I write this article as a freelancer. I take Lyft to get around. I’ve booked an apartment this summer through Airbnb. I’ve been an adjunct professor. I’ve just gotten estimates for roof and other home repairs from men who work for themselves.
All of these activities are part of a large universe of what’s come to be called the “gig economy” in America, the contentious subject of a U.S. Bureau of Labor Statistics report released Thursday.
The study found that about 15.5 million Americans work in contingent, or short-term, jobs and/or in “alternative work arrangements,” including as independent contractors, on-call workers, temporary agency workers, and workers sent out on jobs by contract firms. A majority of these workers is men, and African Americans and Hispanics are disproportionately represented in the lowest-paid sectors of the gig economy. Sara Horowitz, founder of the Freelancers Union, says that 55 million Americans are independent workers, and the Government Accountability Office puts the number even higher. “Establishing a statistical definition of the gig economy is no easy task,” as a 2016 Congressional Research Service report said.
Whatever the number, the gig economy is a sign of the growing precariousness of work in America. With artificial intelligence and other technologies threatening to further reduce the need for full-time workers, it’s imperative that labor law and social policies change.
New data from the BLS allows us to assess the geographic winners and losers from the ecommerce boom, including jobs lost in brick-and-mortar retail. We calculate net job change by state since 2014 in the three ecommerce industries–electronic shopping, warehousing (fulfillment centers) and couriers and messengers (local delivery). We compare that to net job change by state since 2014 in brick-and-mortar retail– retail minus electronic shopping. Ecommerce and brick-and-mortar retail taken together comprise the “consumer distribution” sector.
Here are our findings:
Since 2014, employment in the consumer distribution sector–including both ecommerce and brick-and-mortar–has risen in 47 out of 50 states.
Measured in absolute terms, the biggest gains in consumer distribution employment came in California, Texas, and Florida.
Measured in relative terms–as a share of 2017 private sector employment– the biggest gains in consumer distribution jobs came in Utah, Washington, Kentucky, Georgia, and Tennessee (Table 1).
Table 1
Change in Consumer Distribution Sector Jobs, 2014-2017
as a percent of 2017 private sector jobs
thousands
Utah
1.7%
20.0
Washington
1.6%
44.2
Kentucky
1.4%
21.6
Georgia
1.4%
50.1
Tennessee
1.2%
29.1
Idaho
1.1%
6.8
Nevada
1.1%
13.4
Florida
1.1%
84.7
Texas
1.1%
112.3
Oregon
1.1%
17.6
Mississippi
1.0%
9.4
New Jersey
1.0%
35.9
South Carolina
1.0%
17.3
North Carolina
1.0%
37.2
Colorado
0.9%
20.5
Arizona
0.9%
21.1
California
0.9%
124.4
Indiana
0.8%
20.3
Minnesota
0.7%
16.5
Rhode Island
0.7%
2.8
Data: BLS QCEW, PPI
4. Now let’s focus on jobs in the ecommerce industries. Measured in absolute terms, the biggest gain in ecommerce industry jobs came in California, Texas, New Jersey, Washington, and Pennsylvania. Measured in relative terms–as a share of 2017 private employment–the ecommerce leaders from 2014 to 2017 were Washington, New Jersey, Kentucky, Tennessee, and Georgia.
5. The biggest loss of brick-and-mortar retail jobs in this period came in Pennsylvania and New York. But in both states, gains in ecommerce jobs were large enough to push the two states solidly into the black for this period.
6. Nationally, workers in ecommerce industries earned an average of $49K in 2017, including year-end bonuses, compared to $30K in brick-and-mortar retail and $55K for all private sector workers. That’s a 12% difference between ecommerce industry pay and average private sector pay.
7. Removing Washington and California from the data, workers in ecommerce industries in the rest of the country earned an average of $44.9K in 2017, compared to $29.7K in brick-and-mortar retail and $53.7K for all private sector workers.
8. In some states, such as Kentucky and Tennessee, average pay in ecommerce industries exceeds average pay for private sector workers overall. In both of these states, real pay in the ecommerce industries has risen since 2014.
In many cities across the nation, home values and rents have risen so high they are pricing teachers out of the market. Young teachers either spend the majority of their paychecks on rent, deal with long daily commutes, or leave the profession. In asurvey of public school teachers who left the profession in 2012, two thirds of those who said they would consider returning rated increased salaries as an important factor in that decision.
