Category: Uncategorized

How Dangerous is the Warehousing Industry? Implications for Ecommerce

Posted on by The Progressive Policy Institute

Worker safety is absolutely crucial.  Driving down both nonfatal occupational injuries and workplace fatalities is one of the most important goals of government regulation.  Since 2003 the rate of nonfatal occupational injuries and illnesses has dropped from 5.0 to 2.8 (per 100 FTE), according to a BLS survey.*

Despite this decline, jobs in physical industries are still more dangerous than office jobs. I say this as someone who respects the extra strain and danger faced by people who work in factories or hospitals, driving trucks or working on construction sites, or any other risky occupation.

From that perspective, I want to assess the current level of occupational injuries and fatalities in the warehousing industry. Driven by the rise of ecommerce fulfillment centers–which are mainly classified by the government as warehouses–this industry shown tremendous growth in recent years, creating jobs for hundreds of thousands of workers without a college degree. These are “mixed cognitive-physical” jobs: They require both physical labor, and also the ability to work with technologically sophisticated equipment.

One criticism of ecommerce fulfillment centers is that they are dangerous for workers. For example, we have  all heard the story of how some workers in an Amazon fulfillment center in New Jersey were sent to the hospital after a can of bear mace fell off a shelf and discharged when a robot drive unit moved against it. Not a pretty picture!

But our question here:  How does the safety record of the warehousing industry–including ecommerce fulfillment centers–stack up overall?

The first thing to note is that the rate of nonfatal occupational injuries in warehousing has fallen almost in half since 2003, going from 9.5 in 2003 to 5.0 in 2017 (per 100 FTE) (see chart below).   The rate of nonfatal occupational injuries with lost days–a measure of the severity of the injury–has declined as well, going from 3.0 in 2003 to 1.8 in 2017 (once again, per 100 FTE) (not shown in chart).

 

How does warehousing compare to other industries, in terms of safety? Warehousing has a somewhat higher injury rate than warehouse clubs, supermarkets, or agriculture, and somewhat lower than hospitals, nursing homes, and air transportation.

Finally, we come to fatal occupational injuries. This is a small but obviously important category. All told in 2017 there were 22 fatal occupational injuries in warehousing,  out of 5147 total occupational fatal injuries across the economy (construction, by comparison, had 971 fatalities). In 2006, warehousing had 17 fatal occupational injuries.

The increase in fatalities, though, is purely reflective of the enormous growth of the industry. The fatality rate in warehousing fell from 4.9 in 2006 to 3.8 in 2017 (per 100,000 FTE).  How does that compare to other industries?  The chart below reports on occupational fatality rates for selected industries. We see that warehousing is slightly above average (the private sector had a fatality rate of 3.7). Interestingly, the fatality rate in warehousing is lower than newspaper publishing (4.8). Truck transportation had a stunning-high fatality rate of 28 (per 100,000 FTE).

How we interpret the data: Like the economy overall, the safety record of the warehousing industry has gotten better, even as ecommerce fulfillment centers have become an increasingly large share of employment.  And as we think about how to further improve the occupational safety performance of ecommerce fulfillment centers, they should be judged against other physical industries such as healthcare and trucking, rather than against office environments.

 

*These statistics come from a BLS survey of employers. It’s clear that the survey undercounts injuries and illnesses, but the undercounts mostly seem to be concentrated among the smaller establishments. Research suggests that larger establishments (over 1000 workers) tended to be much less prone to undercounts. Moreover, the transportation/warehousing/utilities sector seems to have a relatively good track record for reporting occupational injuries and illnesses.

 

 

 

 

 

 

Kim for Medium: How “Moderates” are bolder than the left

Posted on by The Progressive Policy Institute

Freshman Rep. Alexandria Ocasio-Cortez recently drew big cheers at the South by Southwest conference in Austin, Texas, earlier this month when she dissed the views of political moderates as “misplaced.” “Moderate is not a stance. It’s just an attitude towards life of, like, ‘meh,’” she told a standing-room only crowd. “The ‘meh’ is worshipped now — for what?”

Ocasio-Cortez’s remarks reflect an old line of attack from the progressive left: that moderates are “mushy” — timid, if not cowardly; that they value incrementalism over true progress; and, worst of all, that they are guilty of “triangulation” — the unprincipled pandering to swing voters by pushing off both left and right.

 

Read the full piece on Medium by clicking here.

America’s Skills Gap: Why it’s Real, And Why it Matters

Posted on by The Progressive Policy Institute

A common view among the left is that the “skills gap” – a shortage of workers with the skills employers want – is a mirage.

