As the Nation Ages, Seven States Become Younger, Census Bureau Reports

Via US Census Bureau:

The median age declined in seven states between 2012 and 2013, including five in the Great Plains, according to U.S. Census Bureau estimates released today. In contrast, the median age for the U.S. as a whole ticked up from 37.5 years to 37.6 years. These estimates examine population changes among groups by age, sex, race and Hispanic origin nationally, as well as all states and counties, between April 1, 2010, and July 1, 2013.

“We’re seeing the demographic impact of two booms,” Census Bureau Director John Thompson said. “The population in the Great Plains energy boom states is becoming younger and more male as workers move in seeking employment in the oil and gas industry, while the U.S. as a whole continues to age as the youngest of the baby boom generation enters their 50s.”

The largest decline in the nation was in North Dakota, with a decline of 0.6 years between 2012 and 2013. The median age in four other Great Plains states — MontanaWyomingSouth Dakota and Oklahoma — also dropped. Alaska and Hawaii also saw a decline in median age. (See Table 1.) In addition, the median age fell in 403 of the nation’s 3,143 counties, many of which were in the Great Plains. Williams, N.D., the center of the Bakken shale energy boom, led the nation with a decline of 1.6 years. Next to Alaska, North Dakota had a heavier concentration of males (51.1 percent of the total population) than any other state.

The nation as a whole grew older as the oldest baby boomers became seniors. The nation’s 65-and-older population surged to 44.7 million in 2013, up 3.6 percent from 2012. By comparison, the population younger than 65 grew by only 0.3 percent.

These statistics released today also include population estimates for Puerto Rico and its municipios by age and sex.

Our nation is a study in contrasts when it comes to local age structure. There was a more than 42-year difference in the median ages of the county with the highest median age — Sumter, Fla., at 65.5 — and the county with the youngest median age — Madison, Idaho, at 23.1.

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RomneyCare a Huge Success in More Ways than One

Governor Romney should have run on these results:

“We find that the (health) reform reduced the total amount of debt that was past due, the fraction of all debt that was past due, improved credit scores and reduced personal bankruptcies. We also find suggestive evidence that the reform lowered the total amount of debt and decreased third party collections. The effects are most pronounced for individuals who had limited access to credit markets before the reform. These results show that health care reform has implications that extend well beyond the health and health care utilization of those who gain insurance coverage.”

Abstract

A major benefit of health insurance coverage is that it protects the insured from unexpected medical costs that may devastate their personal finances. In this paper, we use detailed credit report information on a large panel of individuals to examine the effect of a major health care reform in Massachusetts in 2006 on a broad set of financial outcomes. The Massachusetts model served as the basis for the Affordable Care Act and allows us to examine the effect of coverage on financial outcomes for the entire population of the uninsured, not just those with very low incomes. We exploit plausibly exogenous variation in the impact of the reform across counties and age groups using levels of pre-reform insurance coverage as a measure of the potential effect of the reform. We find that the reform reduced the total amount of debt that was past due, the fraction of all debt that was past due, improved credit scores and reduced personal bankruptcies. We also find suggestive evidence that the reform lowered the total amount of debt and decreased third party collections. The effects are most pronounced for individuals who had limited access to credit markets before the reform. These results show that health care reform has implications that extend well beyond the health and health care utilization of those who gain insurance coverage.

Reference

Mazumder, Bhash  and Miller, Sarah. (2014). The Effects of the Massachusetts Health Reform on Financial Distress. Federal Reserve Bank of Chicago.

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Political Polarization Increases Deficits and Depresses Economic Growth

Does political polarization increase government deficits and discourages investment, output, and employment. Yes. according to Azzimonti (2014), “Moreover, these declines are persistent, which may help explain the slow recovery observed since the 2007 recession ended.” Azzimonti also finds partisan conflict correlated to income inequality. “We conclude that the relationship between the trend observed in partisan conflict and that of inequality is not coincidental. Low levels of partisan conflict ease the implementation of policies that reduce inequality, while low inequality creates incentives for parties to move toward the center.”