Raising salaries is difficult for districts, given the twin burdens of state funding cuts since the Great Recession and skyrocketing costs for health care and pensions. But innovators in Newark, New Jersey, have found a solution: a new “Teachers Village” that gives teachers subsidized rents in the center of the city.
Teachers receive discounts of seven to 15% off units’ market rate, and currently seventy percent of the residents are educators. Twenty percent of the apartments are discounted for individuals earning up to 80% of Newark’s Area Median Income, while the remaining 10 percent are rented at market rates.
A new report from the Social Security trustees warns that the program is in deep trouble. The retirement and social insurance program is already spending more on benefits than it raises in dedicated revenue, due in large part to a decline in birth rates and a decreasing ratio of workers to retirees. By 2034, beneficiaries face the prospect of a sudden 21 percent benefit cut when trust fund savings from the program’s prior surpluses are exhausted.
It’s a real problem, but a solvable one. Despite a lot of posturing and politics, Congress can shore up Social Security’s finances by reducing benefits, raising the retirement age for when workers can collect benefits, raising the Social Security payroll tax rate, or raising the income level at which workers stop paying said taxes — $128,400 this year based on a formula in law. Making such changes would generate sufficient revenue to keep Social Security on firm footing.
Some of these ideas are more popular than others. Raising the payroll tax income limits would help preserve the progressivity of Social Security, but that idea, in practice a tax increase, is politically challenging and insufficient to solve the program’s shortfall by itself.
It’s no secret that the American health care system is far from perfect. The United States spends a higher percentage of our gross domestic product on health care thanany other countrydespite having comparable outcomes. And although the Affordable Care Act successfully reduced the percentage of uninsured Americans by almost half between2010and 2016,8.8 percentstill had no coverage according to the most recent Census estimate – one of thehighest rates of any OECD country. Moreover, Republican sabotage of the ACA has threatened to dramaticallyincrease costsandreversemuch of these coverage gains.
Many Democrats have embraced “Medicare for All” as their preferred mechanism for addressing these problems. Medicare is already one of the largest health insurers in the United States, covering about one sixth of the population, including most Americans over the age of 65, as well as a select few other groups, such as individuals with disabilities. Expanding Medicare to cover the rest of the population has a natural appeal given the program’s overwhelming popularitywith both beneficiaries and the general public. But this week’s report from the program’s trustees warns of serious financial challenges that threaten Medicare’s ability to meet its obligations to current beneficiaries. The program cannot be expanded unless these problems are resolved and benefits can be sustainably financed.
Medicare consists of two financing mechanisms: Hospital Insurance (HI) and Supplemental Medical Insurance (SMI) trust funds. The HI trust fund pays for Medicare Part A, which covers hospital services, nursing facilities, home health assistance, and hospice care. HI is primarily funded by premiums and a payroll tax of 1.45 percent paid by both workers and their employers (or 2.9 percent in the case of self-employed workers who are required to pay both taxes). In years when these revenue sources exceed spending, the Treasury Department credits the HI trust fund for the balance. In subsequent years when spending exceeds revenue, Medicare can then draw upon these surpluses to make up the shortfall.
Although HI used to have regular annual budget surpluses up until 2004, it is now runningchronic cash deficits. The trustees report projects that the trust fund will be exhausted by 2026, at which point Medicare would only have enough revenue to meet91 percentof its Part A obligations. The HI trust fund’s exhaustion date is typically the metric most commonly cited in the media when discussing Medicare’s financial health, but in reality it’s only the tip of the iceberg: the challenges facing HI pale in comparison to those facing SMI.
Unlike HI, SMI – which covers both Medicare Part B (outpatient services and medical equipment) and Part D (prescription drugs) – only receives about one quarter of its revenues from dedicated sources. The remainder is automatically funded by general revenues, which ensures that SMI can never become insolvent but also obscures the true cost to both voters and policymakers. This structure is particularly problematic because Medicare is the fastest growing program in the federal budget: as the total size of SMI grows, it threatens tocrowd out other public prioritiesthat compete for the same pool of resources even if the proportion of the program funded by general revenues remains the same.