A new PPI report decisively debunks this myth. As author Ryan Craig explains, the skills gap is real: employers are having trouble finding enough workers with digital skills and “soft skills.”

Craig attributes these shortages to two factors: “Education friction” – the failure of higher education institutions to turn out job-ready graduates — and “hiring friction” – digital screening practices that cause employers to overlook qualified workers.

Craig offers a fresh take on why skills gaps persist, the consequences for economic growth and what he calls “economic alienation” among workers feeling left behind in today’s economy.

Langhorne for Medium, “Why We Need to Make Public School Choice an Easier Choice for Low-Income Families”

Posted on by The Progressive Policy Institute

Most people who know me know that I’m a big believer in public school choice. To me, it’s a no brainer that when school districts create school attendance zones based on students’ home addresses, they are creating systems in which poor students will most likely attend poorly performing schools. Forcing students to attend a chronically failing school because of where they live sets them up for failure and reinforces cycles of generational poverty. When students have the option to attend any public school that they choose, it helps to unshackle their education — and by extension their future — from their family’s financial history.

But another reason I like public school choice is that it often leads to a variety of school models that can meet the needs and interests of a variety of students. Systems of public school choice usually have many unique learning models — computer-science focused, dual-language, diverse-by-design, arts-based, project-based, policy-oriented, and more — within their public schools. Districts that assign students using their home addresses rarely attempt to create an abundance of schools with innovative learning models. Imagine a district trying to force a parent to send their child to an arts-based school or a single-sex school, and you’ll understand the difficulty. It’s far easier for these districts to create cookie-cutter, one-size-fits-all schools and hope that most kids succeed in them.

And so, without public school choice, it’s only affluent families — the ones who can pay for their children’s education or help them test into a selective public school — that have access to this menu of options.

 

Continue reading at Medium.

Price gouging bills miss the mark

Posted on by The Progressive Policy Institute

A bill working its way through the Minnesota state legislature would prohibit drugmakers from “price gouging” for essential prescription drugs. The law seeks to end some pretty egregious behavior by bad actors in the biopharmaceutical industry.

Like any industry, the drug industry has its share of bad actors. The loathsome “pharma bro” Martin Shkreli is now serving time in prison after his company, Turing Pharmaceuticals, increased the cost of a lifesaving AIDS drug by 5,000 percent. And one pharma executive has defended prices increases as a “moral requirement to sell the product at the highest price.” These examples of price-gouging, and more, are inexcusable.

In response, states have been looking for ways to curb this type of behavior. Maryland passed a first-of-its-kind anti-price gauging law. The law sought to stop drugmakers from hiking generic drug prices in an “unconscionable” way as determined by the state. It allowed the state attorney general to sue the makers of off-patent and generic drugs for particularly egregious price increases that could not be justified by new production or distributing costs.

However, the law has since been challenged in court and a federal appeals court ruled that it violated the commerce clause of the constitution because it forced manufacturers and wholesalers to act in accordance with Maryland law outside of the state. The Supreme Court decided not to take up the appeal, so the lower ruling stands.

Now a similar law is under consideration in Minnesota. SF 1518 would authorize the state to publish a list of “essential” generic or off patent drugs, defined as drugs which treat “a life-threatening health condition or a  chronic health condition that substantially impairs an individual’s ability to engage in  activities of daily living.” In other words, almost every drug. If a manufacturer increased the drug price more than 50 percent within a year without legitimate market considerations to substantiate the price increase, it would allow the Board of Pharmacy to take disciplinary action against the manufacturers or wholesale distributors. This law may end up having the same legal trouble as the Maryland one.

While intended to protect consumers, this law would add another level of bureaucracy to the already challenging and low-margin generic drug market. The passage of various state-level drug pricing laws may be counterproductive – with lawsuits challenging the legality of each one, conflicting rules, and a patchwork system across states, smaller companies or generic producers with small margins may find it too expensive to participate in the market.

As a result, as Michael Mandel and Elliott Long argued in a paper published last year by PPI,  state price gouging and drug transparency laws may end up raising health care costs, which is not what the sponsors want at all. Indeed, state legislators are focusing too much on pharmaceutical prices and not enough on other drivers of health care costs: hospitals and providers.

Community Responsive Rural Charter Schools as a 21st Century Solution to School Consolidation

Posted on by The Progressive Policy Institute

The West Virginia House of Delegates recently voted against Senate Bill 451, which would have allowed for the creation of public charter schools throughout the state. Critics of charter schools claim that they “drain money” from traditional local public schools. However, West Virginia has been draining money from its local public schools for years.

