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College and COVID-19: Four Things Colleges Can Do Post-Crisis

Posted on by The Progressive Policy Institute

It is becoming clearer each day that the health and economic crisis created by the COVID-19 pandemic won’t just change the way we live and work, it will also change the way we educate.

Paul Weinstein Jr. is the Director of the MA in Public Management program at Johns Hopkins University and a senior fellow at the Progressive Policy Institute.

It is becoming clearer each day that the health and economic crisis created by the Covid-19 pandemic won’t just change the way we live and work, it will also change the way we educate. Already colleges and universities across the nation have closed their campuses and shifted to online, video-teaching, or some combination of the two for the remainder of the spring semester.

But what will happen after that? Our higher education system will not go back to the status quo ante, that much is clear. The experience of shifting to remote learning will have long-lasting effects on the ways we think about teaching and learning.

That’s the upside, but there are also serious downsides that we need to start thinking about — now. And to address them we’ll need decision-makers in Washington and state capitals to prepare the groundwork.

Here are three things that will be different.

First, next year’s incoming students will have fewer resources than last year’s. Very likely these students and their families will be under greater financial strain and more concerned about the health consequences of living in dormitories and attending large classes with hundreds of their peers. According to a study conducting by the Art and Science Group, 1 out of 6 high school seniors who expected to attend college this fall are rethinking those plans.

Second, next fall we are going to have fewer colleges for new and current students to attend. A sizable number of small private colleges may have to close their doors because they are tuition-dependent and don’t have significant endowments. Many of these schools have lived on the margins for a long time, able to postpone tough budget choices as long students could access federal loans to finance the rising price of a college education. A 2016 report by Ernst & Young noted there are 800 colleges vulnerable to “critical strategic challenges” because they depend on tuition for more than 85% of their revenue. Already more than 90 colleges have closed in the last three years according to EducationDive — and that number will likely increase dramatically because of the impact of Covid-19.

Finally, many state schools (including 4-year and community colleges) are already overcrowded with students who can’t get into the classes they need to graduate. These schools will be unable to accommodate the increased number of students seeking less expensive alternatives to private schools.

Fortunately, a number of America’s leading public and private schools have large endowments (106 have endowments over $1 billion according to the Chronicle of Higher Education) and they have the resources — both technological and personnel — to help. How? By dramatically expanding online and virtual learning to those who — because of the crisis — can no longer afford the high cost of tuition, have lost their place at college because their school went out of business, or have lost their job.

There are four things institutions of higher education can do post-crisis to expand opportunities for less costly online learning at America’s best schools:

  1. Leading universities — Harvard, Columbia, University of Texas at Austin, among others — offer online extension programs where students can take college-level courses and earn degrees. These schools, along with the others with endowments above $1 billion, should commit to expanding enrollments in these programs in the fall by 10 to 25 percent, at heavily discounted prices (most are already cheaper than comparable onsite courses). As we have seen from the recent closure of colleges across America, shifting quickly and smartly to virtual classrooms is possible, and in this time of crisis a necessity.
  2. All colleges and universities should treat these programs the same as on-campus ones (and if they don’t Congress should make them). If students who are enrolled in these programs later decide to transfer to another school (or apply to a graduate program), all colleges and universities would be required to accept all successfully completed work in these courses (grade C or above) for full credit.
  3. In order to ensure there are enough instructors, tenured and full-time faculty at the 160 schools mentioned above, should volunteer to teach one to two more online courses a semester than their contracts require — without additional compensation. As a director of a graduate program at Johns Hopkins University, my contract requires me to teach 3 courses a year. While teaching an extra two courses next year would be a challenge, it is nothing compared to the sacrifice being made by our medical community and others putting their lives on the line in the fight against Covid-19. According to the American Association of University Professors, there are over 52,000 tenured or non-tenured full time faculty in the U.S. If only half those agreed to teach two additional courses next academic year at 20 students per class, the number of course slots would increase by one million.
  4. The well-endowed schools should commit to hiring more adjuncts to teach some of these courses at above the median adjunct pay salary — currently $2,700 per course according to an AAUP survey. Doing so would help reduce the economic impact of the crisis.

While college and university leaders need to take the lead on these initiatives, they need help from lawmakers in Washington and state capitals.

  • Financial Support. The recently enacted stimulus bill included $14 billion for higher education. The Secretary of Education has some flexibility over about 2.5 percent of that funding — which could be used to support the top private and public schools from expanding or creating online undergraduate programs at reduced costs. Congress should also provide additional funding for this effort if and when they enact a second COVID-19 stimulus bill.
  • Remove Regulatory Barriers. Governors and state legislatures should waive any licensing requirements and fees that might prevent these public and private schools from implementing launching this effort.
  • Provide Legal Protection for Schools. Some endowment funds are tied to specific projects or research. To give schools the ability to use their endowments in this national crisis, Congress should enact legislation that would shelter schools from legal action from past donors.

When our political leaders in Washington failed to recognize the seriousness of the Covid-19 crisis, America’s colleges and universities stepped up to the plate by shuttering their on-campus operations and swiftly moving students to virtual education for the rest of the spring semester. Undoubtedly this will save countless lives, but their work is not done. Colleges and universities will need to step up again this fall when the worst of the health crisis is hopefully over and the struggle to reboot America’s economy begins.

https://medium.com/@progressivepolicyinstitute/college-and-covid-19-ba8801ec66c0

Expanding the Child Tax Credit: A Better Way to Unite Democrats

Posted on by The Progressive Policy Institute

Financing Child Tax Credit refundability with taxes on high unearned incomes is a progressive anti-poverty model that Biden should take inspiration from.

By Brendan McDermott | Fiscal Policy Analyst for PPI

Vice President Joe Biden has begun the hard work of uniting the party against Donald Trump. Biden has tried to appeal to the party’s left wing with proposals to eliminate student loan debt and lower the age at which people qualify for Medicare from 65 to 60. But a better approach would be to adopt cost-effective policies that are targeted to support struggling families. A particularly promising example is a proposal former presidential candidate Sen. Michael Bennet introduced alongside Sen. Mitt Romney to extend the Child Tax Credit to the poorest families and offset the cost through progressive tax reforms.

Raising a child is expensive. Food, clothing, child care, and birth-related health care for both the mother and her child can easily strain a family’s finances. In spite of these high and rising costs, the Urban Institute projects that the federal government’s expenditures on children will fall from 2.4 percent of U.S. gross domestic product in 2018 to 2.1 percent by 2029. Although there are many causes of this decline (not all of which are cause for concern), a particularly worrying contributor is the fact that spending on children will compete for funding with programs that benefit the elderly, which are growing more expensive as America’s population ages.

The federal government provides the Child Tax Credit to help parents afford the cost of raising a child. The credit’s value phases in with parents’ income (families with no earned income receive no credit), until it reaches its maximum value of $2,000 for each child under 17 years old. The credit’s value begins phasing out if the parent earns more than $200,000 ($400,000 for married couples). If the credit is larger than the parent’s tax liability, the parent can receive a tax refund for up to $1,400 of the credit, but parents still need to earn at least $2,500 to qualify for any refund at all.

