Russia invaded Ukraine in February 2022, placing the European Union in a bind and forcing a choice between supporting Ukraine with aid, arms sales, and sanctions on Russia on the one hand, or withholding support to maintain Russian natural gas supplies. Before the invasion, Russia served as the largest supplier of natural gas to the EU through multiple pipeline systems and as Liquified Natural Gas (LNG). Europe chose support for Ukraine, and two key pipelines were shut off following the invasion.
The EU has sought to increase LNG imports from around the world to make up the gap as best as possible, and global gas prices skyrocketed as a consequence. The U.S. has stepped in as a key LNG supplier, sending nearly triple the quantity of LNG to the EU through August 2022 compared to the first eight months of 2021. The U.S., EU, and other allies with ambitious climate agendas should also seize on the crisis as an opportunity to expand and speed up deployment of clean energy and efficiency technologies to the greatest extent possible.
American exports are limited by the available capacity of liquefaction terminals, so the increase in shipments to Europe has come at the expense of other global customers for U.S. natural gas. The EU has spent the past several months purchasing as much LNG as possible to hit storage targets, along with a raft of policies aimed at expanding alternative sources of energy, encouraging conservation, and supporting households with subsidies.
The squeeze on supplies has loosened since September, as storage tanks across Europe have reached their capacity, and warm fall weather lessened seasonal demand. Through a combination of luck with the weather, curtailed industrial output, and expensive inventory buildup through LNG import growth, the European Union has made it nearly to the end of 2022 without a disaster. But the limits of LNG import and storage capacity, the vagaries of winter weather, and success in deploying clean energy and efficiency technologies will each continue to affect the EU, its energy markets, and its climate ambitions for the foreseeable future.
EU ENERGY SUPPLIES BEFORE AND AFTER RUSSIA’S INVASION
In terms of overall supply, the EU imported 58% of its energy in 2020, down slightly from the pre-pandemic figure of 60% in 2019. Natural gas makes up 24% of all the primary energy consumed in the EU, with import dependency and share of natural gas in overall energy supply varying by country.
In 2019, a “normal” pre-pandemic year, the EU’s total energy supply added up to 16.5 Petawatthours, of which 24% or 3.9 PWh came from natural gas. In that year, the EU imported a total of 440 bcm of natural gas, of which 38% came from Russia through the Nord Stream, Yamal, Turkstream, and Ukrainian pipeline systems and via LNG tanker. The remaining share was supplied by Norwegian, North African, and Turkish-Azerbaijani pipelines and by LNG tankers from around the world. After Russia, the largest exporters of LNG in 2019 were Qatar, Nigeria, and the United States (which supplied 3% of EU gas imports in 2019).
This picture of Europe’s pre-war energy reliance underscores the importance of Russia’s decision to weaponize its energy resources since its invasion of Ukraine. The Yamal Pipeline, running through Belarus to Poland, has been shut off since July. Now, the Nord Stream pipeline in the Baltic, which was running below capacity for several months while Gazprom claimed maintenance issues but is now offline due to suspected sabotage, is permanently out of commission as well. Prior to the invasion and shutoffs, these pipelines would be supplying roughly 800 mcm and 1,200 mcm respectively per week around this time of year.
The set of pipelines running through Ukraine supplied more variable quantities of natural gas in pre-invasion years, but has been supplying between 260-280 mcm of natural gas per week, or roughly 10-20% below prewar maximums ranging from 1550-2250 mcm per week. Unlike the other three main pipeline systems sending Russian gas to the EU, the Turkstream pipeline has not been severely curtailed, but it supplies smaller, variable amounts with a range this year of 34 to 323 mcm per week.
Cumulative Russian gas exports through midOctober to the EU and the U.K., as measured by Bruegel and ENTSOG, dropped by 74.5 bcm compared to the average for the same length of time for the years 2015-2020. That leaves a huge hole in Europe’s energy supply, equivalent to 4.8% of total energy supply for the EU in 2019. If Russian exports continue at 500 mcm per week, roughly continuing the trend since August, the total loss will reach 6.8%.
Imports and storage have helped make up part of this gap, but due to their relatively fixed capacity can only contribute as much as the EU’s present energy infrastructure allows. Data from the EU’s gas transmission system shared by Breugel show that European storage has filled to nearly the all-time maximum as importers rushed to replace cut off Russian supplies even after prices spiked:
While the Breugel data for 2021 and for previous years show that gas stocks usually started drawing down at this time of year, that’s happening more slowly this year as Europe attempts to store the absolute most it can for the winter. But since storage is nearly full and LNG imports do not necessarily have a place to go in the EU, LNG future prices have dropped back to a point comparable to post-invasion, preshutoff levels:
Looking ahead, future markets expect prices to stay elevated for the coming year at least and major uncertainties remain. In the meantime, painful tradeoffs are being made. The EU agreed to union-wide targets for storage, which they have since exceeded, and for reductions in gas demand of 15% through this coming March.
While good weather so far this fall kept building heat demand for gas low, the elevated price of natural gas has still hit consumers in heating, electricity, and especially industry. Industrial gas consumption dropped by 25% in the third quarter of this year, and continued high costs have come to threaten the viability of European plants in energy-intensive industries like chemicals, basic metals, and mineral producers. High gas costs also are passed through electricity prices to other energy-intensive industries that do not consume significant quantities of gas directly, and to households.
In France, where a nuclear-heavy grid might have been expected to lessen the blow to the power system, a set of prolonged maintenance issues have kept reactors from providing a crucial backstop. The EU and its member states are exploring and adopting various policy tools to subsidize households, diversify supplies of gas, and speed deployment of efficiency upgrades, renewables, and electrified end-use technologies like heat pumps that can help replace gas combustion where possible.
Many of these initiatives will take time to bear fruit, and in the meantime nobody in the financial markets or elsewhere can fully predict the most important immediate factor in Europe’s energy shortage: the weather this winter. A cold winter means higher demand for heating and electricity, and fixed import and storage capacity might not be able to keep up without painful tradeoffs for the EU.
AMERICAN LNG TO THE RESCUE
Into the Russia-sized hole in European energy budgets step the United States, Qatar, and Nigeria. A major global producer and now exporter of oil and natural gas, America is host to the largest LNG export capacity of any country in the world, with seven liquefaction terminals together averaging 11.1 bcf in exports per day in the first half of this year.
U.S. exports to the EU were already growing for years before the invasion, as the graph above shows. But U.S. firms have stepped up shipments to the EU massively since Russia’s invasion:
U.S. LNG exports to Europe increased by 2.8 times in the first eight months of 2022 compared to the same period in 2021, up from 512 bcf to 1,413 bcf. EU neighbors Turkey and the U.K. also roughly doubled their imports of American LNG over these periods, up by 67 bcf and 123 bcf, respectively. Global US LNG exports increased slightly in that time, to 2.6 trillion cubic feet through August of this year from 2.3 tcf in the first eight months of 2021, but capacity is fixed in the short run (absent maintenance problems like the May 2022 fire at the Freeport terminal, which is expected to resume exports soon).
While the “size of the pie” of overall U.S. gas exports grew ever so slightly, the main way that gas shipments to the EU have increased is by taking a larger slice of it from other would-be importers of U.S. LNG around the world, from 23% last year to 54% through August of this year.
For example, big customers of U.S. LNG in South America and Asia have seen sharp drops in American imports in 2022 so far. Brazil, Argentina, and Chile together imported 213 bcf less in 2022 than the same period in 2021. In East Asia, a slight increase in shipments to Taiwan was dwarfed by the huge drop in aggregate imports of China, India, Japan, and South Korea for a net decrease of 541 bcf. Smaller importers around the globe lost out too, as these decreases among big importers outside of Europe did not entirely offset the ravenous EU. As noted above, the share of overall American LNG exports going to Europe shot up from 23% last year to 54% so far this year.
Diverting shipments to the EU has the benefit of easing Russia-induced shortages across the Atlantic, but this strategy creates tradeoffs. Trading a concentrated, acute shortage in Europe for a diffuse shortage around the world means that the losers of a natural gas bidding war must contend with higher prices and foregone economic activity. Some will take the option of burning more coal instead, releasing more carbon dioxide and air pollution into the atmosphere.
