Category Archives: Economy

Trump’s “compassionate” budget to endanger millions threatened by famines

In response to widespread criticism of President Trump’s recent budget, Office of Management and Budget Director Mick Mulvaney defended massive cuts to government programs, saying “it’s probably one of the most compassionate things we can do.” Mulvaney was directly defending the choice to eliminate funding for domestic programs like Meals on Wheels and afterschool programs for low-income children. But his ridiculous comment reveals the Trump administration’s general lack of sympathy and support for low-income populations.

The President’s blatant apathy towards the plight of the poor demands our attention both as people in an increasingly globalized world. The reality is that the proposed cuts in the budget, if endorsed by Congress, are likely to have devastating and potentially deadly consequences for vulnerable groups both in this country and around the world.

Continue reading

Demystifying President Trumps Proposed Budget

Source: Washington Post

Quoted in the Washington Post, former EPA administrator Gina McCarthy has referred to President Trump’s budget as “a scorched earth budget that represents an all out assault on clean air, water, and land.” She continued to state that “You can’t put ‘America First’ when you put the health of its people and its country last.”

Earlier this month, President Trump released his Proposed Budget for Fiscal Year (FY) 2018. As it was speculated, the budget contains drastic cuts to several departments, and eliminates funding for nineteen agencies. The Environmental Protection Agency (EPA) suffers the largest percentage cut at 31%, followed closely by the State Department at 29%.  The State Department cut translates to decreased funding of $10.9 Billion. Cuts to climate change efforts, foreign aid, and cultural exchange programs demonstrate a shift from an international focus to an “America First” perspective.

Continue reading

Image

Sanford Professors Talk Capital in the 21st Century

If you hCapital_in_the_Twenty-First_Century_(front_cover)aven’t heard anything about Thomas Picketty’s book “Capital in the 21st Century,” it may be time to look it up (go ahead, the Economist has a four-paragraph summary if you are short on time). “Capital” uses newly compiled data to track the evolution of wealth inequality since the industrial revolution. The analysis shows that wealth is increasingly concentrated among an elite few, and that Europe and the United States may be returning to a structure in which the economy is dominated by inherited wealth. Picketty’s conclusions have attracted an incredible amount of both positive and negative attention – as  Paul Krugman commented, “we’ll never talk about wealth and inequality in the same way.” Continue reading

A Higher Minimum Wage: Not Actually a Bad Policy

Wage Pic

Raising the minimum wage will do more good than harm. Income inequality is at historic highs, and the minimum wage is worth less now than 40 years ago—a typical earner makes less than poverty level. Economists split hairs over particulars, but on the whole, an increase will boost low-wage workers’ fortunes, without large negative effects on employment. A higher wage floor will put many hard-working Americans on better footing.

I started thinking about this issue a few weeks ago, when I stumbled on a street demonstration in my home city of St. Paul, MN (see the picture). It was the day after Black Friday and protesters had just marched through the parking lots of Walmart and Target. I was waiting for a bus. They were calling for a higher minimum wage. I decided to look into it.

The federal minimum wage is $7.25 per hour. Many localities set wages above this rate. Washington D.C. just approved upping theirs to $11.50. Sea Tac, a suburb of Seattle, now has a $15 wage floor. New York State, California, and New Jersey recently upped their minimums. Congress has raised the federal minimum wage 29 times since its inception in 1938 (at 25 cents!), most recently in 2007.

Earlier this year two Democrats introduced the Fair Minimum Wage Act in Congress. It aims to raise the minimum wage to $10.10 by 2015. President Obama supports the measure, but Republicans in Congress do not. In general, a large majority of Americans favor raising the minimum wage; businesses are split.

Two-thirds of minimum wage earners are adults, and one in four is raising children. Even with full-time hours, a minimum wage salary pays only $15,080 per year, one-third less than the poverty level. The current minimum wage is worth less now than in the 1960’s.

If intuition tells you that amount is not enough to live on, you’re right. Taxpayers pick up the slack. For example, half of all fast food employees receive some kind of public assistance, $7 billion in total per year.

An increase to $10.10 would affect many who make above the current minimum. The Economic Policy Institute, a left-leaning think tank, estimates that 17 million workers—about one fifth the hourly workforce—would receive pay increases with the new law.

Really smart economists are divided over the effects of an increased minimum wage. A higher wage floor increases incomes, which stimulates spending, and may even drive employment. But it may also force companies to decrease personnel to account for higher labor costs.

Many business leaders feel strongly that a wage floor will hurt workers. “Arbitrarily raising the cost of labor would increase, not reduce, the unemployment rate among young, less-skilled workers,” Bruce Josten of the U.S. Chamber of Commerce said in a statement. James McNerney Jr., the CEO of Boeing, even hinted that higher labor costs could force companies to relocate, even though research suggests that most outsourced jobs are high-paying.

Microeconomics 101 teaches that as the price of labor rises, the demand for labor will decrease. No one really disagrees with this. However, studies have shown that in practice, an increase in the minimum wage improves the fortunes of low-wage workers without massive layoffs. Unlike other anti-poverty policies, this one adds nothing to the federal budget. It may even shift some of the burden back to private companies (remember that $7 billion for fast food workers?).

The United States is in a period of vast income inequality. Jared Bernstein of the non-partisan Center on Budget and Policy Priorities argues that the minimum wage “sets an important labor standard: the government will compensate for the sever lack of bargaining clout among our lowest-wage workers by setting a floor below which we won’t allow their wages to fall.”

Yes, we as a society need to have a broader conversation about our inequities, but as its name implies, a fair minimum wage should be the least we do for the most vulnerable in our society.

 

The Coming Shockwave

Graph via Wikimedia Commons

By Jeff Bartelli, Staff Editor

The Baby Boom generation is beginning to retire, and communities around the country have not begun to prepare. As this generation grays, it will need better public transit, walkable cities and neighborhoods, better health care, and active workers to support them. The United States is continuously bickering over policies that would provide for the boomers and the generations that follow them. Boomers themselves are struggling to survive, even returning to school in the hopes of getting jobs to replace everything they lost in the last recession. Forward-thinking policies should be implemented now to serve all Americans. Solutions to health care challenges, Social Security’s long-term solvency, and inadequate transportation infrastructure are critical for serving Baby Boomers and everybody else. The longer politicians delay, the more it will cost the country in the long run, and the more U.S. citizens will struggle.

Budget Cuts Hamper Government’s Energy Data Reporting

 

Graph from Inman's "Removing the baseline" in December issue of Nature Climate Change

By Kris FitzPatrick, Staff Editor

The U.S. Energy Information Administration is the small agency within the Department of Energy that compiles and analyzes data on domestic energy production and consumption. The average citizen has likely never heard of the EIA, but it is the primary data resource for policymakers, researchers, regulators, and industry personnel in the energy sector.

Despite the EIA’s critical role in a $1.2 trillion energy market, its budget was slashed by 14 percent this past April. According to a recent article in the December issue of the journal Nature Climate Change (available through Duke library here), the cutbacks are already having serious impacts on the EIA’s ability to do its job.

A group that included three former secretaries of state and a former president of Shell Oil sent a letter to the U.S. House and Senate in June criticizing the cut as excessive. Former administrator of the EIA and current Nicholas School of the Environment faculty member at Duke, Richard Newell, also signed the letter. Newell emphasized EIA’s role in collecting and reporting the baseline data that supports critical policy and business decisions. As he states in the afore-mentioned article, “When you’re driving at night in the rain, it’s not a good idea to turn off your headlights.”