The Child Tax Credit lifted over four million children out of poverty in 2018. But because parents with very low incomes do not qualify for the credit or only qualify for a partial credit, the children who need financial support the most are often the ones whose families receive the smallest credit or none at all. The Tax Policy Center estimates that while almost all upper-middle and middle-income families receive the Child Tax Credit, just 75 percent of the poorest fifth of families do. PPI called for making the Child Tax Credit refundable in our budget proposal, Funding America’s Future, released last year. Democratic lawmakers also proposed making the credit fully refundable for six years as part of the negotiations over what would become the Coronavirus Aid, Relief, and Economic Security Act, Congress’ recent bill to mitigate the impact of the coronavirus pandemic.

The centerpiece of Bennet’s presidential campaign was an expansion of the Child Tax Credit, which he introduced in the Senate with Sen. Sherrod Brown. More recently, Bennet and Romney proposed a plan that would give parents of children under six years old a “Young Child Tax Credit” worth up to $2,500, $1,500 of which would be completely refundable regardless of the parents’ income. Parents of children from age 6–17 would receive the same credit they do today, but $1,000 of the credit would be refundable even if the parents had no income, and there would be no limit on how much of the credit a parent could receive as a tax refund if they received a larger credit. Since cash transfers to families are associated with better health, educational, and economic outcomes for children, especially poor children, ensuring that the children of parents with no or very low income still get financial support will pay off throughout the child’s life.

This Bennet-Romney plan is more modest than Bennet’s previous proposals but is the first to receive bipartisan legislative support. And while the plan’s cost has not been scored by the Congressional Budget Office, it is the first to include a pay-for. The senators would offset the cost of the credit by partially closing an egregious tax loophole — the “stepped-up basis” for taxing inherited assets. People pay capital gains taxes on the income they make by selling an asset for more than they bought it for. But if someone inherits an asset and sells it, they only have to pay tax on the increase in the item’s value since they inherited it, lowering their tax burden. Wealthy people are far more likely to have both capital and inheritances, so the stepped-up basis loophole specifically benefits the people who need it the least. The Bennet-Romney plan would still exempt $1.6 million of inherited assets per person ($3.7 million for spousal inheritance) from new capital gains taxes.

It is unclear whether this tax change would raise enough revenue to offset the full cost of expanding the Child Tax Credit under the Bennet-Romney plan, and Biden has already proposed using this revenue source to pay for some of his other priorities. Still, financing Child Tax Credit refundability with taxes on high unearned incomes is a progressive anti-poverty model that Biden should take inspiration from, both to substantively strengthen his platform and to help appeal to the party’s left without plunging the nation deeper into debt.

https://medium.com/@progressivepolicyinstitute/expanding-the-child-tax-credit-a-better-way-to-unite-democrats-7dbebc2e3a12

Osborne: COVID Slide Is Going to Make the Usual Summer Slide Even Worse.

Posted on by The Progressive Policy Institute

This year, thanks to the coronavirus, the dreaded “summer slide” will be worse than usual. Studies have found that students lose up to 25 to 30 percent of what they learned in an academic year over the following summer, with the worst losses, particularly in reading, among low-income kids.

A Gallup survey done in early April found that 83 percent of parents reported their children were involved in online distance learning. But Gallup conducted the survey online, so it excluded families with no internet connection. That means perhaps a third of students are not participating in remote learning this spring. For them, “summer” will last at least five months.

Some districts and charter schools may run summer schools after stay-at-home orders are lifted. But most are predicting funding problems ahead due to lower tax revenues, so it’s likely that few will be able to afford summer school.

Are there other solutions? Districts and charter organizations could switch to year-round schedules, which have developed in some places to combat summer slide. Typically, these schools close for only a month or so at the height of summer. They reopen in early August, then have two-week breaks in the fall, at Christmas, in February and in April. Some charter schools bring kids who are behind grade level in for intensive catch-up work during at least one of the two weeks off each quarter.

Read the full piece here.

People have increased anxiety and depression from Covid-19 — telehealth can help

Posted on by The Progressive Policy Institute

Fears about the novel coronavirus, the economic meltdown, and prolonged self-isolation are taking an emotional toll on Americans. Calls to the federal mental health crisis hotline are 900 percent greater than this time last year.

In normal times, one in five American adults deals with mental health issues. Anxiety is the most common mental disorder; 6.8 million people in the U.S. — roughly 3 percent of the adult population — suffer from generalized anxiety disorder.

Anxiety increases in response to global events. There is evidence that Americans felt increased anxiety after 9/11 and suicides increased during the Great Depression and World War II. Financial stress can also exacerbate anxiety and depression and 40 percent of Americans don’t have enough savings to cover a $400 emergency.

But in the unique moment of time we find ourselves in today, Americans are currently dealing with increased stress, decreased cash flow, and an inability to leave their house to seek mental health services.

Tele-health poses an opportunity to address some of those issues.

Read the full piece

Amazon, Antitrust, and Private Label Goods

Posted on by The Progressive Policy Institute

Yesterday, the WSJ published an investigation with the headline: “Amazon Scooped Up Data From Its Own Sellers to Launch Competing Products.” As the article notes, in a Congressional hearing last year, an Amazon associate general counsel said, “We don’t use individual seller data directly to compete” with businesses on the company’s platform. The reporter for the WSJ claims to have seen evidence of Amazon managers violating this self-imposed rule in order to improve its private label goods business (i.e., Amazon-branded products).

There are two issues at play here. First, there is the question of whether Amazon violated Section 5 of the FTC Act by engaging in “unfair and deceptive practices” in order to entice third-party sellers onto its platform. Amazon is currently conducting an internal investigation into what occurred and a Congressional committee has already said it will be looking into the matter. These investigations are necessary and worthwhile for determining what exactly happened and who knew what when.

The second issue is about antitrust law. Stacy Mitchell, the executive director of the Institute for Local Self-Reliance, said, “An exec testified in July that Amazon doesn’t use data from sellers to create its own rival products. Turns out it does. This is monopoly behavior, hence the coverup.” But as Doug Melamed, a professor at Stanford Law School, said in comments about the situation, “Using the data to improve product offerings is not, and ought not be, unlawful under US law. The issue is whether Amazon obtained the data by misappropriation or misrepresentation.” Professor Melamed is correct on the question of antitrust law. To understand why, it’s useful to discuss the history of the retail industry and how it works today.

1. All major retailers use data on what sells in stores to build their private label businesses

It is common practice for retailers, including grocery stores and department stores, to use data to develop their own store brands to directly compete with name brand products. As Benedict Evans, an independent analyst, put it in reaction to the story, “It can be pretty entertaining to watch critics of Amazon discover ‘retail.’” The practice of using information about which products are selling well to develop private label goods is nearly as old as the retail industry itself. Sears launched its catalogue business in 1888. By 1927, the retailer was selling its own tools and appliances under the Craftsman and Kenmore in-house brands.