Since the 1900s, West Virginia has closed thousands of its schools. Smaller, rural schools were consolidated into larger, regional schools to increase efficiency and save money. In 1989, Governor Caperton accelerated school consolidation by forming the School Building Authority (SBA) which only provided funding for school-building maintenance and renovation if a school met SBA’s minimum enrollment requirements. Unsurprisingly, SBA’s one-size-fits all approach predominantly affected small rural schools, forcing them to consolidate. SBA and Governor Caperton claimed that this would save money, increase efficiency, and improve educational quality. What really happened was quite different.

Maintenance and transportation costs increased as thousands of students endured longer bus rides– sometimes up to two hours a day– on rough terrain. Students had less time for extra-curriculars. Grades dropped while student stress and unhappiness rose. School officials promised to offer more course options, including advanced placement, but these courses were eliminated.

Meanwhile, the number of state administrators increased as did their salaries. Ultimately, the consolidation did not save any money. On the contrary, it cost the state 1 billion dollars from 1990 to 2002.

School consolidation is an old solution to the enduring problem of cutting costs in rural areas. However, increases in transportation costs and bureaucratization often offset any savings so consolidation rarely results in lower per-pupil spending. To make matters worse, school consolidation negatively affects communities both socially and economically. Rural schools often act as the center of the community, and losing a school leaves a hole in the community that rarely gets filled.

Many rural communities want to keep their local schools; however, they need innovative 21stcentury solutions to overcome their respective challenges in doing so.

Rural populations are becoming poorer, older, and less white. Unlike in metro areas, rural employment has not recovered since the 2008 recession.The National Center for Education Statistics has labeled more than half of rural districts in the United States as “high poverty,” with nearly half of their students considered economically disadvantaged. Rural schools typically receive less funding and spend less per pupil than suburban or urban schools, and they have been shown to be disadvantaged in Title I funding formulas. They spend twice as much on transportation. They also struggle to recruit and retain skilled teachers because of low salaries, geographical isolation, and poor recruiting incentives.

Charter schools, with their school-level autonomy and increased flexibility, could have been an innovative solution to the problem of consolidation in West Virginia.

Other rural communities have used the flexibility of charter schools to address state-forced consolidation initiatives. For example, the community of Tidioute, PA, with a population of only 654 had success in establishing a charter school when the district proposed closing its school as a part of a consolidation. Because of their remote geography, distance from other communities, and the icy conditions they face in winter, the community members felt it was important to have a school located within Tidioute. Their charter school capitalizes on their tight-knit community and local natural resources to offer their students place-based education and a family-like culture.

Community support, however, is hard won in rural communities. As in urban and suburban areas, traditional local schools are often at the heart of a rural community. Children attend the same school that their parents and grandparents attended, and community members sometimes view a new charter school as an invader. Sometimes, new charter schools in rural areas initially face opposition. That was the case with Upper Carmen Charter School in the remote ranching community of Carmen, Idaho. Carmen had lost its local one-room school in the 1950s after consolidating with neighboring Salmon school district. In 2005, Sue and Jim Smith used Idaho’s charter law to reopen the school as a charter school. Unsurprisingly, Salmon public school district strongly opposed this idea, making the Smiths fight a long uphill battle. However, with persistence and a dedication to understanding Carmen’s needs, the Smiths convinced community members that the charter school was the best option for their children. Sue and Jim’s hard work has paid off. Out of the state’s 490 K-8 public schools, Upper Carmen Charter School is in the 85th percentile for ELA and Math achievement, and Idaho’s State Department of Education recognized the school as a 2018 Top Performer in ELA growth.

Difficult problems require innovative solutions. Rural communities need a system that is flexible and responsive. Letting charters open doors that consolidation closed can bring schools back to the center of a rural community.

Ritz for Forbes, “Donald Trump’s Budget For A Declining America”

Posted on by The Progressive Policy Institute

After the president’s budget was released on Monday, House Budget Committee Chairman John Yarmuth (D-KY) called it “A Budget for a Declining America.” Unfortunately, that might be an understatement.

The Trump administration’s Fiscal Year 2020 budget proposal is a compilation of the worst ideas to come out of the Republican Party over the last decade. It would dismantle public investments that lay the foundation for economic growth, resulting in less innovation. It would shred the social safety net, resulting in more poverty. It would rip away access to affordable health care, resulting in more disease. It would cut taxes for the rich, resulting in more income inequality. It would bloat the defense budget, resulting in more wasteful spending. And all this would add up to a higher national debt than the policies in President Obama’s final budget proposal.