CONCLUSION
Since the Nord Stream pipeline has now been not only shut off but damaged in a probable sabotage, global LNG suppliers have shipped nearly as much gas as storage can hold. Meanwhile, the war shows no signs of abating as Ukraine continues to claw back territories supposedly “annexed” by Russia. Europe thus could face a prolonged energy shortage and will continue importing significant volumes of LNG for the foreseeable future.
The United States must continue to boost exports of its relatively cleaner natural gas to Europe and the world. Otherwise, EU countries and other would-be gas importers could be forced to burn more coal to keep the lights on, or endure painful energy shortages.
Entering winter with nearly full storage capacity in the EU, global prices are higher than preinvasion benchmarks but dropping from their end-of-summer/fall peak. With futures prices high for the coming years, planned expansions to U.S. export capacity will help as they come online, but will take years. Expansions underway at three more liquefaction facilities are not expected to increase peak capacity from 13.9 bcf per day to 19.6 bcf per day until the end of 2025. With demand dependent on the uncontrollable factor of winter weather and short-run capacity for U.S. exports fixed, there remains much to do outside of direct increases in U.S. exports.
In Europe, supply-side policies to boost alternatives to natural gas such as expanding renewables generation and keeping older nuclear plants online will help keep the kilowatts flowing, emissions down, and energy costs from spiraling. Support on the demand side for electrified appliances to replace gas heaters and stoves and efficiency upgrades like insulation will ease the pressure on limited gas inventories and household finances.
These recommendations apply in equal measure to the U.S., where electrification and climate tech deployment can help add to the suite of available options for American consumers increasingly exposed to fickle international gas markets.
Planned expansions of LNG export capacity, and the pipeline systems required to feed them, should be acknowledged as a means to reduce global power-system emissions wherever they replace marginal coal combustion or natural gas produced in countries with higher leakage rates. As the methane mitigation policies in the Inflation Reduction Act and other potential policies like the new U.S. pledge at COP27 help reduce the impact of U.S. gas extraction upstream, the carbon advantage and climate benefits of globally abundant American LNG will grow.
Finally, as PPI has noted elsewhere, if American natural gas is to help Europe meet its carbon reduction targets, reducing upstream leaks and providing support to complementary energy technologies that speed decarbonization need to be part of the policy package.
PPI’s Center for Funding America’s Future today called on Congressional Leaders to prioritize the fight against inflation above all else as both Chambers race to complete the legislative priorities of the 117th Congress.
In their memo to leadership, Ben Ritz and Nick Buffie argue that Congress should not cut taxes or increase spending over the next year or in future years without concurrently offsetting the costs over the same time period. Doing so would double down on a borrowing binge that has worsened inflation and raised costs for hardworking Americans.
PPI’s Center for Funding America’s Future’s outlines key priorities for lawmakers to address in a fiscally responsible way that supports our economy and helps the Federal Reserve bring down inflation:
Providing adequate appropriations for normal government operations and new public investments
Supporting the fight for democracy in Ukraine
Restoring some expansion of the child tax credit
Restoring immediate expensing for R&D investments
Improving retirement security without costly budget gimmicks, and
Passing energy permitting reform to boost energy supply and combat climate change
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
FACT: International student enrollment in U.S. colleges and universities is down by 12,000 since 2018.
THE NUMBERS: Drop in international student enrollment for 2018/19-2022 –
Total U.S.:
-127,000 (-12%)
Arizona State University:
-652 (-14%)
Montgomery College:
-403 (-19%)
Hartwick College:
-8 (-22%)
Spelman College:
-15 (-47%)
University of Montana:
-199 (-70%)
WHAT THEY MEAN:
From Spelman College’s International Student site:
“Diversity is a large part of what makes Spelman a global leader in higher education. Spelman College welcomes women from all over the world, including the Bahamas, Ghana, South Africa, Japan, Trinidad, Tobago, Australia, the United Kingdom, Czech Republic, South Korea and Vietnam.”
Spelman, an historically black women’s college in Atlanta, reports 17 international students in a student body of 2,417 this year. Some other snapshots drawn from the U.S.’ kaleidoscopic array of 3,731 public universities, private colleges, religious schools, HBCUs, arts academies, community colleges and more: According to the Common Data Set, which schools publish each year, in upstate New York Oneonta’s Hartwick College has 28 international students among 1,163 undergrads; looking west, Arizona State has 4,049 in a student body of 64,716, and the University of Montana, 83 of 7,223; and just north of D.C., two-year Montgomery College counts 1,751 international students among its 17,137 students.
The Institute for International Education’s Open Doors 2022 report provides a full national picture. In the 2021-2022 academic year, 948,000 international students were at school in the U.S., comprising 2% of America’s 16.9 million undergraduates and 12% of its 3.1 million graduate students. Most are here for a long stay with a degree at the end, and their top choices are technical subjects: topped by 290,590 aspiring engineers, 182,106 computer science and math students, and 147,293 in business and management. Some data points, and then a look at a perhaps troubling recent trend:
1. Origins and Destinations:Open Doors finds students from 218 countries and territories — essentially every place on Earth with the lone and slightly puzzling exception of Greenland. China’s 290,086 and India’s 199,182 represent a bit more than half the total. More data by country below; by region, exclusive of China and India, IIE counts 42,500 from sub-Saharan Africa; 3,700 from Central Asia; 102,000 from East Asia excluding China; 26,000 from South Asia apart from India; 49,000 from Southeast Asia; 83,200 from Europe; 10,800 from the Caribbean; 67,200 from Latin America; and 53,000 from the Middle East and North Africa.
By state, the top five destinations are California with 134,000 international students; New York with 114,000; Massachusetts with 71,000; Texas with 70,000; and Illinois with 47,000. By institution, eight institutions (NYU, Columbia, Northeastern, USC, Arizona State, University of Illinois/Champaign, UCSD, and BU) together enroll more than 100,000.
2. Tuition and Trade: Considered as a form of “trade,”* U.S. education ranks comfortably with U.S. exports of grains, cars and trucks, and metals. In 2019, the peak year for international enrollment, the Bureau of Economic Analysis reported $47.9 billion in “exports of travel services, education,” or 2% of the $2.5 trillion in total U.S. exports. A quick table puts this in perspective:
Total goods & services:
$2,528 billion
Agriculture:
$142 billion
Cars & trucks:
$57 billion
Education services:
$48 billion
Steel:
$13 billion
Alternatively, as part of the U.S. higher-ed economy, Princetonian Chengyu Ming finds that international students make up about 5% of the student body, but being in most cases ineligible for financial aid programs, they pay about 12% of U.S. higher-ed tuition revenue. American students abroad spent about $11 billion in 2019, so as a trade matter education services were about $36 billion in surplus.
3.Economics & Workforce: Having finished their degrees, some graduates go home. Others stay on in the U.S. to work. The high counts of engineering and math students, for example, underpin the large foreign-born scientist role in U.S. science and technology. The National Science Foundation’s Science and Technology Indicators 2022 reports that at master’s level, 34% of U.S. engineers and 47% of U.S. math/computer science workers are foreign-born, and at doctoral level the shares are 57% and 60%.
In sum: In an idealistic sense, all this represents a sort of republic of knowledge, with large and free flows of information and ideas between and among students, universities, scholars, and countries everywhere in the world. In more practical terms, students purchase knowledge and credentials for themselves, universities receive revenue, the overall U.S. trade deficit gets a modest offset, and U.S. science & technology get an immodest boost. With that, recent trends and policies raise some questions:
Having risen rising steadily from 1950 through the mid-2010s,** international student enrollment peaked in the 2018/2019 academic year at 1.095 million students and 5.5% of a 19.8 million student body. The count then dipped to 1.075 million in 2020 and 915,000 in Covid-stricken 2021, before this year’s modest rebound. By major, Open Doors counted 230,780 international engineering students in 2019 and 188,194 in 2022; and by state, international enrollments are down by 12,000 in Texas, 6,000 in Florida, 5,500 in Michigan, and similar percentages generally. Or, returning to the institutions sampled above, the Common Data Sets of the past five years show Spelman’s enrollment peaking at 32 in 2018 and falling to 11 in 2021, before rebounding to this year’s 17, the University of Montana’s down from 282 to 83; Hartwick’s from 36 to 23 with a 2022 rebound to 28; ASU off by 652 from its 4,692 peak, and Montgomery College down from 2,154 to 1,751.