Source: Benedict Evans 

These days, selling private label goods is practically de rigueur for a company competing in the retail industry. Here are the shares of revenue from private label goods for some leading retailers according to data compiled by Morgan Stanley:

  • Kohl’s: 46%
  • JCPenney: 44%
  • Target: 33%
  • Kroger: 25%
  • Macy’s: 20%
  • Lowe’s: 20%
  • Costco: 20%
  • Office Depot: 20%
  • Dollar General: 20%
  • Walmart: 15%

By comparison, Amazon share of total retail sales from private label goods is only 1% (excluding its proprietary electronics such as Echo voice assistants, Fire TV, and Ring doorbells). As Jack Hough writes for Barron’s, “Private labels work best for products with decent turnover and excessive margins. […] Remember when HDMI cables sold for $30 a decade ago? Now, you can find them for $7.” Most private label goods are commodities akin to HDMI cables. The large and concrete benefit of lower prices to consumers outweighs the negligible effects on innovation (the HDMI cable has reached its final state and requires no new investment).

2. Amazon is not dominant in retail

While private label goods may be ubiquitous in retail, some critics argue that Amazon is so dominant it’s qualitatively different from when other retailers do it. Hal Singer, a managing director at Econ One, argued as much on Twitter: “It’s not just that Amazon has access to better information. It’s that, unlike a grocery chain, Amazon is DOMINANT PLATFORM PROVIDER.” But retail is a much more competitive market than many realize. For instance, Amazon is still much smaller than Walmart. Here are US retail sales figures for 2018 (the most recent year of data):

  • Walmart: $388 billion
  • Amazon: $121 billion
  • Kroger: $120 billion
  • Costco: $101 billion
  • Walgreens: $98 billion
  • Home Depot: $97 billion
  • CVS: $84 billion
  • Target: $74 billion

It seems difficult to argue that it’s a problem when Amazon uses data to inform its private label business, but not when a company more than three times its size ($388 billion vs. $121 billion) does the same thing at a rate 15 times higher (15% vs. 1%).

3. Online retail platforms are more open to competition than physical stores

But maybe it’s something special about the online retail market as opposed to the brick-and-mortar retail market? Perhaps sellers feel they have no option but to sell on Amazon if they want to sell online? That doesn’t seem to be the case. According to data from eMarketer, more than half of Amazon sellers also sell on eBay. Slightly less than half sell on a personal website as well. More than a third also sell on Walmart. It also seems worth noting that prior to the internet, third-party sellers had no option at all for selling directly to consumers. They had to negotiate with one of the big box retailers for placement on store shelves. Online platforms give them a new channel for reaching customers directly.

4. Retailers don’t have private data on cost structures for manufacturers

So, private label goods are not unique to Amazon in the retail industry and the company does not have a dominant position in the market. But maybe because Amazon is a “tech” company it has much more data than brick-and-mortar retailers and therefore has an anti-competitive advantage? Shaoul Sussman, a legal fellow at the Institute for Local Self-Reliance, tried to make that argument:

The key here is ad spend on Amazon! In the past, Amazon claimed that it only uses data that is widely available to brands-including sales, product ranking, and the like. But the amount a brand spends on ads is private information that only Amazon has!

I can reverse engineer the majority of another brand’s cost-including shipping, referral, and storage fees — but the missing piece would be ad spend! That is key for 2 reasons: (1) actual margins (2) how much the brand has to boost the product to hit optimal sales volume.

Sussman’s claim that a retailer could “reverse engineer the majority of another brand’s cost” is unfounded. No retailer has nonpublic information about the vast majority of a manufacturer’s fixed costs (property, plant, and equipment) or variable costs (raw materials, labor, etc.). Knowing the amount spent on shipping, storage, and marketing is only a small fraction of a company’s cost structure. Understanding marketing costs is helpful, but that doesn’t mean Amazon knows the cost structure of manufacturing the product. In some cases, that might be publicly available information. But that means every other competitor has access to it, too.

Yes, Amazon has more data than rival brick-and-mortar retailers (particularly on what consumers look at but never purchase), but the jury is still out on how much of a competitive advantage this affords them relative to big players like Walmart (which also has its own online marketplace and spends more on IT per year than Microsoft and Facebook). And even if this is an advantage, that would not necessarily be an antitrust issue if it’s used to deliver consumer benefits. (Of course, that does not absolve Amazon of the need to truthfully represent to sellers how it’s using that data.)

5. The only difference between a platform and a retailer is inventory risk

Sussman thinks there is another key difference in Amazon relative to other retailers:

Amazon is a *retailer*, a *platform*, and a *producer*. I have no problem with them using the data they have as a *retailer* to develop products — just like Walmart. I do have a problem with Amazon using information they gather as a *platform/ad biz.*

First, it’s important to know that ad fees on Amazon are analogous to slotting fees in brick and mortar stores. Brands have been paying for promotion in retail long before the e-commerce revolution. Prime shelf space and prime search rankings are both scarce resources that are auctioned off to the highest bidder. According to data from the Center for Science in the Public Interest, food manufacturers spend 70% of their marketing budgets on these “trade promotion fees” and 30% on advertising. At the end of the day, it’s all marketing.

Second, while it’s true that Amazon is simultaneously a retailer, producer, and platform, this is not economically different from traditional retailing. I’ve already explained how legacy retailers also engage in private label and are therefore “producers.” And while they are not “platforms” in the technical sense of being open to anyone (sounds… anticompetitive), the business model is not significantly different. 

Traditional retail charges a markup on the price paid to wholesalers or manufacturers (a percentage of the final retail price). The retailer can either purchase that inventory outright and assume the risk of it not selling, or it can include a “sale or return” provision, which reserves the retailer the right to return the inventory to the wholesaler or manufacturer if it does not sell. Inventory risk is just another cost and can be traded off with other contract provisions during the negotiating process.

Platforms, on the other hand, do not take custody of the inventory and instead provide services to sellers. In exchange, the platform charges a percentage of the final retail price. Whether it’s a platform or a retailer, the business is the same: Partner with companies selling goods and collect a profit margin on the final retail price. The rest is just accounting.

Conclusion

In the debate over private label goods, it’s important to keep in mind why consumers prefer them. According to survey data from Nielsen, 70% of people say they purchase private label brands to save money. This is unsurprising as private label goods tend to be less expensive than name brand goods while offering similar levels of quality. It’s as clear an example there is of direct horizontal competition. 

While the FTC should look into the allegations that Amazon violated its own Chinese wall — and therefore misled sellers — politicians such as Senator Warren and Congressman Cicilline are conflating a consumer protection issue with an antitrust issue to support their own ideological crusade. Contrary to what they may claim, the accusations of antitrust violations in this case are dubious.

https://medium.com/@progressivepolicyinstitute/amazon-antitrust-and-private-label-goods-bf8b8cc00e99

PPI Conference Call | Lasting Consequences: The Positive Impacts of Telehealth

Posted on by The Progressive Policy Institute

PPI, R Street Institute, and the Alliance for Connected Care discuss the potential of telehealth to reach patients where they are — at home. Courtney Joslin, Krista Drobac and Michael Mandel shared how the Trump administration has reduced barriers to accessing telehealth, and what states can do to increase access to telehealth services during the COVID-19 pandemic. They highlight how this can help patients, what hurdles remain, and the limits to care delivery via telehealth.

