Thirdandstate.org's blog

Bailouts for the Banks and Cake for the 99%

A blog post by Mark Price, originally published at Third and State.

What is good for the financial sector is good for the 99% 1%.

For the financialization of America wasn’t dictated by the invisible hand of the market. What caused the financial industry to grow much faster than the rest of the economy starting around 1980 was a series of deliberate policy choices, in particular a process of deregulation that continued right up to the eve of the 2008 crisis. Not coincidentally, the era of an ever-growing financial industry was also an era of ever-growing inequality of income and wealth. Wall Street made a large direct contribution to economic polarization, because soaring incomes in finance accounted for a significant fraction of the rising share of the top 1 percent (and the top 0.1 percent, which accounts for most of the top 1 percent’s gains) in the nation’s income. More broadly, the same political forces that promoted financial deregulation fostered overall inequality in a variety of ways, undermining organized labor, doing away with the 'outrage constraint' that used to limit executive paychecks, and more.

The Pittsburgh Post-Gazette reviews employment law in Pennsylvania and notes that there are two sets of rules, the rules for the rest of us (we are employed at will and rarely get a severance) and the rules for top executives.

Congress Passes Trade Deals while Families Suffer

A blog post by Mark Price, originally published at Third and State.

Unemployment in most places is higher than it has been in decades, and worse still unemployment rates have started rising again as private-sector job growth has stalled and the public sector continues to shed jobs. The economy needs a boost, but Congress is making no progress towards passing a jobs bill. You might be tempted to think Congress can agree on nothing. Well, it depends on what you mean by nothing.

The economic benefits are projected to be small [blogger's note: even according to people whose models capture gains from trade but not the downside]. A federal agency estimated in 2007 that the impact on employment would be 'negligible' and that the deals would increase gross domestic product by about $14.4 billion, or roughly 0.1 percent.

This 112th Congress is building a solid record of having a negligible effect on employment. Meanwhile, back in the real world, a story that just breaks your heart.

What [Chelsea] Hines wants most are answers — and the confidence that one day she would be able to support a family.

The Senate Chooses to Do Nothing About the Economy and You Should Root for GE

A blog post by Mark Price, originally published at Third and State.

The economic news this morning makes you feel like you are watching Major Kong (from the movie Dr. Strangelove — the picture on the left) ride the bomb like a mechanical bull to our mutual total economic destruction. But our economic situation is more similar to that of Otto (played by Kevin Kline in A Fish Called Wanda — on the right).  At first we are amused with the idea of being run down by a steamroller moving 2 miles per hour. But then we realize that we have stepped in wet cement and are thus destined to be run down by the U.S. Senate a one-eyed man with ketchup stains round his nostrils.

In short, our problem is a lack of aggregate demand and the solution is well within our grasp, but our politics are paralyzed and millions are destined to be run down by years of needless misery.

Hard Times In Pennsylvania and Debates About Higher Education

A blog post by Mark Price, originally published at Third and State.

The Mercyhurst College Center for Applied Politics has released to The Philadelphia Inquirer the results of a poll asking Pennsylvanians about the impact of the economy on their lives.

The poll found that one in four Pennsylvania residents has had someone living in his or her household lose a job or be laid off in the last 12 months — and two out of three had close friends or family members who were put out of work in that time. More than three out of every four Pennsylvanians said they knew individuals or families who struggle every month to afford basic needs such as rent, utilities, health care, clothes, or food. 'The poverty question was startling,' said Joseph Morris, a professor and director of the college's Center for Applied Politics, which conducted the poll, 'as was the fact that a strong majority of Pennsylvanians have had to make lifestyle changes because of the economy.'

The Mercyhurst College Center findings mirror those of the State of Working Pennsylvania 2011:

A Mainstream Plan for Taxing Natural Gas Drilling in Pennsylvania

A blog post by Sharon Ward, originally published at Third and State.

On Tuesday, I joined state Representatives Tom Murt and Gene DiGirolamo at a press conference announcing their bill to enact a natural gas drilling tax that would support shared statewide priorities like education and human services, as well as local impacts and environmental protection.

Almost 98% of natural gas produced in the United States is subject to a drilling tax or conservation fee. This legislation would finally put Pennsylvania into the mainstream of energy-producing states. It would address the impacts of drilling but go beyond that to support economic growth and more opportunities for Pennsylvanians.

You can listen to a two-minute podcast of my remarks from the press conference below and click here to read more about the Murt-DiGirolamo plan (including a link to the lawmakers' co-sponsorship memo).