Much of this decline came with the COVID-19 pandemic and is likely temporary. Another cause, though, is a set of Trump-era rules requiring multiple visa applications and limiting post-degree job opportunities, which make study in the U.S. more difficult and less attractive. The rationale appears mainly to be a foggy “lump-of-labor fallacy” thinking that higher international student admissions might require lower U.S. student admissions. In fact this has not happened, as foreign enrollment rose by about 700,000 between 1990 to 2019, U.S. citizen enrollment rose by 5.4 million, and the share of U.S. high school grads going on to college rose from 60% to 69%. It’s more plausible, in fact, that international students mostly paying full ride are subsidizing financial aid for larger college-bound U.S. born student body. Biden administration efforts to dial back these constrictions are still new and the 2022 rebound is encouraging though not dispositive.
* BEA and international trade statisticians generally classify education as a form of “trade” on the grounds that a foreign consumer is purchasing knowledge — differential equations, literary theory, CGE modeling, materials science, management case studies, etc. — plus valuable credentials assuming all goes well from an American provider.
** Long-term counts: In 1950, there were 26,000 international students in the U.S., making up 1% of the 2.4 million students. By 1980 these counts and fractions had risen to 290,000 students and 2% of 11.6 million students; in the millennial year 2000, 515,000 students and 3.5% of 14.8 million students.
FURTHER READINGS:
The Institute for International Education’s Open Doors 2022 has data on foreign students in the U.S. and Americans abroad. As a quick country-by-country addition, following China, India, Korea, Canada, Vietnam, and Taiwan come 7 countries with 10,000 to 20,000: Brazil, Mexico, Nigeria, Japan, Nepal, Bangladesh, and the United Kingdom; then 14 countries with 5,000 to 10,000: Iran at 9,295, followed by Pakistan, Germany, Turkey, Spain, Colombia, Indonesia, France, Kuwait, Hong Kong, Italy, and Thailand. A sample of the next tiers: 4,933 Malaysians, 4,916 Ghanaians, 3,982 Aussies, 2,651 Jamaicans, 2,407 Greeks, 2,202 from Oman, 2,027 Israelis, 1,466 Moroccans, 1,458 Poles, 1,355 Mongols, 1,228 Guatemalans, 1,091 Danes, 1,030 Portuguese, 1,026 Albanians, 714 from Paraguay, 631 Uzbeks, 485 Palestinians, 366 Armenians, 305 Yemenis, 197 Sierra Leonians, 159 Antiguans, 119 Tongans, 109 Estonian, 101 Laotians, 85 Fijians, 29 from Timor Leste, finally to two from the Vatican, and one each from Tuvalu, Sao Tome e Principe, and the Falkland Islands. Greenland seems to be the only locality without a student in the U.S. this year.
Open Doors 2022, with links to previous years and 1950-2021 enrollment totals.
Policy:
Inside Higher Ed on late-Trump effort to complicate student visa applications and after-degree job opportunities.
Montgomery College’s International Student services page.
Data:
NAFSA, the Association of International Educators, has state-by-state counts of tuition and other income; a look at international students at community college, and more.
Mingyu Chen on foreign student tuition payments, mistaken fears of “crowding out” U.S. applicants, and more.
The National Science Foundation reviews foreign and native-born employment in American science and technology.
And BEA’s services-trade data, with U.S. education receipts and spending abroad, Table 5.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Taylor Maag, Director of Workforce Development Policy at the Progressive Policy Institute (PPI), released the following statement in support of the Administration’s push to avert the looming rail strike and potential economic fallout:
“In September, the Biden Administration helped to negotiate a tentative agreement between rail workers and operators to avoid a strike and railway shutdown. This agreement was approved by labor and management negotiators and, when it was announced, those involved called it a fair resolution. However, this week, the deal was voted down by four of the 12 railroad unions. The lack of consensus means a looming strike.
“With less than two weeks until the strike deadline, the President has called on Congress to pass legislation that would codify this agreement and therefore avert a strike.
“While the President has been open about his hesitation to push a deal that has been rejected by some union members, he also said a rail strike would devastate our economy, as more than 500,000 Americans, many of whom are union workers, could be put out of work in the first two weeks. This concern has been reaffirmed by businesses across the country. The U.S. Chamber of Commerce and roughly 400 business groups, representing a wide range of industries, sent a letter to Congress on Monday calling on federal leaders to intervene before the deadline to ensure continued rail service to avoid the economic fallouts.
“While a voluntary agreement with the four holdout unions would be the best outcome, the risks to America’s economy and communities is too great. A rail strike could threaten the nation’s water supply, halt rail travel, and trigger even more disruption to the U.S. supply chain — which could potentially worsen inflation.
“PPI supports the Administration’s efforts and calls on Congress to adopt the agreement, without delay or modifications. Congress has the power to prevent a railway shutdown and deliver for the American people — we hope Congress makes the right choice.”
Ainsley most recently served as Executive Director of Policy for the Labour Party’s Leader of the Official Opposition, Keir Starmer
The Progressive Policy Institute (PPI) announced it is expanding its international operation to the United Kingdom, bringing on Claire Ainsley as Director of the PPI Project on Center-Left Renewal. This new U.K.-U.S. initiative aims to catalyze and create renewal of the center-left, as social democrats have seen a revival in their fortunes around the world.
The PPI Project on Center-Left Renewal will look at the political forces driving the changes and how center-left parties can build sustainable majorities in volatile times. Most recently, Ainsley was Executive Director of Policy for the Labour Party’s Leader of the Official Opposition, Keir Starmer MP.
“There is a real opportunity to galvanise a center-left agenda that can win in parliaments and for people. I am really excited to be working with PPI on this new U.S.-U.K. collaboration and look forward to working in partnership across the nations for our common cause,” said Claire Ainsley.
“We’re delighted to join forces with Claire Ainsley, whose insights into working class alienation in Great Britain also are highly relevant to America’s Democrats and center-left parties across Europe,” said Will Marshall, President and Founder of the Progressive Policy Institute. “Our collaboration aims at giving these voters a more compelling center-left alternative to right-wing populism.”
“Claire Ainsley is a wonderful addition to the PPI team. As our friends in the Labour Party are on the verge of returning to lead the U.K. after a disastrous few years of Tory failures, there is much to learn and compare in the U.K. and U.S. The center-left leadership of ideas and policy that benefit the working class is what PPI is cemented in and Claire brings a needed expert voice to our work in the U.S. and U.K.,” said Lindsay Mark Lewis, Executive Director of the Progressive Policy Institute.
The Project on Center-Left Renewal will officially launch in January of 2023. This is the second international project for PPI, with PPI Brussels established in 2018.
Prior to joining the Progressive Policy Institute as Director of the PPI Project on Center-Left Renewal, Claire Ainsley was the Executive Director of Policy to Keir Starmer, Leader of the Opposition and U.K. Labour Party. Claire also served as the Executive Director of the Joseph Rowntree Foundation, where she led JRF’s work on the social and political attitudes of people with low incomes. She is the author of “The New Working Class: How to Win Hearts, Minds and Votes,” which was published in May 2018.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Even as Republicans take narrow control of the House of Representatives, Democrats are still aglow over their political gravity-defying performance in the midterm elections. More gratifying than the partisan scorecard, however, is the big civic takeaway: Anti-democratic extremism mattered to America’s voters.
They can’t abide it and they voted against candidates who embraced it. This despite the punditocracy’s herd-like certitude that Americans can’t see beyond their kitchen table and would mainly vote their pocketbooks.
Many did – inflation was the top issued cited by voters, and those who gave it priority voted overwhelmingly for Republicans. But many didn’t, turning what would normally be big off-year election gains by the out party into a rebuke of Trumpism.
Consequently, U.S. democracy dodged a bullet this month, giving Americans something else to be grateful for this Thanksgiving.
Ben Ritz, Director of the Progressive Policy Institute’s (PPI) Center for Funding America’s Future, released the following statement in response to the Biden Administration’s announcement of another extension of the student loan repayment pause:
“Extending the pause on student debt repayments and interest accrual, which was first enacted in the early days of the COVID-19 pandemic, demonstrates a lack of concern about the squeeze that rising prices are putting on American families, especially those who don’t have the higher incomes associated with a college education. Even the administration has admitted that continuing the pause worsens inflation when they announced their previous plan to bring it to an end this year.