Europe after the plague

Posted on by The Progressive Policy Institute

President Trump, you’ve got company. The European Union also is on the hot seat for its tardy and ineffectual response to the coronavirus pandemic.

Come November, U.S. voters will have an opportunity to fire Trump for rank incompetence. But Americans should be rooting for the EU to raise its game. Otherwise, Europe could emerge from the COVID-19 crisis fatally weakened in every way — broke, politically fractured and unable to resume its role as America’s main partner in world affairs.

Euro-skepticism was rising even before the crisis hit. Britain emphatically reaffirmed its decision to quit the EU last December. Across the continent, insurgent populist parties have been gaining ground on the strength of promises to curb migration, shelter workers from globalization and “restore” national sovereignty.

Against this backdrop of rising nationalism, the pandemic is putting the EU to a stern test of efficacy and relevance. As Europeans struggle to contain the plague and keep their economies from unraveling, can Brussels organize mutual aid that’s equal to the magnitude of the crisis? So far, the answers haven’t been encouraging.

Italy was the first EU country to be hit hard by the virus. As the pandemic ravaged northern Italy and economic life sputtered to a stop, its neighbors were excruciatingly slow to lend a hand.

Read the full piece here.

A Student’s View: Thinking Outside the Device – With a Little Ingenuity, Libraries Could Keep Kids Loving Reading While Schools Are Closed

Posted on by The Progressive Policy Institute

The transition to distance learning has caused unprecedented disruption to our education system. Many low-income students do not have internet access necessary for taking classes online. While some districts and charter schools are distributing devices and hotspots, in others, students are making do with paper packets.

With all this chaos, though, we still live in an economy in which most occupations will require more than a high school diploma in the near future. Students must be prepared with an adequate education.

So let’s think creatively about what we can do to help. One constant resource for kids of all ages is the local library. Why not begin by opening libraries and using them as one way to bridge the gap? Reading is the gateway to learning, and nothing is more valuable to children than developing a love of reading. Yet according to a recent survey, only 56 percent of American students read for enjoyment.

Could we use this moment to help cultivate that love?

Widely available antibody testing is inching closer to reality. It could soon be possible to partially staff libraries with employees who have recovered from the coronavirus, who are therefore more likely to be immune, and who volunteer to return to work.

After libraries are deep cleaned, librarians could curate recommended reading lists and encourage children to check out books from them. Teachers could also develop reading lists and periodically ask their students for book reports, to demonstrate that they’re participating.

This would not be a replacement for online learning; rather, it would be a supplemental solution that could reach all students equitably and without requiring too much parental assistance. For some families, it would provide a welcome break from their new teaching duties.

With at least 20 states already closing schools for the rest of this academic year, summer is starting early for many students. Even during a normal summer, many students, especially lower-income children, lose up to 30 percent of what they learned the prior year; an anticipated “COVID slide” is likely to make things even worse.

To combat summer slide, schools have long promoted summer reading programs, which have been shown to improve literacy for low-income students. Accessing good books could provide an escape during the long months between now and the fall. And perhaps students who never read for pleasure before could get hooked on books.

To communicate about the program, schools and districts could send out emails and put flyers in the free meals distributed to students at grab-and-go meal sites and bus stop deliveries.

To maintain social distancing, libraries could designate specific days of the week for different grades. Students would line up outside their library on their designated day, six feet apart, wearing masks and gloves. The libraries could make books from their reading lists available on tables just outside or inside the door. Children could then take turns choosing their next books.

A week later, they would return what they took in a paper bag and check out new books. Librarians would allow bags of returned books to sit for 72 hours — the virus’s lifespan on plastic — before handling. For an extra precaution, libraries could even remove the plastic covers typical of most library books.

Districts and charter schools that are distributing hotspots and devices to families with no internet connection could give them out at libraries as well, to reach any families who have not yet received them. Some libraries offered mobile hotspots to residents before COVID-19; there is even more reason to do so today.

As the program would gain in popularity, students would tell their classmates and friends about it. Teachers could even offer rewards for the number of books read and the number of other students recruited to read.

I expect many teachers would be excited to participate, on a voluntary basis, and have the opportunity to see their students again. Communities could organize book drives and create boxes outside libraries to be filled with donated books. The libraries could let the donation bin sit for at least three days, then allow students to take a few books to keep.

This initiative could help meaningful learning continue for all students, regardless of circumstance. And it could fuel a love of reading in a new wave of students, of all income levels.

As Dr. Seuss said, “The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”

Bruce Arao, a spring 2020 intern at the Progressive Policy Institute, is a student at the University of California, Santa Barbara, double-majoring in economics and sociology.

The Brazilian App Economy 2020

Posted on by The Progressive Policy Institute

The COVID-19 pandemic is already a world-historic event, both in terms of health and economics. For Brazil, no one knows how far the disease will go and how bad the damage will be.

(A Brazillian Portuguese version is available for download here/Versão em português do brasil)

Yet as people around the world engage in “social distancing” in order to stem the virus, the importance of connectivity and in particular wireless connectivity stand out. Mobile phones enable people and business to communicate and be productive even when they have to stay physically apart. In particular, mobile apps are becoming even more embedded into daily life.

In this paper, we focus on Brazil’s App Economy: Those app developers and other workers who create, maintain, and support an ever-expanding range of apps for health, communications, ecommerce, education, transportation, banking, and smart homes. The size of an App Economy workforce in a country is indicative of the rate at which that country is embracing the digital transformation and how well it will be positioned as the global economy recovers from the pandemic.

As of January 2020, before the global pandemic took hold, we estimate Brazil has 277,000 App Economy jobs.1 We find 178,000 App Economy jobs to belong to the iOS ecosystem, and the Android ecosystem to total 228,000 jobs. (These numbers sum to more than the total of Brazilian App Economy jobs because App Economy jobs can belong to multiple ecosystems).

INTERNATIONAL COMPARISONS

How does Brazil’s App Economy compare with other countries? In absolute terms, Brazil’s 277,000 App Economy jobs as of January 2020 compares well with Canada, which had 262,000 App Economy jobs as of November 2018.2 Brazil’s App Economy rivals that of some important European Union members.3

For example, we estimated Germany to have 296,000 App Economy jobs as of July 2019 and the Netherlands to total 212,000 App Economy jobs as of July 2019. On a smaller scale, Argentina had 40,000 App Economy jobs as of February 2018 (Figure 2).4

EXAMPLES OF APP ECONOMY JOBS

The Brazilian App Economy is extensive both in terms of its depth and range of industries. We examined App Economy job postings as of March 2020, as the global pandemic was starting to take hold.

