstein believes the two are causally related. That, in his words, “higher inequality is itself driving a chain of events that leads to lower rates of income mobility.” He continues:

There are various links to this chain—and this is just a hypothesis at this point (but I’ll bet I’m right). The relationship between income concentration and political power is one important link. The austerity measures we are now contemplating, the regressive changes to the tax code, the sharp cuts in discretionary spending (a part of the budget that pays for, among other things, various investments in human capital targeted at less advantaged populations)—the general and pervasive view that we a) can’t afford the investments and social insurance we need, and b) can’t raise taxes to pay for them—is not an objective fact based on analysis. It’s a political call based on power.

Last night, Fareed Zakaria hosted a special on CNN called “Restoring the American Dream: Fixing Education.” On CNN’s web site, Zakaria writes:

I’ve been thinking about Occupy Wall Street, which is now occupying a number of other cities in America. What is it really about? The protesters don’t like bank bailouts; they feel the 99% have been hard done-by and they’re protesting what they see as unprecedented inequality.

His conclusion is that the lack of social mobility is what underlies it all:

I think underlying their sense of frustration is despair over a very un-American state of affairs: A loss of social mobility. Americans have so far put up with inequality because they felt they could change their own status. They didn’t mind others being rich, as long as they had a path to move up as well. The American Dream is all about social mobility – the sense that anyone can make it.

Zakaria also has stats. He notes this week’s TIME magazine cover story on social mobility, in which the author points out that if you were born in 1970 in the bottom one-fifth of the socio-economic spectrum, you had only a 17% chance of making it into the upper two-fifths.

From what I can tell, the terms “social mobility” and “inequality” used by Zakaria here are roughly equivalent to—or at least very closely tied to—the concepts of income inequality and income mobility discussed in Bradbury’s paper. In other words, he thinks (and I think he’s probably right about this) that people are frustrated because they see rich people getting richer while their own opportunities to get ahead are diminishing. (Although I’m not sure if this goes far enough—people seem angry about not just diminishing opportunity to get ahead, but about falling further behind.)

Zakaria’s answer, like others in the media, is education:

There are a number of reasons why we find ourselves in this predicament – but the most important of them is how much we have lagged behind on education. No other factor is as closely linked to upward mobility. Education is the engine of mobility (my emphasis).

Reading this after reading Bernstein’s article, I wonder if our education system really is the primary reason why we “find ourselves in this predicament.” After all, many of the Occupy Wall Street protesters are college-educated, as are many of the long-term unemployed. While I would imagine that most protesters would agree that equal opportunity for education is consistent with their message, what people appear to be most directly angry about is that despite having educated themselves and worked hard and done all the things they are supposed to do, economic opportunity is actually narrowing—and in some cases, drastically. (I also think many are focused more on immediate actions and less in long-term investments—but that is another discussion.)

Everyone agrees that investments in education make sense, but what is the degree to which these investments will actually impact family income inequality absent any other reforms or changes in our economic system? Is education still the primary engine of mobility that Zakaria claims it is? Do people believe that it is? Perhaps this is discussed during the program (which I have not seen), but in his introduction, Zakaria does not get into the issue of income concentration and political power that Bernstein raises.

In education we talk a lot about return on investment. You can’t get two sentences into a conversation with a pre-K education advocate, for example, before hearing about how x number of dollars invested in the system will result in y amounts of economic output. But the income inequality and mobility problem suggests to me that right now there may be a different, more relevant way to ask about return on investment in education: to what extent will our investments in education result in greater income equality and/or greater rates of mobility? If those investments are not going to do it on their own, what else needs to happen? In particular, I’m hoping that when people call for reform and increased investments in education as a direct response to these protests, they can address these questions.

I think these are especially relevant questions for those of us in the adult education field. Clearly, a lot of adults who need help with basic skills are hoping that improving those skills will lead them to greater economic opportunity. One thing for sure: we tell them that all the time. But for adult learning to lead to greater economic opportunity, there has to be a reasonably equitable economic playing field for them to enter once they upgrade those skills. What if students decide that this is no longer the case—that whatever effort they put into improving their skills, they will end up right back where they started? There is a line in Bradbury’s paper that suggests this is not an unreasonable position: she writes that “families’ later-year incomes increasingly depended on their starting place. (my emphasis)”

Shortsighted Cuts

/ The Old Crank

The budget for adult education programs in Pennsylvania was cut by 17% earlier this year. Chester County’s Daily Local News published a story today on the impact of those cuts in the Kennett Square area, where the local adult literacy program’s annual budget has been reduced from $145,000 to $92,000. The story describes the stimulative effects that the investment in adult literacy has had on the local economy.

Many small business owners in Kennett Square, in fact, became successful after going through the Adult Literacy program. Some have started small businesses like restaurants and landscaping companies. Jacobi said 325 to 400 students go through the program every year.

…

“It’s a crying shame,” said Carrie Freeman, executive director of the United Way of Southern Chester County, an agency that provided $31,200 in support for the local adult literacy program this year. “To me, this is an absolutely vital program. People are able to start businesses and hire people and it helps our general local economy.”

…

Jose Hernandez, owner of Greentree Landscaping in West Chester, said he would have never been able to create his business without the help of Adult Literacy.

“I came here in 1986,” he said. ‘I never had the chance to go to high school. I learned English on the streets, but couldn’t read or write English. I picked mushrooms when I first came here. Then in 2001, I went to the (Bayard Taylor) Library to study for my citizenship test. I would never have been able to pass without a tutor.”

Multiply this by the hundreds of other communities around the country where adult education money has been cut and it’s not hard to imagine that these cuts will lead to a further drag on the growth of the economy.