When taken together, Medicare’s dedicated revenue sources only cover about half of its spending. In that context, it makes sense that many voters would feel they get a better deal out of Medicare than other forms of insurance – they’re only seeing half the cost. Additionally, there are far more workers paying taxes into Medicare than there are beneficiaries. The Medicare model works for providing subsidized care to targeted subsets of the population, but if it were extended to cover the whole population, suddenly there would be fewer taxpayers than beneficiaries and no way to defray the cost.
One alternative that several moderate Democrats have suggested is to offer consumers an option to buy into Medicare voluntarily instead of automatically enrolling the entire population. This “public option” approach would preserve the private health insurance market but allow a public plan to compete. If the public plan is able to deliver more efficient health services or achieve lower prices through the use of Medicare’s rate-setting system, it could eventually grow to dominate the market through consumer choice and develop into a de facto single-payer system.
Before policymakers go this route, however, they need to ensure that any public option is self-financed through premiums (asmany of the current proposalsrecommend). To the extent coverage is subsidized by the government, it must be limited to the same subsidies consumers receive from programs such as those in the Affordable Care Act to purchase private insurance. Should the public option be subsidized by general revenues the same way as SMI, it would become increasingly unsustainable as market share grows – an outcome would be bad for taxpayers and beneficiaries alike.
Lynnel Beauchesne’s dental office hugs a rural crossroads near Tunnelton, W.Va., population 336. Acres of empty farmland surround the weathered one-story white building; a couple of houses and a few barns are the only neighbors. But the parking lot is full. Some people have driven hours to see Beauchesne, the sole dentist within 30 miles. She estimates that she has as many as 8,000 patients. Before the office closes at 7 p.m., she and her two hygienists will see up to 50 of them, not counting emergencies.
About 43 percent of rural Americans lack access to dental care, according to the National Rural Health Association, and West Virginia, among the poorest and most rural states, is at the center of the crisis. All but six of the state’s 55 counties include federally designated “Health Professional Shortage Areas,” “Medically Underserved Areas” or both. The state’s Oral Health Program found in 2014 and 2015 that nearly half of counties had fewer than six practicing dentists, just half of adult West Virginians had visited a dentist in the previous year, and more than one-fifth hadn’t seen a dentist in five years. By comparison, a U.S. Centers for Disease Control and Prevention study in 2015 found that 64 percent of all American adults ages 18 to 64 reported seeing a dentist in the previous year. The rate of total tooth loss is 33.8 percent among West Virginians over 65, compared with roughly 19 percent for all seniors nationally.
One seemingly obvious solution is to persuade more dentists and other oral-health providers to come to places like West Virginia, a goal of various public efforts. The federal National Health Service Corps program, for example, offers up to $50,000 in loan assistance to doctors and dentists willing to work two years in a designated shortage area. And several states have passed or considered legislation authorizing “dental therapists” — midlevel providers akin to nurse practitioners — to provide certain kinds of primary dental care in areas where dentists are scarce.
Donald Trump and his court appear to believe that the president has near absolute power over trade. After Trump ordered tariffs on imported aluminum and steel, Commerce Secretary Wilbur Ross noted that Trump could alter the tariffs or impose quotas or “do anything he wishes at any point.”
Trump recently launched an investigation to limit car imports on “national security” grounds and reportedly told French President Macron that he aims to push German carmakers out of the American market altogether.
But Trump and his team are mistaken. Under Article I, Section 8 of the Constitution, Congress has the power “to regulate commerce with foreign nations.” The president’s powers over trade — including his authority to enter into trade agreements and impose tariffs — are delegated by Congress under various laws.
The new reports released yesterday by the trustees forSocial SecurityandMedicarewarn that both programs face a growing gap between scheduled benefits and the dedicated revenue sources that finance them. If nothing is done to address the shortfalls in these programs, they will pose a grave threat to both the beneficiaries who depend on Social Security and Medicare and the other critical public investments that will increasingly have to compete with these programs for limited resources.
Unlike most programs in the federal budget, which are funded from the same pool of general revenues, Social Security and Medicare were designed with dedicated revenue sources intended to finance their benefits (primarily payroll taxes for Social Security and a combination of taxes, premiums, and fees for Medicare). But in 2017, Medicare required $307 billion in general revenue funding to meet its obligations, while Social Security required another $41 billion – a combined gap which equaled roughly two percent of gross domestic product.