The Brazilian ICT sector was undoubtedly hiring App Economy workers. As of March 2020, content platform Encripta S/A was searching for a senior Android developer in Sao Paulo. IT company Indra Sistemas, S.A. was seeking a senior Java developer with knowledge of iOS and Android in Sao Paulo. Software firm TOTVS was looking for a junior front-end developer to work on mobile apps in Joinville. Mobile app development company Tap4 Mobile was hiring a mobile developer with knowledge of Swift programming in Manaus. Software developer Supero was searching for an Android developer with experience in Kotlin and Swift in Florianópolis.

The financial sector was actively hiring App Economy workers. As of March 2020, payment processor Stone Tecnologia was seeking a front-end developer with experience in iOS and Android in Sao Paulo. Financial firm SPC Brasil was looking for a senior mobile developer with iOS experience in Sao Paulo. Banking cooperative Sicredi was searching for an iOS developer in Porto Alegre. Financial research firm Empiricus was hiring a senior mobile specialist with knowledge of iOS in Sao Paulo. Payment platform PicPay was seeking an iOS developer in Vitória. Banking company Banco Itau was looking for mobile engineers with iOS and Android experience in Sao Paulo.

But other industries are also hiring App Economy workers as digital technology spreads into the physical industries. Pulp company Eldorado Brasil was hiring an Android developer in Campinas. Farming equipment manufacturer John Deere was searching for a junior backend software engineer with knowledge of Java or Kotlin in Indaiatuba. As of February 2020, appliance manufacturer Whirlpool Corporation was seeking a senior information systems analyst with experience in iOS and Android in Sao Paulo. Agricultural company Cargill was looking for a senior software engineer with experience in Xamarin and Swift in Sao Paulo. Medical e-learning company MedMKT was hiring a developer with knowledge of iOS and Android in Moncoes.

As of March 2020, retail company Via Varejo SA was searching for an Android developer in São Caetano do Sul. Event platform Uhuu! was seeking an Android developer in Porto Alegre. Travel aggregator Hurb – Hotel Urbano was looking for an Android developer in Rio de Janeiro. As of February 2020, ecommerce logistics company ASAP Log was hiring a fullstack developer with Android experience in Curitiba.

Media company Grupo Global was searching for iOS and Android developers in Rio de Janeiro as of March 2020. News company globo.com was seeking an iOS developer in Rio de Janeiro. As of February 2020, content publisher Secad was looking for a mobile application developer with experience in iOS and Android in Porto Alegre.

Academic institution Fundação Armando Alvares Penteado was hiring a mobile iOS developer in Sao Paulo as of March 2020. Research nonprofit Instituto de Pesquisas Eldorado was searching for an Android developer in Brasília. As of February 2020, research organization Atlantico Institute was seeking a junior test analyst with knowledge in Android.

FUTURE GROWTH

The economic turmoil caused by the global pandemic is likely to depress demand for App Economy workers in the short-run in Brazil and elsewhere. But as that turmoil dies down, the economic and social changes triggered by COVID-19 are likely to expand demand for health related apps. Telehealth, or the ability to deliver healthcare at a distance, will become more important in the aftermath of the pandemic. Similarly, long distance learning will become more accepted, as will ecommerce delivery.

In a 2019 report, Brasscom, the Brazilian ICT industry association, projected the need for 70,000 new ICT professionals per year going forward. According to Brasscom, the demand is spread across such areas as mobile apps, the cloud, information security, Internet of Things, and big data.

But mobile apps are a key enabling technology, because it is only natural to use tablets or phones as the human interface for almost any technology. A farmer who accesses a program for boosting crop yields, for example, will almost invariably use an app.

And then there are gig economy apps such as Rappi, iFood, and Uber. Our figure for App Economy jobs does not include gig economy workers. However, according to the Instituto Locomotiva, approximately 17 million Brazilians regularly use an app to generate income.5 These gig economy jobs are suffering during the pandemic, but they will be a potent source of growth in the future.

POLICY DEVELOPMENTS

In August 2018, Brazil passed Lei Geral de Proteção de Dados (LGPD), a comprehensive data protection law. Similar to the European Union’s General Data Protection Regulation, LGPD regulates the use of personal and sensitive personal data and defines an individual’s data rights such as the right to access and delete data.6 Additionally, the law requires businesses and organizations handling data to hire a data protection officer, provides ten legal bases for processing data, allows fines of two percent of a company’s Brazil revenues up to 50 million reals, and applies to multina-tional companies doing business in Brazil.

As economies become increasingly connected through globalization and digital technology, multinational companies will naturally gravitate toward investing in countries with better business conditions. Additionally, costly and burdensome requirements like LGPD make it difficult for startups to innovate and provide new products and services.

CONCLUSION

The coronavirus pandemic will undoubtedly transform global health and the economy. Ways of doing business while limiting contact like telehealth, distance learning, and ecommerce will likely see increased demand. As a result, apps and data – which allow consumers to purchase goods and services without coming into contact with others – will play a critical role in the recovery. Brazil’s App Economy is already sizable, totaling 277,000 App Economy jobs by our estimates as of January 2020. That includes the digital sector but also physical industries such as banking, ecommerce, media, and education.

  1. This number is not directly comparable to our February 2017 estimate of 312,000 Brazilian App Economy jobs because of a subsequent change in methodology. A description of our current methodology can be found in our October 2017 report, “The App Economy in Europe: Leading Countries and Cities, 2017.”
  2. Elliott Long, “The App Economy in Canada,” Progressive Policy Institute, July 2019. 
  3. Michael Mandel, “European App Economy Jobs Update, 2019,” Progressive Policy Institute, September 5, 2019.
  4. Elliott Long and Michael Mandel, “The Argentina App Economy: 2018,” Progressive Policy Institute, April 2018. 
  5. “Brazil’s Gig Economy Gains Ground,” Angelico Law, May 17, 2019.
  6. “What is the LGPD? Brazil’s version of the GDPR,” GDPR.eu.

Gary Pearce: Trump’s Trump Card

Posted on by The Progressive Policy Institute

Gary Pearce on Politics and Public Policy in North Carolina

The virus has taken away President Trump’s biggest reelection weapon. But he has a big weapon left, and he’s wielding it relentlessly.

Gone is his economic message: “You’ve never had it so good, the stock market has never been so high, and unemployment has never been so low.”

But Trump hasn’t lost the weapon that got him elected and could get him reelected: his ability to divide and conquer.

That weapon is super-charged by the President’s willingness, eagerness and ability to dominate the public debate. He has turned his daily White House briefings into the most powerful of bully pulpits.

But therein lies a risk. For Trump can – and has – hurt himself as much as he helps himself in the briefings. Staying at a podium for more than an hour is like staying at a bar past midnight: Not much good can happen.

Trump reminds me of North Carolina’s Senator Jesse Helms. I still have scars from Governor Jim Hunt’s unsuccessful campaign against Helms for Senate in 1984. That race taught me some hard lessons about politics.

Helms’ team approached the race very differently from us. Hunt was a popular Governor, while Helms was controversial and unpopular. We thought that gave us an edge.