The most harmful aspect of Trump’s fiscal blueprint is its scheme for gutting investments in public goods that are core responsibilities of government. The administration proposes to reduce the share of gross domestic product devoted to non-defense (domestic) discretionary spending – the category of the budget that is annually appropriated by Congress and includes most federal spending on infrastructure, education, and scientific research – by more than half over the next decade. The result is deep cuts to all three of these important investments that provide the foundation for long-term economic growth.

Continue reading at Forbes.

 

 

Langhorne for Forbes, “Separating Fact From Fiction: Five Important Findings About The Nation’s Charter School Landscape”

Posted on by The Progressive Policy Institute

Charter schools serve about three million students across 42 states and the District of Columbia. To clarify, charter schools are public schools operated by independent organizations, usually nonprofits. Most are schools of choice, and unlike magnet schools in traditional districts, they are not allowed to select their students. If too many students apply, they hold lotteries to see who gets in. Charter schools are freed from many of the rules that constrain district-operated schools. In exchange for increased autonomy, they are held accountable for their performance through contracts with authorizers.

Each state’s charter law empowers a variety of different agencies to authorize charters. The most common types of authorizers are a local school board, a state education agency, higher education institutions, and statewide bodies set up for the sole purpose of overseeing charter schools. Authorizers vet and approve charter school applications, and they also close or replace underperforming schools.

Based on both performance and sustainability, charter schools have been the most successful education improvement strategy of the millennium, and they’ve been particularly effective at educating low-income students. In places like New Orleans, Denver, and Washington, D.C., the charter formula – school-level autonomy, accountability, diversity of school design, and parental choice – has proven far more effective than the centralized, bureaucratic approach inherited from the 20thcentury.

However, over the last few years, the growth of charter schools across the nation has slowed. In an effort to understand this decline in growth, the National Association of Charter School Authorizers (NACSA) examined charter school proposals and approvals over the last five years, analyzing 3,000 charter school applications to authorizers in the 20 states that oversee nearly two-thirds of charters nationwide. Their new report Reinvigorating the Pipeline: Insights into Proposed and Approved Charter Schools unearths important facts about the nation’s charter school pipeline, facts that also dispel some of the commonly perpetuated myths about charter schools.

Continue reading at Forbes.

Sen. Warren’s Tech-Bashing Populism Misses the Mark

Posted on by The Progressive Policy Institute

The last time we checked, the United States was locked in a high-stakes race with China to lead the world on digital innovation.  So we’re mystified by Sen. Elizabeth Warren’s call today to break up Google, Amazon and Facebook. These are not only America’s most creative companies, but they and other large tech platforms have pioneered a global digital revolution.

They’ve grown big because they’ve been successful. That doesn’t make them perfect and, like any private enterprise large or small, they need strong public oversight and regulation. But breaking them up, absent compelling evidence that they are systematically gouging consumers or stifling competition, would be an act of stupendous economic folly.

To be sure, business consolidation and concentrated market power are real concerns.  But as PPI economist Michael Mandel has demonstrated, such worries apply less to the dynamic and fiercely competitive digital ecosystem than to America’s older and more static physical industries.

Perhaps Sen. Warren is jockeying to enter a very crowded populist “lane” in the 2020 presidential nomination contest.  But if she believes that anti-tech populism is broadly popular with U.S. voters, she’s mistaken. In fact, as a recent PPI poll makes clear,  most Americans have a favorable view of the big tech companies, and oppose breaking them up.

Our poll found that 67 percent of likely voters view the tech companies positively, as shown in Figure 1, and 55 percent oppose breaking them up. While 60 percent of voters acknowledge they are concerned about tech companies’ handling of privacy and data protection, 71 percent of voters view tech companies as “a sign that the American economy is working.” In contrast, just 32 percent view Big Tech as “too powerful.”

Sen. Warren’s call to break up America’s tech leaders may go down well with her party’s “democratic socialist” faction. It will no doubt be applauded by European regulators, who have also drawn a bead on U.S. tech companies. But to most voters, they symbolize American ingenuity and entrepreneurial prowess. Are those qualities progressives really should oppose?