Pennsylvania Records First Quarter Revenue Growth

A blog post by Michael Wood, originally published at Third and State.

The September revenue collections are in, and as I told the Harrisburg Patriot-News this week, Pennsylvania is on track to meet revenue projections for the year, despite missing official estimates for the first quarter of 2011-12.

How's that? Well, first of all, revenue collections so far this fiscal year are running ahead of the same three-month time period last year, reflecting a stubbornly slow but continued economic recovery. Tax revenue grew by 3.7% during the quarter, which is slightly ahead of estimated growth of 3.3% for the fiscal year.

While actual tax collections are below official estimates, some of that underperformance may be attributed to a change in the way those revenue estimates were made. The 2011-12 estimates predict a larger share of annual revenue coming in during the first half of the fiscal year than revenue estimates of the past several years. If 2011-12 collection patterns follow a similar course as most recent years, this change may make budget “shortfalls” more common in the first half of the fiscal year, followed by surpluses in the second half.

Regulations, Jobs and Pennsylvania's Prevailing Wage

A blog post by Mark Price, originally published at Third and State.

Bruce Bartlett, former advisor to Ronald Reagan and George H.W. Bush, has a column in the Economix blog at The New York Times this morning with compelling fresh evidence (from the Bureau of Labor Statistics) that job creation is not hampered by regulation but, you guessed it, a lack of demand.

Also this morning, as if on cue, news stories appeared about the movement Monday of bills to weaken Pennsylvania's prevailing wage statute. The Pennsylvania House majority leader called the current prevailing wage statute a "job-crushing" law — without actually providing any evidence, naturally.

This week is off to a great start! Monday we demonize the unemployed and Tuesday it is all about regulation. I can't wait for Wednesday.

Skill Mismatch Is Back and It Is Still Wrong

A blog post by Mark Price, originally published at Third and State.

The view that people who lost a job due to the economy are lazy and shiftless dilettantes has spread from the editorial page of The Patriot-News to the newsroom with a particularly misleading story Monday.

The jobs are out there. Companies just can’t find the workers to fill them....Economists and business leaders point to a factor contributing to the pervasive disparity between available jobs and workers: attitude. Prospective work candidates simply want their cake — and on a silver platter. Some don’t want to commute, others want to work only the day shift, and others don’t want to take a job they feel is beneath them.

Dejesus gets creative with the presentation of facts, noting "3.2 million jobs remained vacant as of the end of July, even as 14 million Americans were jobless." How does the BLS report this number? "There were 3.2 million job openings on the last business day of July, the U.S. Bureau of Labor Statistics reported today." The reader of the Dejesus story is left with the impression that the problem is unfilled job openings.

PA Tax Collections Strong So Far, September Will Tell Us More

A blog post by Michael Wood, originally published at Third and State.

Here is another look at General Fund tax collections in the first two months of Pennsylvania's 2011-12 Fiscal Year. As you can see, collections so far this year have exceeded pre-recessionary levels — a positive sign.

General Fund Tax Collections July and August

Revenue collections for September will be released as early as late Friday. September collections are important to monitor because they include quarterly corporate and personal income tax payments. They should give us a much better idea of what to expect in future months.

So far, so good.

High Unemployment Leads to More Student Loan Defaults

A blog post by Sean Brandon, originally published at Third and State.

The U.S. Department of Education recently released 2009 fiscal year data on the number of students defaulting on college loans. In a press release, the Department noted that the national default rate rose from 7% in 2008 to 8.8% in 2009, affecting loans for all types of colleges and universities. The default rate rose from 6% to 7.2% on loans for students at public institutions, 4% to 4.6% at private institutions, and 11.6% to 15% at for-profit institutions.

Among the states, Pennsylvania has the third highest number of higher learning institutions (behind California and New York) and a student default rate of only 6.6%, which is considerably better than the national rate. However, Pennsylvania is no exception when you compare the relationship between the unemployment rate and the borrower default rate.

Earlier this month, Rortybomb blogger Mike Konczal compared the default numbers of subprime mortgages with for-profit college loans. In his analysis, he drew attention to the relationship between unemployment and default rates.

The Keystone Research Center recreated one of Mike's graphs below. It is quite clear that as unemployment rises, the number of students defaulting on their loan payments also goes up. Pennsylvania is the label highlighted in red. 

Pa. Revenue Growth Strong in 2011-12, Despite Missing Official Estimates

A blog post by Michael Wood, originally published at Third and State.