In less than 20 years, that gap will double to more than four percent of GDP as the baby boomers move into retirement and theratio of workers to beneficiariesfalls. This growth places an enormous burden on the rest of the federal budget by increasingexisting deficitsand creating competition with all the other federal programs, from defense to education, that require general revenue funding. For comparison,discretionary spending– the part of the budget that includes all federal spending appropriated annually by Congress, including everything from the military to infrastructure funding – totaled just 6.3 percent of GDP in 2017 and is set to fall in future years.
Under current law, Social Security and Medicare are allowed to spend more than they collect in dedicated revenue, but only up to a point. In years when dedicated revenue exceeds spending, the Treasury Department credits one of four trust funds for the balance: the Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds for Social Security, and the Hospital Insurance (HI) and Supplemental Medical Insurance (SMI) trust funds for Medicare. In subsequent years when spending exceeds revenue, Social Security and Medicare can then use transfers from general revenue to draw upon these established surpluses and make up their annual shortfall.
Once the fund balances are exhausted, however, benefits are automatically reduced to what is payable with incoming revenue (except for SMI, which by design is partially funded with general revenues and can never be exhausted). The trustees projected the following trust fund exhaustions in their reports:
HI will be exhausted in 2026, at which point benefits would be reduced by 9 percent;
DI will be exhausted in 2032, at which point benefits would be reduced by 4 percent;
OASI will be exhausted in 2034, at which point benefits would be reduced by 23 percent; and
If OASI and DI were combined, they would be exhausted in 2034, at which point benefits would be reduced by 21 percent – a cut that would gradually increase to 26 percent as the gap between revenues and scheduled benefits continues to grow.
Waiting until the last minute to address these shortfalls would be catastrophic for a number of reasons. First, it creates the prospect of sudden and draconian benefit cuts for seniors and individuals with disabilities. Uncertainty about the future of Social Security and Medicare undermines the ability of all Americans to plan for their retirement accordingly and risks jeopardizing public support for the program. In fact, recent polls have found a majority of Americans bothyoungandoldalready lack confidence in the ability of Social Security and Medicare to pay future benefits as scheduled. Restoring long-term solvency to these programs would help restore public confidence in them as well.
The alternative to sudden benefit cuts, that future workers will be asked to bear the entire cost of poor decisions made by previous generations, is hardly better. The Social Security trustees note in their report that if action were delayed until 2034, policymakers would need to immediately and permanently increase revenue by an amount equal to a one-third increase in the payroll tax rate to prevent sudden benefit cuts in Social Security alone. Combined with the even-larger tax increases necessary to fully fund Medicare, this would be an enormous tax burden to place entirely on the shoulders of tomorrow’s workers. The longer policymakers wait to begin phasing in changes, the harder it will be to have older generations contribute to the solution and defray the burden.
Finally, the competition for limited resources created by growing general revenue subsidies threatens to crowd out other important progressive priorities. General revenue isalready insufficientto cover current spending levels – a reality that pre-dated last year’stax legislation. Because the trust funds aren’t invested as external savings, the government must borrow from private investors to repay the trust fund surpluses as they’re drawn down (replacing this intragovernmental debt with more economically significant debt held by the public). This debt comes with added interest costs, further increasing the pressure on the federal budget.
In the coming years before trust fund exhaustion, funding that could be used for public investments in our future such as infrastructure, education, and scientific research will be increasingly consumed by growing subsidies for social insurance programs and interest costs. Even worse would be a scenario in which policymakers use the existence of the trust funds as an excuse to delay action on correcting the imbalances between dedicated revenues and spending, only to abandon the system and provide unlimited infusions of general revenues when the trust funds’ exhaustion would otherwise force hard choices.
We can do better. Our elected officials shouldtable costly policy proposalsthat threaten to make the problem worse and instead work towards phasing in pragmatic reforms to strengthen and secure the future of these important programs.
Change is afoot in Europe. On the same day last week, Spain ousted the populist Prime Minister Mariano Rajoy in favor of the socialist Pedro Sánchez, while Italy welcomed the first populist governmentin Western Europe. In the coming months, PPI will track the tides of populism across Europe in real-time and provide updates on this blog.