 

Charter Schools in Rural Communities: An Opportunity for Career Preparation through STEM Skills Development

Posted on by The Progressive Policy Institute

The West Virginia House of Delegates recently shot down Senate Bill 451, abruptly killing a promising chance for education reform throughout the state. The bill, which would have allowed for creation of public charter schools throughout the state as well as an increase in open enrollment policies, would have created more educational options for all of West Virginia’s children. However, the teachers unions and their allies rallied against the bill, arguing that charter schools would take money away from public schools. This is, of course, nonsense, since charter schools are public schools. Nonetheless, West Virginia teachers walked out of their classrooms last week in protest of the bill, striking for the second time in the last 18 months.

The state’s House of Delegates missed a tremendous opportunity to ensure that all children in West Virginia have the best chance for academic success. Many of the jobs in well-paying industries that rural communities used to rely on, like manufacturing and energy, are no longer available or have adapted to the digital age so that today’s workers need higher-level skills, such as coding, equipment maintenance, or systems knowledge, to enter to the workforce. As a result, there’s an increasing need for the rural workforce to develop STEM (science, technology, engineering, and mathematics) skills for STEM and non-STEM fields such as computer science and coding. Rural areas across the nation have been experiencing significant “brain drain” as young people leave their communities for better academic or economic opportunities elsewhere.

And, in a state where over 50 percent of the population lives in rural areas, the legislature can’t afford to miss opportunities to improve education.

Twenty-first century school systems built upon the pillars of autonomy, accountability, diversity of school design, and parental choice have resulted in dramatic and positive educational change in urban areas such as New Orleans and Denver. Essentially, these systems treat all of their public schools like charter schools. Rural communities can likewise benefit from the creation of public charter schools.

Many rural charters partner with local industry, higher education institutions, and the community to provide students with the skills needed to succeed in the local economy. Many rural charter schools such as North Idaho STEM charter academy in Rathdrum, Idaho offer dual-enrollment courses, which allow for students to earn an associate’s degree while in high school. These students not only save money by earning college credit during high school, but they also improve their skill set by taking career applicable courses. The Academy of Seminole, a public charter school in Seminole, Oklahoma, was founded by the leader of a local aerospace manufacturing company because his company had encountered difficulty in finding skilled local workers to fill their positions. The school has a partnership with the company, and it focuses on career and workforce development. It also offers dual enrollment courses through a partnership with a local community college, vocational certificates, and a business mentoring program that enhances students’ exposure to different types of careers.

Other rural charter schools have also used place-based education to draw upon their existing natural resources to encourage curiosity and teach STEM concepts while enhancing their connection to the community. Through a partnership with Oregon State University, Elkton Charter School in Elkton, Oregon, uses its proximity to the Umpqua River to create a natural resources curriculum where students engage in project-based learning: they study soil samples, mold, fungi, leaves, trees, and estuaries.

STEM-focused charter schools and school choice programs offer a potential solution for communities who wish to retain and adequately prepare their young populations for skilled careers in their community. Considering West Virginia is the third most rural state in the United States, it is a shame that lawmakers are failing to seize the opportunity to address the needs of students in rural communities by allowing for the creation of charter schools.

Press Release: Americans deserve solutions, not rhetoric, to solve Net Neutrality

Posted on by The Progressive Policy Institute

For Immediate Release (3/6/19)

WASHINGTON – “Senator Edward J. Markey (D-Mass.) and Congressman Mike Doyle (PA-14) today unveiled a bill that will only continue to delay real action on net neutrality.  Congress last passed significant legislation on our communications networks in 1996 and this new proposed bill is a continuation of the DC game of rhetoric and no action as this bill has no chance of passing Congress.

“For the last two decades, different versions of net neutrality have bounced between Congress, the FCC, the courts, and most recently within states — but even with today’s proposal, many of the issues surrounding Net Neutrality will still go unsolved.

“Bipartisan compromise on strong, permanent, clean net neutrality is clearly within reach. We are confident that a practical deal that will protect consumers, strengthen the internet, grow the digital economy, and add jobs in an evolving and modern sector is on the horizon, but this proposal doesn’t pass the smell test.

“It’s not enough to hold press conferences and introduce message bills – American consumers deserve effective action that actually solves the problem of net neutrality.   The backward-looking poison pill approach we have seen so far only makes it harder to achieve.  Hopefully, Democrats and Republicans in the House and Senate will work together moving forward on changes to this legislation that can get us over the finish line and deliver a lasting solution on Net Neutrality – not just more talking points and fundraising emails.

“We continue to urge Congress to solve this problem for good by enacting a strong, pro-consumer, clean net neutrality law ensuring an open internet for all that does not apply European style regulations to a true American success story: the communications sector.”