“We understand that the court challenges facing the president’s legally dubious attempt to cancel up to $20,000 of debt for some borrowers creates undue uncertainty for them. The White House should have considered the likely – and now ongoing – legal fight over this policy before promising debt cancellation to tens of millions of people. Regardless, there is no reason high-income individuals not eligible for debt cancellation under the president’s plan, or those who have balances of more than $20,000, should be exempt from repaying balances that have no chance of being canceled even if the administration prevails in court.
“The administration says repayments will resume ‘no later than’ August 30th. But every time they have said that in the past, they have kicked the can down the road. This shortsighted fiscal policy must come to an end. Democrats and Republicans in the next Congress must work together on a bipartisan basis to curtail the limited debt modification authority this administration has brazenly abused and replace it with real solutions to control the skyrocketing cost of higher education.”
FACT: PPI has published 171 papers, posts, op-eds, and Trade Facts so far this year.
THE NUMBERS:
Publication average, 2022: One every two days
WHAT THEY MEAN:
With staff preparing for holiday travel, in lieu of a regular Trade Fact we have some reading ideas for the long weekend: (a) highlights from PPI’s papers and posts over the past year; (b) four not-quite-canonical classics for the ambitious reformer already thinking about 2023; and (c) four book recs for sidewise, bottom-up, and overhead views of economic policy, trade, and technology:
1. Five reads from PPI:
Bill Galston & Elaine Kamarck, in The New Politics of Evasion, look at swing voters, the American political system, and liberalism in 2022.
Ed Gresser on the U.S. tariff system, mostly ineffectual as a job-preserver but quite good at taxing the shoes and clothes low-income families and single moms buy.
Paul Bledsoe’s prescient case against the European Union’s dangerous reliance on Russian gas (December 2021) and better alternatives for European security and emissions reduction.
Malena Daley cautions against antitrust over-enthusiasm in the tech world.
Arielle Kane examines the lessons of COVID-19 and preparation for the next pandemic.
And Taylor Maag and Gresser suggest replacing Trade Adjustment Assistance with all-worker-eligible supports.
2. The timeless wisdom of the classics:
At last! That long-awaited sub-Cabinet nomination (or alternatively Congressional subcommittee chair, Chief Negotiator assignment, White House Senior Director position, etc.) has finally come through. You’re memorizing the oath and preparing to change the world. Some lesser-known classics can help you see what’s ahead:
The Tactics of Reform — As you get started, remember that while issues and political coalitions constantly shift and change, the challenges of reform are always the same. As medieval knights must triumph over ogres, dragons, and giants, modern reformers must overcome entrenched defenders of the status quo, ossified procedures and vicious though pointless bureaucratic rivalries, and ruthlessly ambitious subordinates who care more about getting your job than the vision. Mervyn Peake’s Gormenghast books (1946-1959) are a sort of parable illuminating their likely tactics, from passive aggression and embittered moping to arson, defenestration, and insincere proposals for incremental change.
The Art of Persuasion — It’s a few months later. You’ve set out a vision and called in the ‘stakeholders’ … somehow logic, eloquence, and appeals to conscience and interest don’t seem quite enough. For additional persuasive power, try Darrell Huff’s How to Lie with Statistics (1954).
The Vigorous Leader — A year in. Reform is stalled, and your superiors in the administration (alternatively the Committee chair/your Cabinet officer/etc.) seem to be hearing more complaints than applause. Time for a stronger approach. Han Fei-tzu’s The Five Vermin (240 BC) helps you play to win, by silencing … forever … the greedy interest groups, preening intellectuals, shirkers, obstinate petty officials, and big-mouths of all sorts who are in your way.
The Perversity of Human Nature — It’s over. How could your steadfast supporters, tough but principled negotiating partners, and loyal opposition have behaved this way? Try ibn Marzuban’s The Book of the Superiority of Dogs Over Many Who Wear Clothes (920)
3. And four new (or new-ish) books on global-economy-related matters:
Jan-Werner Muller’s What is Populism (2016, still relevant though) on the origins and ideas of populist-nationalist movements in the U.S., Europe, and Latin America.
Our Trade Fact launch edition, on the case for liberalism in darkening times.
Happy Thanksgiving from all of us to PPI’s supporters, readers, and friends at home and abroad.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
The big news out of COP 27, the UN climate negotiations, according to most media was a global agreement to create a fund to provide developing nations more aid to explicitly address rising climate change impacts. Yet, this action, while justified, is at best a thin, temporary band aid. Because without deep cuts in greenhouse gases from huge polluters like China, the cost of climate impacts will soon skyrocket into the trillions, overwhelming the ability of rich and poor countries alike to address it.
So, what was done in Egypt to actually limit emissions and control global temperature increases, which after all is the central goal of the 2015 Paris climate agreement? Precious little. Instead, a perverse sort of political correctness on the global left overtook the needed focus on solving the climate crisis, much of which is now inarguably caused by autocratic nations like China, Russia, Turkey, Iran and Saudi Arabia, who were barely mentioned during these talks.
China’s annual emissions alone are nearly one-third of the global total, more than all the developed countries combined, and still rising. Global greenhouse emissions cannot decline — and climate protection cannot be achieved — until and unless China begins to cut its emissions. Yet, China was never under any intense pressure from developing nations to act at these negotiations. China’s President Xi Jinping, fresh from gaining a third consecutive five-year term as the leader of the Communist Party Conference, didn’t even bother to show up. Never mind, that China consumes nearly 60 percent of the world’s coal each year!
Platform work offers more flexibility and better earning opportunities for millions of working Americans providing unpaid care
Today, the Progressive Policy Institute (PPI) released a new report showing that on the average day, 36% of working-age Americans provide unpaid care for children, parents and other loved ones. This unpaid labor is worth $980 billion per year, according to this new report, titled “Platform Work and the Care Economy” and authored by PPI Vice President and Chief Economist Dr. Michael Mandel.
The report examines how the stress of this immense burden can be eased by the availability of flexible platform work, including companies such as Lyft, Uber, Doordash, and Instacart.
“Platform work provides an alternative that offers better scheduling and earning opportunities for unpaid caregivers,” writes Dr. Michael Mandel in the report. “Rather than requiring a choice between full-time work and no paid work at all, there is a flexible alternative.”
The report also explores the possibility that platform work may help narrow the longstanding gender gap in unpaid caregiving.
Dr. Michael Mandel is Vice President and Chief Economist at the Progressive Policy Institute in Washington DC and senior fellow at the Mack Institute for Innovation Management at the Wharton School (UPenn). He was chief economist at BusinessWeek prior to its purchase by Bloomberg.With experience spanning policy, academics, and business, Dr. Mandel has helped lead the public conversation about the economic and business impact of technology for the past two decades. His work has been featured by the Wall Street Journal, New York Times, Washington Post, Boston Globe, and Financial Times, among others.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
Welcome to the Care Economy, a term that is being used much more frequently these days. America’s aging population means that many workers are spending more hours than ever taking care of older parents. At the same time, the time burden of raising children has not diminished. That means roughly 36% of the working-age population is engaged in providing unpaid care on any given day, according to the annual American Time Use Survey from the Bureau of Labor Statistics (ATUS).
Overall, if Americans were paid $15 per hour for their unpaid caregiving labor, then the total value of the time spent on unpaid care would be $980 billion per year.
The nature of work in America, though, means that unpaid care is more stressful than it needs to be. In an ideal world, many people with caregiving responsibilities would search out part-time positions that fit their specific situations. But conventional part-time employment tends to offer much lower hourly pay than comparable full-time positions and, it turns out, much less flexibility. Therefore, caregivers are forced to either (1) accept low paying and inflexible parttime jobs; (2) take conventional full-time jobs, with all the stress of combining work and unpaid care responsibilities; or (3) drop out of the paid workforce completely. Notably, this difficult decision — and the burden of unpaid care in general — falls mainly on women. We estimate that the size of the caregiving gender gap can be valued at $325 billion per year.