One key country resisting populist forces is France. In electing Emmanuel Macron president, French voters rebuffed both the far-right populist Marine le Pen and the ultra-left demagogue Jean-Luc Melenchon. The key,arguesProgressive Policy Institute President Will Marshall, lay in Macron’s ability to tap into the voters’ mood for radical change without embracing the populists’ reactionary demands. Instead, Macron derived his agenda from the pragmatic elements of both the Socialists and the center-right Republicans. Second, Macron’s economic agenda focused on reducing stagnation by simultaneously shielding individuals against market fluctuations while liberalizing France’s economy. Third, Macron forged consensus among progressives and traditionalists by fusing a hopeful and forward-thinking narrative with classic ideas rooted in the spirit of the European Enlightenment.
Following in Macron’s footsteps, the task ahead for progressives is to channel the insurgent mood in both America and Europe in more constructive directions. That means speaking to voters’ common hopes and aspirations, not the animosities that divide them.
WASHINGTON — Ben Ritz, director of the Center for Funding America’s Future at the Progressive Policy Institute (PPI), today released the following statement after the annual Social Security and Medicare Trustees reports were released:
“The annual reports from the Social Security and Medicare trustees should serve as a reality check for politicians who support costly expansions of these programs. As they have consistently done for several years, the trustees again warn that current program revenues are insufficient to sustainably finance promised benefits – an imbalance that must be addressed by policymakers before considering changes that could make the problem even worse and crowd out resources needed for other important public investments.
“Last year, Social Security spent $41 billion more on benefits than it collected in dedicated revenue. Over the next 25 years, the gap between dedicated revenue and promised benefits will grow to 1.26 percent of gross domestic product as the baby boomers move into retirement and the ratio of workers to retirees continues its decline. If nothing is done to address this growing shortfall, beneficiaries face the prospect of a sudden and permanent 21-percent benefit cut beginning in 2034 (the year in which the combined Social Security trust funds, which are credited with surpluses from previous years in which program revenue exceeded spending, are exhausted).
“The challenges facing Medicare are even more alarming. The gap between spending and dedicated program revenue ($307 billion in 2017) is projected to double as a share of the economy in the next 25 years, from 1.58 percent of GDP in 2017 to 3.16 percent of GDP in 2042. If these gaps are left unaddressed, Medicare and Social Security will consume an ever-greater share of general revenue, leaving less money available to fund critical public investments in our future – including key progressive priorities such as infrastructure, education, and scientific research.
“Policymakers could strengthen Medicare and Social Security while protecting public investments for the foreseeable future by modernizing their benefit structures and adopting modest revenue increases. Unfortunately, President Trump and Congressional Republicans made bipartisan action even less likely than it already was when they passed their egregious $2 trillion tax cut last year. Although the financial challenges facing Social Security and Medicare predate the tax bill and exceed it in size, Republicans cannot expect Democrats to make changes to programs that benefit the middle class just so the GOP can squander the savings on more tax giveaways for the wealthy.
“Nevertheless, Republican recklessness doesn’t give Democrats an excuse to ignore the very real problems facing Social Security and Medicare. Democrats have a moral obligation to not only reverse the Trump tax cuts but also to secure the future of our social insurance programs in a way that is equitable to both current beneficiaries and young workers. Elected officials in both parties should take their lead from the trustees instead of Trump by eschewing expensive tax cuts and broad-based benefit expansions, instead pursuing pragmatic reforms that ensure benefits are adequate and sustainable for all.”
When asked about my education in a traditional public high school, I always talk about Mr. Gebler’s pre-calculus class. I remember it well for two reasons. One, I struggled to earn a C. Two, his standards — like his eccentric behavior and dedication to students — were so exceptional that I actually retained the content after the school year ended.
A draft research report by workplace survey company Pairin confirms what I’d always known: Mr. Gebler was a top-tier teacher.
Pairin recently analyzed survey results from 9,359 teachers in traditional public schools and 390 in public charter schools. It found that certain behavioral attributes — motivation, independence, and the ability to correct others — correlate with high performance. Mr. Gebler had all of these.
Today, however, many educators who share these behavioral qualities aren’t working in our nation’s traditional public schools. They’re working in charter schools.
“When we look at the aggregated survey results, more charter school teachers share the qualities that we’ve found in all top-performing teachers,” says Pairin CEO Michael Simpson. “What we’re trying to figure out is why trends in behavior differ between these two sectors and how we can help teachers overall be more successful.”