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Members of the news media may contact media@ppionline.org, or by phone (202) 525-3926.

Gerwin for Medium: “Trump Thinks ‘Trade Isn’t Tricky'”

Posted on by The Progressive Policy Institute

When economic historians recount U.S. trade policy under Donald Trump, they’ll tell a cautionary tale. Like the current consensus that the Smoot-Hawley tariffs worsened the Great Depression and tanked global trade, future analysts will detail the negative economic effects of Trump’s go-it-alone trade policies. And historians will draw from a treasure trove of quotes from the “Tariff Man,” who famously said that “trade wars are good and easy to win.”

Perhaps no quote better captures the essence — and dysfunction — of Trump’s trade policies than his claim that “trade isn’t tricky.” Trump sees trade as a straightforward, black-and-white issue. As a result, he’s pursued simplistic — often blunt-force — solutions. Trump’s failure to appreciate the complexity of the interconnected global economy is perhaps the greatest source of the long-term damage that his policies are causing to America’s economy and global standing.

 

Read the full piece on Medium by clicking here. 

New Ideas for a Do Something Congress No. 6: Break America’s Regulatory Log-jam

Posted on by The Progressive Policy Institute

Regulation plays a critical role in refereeing competition in a free market economy. But there’s a problem: Each year, Congress piles new rules upon old, creating a thick sludge of regulations – some obsolete, repetitive, and even contradictory – that weighs down citizens and businesses. In 2017, the Code of Federal Regulations swelled to a record 186,374 pages, up 19 percent from just a decade before.

The steady accumulation of regulations raises compliance and opportunity costs for businesses, especially small enterprises, putting obstacles in the way of economic innovation. Dozens of agencies in Washington issue new rules, but not one is dedicated to retiring old ones. To fill this institutional vacuum, PPI proposes a Regulatory Improvement Commission (RIC), modeled on the highly successful Defense Base Realignment and Closure (BRAC) process for closing obsolete military installations. Like the BRAC process, the proposed RIC would examine old rules and present Congress with a package of recommendations for an up-or-down vote to eliminate or modify outdated rules.

 

THE CHALLENGE: REGULATORY ACCUMULATION DAMPENS AMERICA’S ECONOMIC VITALITY

Wise regulation is essential to facilitate market competition, protect public health and safety, and keep powerful economic actors honest. But as PPI has pointed out in a series of reports, even if any particular regulation is defensible, the sheer accumulation of rules over time can dampen economic vitality (1). New regulations can interact with old ones in unintended ways, and business owners end up spending more time trying to navigate and comply with proliferating rules rather than on growing their companies.

  • Federal regulations hardly ever die, resulting in a dense thicket of rules that raise costs for America’s entrepreneurs and economy.

As shown in Figure 1, the Code of Federal Regulations has steadily grown in size over time, swelling to a record 186,374 pages in 2017 (2). Because the extent of regulation can be difficult to measure, the Code of Federal Regulations’ size is commonly used to provide a sense of the scope of regulations businesses and consumers must comply with. Measured another way, the Federal Register (where the federal government prints new rules) published 61,950 pages in 2017 alone, including proposed rules, final rules, and notices.

Spread across every sector, regulatory accumulation acts as a drag on the economy. One often-cited 2010 study for the Small Business Administration placed just the direct cost of compliance with all federal regulations at $1.7 trillion in 2008, or $15,584 per household (3). A 2012 consulting study for the Manufacturers Alliance for Productivity and Innovation estimated the cumulative cost of major regulations for manufacturers to be $164 billion in 2011 (in constant dollars), double the cost just 10 years earlier. More recently, a 2017 National Small Business Association survey estimated that the average small business owner spends at least $12,000 every year on compliance, with nearly one in three spending more than 80 hours every year dealing with federal regulation (4).

The Trump Administration’s “2-for-1” approach to deregulation fails to distinguish between vital rules and those that tax innovation and growth.

  • President Trump frequently brags about his efforts to provide business with regulatory relief, but his 2017 executive order requiring the elimination of two regulations for each new regulation is the wrong approach. It raises the bar for issuing new regulations without creating a rigorous mechanism for pruning old ones (5).