Some state policymakers are concerned that Pennsylvania tax collections are trailing official revenue targets for the first two months of the 2011-12 Fiscal Year. However, Pennsylvania’s revenue collections for July and August are running well ahead of the same two-month period in 2010-11.

While actual tax collections are below official estimates, some of that underperformance may be attributed to a change in the way those revenue estimates were made, as the Pennsylvania Budget and Policy Center explains in our recent Revenue Tracker.

Recessions Drive Up Poverty Rates

A blog post by Chris Lilienthal, originally published at Third and State.

This will come as a little or no surprise to most people, but poverty rates rise following recessions. The economists at the Keystone Research Center recently put together this chart to make that point, using poverty data from the U.S. Census Bureau's Current Population Survey (CPS), going back to 1980.

Recessions Drive Up Poverty Rates in PA and the U.S.

(Click on the chart to make it larger.)

The Census also released data from its American Community Survey (ACS), which we highlighted last week and fellow blogger Stephen Herzenberg discussed recently on Radio Smart Talk (skip ahead to the 40-minute mark for Steve's segment).

Census Local Data: Poverty Rises Sharply in Most Areas of Pennsylvania

A blog post by Michael Wood, originally published at Third and State.

Poverty has risen sharply in most areas of Pennsylvania, according to new data released today by the U.S. Census Bureau. The report highlights the widespread impact of the recession and the need for policymakers to protect struggling families and invest in building a stronger economy.

Overall poverty in Pennsylvania rose by a statistically significant margin, going from 11.6% in 2007 to 13.4% in 2010. Most Pennsylvania metro areas also saw statistically significant increases in poverty from 2007 to 2010.

The number of Pennsylvanians living in deep poverty — the share of the population with incomes below half the poverty line — rose to 5.9% (726,102 people) in 2010. As the Center on Budget and Policy Priorities explains, Pennsylvania was one of 40 states to see a statistically significant rise in deep poverty.

Deep Poverty Rose in 40 States Between 2007 and 2010

In urban areas of Pennsylvania, poverty rose to 14.7% in 2010 with 1,360,202 urban residents currently living in poverty, according to the Census Bureau’s annual American Community Survey. That is up from 12.7% in 2007, before the recession started. The picture is similarly bleak in rural Pennsylvania where 9.5% of residents (287,982 people) lived in poverty in 2010, up from 8.1% in 2007.

National Weakness in Economy Spreads to PA in August

A blog post by Sean Brandon, originally published at Third and State.

Pennsylvania’s unemployment rate rose to 8.2% in August but remains below the 9.1% national rate. Pennsylvania has been below the U.S. unemployment rate for 40 consecutive months, and at or below the U.S. rate for 58 consecutive months. This trend is in jeopardy, however, as Pennsylvania’s unemployment rate has risen eight-tenths of one percentage point since May.

Government and Information industries performed very poorly in August, while the Manufacturing and Professional and Business Services sectors showed employment growth. In the last two years, Pennsylvania saw the third highest rate of job growth out of the 50 states by volume and the 11th highest in percentage terms.

However, Pennsylvania’s jobs deficit, or the difference between the number of jobs the state has and the number it needs to regain its pre-recession employment rate, is 240,700. That number includes the 126,000 jobs Pennsylvania lost plus the 114,700 jobs it needs to keep up with the 2% growth in population that has occurred in the 44 months since the recession began. Pennsylvania, like the rest of the nation, needs a jobs plan to meet the vast challenges our economy currently faces.

From his Mouth to Lawmakers' Ears: Governor Corbett Calls for Gas Drilling Fee

A blog post by Chris Lilienthal, originally posted at Third and State.

Last week, Pennsylvania Governor Tom Corbett signaled his support for enacting an impact fee on Marcellus Shale gas drillers. His plan would use fee revenue to pay for statewide environmental cleanup and local impacts, such as road and bridge damage, the Governor said on his new radio show. He plans to release more details as early as this week.

This is a significant development for Governor Corbett, who was initially skeptical of a drilling tax or fee. As The Philadelphia Inquirer reported last week:

He had stuck to a pledge made in last year's gubernatorial campaign to oppose any new taxes — or fees — on anyone for anything. Since taking office in January, Corbett has softened that stance, saying at first that he would consider a local impact fee on the drillers, then saying he was in talks about one with GOP legislative leaders. His Marcellus Shale Advisory Commission studied the issue and recommended an impact fee.

The Pennsylvania Budget and Policy Center will have an update when the new fee proposal is introduced.

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