But the Helms campaign didn’t try to make him more popular than Hunt. They didn’t think that was possible, I later learned. So, they flipped the script.

Their goal was to make Hunt more unpopular than Helms.

They did a good job. They started running negative ads against Hunt 18 months before the election. They never stopped.

Much like Trump does to his opponents today, they tied Hunt to people and groups who were unpopular with a lot of North Carolina voters: Jesse Jackson and other civil rights leaders, Democratic presidential candidate Walter Mondale, abortion-rights supporters, labor unions and what Helms called “the homosexual lobby.”

This same strategy is Trump’s trump card, if you will. He played it against Hillary Clinton. He’ll play it against Joe Biden.

A Republican political consultant once explained to me the ironclad hold that Trump has on his famous base: “He’s fighting the people they hate.”

That’s why Trump constantly picks fights. He fights with Democrats in Congress, with bureaucrats in Washington and with politicians of both parties.
At his virus briefings, he picks fights with reporters, with governors and with his own public health experts.

He picks a fight with China by calling it the “Chinese virus.” He picks fights with the World Health Organization. He picks fights with his own staff, Cabinet and military commanders.

The day he announced his campaign for President, he picked a fight with Mexico and immigrants. He picked fights with John McCain and a Gold Star family. He picked fights with his Republican primary opponents – nasty, personal fights.

He’s a fighter. His base loves that. They love him for fighting, and they hate the people he fights.

But his greatest strength can also be his greatest weakness. Trump is President at a time when the nation is facing the greatest crisis in a generation.

It’s a double whammy: thousands of people are dying and getting sick, and millions of people are losing their jobs and businesses.

Ultimately, President Trump will face the voters’ judgment on how he has responded and on how he acts from here out. This election was always going to be a referendum on Trump. Now it’s even more so.

Voters know he’s good at fighting his enemies. They’ll judge how good he is at fighting for the country.

Gary Pearce writes on policy and politics in North Carolina, and is a guest writer for the Progressive Policy Institute. You can learn more about Gary by visiting www.NewDayforNC.com.

Paying the Bills for COVID-19: Three Ideas for Protecting Patients and America’s Health Care System

Posted on by The Progressive Policy Institute

Covid-19 is hitting the United States harder than any other country in the world. Roughly 41,000 Americans have died from the novel coronavirus and more than 50,000 Americans have been hospitalized. Some experts estimate millions more could be hospitalized before the disease runs its course. Each Covid-19-related hospitalization costs between $30,000-$72,000 per person.

However, it is unclear how those increased costs will effect patients in the long term. There will clearly be a large expense in order to deal with Covid-19 cases. However, there has also been a reduction in other types of care due to the limitations on elective procedures and the logistical difficulties of seeking care in the current environment.

As of now, it is unknown whether health care spending in the aggregate will go up or down. Some hospitals might lose money and layoff workers. Ultimately, insurance premiums might stay steady, but they could also increase, draining state coffers, stretching employer budgets, and straining household finances beyond their capacity. And beyond the aggregate changes, any individual person, doctor, hospital, or insurer could see wild and unanticipated swings in either revenues or costs.

The presence of this uncertainty in the country’s largest economic sector should be a call to action. Only the federal government has the national reach and resources to do the job and eliminate most of this uncertainty. The emergency legislative actions taken by Congress so far are not enough.

Read the full piece here.

Follow the Leaders: Workplace Safety and Pay Policy

Posted on by The Progressive Policy Institute

Here’s a good rule of thumb: The companies or industries that actively expand during a recession often become the leaders in the recovery that follows. For example, housing starts actually rose in the 2001 recession, foreshadowing the coming housing boom.  The financial crisis of 2008-09 was also marked by the early years of the Apple iPhone, leading into the App Economy and the wireless boom of the past ten years.

And now, in the middle of the pandemic-caused economic crisis, companies like Amazon, Walmart, and Target continue to hire hundreds of thousands of workers to provide and deliver essential goods. As they add new workers, they also find themselves grappling with the ever-changing medical landscape of how the virus spreads and manifests itself in order to reduce the risks for workers and customers.

Indeed,  the hiring leaders are also turning out to be the leaders in adopting new safety measures and new pay policies for dealing with the pandemic. To be sure, these safety measures are a moving target, as scientists learn more about the behavior of the virus.  What is the new standard of safety that these companies are trail-blazing?

Temperature Checks: One of the main symptoms of COVID-19 is fever.  To spot workers who were suffering from the virus, Amazon was an early adopter of daily temperature checks for workers. Walmart soon followed.  Amazon has also moved towards using thermal cameras in some locations, a technology that might be easier for more companies to adopt.

Masks: Originally the CDC was discouraging non-medical personnel from using masks. That guidance changed. What also changed was a greater appreciation of the importance of controlling asymptomatic spread.  As a result,  companies are starting to distribute masks to slow the spread of coronavirus. Target is distributing masks and gloves to all of its workers at the beginning of their shift. Amazon provides masks to its employees and delivery service partners. Walmart is requiring all employees to wear masks.

Testing: As we noted here, workplace-based testing by businesses is key. Amazon is exploring building what it calls scaleable testing capacity that could be used to regularly test all of its workers.  So far no other company has come out and directly talked about developing their own testing capacity, but it’s clear that others would follow if workplace-based testing became possible.

Pay Policy: Labor markets function even during a pandemic. Leading companies have boosted pay for essential workers offering bonuses and temporary hourly wage hikes. Target raised wages by $2 per hour. Walmart boosted pay in its fulfillment centers by $2 per hour, and added a cash bonus for hourly associates. Amazon increased pay for hourly employees by $2 per hour in the U.S., C$2 per hour in Canada, and €2 per hour in many EU countries, and doubled the regular hourly base pay for every overtime hour worked.

These pay changes were all billed as temporary. But unlike seasonal pay hikes, the pandemic is not going away any time soon.  Moreover, there’s a word that economists use, hysteresis,  which means effects that persist after the initial causes giving rise to the effects are removed.

These companies are now the leaders, setting the trends for safety measures and pay policies. As the U.S. economy reopens,  other businesses will be following their path.

 

 

 

 

 

 

The Postal Service is Essential – Now is Not the Time to Politicize It

Posted on by The Progressive Policy Institute

The United States Postal Service (USPS), like many other businesses right now, is in dire straits. Solicitation mailer volume, a major revenue source for the USPS, has dried up as businesses remain shut down. On Thursday, the Postmaster General Megan J. Brennan informed Congress that the nation’s mail service would need $89 billion or else it would run out of cash by September.

Despite the bipartisanship coronavirus stimulus negotiations, Democrats’ desire to shore up the USPS as a part of the coronavirus relief has hit a partisan roadblock. This roadblock has been led largely by Treasury Secretary Steven Mnuchin, who told lawmakers during the Coronavirus Aid, Relief, and Economic Security (CARES) Act negotiations that “You can have a loan, or you can have nothing at all” in response to the original provision that would have given the postal service a $13 billion grant to alleviate its financial woes. The USPS eventually received a $10 billion line of credit as part of the bill, which the postal agency has yet to draw on.