In addition, Trump’s 2-for-1 scheme fails to distinguish between the kinds of regulations that are reasonable for public health and economic stability or would enhance market competition and those that might be unnecessary or harmful to innovation and growth. Setting aside its conceptual flaws, Trump’s approach has so far not had much practical effect either. According to a Brookings Institute analysis, the Administration’s approach to regulation has largely been one of inaction, and the most consequential “deregulatory” maneuvers have actually been undertaken by the GOP Congress through the wholesale legislative reversal of important Obama-era rules, such as on environmental protection (6). Neither outcome leads to the sort of effective regulatory framework our economy needs.

 

THE GOAL: IMPROVE THE REGULATORY ENVIRONMENT TO UNLOCK ENTREPRENEURIAL GROWTH

Washington needs a mechanism for systematically eliminating regulatory obstacles to economic innovation and entrepreneurship while protecting public safety and ensuring fair competition. Improving the regulatory climate would help inventors and entrepreneurs spend less time and resources on regulatory compliance and focus instead on delivering goods and services and growing their enterprises. A smarter regulatory regime would also realize savings for taxpayers, as less money would need to be spent on enforcement.

While Democrats see the value in responsible regulation that has an important societal function, Republicans take the general view that less regulation is always preferred to more, and that too many regulations of any kind hamper economic growth and potential business investment. These differences in opinion result in incompatible ideas for what regulatory reform should look like.

The answer to outdated, conflicting, or costly rules isn’t deregulation, but the constant updating, streamlining, and improving of our regulatory system. PPI’s proposal for a Regulatory Improvement Commission (RIC) bridges the stale, gridlocked debate on the merits of regulation between Democrats and Republicans, presenting a measured and bipartisan mechanism for improving the regulatory environment to catalyze innovation while also protecting public interests. The RIC would fill an institutional vacuum in regulation policy by creating a mechanism for the periodic clearing out of obsolete rules. Importantly, the RIC has no mechanism by which it can inhibit policymakers’ ability to create critical new rules to address threats to competition or public health and safety. Rather, the RIC would be designed to address only existing regulations that have accumulated over time and are now obsolete.

 

THE PLAN: ESTABLISH REGULATORY IMPROVEMENT COMMISSION TO DEAL PERIODICALLY WITH THE BUILD-UP OF OLD RULES

Washington has dozens of agencies that issue new rules, but not one institution dedicated to streamlining the accumulated body of regulations. To fill that vacuum, Congress should set up a regulatory version of the Defense Base Realignment and Closure Commission (BRAC), which has resulted in the successful closure of more than 350 obsolete installations since the late 1980s. That panel offers a rare example of bipartisan success in accomplishing a politically difficult mission – shutting down old military bases that the Pentagon deemed no longer necessary, but which had influential constituencies in communities around the country.

The RIC would be an independent commission of eight members, appointed by the President and Congress, with regulatory expertise across industry and government. It would meet as authorized by Congress to review and, following a public comment period of 60 days, draw up a list of 15 to 20 rules for elimination or modification. The package would be sent to Congress for an up-or-down vote, and the RIC would be disbanded. If the proposed changes pass Congress, they would go to the president’s desk for signature or veto. The RIC would need to be re-authorized each time Congress would like to repeat this process. Such continued re-authorization is important, as it provides an inexpensive method to solve the problem of regulatory accumulation compared to a standing committee and avoids the creation of a new government bureaucracy.

In 2015, bipartisan groups of lawmakers introduced bills in the House and Senate to establish a Regulatory Improvement Commission based on the BRAC model. House cosponsors included Mick Mulvaney (R-SC), now acting White House Chief of Staff, and Kyrsten Sinema (D-AZ), now a Democratic Senator from Arizona. Unfortunately, the incoming Trump administration ignored the bipartisan RIC bills in favor of anti-regulation bills supported only by Republicans.

The RIC offers an alternative to the witless binary approach to regulation poised by extreme partisans on both ends of the spectrum. Obviously, America’s massive and complex economy needs smart regulation to function properly, and we need institutions charged with constantly improving our regulatory environment, rather than simply piling new rules atop old ones.

In this way, the RIC would fill a vacuum in Washington for a politically viable regulatory improvement mechanism that can inspire confidence across our partisan and ideological divides. And it would create a court of appeal where anyone—business, consumers, labor, civic groups—could challenge existing rules and propose changes.