Abstract

American politics have become extremely polarized in recent decades. This deep political divide has caused significant government dysfunction. Political divisions make the timing, size, and composition of government policy less predictable. According to existing theories, an increase in the degree of economic policy uncertainty or in the volatility of fiscal shocks results in a decline in economic activity. This occurs because businesses and households may be induced to delay decisions that involve high reversibility costs. In addition, disagreement between policymakers may result in stalemate, or, in extreme cases, a government shutdown. This adversely affects the optimal implementation of policy reforms and may result in excessive debt accumulation or inefficient public-sector responses to adverse shocks. Testing these theories has been challenging given the low frequency at which existing measures of partisan conflict have been computed. In this paper, I provide a novel high-frequency indicator of the degree of partisan conflict. The index, constructed for the period 1891 to 2013, uses a search-based approach that measures the frequency of newspaper articles that report lawmakers’ disagreement about policy. I show that the long-run trend of partisan conflict behaves similarly to political polarization and income inequality, especially since the Great Depression. Its short-run fluctuations are highly related to elections, but unrelated to recessions. The lower-than-average values observed during wars suggest a “rally around the flag” effect. I use the index to study the effect of an increase in partisan conflict, equivalent to the one observed since the Great Recession, on business cycles. Using a simple VAR, I find that an innovation to partisan conflict increases government deficits and significantly discourages investment, output, and employment. Moreover, these declines are persistent, which may help explain the slow recovery observed since the 2007 recession ended.

Reference

Azzimonti, Marina. (2014). Partisan Conflict. Research Department. Federal Reserve Bank of Philadelphia. Working Papers.

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14 Tech and Pharmaceutical Companies Hold a Trillion Dollars Offshore to Avoid Taxes

Via Alan Pyke:

“Just 14 American tech and pharmaceutical companies have parked about half a trillion dollars offshore to avoid U.S. taxes, the Financial Times reported on Friday. The handful of firms controls about one quarter of the nearly $2 trillion in total U.S. corporate profits hold overseas.

The list of companies includes names that should be familiar to those who follow the legal wrangling over corporate taxes and international tax havens. AppleMicrosoft, and Google top the list, and each of those tech giants has had its tax schemes exposed by Congressional investigators or reporters in recent years.” Continue reading – - >

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Do the Benefits of College Still Outweigh the Costs? Yes, Says the New York Fed

Another study demonstrates despite rising tuition a college education is still a good investment.

Via Federal Reserve Bank of New York

Do the Benefits of College Still Outweigh the Costs?

Despite rising tuition and falling wages for college graduates over the past several years, a college degree still tends to be a sound investment, according to a new Federal Reserve Bank of New York study.

In “Do the Benefits of College Still Outweigh the Costs?” economists Jaison R. Abel and Richard Deitz examine the economic costs, benefits, and return to an associate’s degree and a bachelor’s degree. The authors show that even with increased tuition and reduced wages, the return to both degrees has held at about 15 percent for more than a decade. The return has remained high because the wages of those without a college degree have also been falling, keeping the college wage premium near an all-time high while lowering the opportunity cost of going to school.

The authors also show that the return to a bachelor’s degree varies with students’ areas of specialization. Students whose majors provide technical training, such as engineering or math and computers, earn the highest returns—21 and 18 percent, respectively. By contrast, those majoring in the liberal arts or leisure and hospitality tend to have below-average returns. Nonetheless, every major earned a return of more than 9 percent—a figure that easily passes the threshold of a sound investment—underscoring the value of earning a college degree. Further, the authors find that these results generally hold true even for those who are chronically underemployed.

Link to the study: Do the Benefits of College Still Outweigh the Costs

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Wisconsin’s Private Sector Job Growth Ranking Slips to 37th from 35th Place

Via Mary Spicuzza@madison.com

Wisconsin ranked 37th in private sector job growth last year, federal employment numbers released Thursday show.

Wisconsin added about 28,141 private-sector jobs during 2013, a 1.2 percent increase, the numbers show. The state lagged the national growth rate of 2.1 during that time period.

The latest statistics from the U.S. Bureau of Labor Statistics, known as the Quarterly Census on Employment and Wages (QCEW), have been called the “gold standard” on job creation numbers…

Wisconsin was ranked 35th in private-sector job growth in previous federal jobs report, which was released in March.

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How Do Your Tax Dollar Expenditures Conform to Your Values and Priorities?