This “caregiving gender gap” is especially large for part-time job holders. Among working-age women who hold part-time employment, 49% have unpaid care responsibilities on the average day, compared to 30% of men with part-time employment, based on our tabulations of the 2021 ATUS (Column (2), Table 1).
Further, these averages do not convey the unpredictable nature of the caregiving role. It’s one thing for a single working mother to arrange her schedule to be home by six o’clock to make dinner and assist with homework. It’s quite something else when a child suddenly falls ill and needs to be kept home from school for a day or a week. Eldercare is even more unpredictable. Medical crises can happen suddenly, as when an aging parent falls, breaks their hip, and can no longer stay in the house where they have lived for 50 years. The nature of aging is that unpaid care responsibilities cannot be postponed or scheduled in advance.
Government policies can certainly help ameliorate the burden of unpaid care. For example, the Family and Medical Leave Act of 1993 (FMLA) requires covered employers to provide unpaid leave for certain medical and family obligations. Currently, 11 states, including California, have put in place paid family and medical leave policies. In his April 2021 American Families Plan, President Biden proposed subsidizing high-quality child care for low-income and middle-income households, and “creating a national comprehensive paid family and medical leave program that will bring America in line with competitor nations that offer paid leave programs.” Some of these programs were incorporated into earlier versions of the Build Back Better legislation, but not the version that eventually passed Congress as the Inflation Reduction Act of 2022.
Even if this legislation had passed in its entirety, the structure of most full-time and part-time jobs is not supportive of unpaid caregiving responsibilities. First, most employers run lean operations without excess labor to rely on in times of emergency. The number of open positions hit record levels in the first half of 2022, according to the Bureau of Labor Statistics, driven by short-staffing in industries such as retail, health care, and transportation. Under these conditions, employers struggle when their employees can’t show up on short notice because of the need to suddenly take an aging parent to the doctor.
Second, government-mandated paid leave plans, like the one proposed by President Biden or currently in effect in states like California, typically offer only partial reimbursement of a participant’s usual pay. The workers who take time off to fulfill caregiving duties additionally have to worry about making up the lost income after the immediate crisis is over. Even the most flexible and supportive employers may be incapable of rearranging work schedules to provide more hours for someone returning from leave.
THIS PAPER: A FOCUS ON PLATFORM WORK
In this paper we demonstrate how platform work, such as work facilitated by companies such as Lyft, Uber, DoorDash, and Instacart can improve earnings opportunities for many Americans in the Care Economy. We first estimate the number of paid employees in the Care Economy, then compare it to unpaid job equivalents. All told, there are roughly 4.5 million full-time equivalent (FTE) workers engaged in eldercare. The child care services industry employs roughly about 700,000 (FTE) workers, up 10% since 2007.
These are substantial numbers, but fall far short of the actual time devoted to caregiving. Second, we use the ATUS to estimate the number of hours of unpaid caregiving, and translate those hours into full-time equivalent (FTE) jobs. We find that unpaid caregiving is equal to more than 30 million FTE jobs. By comparison, the health care and social assistance sector includes 17 million FTE paid jobs.
Third, we analyze how the unpredictability of caregiving is more conducive to platform work than to traditional part-time employment. In particular, we show two key advantages that platform work has over conventional part-time work: “downward flexibility” and “upward flexibility.” We define downward flexibility as the ability of the worker to choose to reduce hours on short notice to deal with unpredictable caregiving issues. We define upward flexibility as the ability of workers to increase hours after a caregiving crisis is over to meet existing financial goals and commitments.
Downward flexibility is often cited as an advantage of platform work for unpaid caregivers. They can fully customize their working hours, choosing to be home when children are home from school. They can adjust when, or even if, they work, to match unforeseen short-term changes in care arrangements, such as school being closed for a day. And they can step away from their work for extended periods to deal with major health crises, such as an elderly parent who is injured.
Upward flexibility usually receives less attention, but it is a key characteristic of platform work that differentiates it from an employer-employee relationship. In general, most jobs are timecapped, in the sense that the worker needs special permission from their immediate supervisor or higher-ups in order to work more hours. Someone who misses out on income when they take time off to care for their aging parent has no guarantee of getting enough hours to meet existing financial goals and commitments, especially if the company is operating under a tight budget.
Upward flexibility provides a way of addressing unexpected caregiving responsibilities while still continuing to pay for essentials, such as housing and food, meeting debt obligations, and/or saving for the future. Upward flexibility is especially important for low-income households that otherwise may struggle to stay afloat and take care of their children and parents at the same time.
Downward and upward flexibility makes it easier for both men and women to combine platform work with caregiving. A 2021 survey of drivers on one platform suggests that the percent of male drivers who report routinely providing care for family members or loved ones (56%) is quite high, and very near the percent of female drivers who are caregivers (61%), as shown in Table 1 (Column (1)). Indeed, the “caregiving gender gap” between men and women who choose platform work is much smaller than that gap for part-time workers in the general population.
Platform work could lead to a smaller caregiving gender gap because men who are unpaid caregivers, whether for children or adults, are more likely to seek out the flexibility offered by platform work. Alternatively, men who participate in platform work for other reasons can find it easier to take on unpaid care responsibilities, especially since they have the flexibility to earn more and still fulfill financial commitments and goals, including meeting debt obligations and saving for the future. Overall, this suggests that platform work can help narrow the caregiving gender gap.
THE GROWTH OF THE CARE ECONOMY
The Care Economy is becoming more economically meaningful in the United States, as the total number of people who need some form of care continues to grow. At the younger end of the age spectrum, the number of children under the age of 15 is up slightly in the 15 years since 2007. At the older end of the age spectrum, the number of Americans who are 65 and over has risen almost 60% since 2007 (Figure 1).
Over the same period, the amount of paid Care Economy work has continued to rise, especially work serving the needs of the elderly. Paid FTE employment in eldercare-related industries such as home health care providers and nursing facilities has risen by 41% since 2007 (Table 2). In particular, FTE employment at home health care agencies is up 70%. By comparison, the amount of overall FTE private sector employment rose only 8% since 2007. All told, there are roughly 4.5 million full-time equivalent workers engaged in eldercare.
The child care services industry employs roughly 700,000 FTE workers, up 10% since 2007. If we include all the informal arrangements with people who are paid to monitor and care for kids in their homes, then the total number goes up to roughly 1.5 million, based on a 2019 report from the CED. And to the degree that elementary and middle schools play a “caretaking” role, some portion of the roughly 6 million public school instructors and staff should be booked against the Care Economy as well.
So far, we have been considering paid caregiving. However, we can estimate the number of unpaid caring hours, based on the annual American Time Use Survey from the Bureau of Labor Statistics (BLS). The BLS collects data on daily activities from a rolling sample of about 9,000 adult Americans over the course of a year. Broad categories of time use include personal care, working, household activities such as food preparation and cleanup, purchasing goods and services, and leisure and sports (including watching television).
The categories of time use that we focus on are “caring for and helping household children and adults” and “caring for and helping nonhousehold children and adults.” (These two categories also include travel time). Table 3 lays out some of the basic facts from the 2021 ATUS about the number of hours devoted to unpaid caregiving as a primary activity. Line (1) gives the average percentage of the population aged 15+ engaged in unpaid caring or helping children and adults inside or outside the household. The table shows that 21.7% of the population cares for household members on an average day, and 9.1% of the population cares for non-household members on an average day.20 Line (2) gives average hours of unpaid caregiving per day for people involved in those activities. We multiply line (1) by line (2) to get line (3), the average hours of unpaid caregiving per day for the entire population, and then multiply line (3) by 7 to calculate the average hours of unpaid caregiving per week (line (4)).
We multiply line (4) by 275 million, the number of people 15 and over, to derive the total number of hours devoted to unpaid caregiving (line (5)). Finally, we calculate full-time equivalent employment by dividing by 40 hours per week (line (6)).
In total, we find that unpaid caregiving hours are equivalent to more than 30 million FTE jobs. That far exceeds the current amount of paid employment in the health care and social assistance sector, which is 17 million paid FTE jobs.
To put it another way, if people were paid $15 per hour for their unpaid caregiving labor, then the total economic impact of the unpaid care sector work would be $980 billion per year.