[gview file=”https://www.progressivepolicy.org/wp-content/uploads/2019/03/PPI_Break-Americas-Regulatory-Log-jam_V4-1.pdf” title=”PPI_Break America’s Regulatory Log-jam_V4 (1)”]

 

ENDNOTES

1) Michael Mandel, “A Progressive Approach to Regulation”, Progressive Policy Institute, February 2011: https://www.progressivepolicy.org/2011/02/reviving-jobsand-innovation-a-progressive-approach-to-improving-regulation/

2) Federal Register: The Daily Journal of the United States Government, “Federal Register and CFR Publication Statistics – Aggregated Charts (XLS)”: https://www.federalregister.gov/reader-aids/understanding-the-federal-register/federal-register-statistics

3) Small Business Administration, “The Impact of Regulatory Costs on Small Firms,” September 2010: https://www.sba.gov/sites/default/files/The%20Impact%20of%20Regulatory%20Costs%20on%20Small%20Firms%20(Full).pdf.

4) “2017 NSBA Small Business Regulations Survey,” National Small Business Association, 2017. https://www.nsba.biz/wp-content/uploads/2017/01/Regulatory-Survey-2017.pdf

5) “Reducing Regulation and Controlling Regulatory Costs,” Executive Order 13771, Federal Register, January 30, 2017. https://www.federalregister.gov/documents/2017/02/03/2017-02451/reducing-regulation-and-controlling-regulatory-costs

6) Jennifer Erin Brown, Joelle Saad-Lessler and Diane Oakley, “Retirement in America: Out of Reach for Working Americans?” National Institute on Retirement Security, September 2018, https://www.nirsonline.org/wp-content/uploads/2018/09/FINAL-Report-.pdf.

7) Connor Raso, “How has Trump’s deregulatory order worked in practice?,” Brookings Institute, September 6, 2018. https://www.brookings.edu/research/how-has-trumps-deregulatory-order-worked-in-practice/.

Kim for Medium: “The Dangers of Big Ideas and Small Tent Politics for House Democrats”

Posted on by The Progressive Policy Institute

Emboldened by their conviction that the national zeitgeist is on their side, the progressive left is taking a harder line against House Democrats reluctant to embrace their agenda.

Groups like the Justice Democrats, for instance, have signaled their intent to primary moderate members who don’t espouse signature liberal efforts such as the “Green New Deal” or the abolition of private insurance in favor of single-payer health care. And last week, Rep. Alexandria Ocasio-Cortez reportedly warned her colleagues in a closed-door meeting of House Democrats that they could find themselves “on a list” of primary targets if they bucked the party on certain votes.

These tactics will do the party no favors as it works to maintain a relatively fragile majority. And as the findings of a pre-election poll by the Progressive Policy Institute (PPI) show, liberals are wrong to assume that most Americans share their desire for sweeping government intervention in the economy.

 

Read the full piece on Medium by clicking here.

Trump Gets It Half Right on PBMs

Posted on by The Progressive Policy Institute

In searching for ways to satisfy public demand for lower drug prices, President Trump has found rare common ground with Democrats. The White House recently released a plan to reform the way pharmacy benefit managers (PBMs) negotiate prices with drugmakers on behalf of health insurance companies. Specifically, the proposal takes aim at special discounts or rebates negotiated by PBMs that create a perverse incentive for drugmakers to push up the list price of their products.

The idea is to get rid of these incentives in order to bring down drug prices, which would mean lower out-of-pocket expenses for patients. Democrats like Senator Ron Wyden have long pushed for changes to the rebate structure. However, Trump’s plan has drawn fire from critics who say it could become a boon for big drug companies by shifting more costs to the federal government. The truth is, the rebate proposal is a good first step to help Medicare beneficiaries at the drug counter; but, without further action to increase transparency around drug pricing and encourage competition, costs could be shifted from drug companies to taxpayers.

 

Langhorne for Forbes, “The Real Faces Behind the ‘Corporate Reform’ of America’s Public Schools”

Posted on by The Progressive Policy Institute

With 2019 barely underway, the nation has already witnessed another set of highly publicized teacher strikes. Teachers unions and anti-charter activists have wasted no time in painting public charter schools as the culprit, blaming them for “draining money from public schools.”

To clarify, charter schools are public schools. They’re supported by taxpayer money and overseen by public organizations—often school districts. All charter students must participate in state tests and related accountability measures. However, charter schools are operated by independent organizations, usually nonprofits, so they’re free from top-down mandates and bureaucratic red tape that often constrain district-operated schools.

In exchange for increased autonomy, charters are held accountable through performance contracts with authorizers, who close or replace them if their students aren’t learning enough. Most charter schools are schools of choice, and unlike magnet schools in traditional districts, they are not allowed to select their students. If too many students apply, they hold a lottery to see who gets in.

Continue reading at Forbes.