There’s a saying that “budgets reflect values.” Here’s a graphic from National Priorities Project depicting where your 2013 tax dollar went.

Where Your 2013 Tax Dollar WentAn interesting thought process dealing with this information is to first ask yourself what the purpose of government is. For example, is it for:

  • Protection of private property?
  • Improve the economic lives of its citizens?
  • National defense?
  • Health and safety?
  • Expand our influence in the world?
  • Promote democracy in far away countries?
  • Expand scientific knowledge?
  • Protect the environment?

How do federal expenditures conform to your values and priorities?

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Productivity Growth is Now 11.4% Higher, but Hourly Wages Have Only Increased 1.5%

Here’s an updated graph on the widening gap between worker productivity and hourly wage growth.

US wage and productivity growthProductivity growth is now 11.4 percent higher than in January 2007, but hourly wages have only increased 1.5 percent since the same time period.

Wonder why the middle class is in trouble?

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Trickle-Down Economics vs. Investing in the Economy: Kansas vs. California

The States can often serve as natural experiments to determine which economic policies work best for promoting economic growth. Such a natural experiment exists in a Kansas model, promoting trickle-down tax cuts for the wealthy with an austerity state budget, and a California model, utilizing tax-supported investments endorsed by California voters.

I. Features of the Competing Models for Economic Growth:

The Kansas trickle-down model featured massive tax cuts for the wealthy, at a cost of $800 million, or 8 percent of the revenue used to fund schools,  and reducing sales taxes from 6.3 percent to 6.15 percent, where it would stay through 2018.  In short, tax cuts for the wealthy and an austerity budget.

The California investment model featured a voter passed tax increases for everyone, including the rich, marginally increasing the sales tax while creating new income tax brackets of 10.3 percent for those who earned between $250,000 and $300,000; 11.3 percent for taxpayers who made anywhere between $300,000 and $500,000; 12.3 percent for incomes of $500,000 to $1,000,000; and 13.3 percent for all incomes above $1,000,000 (Gibson, 2014). 

II. The Outcomes of the Two Natural Experiments:

The Kansas Trickle-Down Model, Tax Cuts for the Rich, Outcome:

  • Kansas’ job growth has failed to keep up the pace with the national average.
  • Moody’s cut the state’s bond rating for the first time in over a decade, citing a lack of confidence in Kansas’ fiscal leadership.
  • Revenue projections are down $700 million from the year before, meaning public services like schools have to be cut as a result. In just fiscal year 2014 alone, the state fell short of estimated revenue projections by $338 million.
  • Kansas’ non-partisan Legislative Research Department estimates Brownback’s tax cuts will cost the state $5 billion in lost revenue by 2019. To put that in perspective, Kansas currently has an $8 billion state budget (Gibson, 2014). 

The California Investment Model Outcome:

Conclusion

Trickle-down economics is a failed policy. Even Ronald Reagan’s economic advisor, Martin Feldstein, found it didn’t work as early as 1989.

“Martin Feldstein and Doug Elmendorf discovered something surprising in 1989. So much so that when they presented it to a National Bureau of Economic Research conference, they titled their paper (PDF) “Budget Deficits, Tax Incentives and Inflation: A Surprising Lesson From the 1983-1984 Recovery.” Feldstein had been Ronald Reagan’s chief economic adviser during that recovery; Elmendorf now runs the Congressional Budget Office. In 1989, they were surprised to read in their own data that the recovery that began in 1983 had been caused mainly by an expansionary monetary policy. (To a lesser extent, it had come from growth in business investment after changes to corporate taxes in 1981.) Feldstein and Elmendorf pointed out that the recovery had not been caused, as was popularly thought at the time, by reductions in the personal income tax rate.

That is: As early as 1989, Reagan’s economics guy did not find any evidence that the Reagan recovery had come from the Reagan administration’s personal income tax cuts.” Continue reading –>

Reference

Gibson, Carl. (2014). How Kansas and California Debunked the GOP’s Tax Cuts Argument. The Blog. The Huffington Post. July 16.

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Minnesota Percentage of Uninsured Drops to Historic Record Low

Via Star Tribune:

“The percentage of uninsured Minnesotans has dropped to the lowest level in state history, and the second-lowest level in the nation, following the end of enrollments under the Affordable Care Act.”

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