THE UNPREDICTABILITY OF THE CARE ECONOMY
The problem, of course, is that much of the unpaid caregiving is supplied by individuals who already have other responsibilities, including paid work. And it is often difficult to integrate since unpaid Care Economy tasks are often unpredictable. Caring for children, as any parent knows, involves frequent unanticipated crises of uncertain duration. Children may suddenly get sick, especially during the age of COVID, and can’t go to school or child care, leaving parents with no choice but to stay home or ask for help from friends or relatives.
The literature and anecdotes suggest that unpredictability is an even more important characteristic of unpaid eldercare. The elderly are likely to suddenly suffer from major illnesses or injuries, such as a stroke, that require a large amount of support. And their ability to take care of daily tasks, like getting themselves to the doctor, may deteriorate at unpredictable rates.
Unpredictability is an important reason why studies and reports consistently show a constant friction between work schedules and unpaid care needs. As one analysis notes:
“Particularly when care demands increase, the unpredictability and the duration of the caregiver experience is accompanied by increased stress, distraction and anxiety over lost productivity.”
The stress can be seen in an employee survey done for a 2019 report on “The Caring Company” from the “Project on Managing the Future of Work” at the Harvard Business School. The survey revealed that “32% of all employees had voluntarily left a job during their career due to caregiving responsibilities.”
What drove these voluntary departures? According to the report:
A closer look at the 32% of employees who admitted to leaving a job due to caregiving showed that this is a multigenerational issue. Care obligations can arise at one or more stages of a worker’s career. Employees cited taking care of a newborn or adopted child (57%), caring for a sick child (49%), or simply managing a child’s daily needs (43%) as the top three reasons for leaving. However, the obligation to provide care for other adults also featured prominently. A third of employees who left a position (32%) cited taking care of an elder with daily living needs as the reason. Almost 25% did so to care for an ill or disabled spouse, partner, or extended family member.
One academic paper identifies a clear difference between child care and eldercare:
While childcare has a fairly predictable pattern with children becoming less dependent on parents as they get older, eldercare is unpredictable, varies in duration, and tends to increase in amount and intensity over time as the care recipient ages.
The burden of the unpredictability of unpaid care mostly falls on women, because they disproportionately provide most of the unpaid care. That’s the “caregiving gender gap,” and no matter what set of numbers you look at, the caregiving gender gap is wide. Going back to Table 1, 49% of women aged 25-64 who work part-time report caring for household or nonhousehold members, compared to 30% of men aged 25-64 who work part-time. That’s based on the 2021 ATUS.
Here’s another illustration of the caregiving gender gap. Table 3 calculates that there are 909 million hours per week in unpaid care for household members, and 351 million hours per week in unpaid care for non-household members, for a total of 1.260 billion hours per week in unpaid care.
Out of those more than one billion hours of unpaid care per week in the United States, roughly 66%, or 840 million hours, come from women, and roughly 34%, or 420 million hours come from men. That’s a difference of 420 million hours per week. Valuing time at $15 per hour — which clearly is a floor — the size of the caregiving gender gap can be quantified as $325 billion per year (420 million hours per week x $15 per hour x 52 weeks).
CONVENTIONAL PART-TIME JOBS, FLEXIBILITY, AND WAGES
It’s important to stress that working a conventional part-time job — say, in the retail sector —typically does not solve the unpaid care issue. Research shows that conventional part-time employment is less flexible and lower-paid than full-time employment. For example, a February 2022 report from the Bureau of Labor Statistics used newly collected data to ask the question: “Does part-time work offer flexibility to employed mothers?” The authors’ answer was no.
…mothers working part-time are employed in jobs that lack many of the attributes that would characterize these jobs as flexible. Mothers in part-time jobs were less likely to have paid leave, work-at-home access, and advanced schedule notice. Although part-time jobs require fewer work hours, these shorter work hours may come at a cost of reduced flexibility, pay, and availability of family-friendly benefits.
For example, the report noted that mothers who worked part-time were less likely to have access to paid leave. Only 29.3% of mothers who were part-time workers had access to paid leave, compared to 76.0% of mothers who worked full-time.
Moreover, the report showed that employed mothers have less control over their work schedule in part-time jobs. According to the data, 22% of mothers in part-time jobs had less than a week’s notice of their work schedule, compared to 10% percent of their full-time counterparts. Similarly, only 50% of employed mothers in part-time jobs had at least 4 weeks advance notice of their schedule, compared to 71% for full-time employed mothers.
Other studies show similar results. “Among 30,000 employees at 120 of the largest retail and food-service firms in the United States… we find that a third of workers are involuntarily working part-time: They usually work fewer than 35 hours and would like to be scheduled for more hours at their job.”
Then there’s the question of pay. BLS data shows that part-time jobs pay considerably less than full-time jobs. Across the private sector, as of June 2022, average hourly wages and salaries for part-time workers came in at only $16.60 per hour, 47% below average full-time wages and salaries. Part-time work is also paid much less within the same occupational category. For example, within service occupations, part-time workers are paid wages and salaries of $13.16 per hour on average, 26% than full-time workers. Within sales and related occupations, part-time workers are paid $13.98 per hour on average, a full 55% less than full-time workers.
Obviously, part of that gap is because part-time workers have different demographic and education characteristics than full-time workers. But even taking those differences into account, the wage penalty for part-time work is still huge. According to a 2020 study, part-time workers “are paid 29.3% less in wages per hour than workers with similar demographic characteristics and education levels who work full-time. Even after controls for industry and occupation are added, part-time workers are paid 19.8% less than their full-time counterparts. … By gender, the adjusted wage penalty is 15.9% for women and 25.8% for men, suggesting that men pay a noticeably higher price for working part time.”
Moreover, “within all occupational groups, mothers earned less per hour when they worked part-time rather than full-time.” Most strikingly, “women working part-time in service occupations and sales and office occupations earned 75% of the earnings of their full-time counterparts, or 25 cents on the dollar less per hour.”
CHARACTERISTICS OF PLATFORM WORK FOR THE CARE ECONOMY
So far, we have established that unpaid care work is pervasive across the economy. Moreover, the high time demands and unpredictability of unpaid care suggests that caregivers would prefer work that leaves them enough time to provide care; is flexible enough to adapt to care crises; and does not require them to absorb a lower hourly wage for the “privilege” of working part-time.
Yet it is clear that conventional part-time work is profoundly biased against precisely the caregiving groups that would want to take advantage of it. With part-time work having lower hourly pay and potentially less flexibility, many people with care responsibilities opt for full-time jobs, or not working at all.
Table 4 shows the distribution of unpaid caregiving hours across full-time and part-time employees, and people who don’t have paid work, broken down by gender. We see that less than 14% of unpaid caregiving hours come from part-time employees. That low figure shows how problematic conventional part-time work is for people doing unpaid caregiving.
By comparison, platform-based work is better suited to people with unpaid care responsibilities. Table 5 lays out the reasons why. These include better schedule control, downward flexibility in work hours, upward flexibility in work hours, and earnings consistency. Let’s discuss each of these in turn.
Better control over schedules: As documented in the previous section, conventional part-time employment, especially in the retail sector, often gives workers little control over their own schedule. By contrast, platform economy work offers workers granular and immediate control over their own schedule. Given the unpredictability of caregiving responsibilities, that control is a huge advantage.
Downward flexibility is the ability of the worker to choose to reduce hours on short notice to deal with unpredictable caregiving issues. That is a major advantage of platform work for unpaid caregivers. They can choose totally customized working hours, such as being home when children are home from school. They can adjust their working schedules to match unforeseen shortterm changes in care arrangements, such as school being closed for a day. And they can step away from their work for extended periods to deal with major health crises that require focusing on caregiving responsibilities.
Upward flexibility can be defined as the ability of platform workers to adjust their use of the platform to increase their earnings opportunities to meet financial goals and commitments. That includes paying for essentials such as food and housing; paying for extras such as gifts and vacations; paying off debt; and saving for retirement or home purchase.
Upward flexibility is a key characteristic of platform work that differentiates it from an employer-employee relationship. In general, most conventional jobs are time-capped, in the sense that the worker needs special permission from their immediate supervisor or higher-ups in order to work more hours. Someone who needs to take off two weeks to care for their aging parent has no guarantee of getting enough hours to make up for the lost income, especially if the company is operating under a tight budget.