Coronavirus is the spark igniting various underlying problems the USPS has had for years. Much of these problems are derived from its most basic mandate: to deliver the mail to every American, regardless of where they may be located. This mandate has become harder to fulfill each year, as internet-driven innovations have made letters a relic of the past, even as the costs of fulfilling this mandate remain the same. 

Beyond just its basic mandate, the USPS is hampered by other onerous Congressional regulations that no other federal agency or private company is saddled with. That includes the 2006 Postal Accountability and Enhancement Act (PAEA), which required the USPS to prefund the healthcare retirement benefits for its employees 75 years into the future. While the bill might sound innocuous or even prudent on its face, it has been criticized as “the most insane law by Congress, ever.” That is because Congress gave the USPS 10 years to create this $56 billion fund, with the annual contributions equaling 8% of the postal service’s annual revenue. Already in a precarious position of fulfilling its basic mandate in the age of the internet, this bill has wiped out the slim profits the USPS makes most years. 

The Postal Service is caught between a rock and a hard place. On one side is Congress, which treats the USPS as it were a federal agency immune from market woes. On the other side is the market, with competitors like the internet, UPS and FedEx slowly chipping away at its bottom line. Congress can’t have it both ways with the USPS; if Congress wants the USPS to be a public good that serves all Americans, then it must financially support the USPS, especially during a time of crisis. If Congress wants the USPS to be a self-sufficient federal agency, then it must cut it loose from burdensome requirements, like PAEA.

There are signs that Congress is beginning to recognize there is a problem with the USPS. Congress agreed to include grant money in the CARES Act before Mnuchin shot down the provision. In early February, a bill to repeal the portion of PAEA that requires the USPS to prepay its retirement health benefits passed the House with 301 cosponsors from both parties. It would enable the USPS to shift to a pay-as-you-go model for its retirement health benefits, how every other federal agency and most other businesses handle these benefits. Crucially, this would provide the USPS with additional wiggle room to fund its retirement healthcare benefits, though these benefits would still remain a significant cost. The repeal’s fortunes in the Senate should be good, considering the bipartisan House effort. Once it’s on President Trump’s desk is another question. The administration has been accused of wanting to privatize the USPS, a move that is easier to accomplish if the postal service is bound to its retirement prepayment requirements during the coronavirus crisis.

Repealing PAEA prepayment provisions alone is not enough. Grants to the USPS should be a Congressional priority as part of the of widely expected fourth coronavirus relief bill, in addition to repeal of the postal service’s retirement prepayment requirements. Funding for universal postal voting would also provide the USPS with much needed cash, while serving a purpose of its own. Hundreds of thousands of jobs are on the line if the USPS collapses, as well as the postal service’s vast network of last-mile delivery that has become essential for Americans who are unable to shop in stores as they normally would. If Congress, or the Trump administration have a desire to reform or privatize the USPS, this crisis would not be the time to do such a measure.

Read the full piece here.

How Workplace Testing Can Get Us Back to Work

Posted on by The Progressive Policy Institute

We’re used to thinking of testing as a public health function. But there’s growing support for workplace-based testing for COVID-19 infections as a first step towards getting the economy restarted again. Scott Gottlieb, former head of the FDA, wrote a op-ed for the Wall Street Journal where he argued that

As employees return to work, perhaps as early as May, employers can offer screening at their place of business. Rapid diagnosis and containment will be a critical part of limiting spread.

An essay by Rajaie Batniji, co-founder and chief health officer at Collective Health, a health benefits company, makes the same point. Indeed, companies such as Amazon and Whirlpool are already exploring workplace-based testing. Amazon, in particular, is starting to take steps towards regularly testing all staff, including those without symptoms, according to CEO Jeff Bezos in his letter to shareholders.

What are the pluses and minuses of workplace-based testing? Done right, it benefits workers, businesses, and the broader society. Individuals get a safer work environment and sick leave if they test positive. Businesses get to stay open in a sustainable way. And public health is improved, especially if the information gained from the test can be used to inform contact tracing. It becomes a bridge to broader testing. Workplace testing gets us a lot closer to the 500,000 tests per day that many experts think is necessary.

Done wrong, workplace-based testing can be used as a hammer against workers, violating privacy without gains. The key is to understand what workplace-based testing can do and what it can’t.

First, we’re talking about tests for current COVID-19 infection, not tests for antibodies or immunity. Some people have suggested favoring workers who have coronavirus antibodies, but it’s going to be some time before we know how long immunity lasts. As long as that’s unknown, companies have to test for infections.

Second, businesses must pay for the test. Currently, each cartridge for Abbott Laboratories’ rapid coronavirus tests costs $40. The Cepheid point-of-care test requires a cartridge that sells for $35. By comparison, average compensation in the private sector is about $35 an hour, so the cost of one test is about an hour of work. In addition, we’d have to add in the cost of the equipment and trained personnel to administer and run the tests.

But these numbers will likely come down quickly as more tests come on the market. Big companies can buy in bulk, which can help bring down the costs. And Amazon is exploring building its own testing capabilities.

Third, the nasal swabs or saliva analysis will have to be repeated regularly, both because of the possibility of false negatives and because workers can obviously pick up the coronavirus at home or in the community. In addition, they will have to be supplemented with daily temperature checks.

Fourth, the work environment will have to be restructured, where possible, to minimize the number of people affected if and when someone is found positive. That means shifts, even for office work, and rearrangement of factories and the like to reduce contact. This is essential, from the personal, business, and public health perspective.

Fifth, the information from the tests has to be available to the public health authorities for contact tracing and potential isolation of infected people. That’s essential to fully leverage business testing for the public good.

Indeed, this division of labor is appropriate for the United States. health care system, which still depends on employer-provided health insurance. Companies are used to providing health coverage for workers, so testing becomes a relatively small part of these expenditures.

While much of testing can be decentralized to workplaces, contract tracing and followup is something only the public sector can take the lead on, aided perhaps by the sort of technological capabilities that companies such as Apple and Google are building. And to be frank, there still isn’t yet bipartisan political support for expanding public health funding enough to support both large-scale testing and large-scale contact tracing.

Legally, testing by employers is on firm ground during a pandemic, as part of providing a safe workplace. The EEOC has already noted that

Generally, measuring an employee’s body temperature is a medical examination. Because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature.

The same reasoning applies to other kinds of pandemic-related testing. In addition, the EEOC has noted that while employers must keep health records in a confidential file, they may disclose the name of employees that have COVID-19 to public health authorities.

As an economic decision, workplace testing is a positive for employees. Everyone wants to earn a living, and no one wants to die. So workplaces that pay more attention to safety will be more attractive to workers, especially if a positive test comes with paid sick leave and payments for care.

Similarly, as the cost of testing goes down, it looks increasingly appealing from a business perspective as well. A large body of economic literature shows that businesses that don’t test will have to pay higher wages in order to attract workers, even in these hard times. Workers have a good sense of their risk level, and vote with their feet accordingly.