President Trump’s most recent budget proposal was widelypannedwhen it was released in February for being both fiscally irresponsible and dependent on unrealistic economic assumptions. Ananalysispublished last week by the non-partisan Congressional Budget Office confirms these criticisms were valid and highlights the significant difference between the Trump administration’s approach to fiscal policy and that of Trump’s predecessor, President Barack Obama. Based on CBO’s analysis, anyone who criticized Obama’s fiscal policy for being irresponsible should be outraged about Trump’s.
When the Obama administration released its final budget proposal in 2016, CBOestimated that it would result in the national debt held by the public equaling 77.4 percent of gross domestic product in 2026. According to last week’s CBO report, debt under the most recent Trump administration budget proposal would reach 85.3 percent in the same year. In dollar terms, CBO estimates that the federal government would accumulate over $2 trillion more in debt by 2026 under the most recent Trump budget than it estimated would be accumulated under the final Obama budget two years ago.
Perhaps more interesting is the discrepancy between the projections of CBO and Trump’s Office of Management and Budget: CBO projects debt as a percent of GDP will be almost 9 percentage points higher in 2026 under the Trump budget than OMB projected in February. By comparison, the difference between OMB’s and CBO’s estimates of the final Obama budget was only about 2 percent of GDP.
The Trump administration’s unrealistic budget forecasts continue its pattern of dubious economic claims. Prior to the passage of last year’stax legislation, for example, the Trump administration claimed it would fully pay for itself or even reduce the national debt. CBO, on the other hand, now projects the legislation to cost roughly$2 trillion over the next decade – an assessment most independent analystslargely agree with.
But even CBO’s forecasts likely understate the debt that would be accumulated under the Trump administration’s fiscal policy. CBO is required to score the president’s budget assuming even its most unrealistic policy proposals could be enacted. These policies include deep cuts to non-defense discretionary spending (the category of federal spending that includes virtually all non-defense, non-entitlement programs), which would reduce such spending below itslowest levelas a share of the economy since before World War II.
Just before the Trump budget was published, however, the Republican-controlled Congress passed – and President Trump signed – legislationthat significantly increased both defense and non-defense discretionary spending. By the end of the projection period, CBO estimates that non-defense discretionary spending under the Trump budget would be less than half what it would be if the spending policies in February’s budget deal were extended. The idea that Congress would suddenly reverse course and support such deep cuts to thislong-starved category of federal spendingis outlandish at best.
Altogether, last week’s CBO report should serve as a damning indictment of the Trump administration’s faulty fiscal policy. It’s remarkable that this administration had to rely upon so many flawed assumptions in crafting this year’s budget proposal, and even then, produced debt projections well above those in President Obama’s final budget. President Trump has certainly earned his self-proclaimed status as “the king of debt” with this year’s budget. On the other hand, perhaps it should be no surprise given therecent track record of Democratic and Republican presidentsthat one of the former would put forth a more responsible budget proposal than one of the latter.
On May 8, PPI participated in a congressional roundtable on the impact of retail automation on workers of color. The roundtable was led by Representative Bobby Scott of Virginia, and moderated by Spencer Overton of theJoint Centerfor Political and Economic Studies. I presented PPI’s latest research on the impact of the ecommerce boom on black and Hispanic workers.
We found that roughly 24% of ecommerce workers identify as black or African-American, compared to 12% of workers in brick-and-mortar retail. This is based on BLS surveys. We also found that roughly 20% of ecommerce workers identify as Hispanic or Latino, compared to 17% of workers in brick-and-mortar retail (Table 1).
We also found that ecommerce industries are hiring workers of color at a rapid rate. From 2007 to 2017, the number of black /African-American workers in ecommerce rose by 51%, compared to a 15% gain for all jobs. The number of Hispanic/Latino workers in ecommerce rose by 73%, compared to 27% for all jobs. (Table 2)
Taken together, these results suggest that the ecommerce boom could benefit workers of color, assuming we have the right policies to allow access to the new jobs. We need to train workers for the new jobs in ecommerce, brick-and-mortar retail, and the next wave of growth in local custom manufacturing. These jobs will require a combination of technical, design, and people skills.
Moreover, we need to provide financing to enable a diverse population of entrepreneurs to take advantage of the new opportunities created by the ecommerce revolution. States must set up programs which allow potential entrepreneurs to experiment with the latest 3D printing and robotics technologies.