Upward flexibility provides a way of reconciling unexpected caregiving responsibilities while still meeting the family’s financial goals and commitments. Upward flexibility is especially important for low-income households that otherwise may struggle to stay afloat and take care of their children and parents at the same time.
Earnings consistency: Conventional part-time work usually incurs a wage penalty; most studies show that part-time workers make substantially lower hourly wages than similar full-time workers. This part-time “wage penalty” is typically larger for men. By contrast, platform work generally offers the same pay scale no matter how much time a worker puts in. To the extent that there are small wrinkles in the pay structure, such as incentives for driving during high-demand periods, they are mostly available to all drivers. Thus, platform work does not unfairly penalize workers for the “privilege” of working part-time.
IMPLICATIONS
The stresses of unpaid caregiving responsibilities are not well-suited to conventional part-time employment, forcing people to either work full-time or withdraw completely from the workforce. The choice is especially tough for people working in retail, service, or production occupations, which have less flexibility even than full-time jobs. And because women typically do two-thirds of the unpaid caregiving, the lack of a good flexible alternative falls even more heavily on them.
Platform work provides an alternative that offers better scheduling and earnings opportunities for unpaid caregivers. Rather than requiring a choice between full-time work and no paid work at all, there is a flexible alternative.
In addition, platform work may help spread the burden of caregiving. Consider the caregiving gender gap. As shown in Table 1, 49% of women aged 25-64 who work part-time are unpaid caregivers for household or non-household members. That’s according to the 2021 American Time Use Survey. But only 30% of men aged 25-64 who work part-time are caregivers. That’s a huge gap. By contrast, a 2021 survey of drivers on one platform shows that 56% of male drivers report that they “routinely provide care for family members or other loved ones” almost identical to the 61% of female drivers who report being caregivers. While these numbers are not directly comparable to the figures produced by the ATUS, the much smaller gender gap for the platform survey suggests that platform work makes it easier for men to combine part-time work with caregiving.
This reduced caregiving gender cap could be because men who have unpaid caregiving responsibilities, whether for children or adults, are more likely to seek out flexible platform work. Alternatively, men who are already doing platform work find it easier to take on unpaid caregiving without changing their overall goals and commitments, since they can add on more hours of work as needed to make up for the time spent on caregiving. Either way, platform work is associated with a more even distribution of caregiving responsibilities across genders.
As America ages, navigating the stress of the Care Economy in a fair way is going to become increasingly important. Platform work has an important role to play.
By Taylor Maag, PPI’s Director of Workforce Policy
Apprenticeship is engrained in America’s history — three of our Founding Fathers started their careers as apprentices. George Washington, for example, apprenticed as a land surveyor. Yet even with this 250-year runway, apprenticeships have not taken off in the United States as they have in other advanced nations.
Our country has about 500,000 registered apprenticeships today, mostly in traditional sectors such as building trades and heavy industry. As a share of their labor force, Great Britain, Australia, and Germany have roughly 10 times more.
It is puzzling that the U.S. hasn’t followed its peers in scaling up apprenticeship, a training model that is also a job, allowing people to work and earn while they are learning the critical skills necessary for good jobs and careers. It’s an especially relevant model now, when most U.S. jobs require at least some postsecondary education and training, and when employers, even in our tight labor market, report a serious shortage of skilled workers in their fields.
Progressive Policy Institute President Will Marshall released the following statement in reaction to Speaker Nancy Pelosi’s announcement that she would step back from leadership in the 118th Congress:
“The Progressive Policy Institute is glad to join in today’s outpouring of tributes to House Speaker Nancy Pelosi.
“She was the first woman to be elected to the nation’s third highest constitutional office. Over the course of two decades as Speaker, she has served her country with consummate skill, integrity and patriotism.
“At the same time, she has also been a highly effective party leader: smart, disciplined, fair, open-minded and, when the occasion demanded it, tough as nails. In good times and bad, she helped to keep her often fractious party united and focused on doing the people’s business.
“It’s not easy to combine these roles, but for Nancy Pelosi public service and Democratic politics are family traditions. She was born Nancy D’Alesandro in Baltimore, where both her father and brother served as Mayor.
“We won’t forget, and we don’t think the American people will forget, the courageous way Speaker Pelosi defended our democracy when it came under attack by a deranged and lawless president on Jan. 6, 2021.”
In the wake of the collapse of crypto exchange platform FTX, the Progressive Policy Institute (PPI) today sent a letter to leadership of the House Committee on Financial Services and the Senate Committee on Banking, Housing and Urban Affairs calling for a functional and modern regulatory regime for digital assets.
Efforts to provide clarity to the regulatory framework of stablecoins have advanced in the House Committee on Financial Services, albeit slowly. The crash of FTX is yet another example of customers losing their savings due to the failure of unregulated institutions, highlighting the need for quick action from federal policymakers on digital assets. PPI urges the leadership of the House Financial Services and Senate Banking Committees to come together in a bipartisan way and advance regulation that balances both the benefits and risks of digital assets for investors and future consumers.
The Honorable Maxine Waters Chair U.S. House Committee on Financial Services Washington, DC 20515
The Honorable Patrick McHenry
Ranking Member
U.S. House Committee on Financial Services
Washington, DC 20515
The Honorable Sherrod Brown Chair U.S. Senate Committee on Banking, Housing and Urban Affairs Washington, DC 20515
The Honorable Pat Toomey
Ranking Member
U.S. Senate Committee on Banking, Housing and Urban Affairs
Washington, DC 20515
Dear Chair Waters, Ranking Member McHenry, Chair Brown, and Ranking Member Toomey:
The collapse of crypto exchange platform FTX underscores the need for a modern, clear, and well functioning regulatory regime for digital assets. In a moment where uncertainty for cryptocurrency investors is rising — with customers losing their savings in the failures of unregulated institutions — the need for legislation to protect investors in the market for digital assets has never been more clear. But protecting investors while enabling the innovation that drives progress will require a balanced approach.
Stablecoins can mitigate the risk of volatility associated with other cryptocurrencies and capitalize on the benefits of digital assets, such as allowing for faster and more efficient transmission of money. However, without a regulatory definition of ‘stablecoins,’ other tokens call themselves stablecoins and are listed as such but are not truly stable, hurting consumers who invest in them. The industry has seen so-called-stablecoins lose value almost overnight, as evidenced by the collapse of TerraUSD in May 2022.
Bipartisan legislative efforts by House Financial Services Committee Chair Maxine Waters and Ranking Member Patrick McHenry have sought to address the need for regulatory clarity in the realm of stablecoins. These efforts can be an important building block in the effort to provide sensible protections for investors.
In the wake of the failure of FTX, regulation may need to be expanded to a broader scope. Fundamentally, though, regulation must both ensure stability and liquidity, and put appropriate measures in place to protect consumers when that is not the case. In regard to stablecoin regulation, a first step is defining a stablecoin as something backed by dollars, allowing consumers to determine legitimate value of digital assets in the market. Additional measures could include enforceable reserve requirements for stablecoins, transparency, and disclosure requirements for the assets backing those stablecoins, compliance with anti-money laundering/counter-terrorism financing rules, and clear rules regarding the timely redemption of payment from the sale of stablecoins.
Innovative payment systems like stablecoins bring competition to the banking and money transmission industries and can provide less expensive, more efficient payments. But legislation is needed to make this system more sustainable. It is crucial that Congress move forward to regulate digital assets, including stablecoins, in a way that balances their benefits and risks.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
FACT: 458 Native American-owned businesses exported in 2019.
THE NUMBERS: Average employment and payroll for Native American-owned businesses* –
Exporting firms: 21 workers at payroll of $59,260 per worker
Non-exporting firms: 8 workers at payroll of $39,370 per worker
* Census & Bureau of Economic Analysis 2020 report
WHAT THEY MEAN:
Observing the beginning of Native American Heritage Month two weeks ago, and with a Tribal Nations Summit at the White House set for the end of November, U.S. Trade Representative Amb. Katherine Tai says that in developing trade policy:
“We must ensure that Tribal leaders and Indigenous communities have their rightful seat at the table. For these reasons, USTR held our second and now annual Tribal consultation and we are determined to visit with, learn, and hear directly from Tribal leaders on the impact of trade policies on their communities. We also remain deeply focused on exploring how trade policy can enhance the economic well-being of Indigenous workers around the world.”