The largest businesses are likely to be the ones that lead the way towards testing. Pre-pandemic, there were roughly 1400 firms with employment over 10,000 workers in the United States. Together these firms employ roughly 30 million workers. Not every big company will test, of course, but if 10% of these big-company workers are tested every two weeks, on average, that comes to 300,000 tests per day.

To be a good proposition for workers and businesses, testing doesn’t have to be perfect but it does have to be systematic. Businesses can’t stop and start — they have to pick a strategy and stick to it. And the strategy has to include a commitment to take immediate steps when positives occur, as they inevitably will.

It should be noted that there’s one part of the labor market where the risk-pay tradeoff doesn’t hold, and that’s immigrant workers, especially from Mexico. According to a 2010 economic study, Mexican immigrant workers “on average

receive zero or very low levels of wage premiums for fatal injury risks.” The key factor appears to be whether the immigrant worker is fluent in English. So industries that employ a larger number of Mexican immigrants who are not fluent in English — notably agriculture and food production — may not be under the same pressure to test.

The public health analysis is more complicated. On the one hand, opening up workplaces does reduce social distancing and increase potential transmissions. It’s a function of how many people are in contact with each other at the workplace, the length of time between tests, and the odds of being infected at home or in transit.

On the other hand, sustained business testing will take a significant burden off the public health system. If a significant number of large employers start workplace testing, it has the potential for reaching a large number of Americans quickly.

But the benefits of this testing require that the public health system be ready to act on this information with sustained contact tracing, to understand how the worker got infected and to potentially isolate their families and contacts who may be asymptomatic and not realize that that they are infectious. Businesses obviously cannot do contact tracing beyond the workplace — that’s the responsibility of the private sector. So business testing makes sense as a complement to investment in public health contact tracing as well.

What about the downsides of workplace-based testing? It clearly raises issues of privacy, especially if the names of people who test positive are passed onto public health authorities. It’s essential that workers not be penalized for testing positive. Nor should they be penalized for being in a vulnerable category, like being over 60 or immune-compromised. Indeed, comprehensive testing makes it easier to employ such people.

Similarly, workers that test positive should be eligible for paid sick leave. That’s likely to raise payroll costs more than the testing itself. If we assume that 5% of the big-company workforce tests positive at any moment and is on sick leave, that raises average weekly compensation costs to large companies by $2.5 billion. That’s a significant cost, but it can be absorbed or passed onto consumers as an essential part of doing business.

Another issue is whether small businesses can afford workplace-based testing that allows them to compete with big businesses. Some provision should be made for allowing small businesses to take advantage of the testing supply chains that large companies develop, to bring down the costs.

In the end, testing in the workplace is an affordable proposition. It will raise costs and likely prices, and lower profits, but that’s a small price to pay for a safer workplace.

Read the full piece here.

Democrats Should Champion Public Investments in Young Voters, Not Affluent Retirees

Posted on by The Progressive Policy Institute

Since locking up the Democratic nomination for president last week, former Vice President Joe Biden has moved swiftly to unify the party around his candidacy. His campaign recently secured endorsements from two former rivals, Massachusetts Sen. Elizabeth Warren and Vermont Sen. Bernie Sanders, and announced a series of joint policy task forces to bridge the gap between the Biden and Sanders agendas. The presumptive nominee is right to seek common ground with the left in building a big-tent coalition to defeat Donald Trump, but these efforts should prioritize forward-thinking public investments instead of backwards promises to expand programs like Medicare and Social Security for affluent retirees. Doing so would be both good policy and good politics.

Federal spending on retirement programs was a key point of contention throughout the Democratic primary. Sanders and Warren proposed expensive expansions of Medicare and Social Security that would increase benefits for people of all income levels, while Biden’s proposed expansions were more-narrowly targeted to benefit vulnerable populations. Although Biden’s pragmatic vision was the one embraced by an overwhelming majority of Democratic primary voters, he moved towards the Sanders/Warren position last week when he proposed lowering the age for Medicare eligibility from 65 to 60.

Read the full piece here.

It’s Not Just Money: Three Ways to Help Small Businesses

Posted on by The Progressive Policy Institute

Lawmakers are gearing up to funnel more money into the new Paycheck Protection Program, which makes loans to small businesses to cover payroll and expenses during the Coronavirus pandemic. The program has been flooded by applications, with one bank seeing more than 85,000 customers apply for $22.2 billion on the first day.

Small businesses are a key component of the American economy, accounting for 44 percent of gross domestic product, 47 percent of private sector employment, and 41 percent of private-sector payroll. But it turns out that it’s not so easy to get $350 billion in loans out to businesses in a hurry. The Small Business Administration (SBA) has been overwhelmed and banks are scrambling to set up systems for processing the huge volume of loan demands.

That’s why in addition to enlarging the Paycheck Protection Program, policymakers should adopt innovative ways to get relief to millions of small business owners.

One way to accelerate lending is to enlist private companies that work with small businesses everyday. Last week, the SBA approved fintech companies like PayPal, Intuit, and Square to participate in the Paycheck Protection Program. These companies have both the virtual infrastructure necessary and the ability to quickly reach small business owners to deliver the loans. Fintech trade group Financial Innovation Now, whose members include those three companies, estimates that its members “could rapidly disburse approximately $100 billion in capital to vulnerable small businesses, in many cases within weeks.”

While allowing fintech companies to participate in the program will expedite the funds to small businesses and alleviate pressure on the banks, the application process has gotten off to a rocky start with the SBA experiencing system outages. Policymakers should seek to smooth the application process by providing additional support to the SBA.

Tax and regulatory relief can also be a lifeline to small businesses. Lawmakers should include rules discouraging state and local governments from imposing costly and burdensome taxes and regulations on small businesses. In a particularly egregious example, Philadelphia requires new businesses to pre-pay the City’s Business Income and Receipts Tax beginning on their second year tax return — before many small enterprises turn profitable. And while some states have already delayed their business tax filing and payment deadlines until mid-summer, they should consider allowing payment deferral until the following year’s tax deadline and waiving associated interest and fees.

On the regulatory front, a 2017 report by the National Small Business Association found the average small business owner spends $12,000 a year on regulations, with nearly one in three spending 40 hours or more a year dealing with state and local government regulation. Tax and regulatory abatements will be a critical component of state and local strategies aimed at helping small businesses recover from the crisis. For instance, under a “One Day to Open” initiative, businesses whose licenses expired during the pandemic or are set to expire should be allowed to delay renewal for a year from their first day of reopening.

Lastly, governments should prioritize the digitization of all aspects of starting and running a business. That will alleviate pressure on administrative systems and save time and money now and in the future. Estonia’s government has digitized many aspects of government-citizen interaction including voting, tax filing, and business registration. It is estimated digitizing these processes saves the country two percent of its Gross Domestic Product a year in salaries and expenses, roughly what it pays to meet the threshold for NATO protection.

Tax and regulatory relief and digitization are essential to ensuring we get the most bang for our buck with the resources devoted to helping small businesses recover from the pandemic.