In recent years, innovation has become synonymous with digital companies such as Apple, Google and Amazon.The Internet, the smartphone, and the cloud have transformed daily life and the way we do business, and artificial intelligence and machine learning will continue the process.
Nevertheless, overall productivity growth remains sluggish. The reason is simple: The digital sector of the economy, where innovation today is focused, is still far smaller than the physical sector. Even today, we spend much more time interacting with the physical world than with the digital world. The chairs we sit on, the food we eat, the cars we ride in, are all made of physical materials, not intangible bits and bytes. According to recent research, digital industries such as communications, entertainment, and finance comprise only 30 percent of the economy, while physical industries such as manufacturing and construction comprise 70 percent.
The George Mason University’s Law & Economic Center hosted its Twelfth Annual Judicial Symposium on Civil Justice Issues on Monday, May 11, 2018. The program included many pressing topics of liability, including innovator liability against branded pharmaceutical companies, climate change tort cases against energy producers, litigation financing, and the implications of the U.S. Supreme Court’s recent personal jurisdiction decisions. The panels were filled with skilled lawyers on all sides of the issues.
PPI Center for Civil Justice Director, Phil Goldberg, and Coleen Klasmeier of Sidley Austin debated Leslie Brueckner of Public Justice and Adina Rosenbaum of Public Citizen on the issue of innovator liability. Innovator liability is a novel theory for liability developed over the past 25 years by which users of generic drugs seek to subject branded drug companies to liability for the harms they allege were caused by the generic drug. The PPI Center for Civil Justice’s previous writing on this issue can be foundhere.
As Goldberg explained to the audience of state judges, innovator liability has been rejected by well-over a hundred federal and state courts, including several U.S. Courts of Appeal. These courts have all concluded that under traditional product liability law, a manufacturer of a product is subject to liability only for its own products, not the products of its competitors. Also, there are no other common law tort theories for establishing this liability because there is no legal relationship between the manufacturer of the branded drug and the user of the generic, and saddling branded drug manufacturers with the liability for all users of generic drugs could have devastating implications for America’s health care.
Therefore, as Goldberg said, “This issue involves determining both what’s best for America’s health care and the most appropriate liability policies. Innovator liability does not advance either and undermines both. Innovator liability is solely about finding a pocket to pay a claim . . . that is the very definition of deep pocket jurisprudence and should continue to be rejected by courts around the country.”
The reason this issue is particularly timely is that in the past six months, three state high courts have ruled on innovator liability claims. The Supreme Court of California allowed these theories for traditional negligence claims, whereas the high courts in Massachusetts and West Virginia continued the widespread rejection of such liability. The Supreme Court of Massachusetts would only allow innovator liability for acts of recklessness or gross negligence. Goldberg broke down all three rulings for the judges in showing how California isolated its law from the rest of the country in allowing for innovator liability.
In addition, Goldberg and Klasmeier fleshed out the West Virginia court’s concern that innovator liability would wreak havoc on the Hatch-Waxman Act, which is the federal law that created a delicate balance between generic and branded drugs and should not be undone through distortions in state tort law. In particular, Klasmeier suggested to the judges that the Food & Drug Administration be afforded primary jurisdiction on these issues because of the imbalance that innovator liability would cause.
In February, the George Mason Law & Economic Center held a similar briefing for members of the Congressional Civil Justice Caucus. A video to that presentation, which featured a debate between Goldberg and Brueckner can be foundhere. A lengthier law review article that Goldberg published on innovator liability can be foundhere.
Despite repeated and flagrant abuses of taxpayer trust and sweetheart deals from energy lobbyists, any of which would have doomed previous cabinet members, embattled Environmental Protection Agency (EPA) Administrator Scott Pruitt appears to still have the support of President Trump, even though White House aides are urging he be fired.
The president’s theory seems to be that Pruitt’s mission to dismantle environmental protections at EPA and investigations of him will fire up the right-wing base turnout in November.
This sounds like wishful thinking. It’s far more likely that headlines about Pruitt’s taxpayer abuses right up to election day will help mobilize college-educated suburban swing voters disgusted by the Trump’s administration’s ethical corruption and rejection of science in favor of polluters.
Leading pollsters say these are just the voters Republicans need to keep Congress. Losing them could be just enough to bring about a Democratic takeover of the House of Representatives, creating potentially inescapable entanglements for president himself.