“Seat at the table” can sound like boilerplate, but in this case it’s not. Under a 2021 White House Memorandum, Biden administration trade (and other) officials have been holding regular “tribal consultations”, meant to solicit advice on policy from representatives of the 574 federally recognized Native American tribes. Some thoughts on the data, institutional steps, and an overseas model that might support this program:
1. Small but high-value export community: Statistical agencies provide some basic facts and data: 1.6 million Native American workers (BLS, 2022); 26,064 known Native American-owned businesses (Census & BEA, 2019); and 79,000 farmers and ranchers (USDA’s 2017 Census of Agriculture), half of whom live and work in Arizona and New Mexico. The Census/BEA report has specifics on exporters:
As of 2019, 458 Native-owned businesses were exporting. This made up 1.7% of Native-owned businesses, which is a bit below the 2.8% exporter rate for the total U.S. business community.
Per the job and pay figures above, the exporters are on average larger and higher-paying employers than non-exporters.
Canada is their main foreign market, buying $56.6 million of $164 million in known Native American exports. The UAE was second at $14.4 million, followed by the EU at $11.1 million, Australia at $7.4 million, and Mexico at $7.0 million.
Still unknown: what products are these businesses exporting? & is there a way to distinguish reservation-based firms specifically?
USDA’s figures, meanwhile, provide an exceptionally detailed portrait of Native American agriculture – 59 million acres of land; heavier on ranching than crops; $3.5 billion in annual sales, more women operators and more very small farms than the national average – but sadly do not provide export data. Larger tribal governments, however, do at times have statistical reports that can provide some insight. About a decade ago, for example, the Navajo Nation’s tribal enterprises Navajo Agricultural Production Industries estimated $2-$3 million in farm exports, all going to Mexico, in a Navajo agricultural economy then measured at about $35 million per year.
2. “Seat at the Table” Program Might be Broadened: Annual tribal consultations presumably offer tribal governments to raise concerns and identify opportunities that federal government trade officials may miss. (Opportunities to suppress overseas counterfeiting of tribal crafts, as the Indian Arts and Crafts Act works to authenticate tribal artisanal work and deter counterfeiting within the United States? Do trade agreements and national laws offer particular opportunities or create problems for tribes – Tohono O’odham, Blackfeet, Sioux, Mohawk, Inuit – with cross-border memberships?) This may be less effective as a way to provide reactions and advice on day-to-day negotiations and litigation; a complementary option would be to add tribal governments to the “Intergovernmental Policy Advisory Committee” – “IGPAC” for short, the “cleared-advisor” group created to give state, local and other sub-federal governments – which does not now and may never have had a tribal government representative.
3. An Overseas Model: The most ambitious foreign model for indigenous trade development is probably New Zealand’s “Trade Engagement with Maori” system, based on the 19th-century British-Maori Treaty of Waitangi defining Maori rights and New Zealand government obligations. Trade Engagement is a consultative system codified in a 2019 Memorandum of Understanding, which establishes regular meetings with clan leaders, field hearings, consultations on ongoing negotiations, and also provides explanations of features of New Zealand’s trade agreements meant to provide opportunities or special protections for Maori industry, agriculture, and intellectual property.
FURTHER READINGS:
The Biden administration’s Memorandum on Tribal Consultation.
From the National Congress of American Indians, President Fawn Sharp evaluates Biden Administration policies, and offers thoughts on tribal sovereignty, Internet access.
Data –
Census and BEA on American exporting businesses as of 2019. Sort on “Ethnicity, Race, and Veteran Status” to view Native American businesses; also features in-depth data on exporters by race & ethnicity (African American, white, Asian American, Pacific Islander, Hispanic), male/female, publicly/privately owned, and veteran status.
… and the Minority Business Development Administration’s Arizona center promotes Native American exports.
USDA’s summary of Native American agriculture, from the 2017 National Census of Agriculture. (The Census comes out every five years; USDA is now working on the 2022 edition). This finds 79,198 Native American farmers and ranchers, running 60,083 operations on 59 million acres of land – 6.5% of U.S. farmland overall – and producing $3.5 billion in agricultural output.
An overseas model –
New Zealand’s Ministry of Foreign Affairs and Trade explains the Trade Engagement with Maori program, including Maori benefits in current New Zealand-Taiwan negotiations, the CPTPP, the PACER-Plus arrangement with Pacific island states, and others.
Policy (1): Intellectual Property Rights –
Tribes as groups, and Native American artisans as individuals, are routine targets for intellectual property theft. Companies continue to use tribal names for profit without permission or payment, and counterfeiters based in Asia copy tribal crafts and sell them as originals not only overseas but in the United States. Secretary of the Interior Deb Haaland (Laguna Pueblo) pictured above) explains the Indian Arts and Crafts Act and options for protecting consumers and artisans from counterfeiters.
National Geographic (2018, subscription required) has a case study, reporting on a large-scale case of counterfeiting of Zuni, Navajo, and other tribal crafts in the mid-2010s, with maps of counterfeiters in the Philippines and China and import routes.
Policy (2): Cross-border Nations –
The Tohono O’odham tribe, with land just west of Tucson, on the U.S.-Mexican border and its current implications for tribal family relationships and economy.
St. Regis Mohawks, on the south bank of the St. Lawrence River; Mohawk Akwesasne in Ontario is across the river on the north bank.
And Inuit Circumpolar Council represents Inuit in the U.S., Canada, Greenland, and Chukotka (Russian far east) in Arctic policy discussions.
Case study –
The Navajo Agricultural Production Enterprise (NAPI), reports $2-$3 million in annual farm exports — pinto beans, corn, wheat and fresh produce such as apricots and cherries — principally to Mexico.
And the Navajo Arts and Crafts Enterprise (NACE) features works from three reservation silversmith shops and 30 weavers, helping artisans and elderly people to supplement family incomes, raise the prestige of craft traditions among young people, and enables U.S. and foreign buyers to buy directly from tribal artisans and avoid counterfeits. They report about $150,000 in annual exports.
And for policy updates, the Navajo Nation’s Washington office.
USDA’s Foreign Agricultural Service on agiculture and seafood export promotion (could use an update).
The Commerce Department’s Senior Advisor on Native American Affairs.
The webinar earlier this week, from the Ex-Im Bank and the National Center for American Indian Business Development, on export finance opportunities.
ABOUT ED
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
Will the combination of high cost increases and low digital inflation spur reluctant companies to digitize?
One of the pleasant economic surprises in recent months has been the low rate of inflation for digital goods and services, compared to the overall inflationary surge. The latest producer price report, released November 15, shows that a basket of digital goods and services (described below) had a median year-over-year price increase of 1.9%. By comparison, the overall year-over-year price increase for final demand, less food and energy, was 6.7%.
We wrote about this big gap between “New Economy” digital inflation and “old economy” inflation in a December 2021 blog item. In June 2022, leading economic statistician Marshall Reinsdorf wrote a paper for PPI examining the continued slow rate of price increases for most digital goods and services.
The growing gap between overall inflation and digital inflation means that the relative price of digital goods and services is falling. To put it another way, in the low-inflation era that preceded the pandemic, many companies enjoyed the benefit of low costs without having to make expensive and potentially risky investments in digitizing their operations.
Now that easy period is over. Companies are looking at technology as a way out of their high-cost trap. Business spending on software, computers, and communication gear hit an all time high in the third quarter of 2022. The layoffs at companies such as Amazon and Facebook notwithstanding, there’s no evidence that companies in the aggregate are cutting back on tech investment. A survey from Gartner predicts a 5% gain in tech spending in 2023.
Nobody likes inflation. But there may be a silver lining if the threat of rising costs forces companies to take digital steps that should have come years ago.
Our price index of digital goods and services includes:
Bundled access services
Cable and other subscription programming
Communications equipment mfg
Computer & peripheral equipment mfg
Data processing and related services
Electronic and mail-order shopping services
Internet access services
Internet publishing and web search portals
Semiconductor and other electronic component mfg
Software publishers
Video programming distribution
Wireless telecommunications carriers
Information technology (IT) technical support and consulting services (partial)
