Today, the Progressive Policy Institute and PPI’s Mosaic Economic Project hosted a webinar with special guest Senator Kirsten Gillibrand (D-NY) on policies to help women return to the workforce following the devastating effect of the pandemic on women’s labor force participation.
The panel included esteemed policy experts on labor, child care, and gender and racial equity, including Chandra Childers, Study Director at the Institute for Women’s Policy Research, Elliot Haspel, Author of Crawling Behind: America’s Child Care Crisis and How to Fix It, and Rhonda V. Sharpe, founder & president, Women’s Institute for Science, Equity, and Race.
“The pandemic recession threatens to erase decades of progress in women’s labor force participation, which hasn’t been this low since the 1980s. But we know that even before the pandemic, women and working mothers were not adequately supported and struggling to thrive. That’s especially true of Black and Hispanic female workers. As the White House and President Biden unveil the American Family Plan this week, we hope that policies to support women and working families are top of mind. We also thank Senator Gillibrand for being a tireless advocate for women and families throughout her time in Congress,” said Veronica Goodman, Director of Social Policy at PPI and moderator of the event.
The event covered a wide variety of roadblocks women face when returning to the workforce, including access to paid family leave, affordable child care, workforce development, and expanding apprenticeships and other educational and job training opportunities.
According to the Department of Labor, Black and Hispanic women workers were disproportionately impacted by the pandemic, as they are overrepresented in low-paying service sector jobs, which were slower to hire workers back as communities reopen and recover from the pandemic. As of March 2021, almost 1.5 million fewer moms of school-aged children were actively working than in February 2020, according to the U.S. Census Bureau.
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.
The Mosaic Economic Projectbrings together a network of diverse women who are experts in economics and technology – fields where women’s perspectives are grossly underrepresented. Mosaic trains, connects, hosts and advocates for the network’s participation in meaningful policy influencing conversations, with a particular focus on Congress and the media.
Prospects for economic recovery are brightening as nearly 3 million Americans per day get their Covid shots.But 18 million Americans still rely on unemployment insurance (UI) benefits, and many will continue to do so until the job market fully recovers and they can return to work. Fortunately, President Biden’s American Rescue Plan (ARP) Act, signed March 11, extended the benefits of 11.4 million jobless Americans until September 6.
Having averted an immediate crisis, the White House and Congressional leaders should now work to transform UI benefits so that they automatically deliver vital aid throughout this downturn and those in the future.
Unfortunately, it appears they cannot count on bipartisan support. As they did in 2020, Senate Republicans fought to cut the pandemic extension’s generosity, claiming it discourages people from taking jobs.To keep GOP obstructionism from causing yet another harmful lapse in September, Senator Ron Wyden is pushing to automatically extend the expansion until the unemployment rate falls below a predetermined threshold.
This makes sense from both a humanitarian and an economic perspective. Lawmakers should not only tie the generosity of benefits to the unemployment rate during this recession, they should do so permanently to insulate all future UI expansions from partisan wrangling in tough economic times.
In addition to preventing premature interruptions in benefits, this change would make future economic slumps less severe. Federal programs like UI that spend more in weak economies and less in strong ones are “automatic stabilizers” because they moderate swings in the business cycle without requiring Congressional action.
Replacing unemployed workers’ lost income through UI enables them to keep paying their bills, which helps to sustain demand across the
entire economy.
U.S. policymakers also should work to modernize other elements of the UI system. As we saw last spring when unemployment surged, outdated computer systems hampered states’ ability to get benefits to idled workers quickly. Congress wisely included $2 billion in ARP for updating UI systems. States should seize this opportunity to modernize their computer systems, and federal lawmakers should offer more resources if necessary.
In addition, Congress should develop a more equitable financing system for UI that fully pays for these expansions over the business cycle. The federal government and the states currently only apply their respective UI payroll taxes to workers’ earnings below a maximum level, which is typically very low. As a result, many low earners pay exactly as much in UI taxes as welloff workers do despite receiving smaller benefits when they become unemployed. The federal government should fully pay for these expanded benefits across the business cycle by raising more revenue from incomes that UI does not tax today.
More specifically, this policy paper proposes that the Biden administration and Congress embrace the following changes in unemployment insurance:
Permanently tie the share of lost wages replaced by UI benefits to the unemployment rate.
Offer Extended Benefits for more weeks during severe recessions.
Fund state IT modernization efforts and avoid duplication of efforts by developing UI administration technology for states at the federal level.
Cover more jobseekers who are not currently eligible for UI by helping self-employed people save for gaps in work and expanding work-sharing programs.
Pay for these reforms across the business cycle by taxing higher incomes than the program currently does.
Adopting these complementary sets of reforms – pegging UI benefits to the unemployment rate and modernizing the way benefits are delivered and financed – would create a stronger safety net for laid-off workers and help temper economic contractions.
The Honorable Nancy Pelosi
Speaker
United States House of Representatives
Washington, DC 20515
The Honorable Charles E. Schumer
Majority Leader
United States Senate
Washington, DC 20510
Dear Speaker Pelosi and Majority Leader Schumer,
The Progressive Policy Institute (PPI) commends President Biden’s push to fund long-neglected public investments like transportation, research and development, clean energy infrastructure, and a highly skilled workforce in the next phase of his “Build Back Better” agenda. We also applaud the president and his team for acknowledging the need for raising revenue to offset most of the costs of his American Jobs Plan and offering concrete proposals to do so.
The federal budget deficit will top $3 trillion for the second consecutive year in 2021, leaving the federal government owing more money than the economy produces annually for the first time since World War II. Although borrowing whatever sums were necessary to combat the covid recession was justified, structural deficits will persist and continue growing larger after the economy has recovered. Moreover, our recovery has thus far been “K-shaped”: those who entered this crisis flush with wealth in stocks and real estate are emerging wealthier than ever before, while lower-income workers and the unemployed are falling farther behind. Americans deserve a recovery package that is substantially funded by progressive adjustments to our tax code.
We understand that the administration’s ambitious blueprint has controversial features and will trigger robust debate in Congress. Our view is that Congress should consider a wider array of tax changes to offset the costs of whatever it eventually passes. Building off of discussions with moderate lawmakers who have expressed similar desires, PPI has developed a menu of radically pragmatic options for strengthening the government’s fiscal infrastructure and sustainably financing strategic investments in America’s future growth.
We respectfully encourage you to consider the following tax reforms, which would largely tax wealth instead of work and make federal taxes more progressive:
Raise the tax on inherited fortunes. Less than 0.1 percent of inheritances are subject to the federal estate tax, which allows heirs to inherit up to $23.4 million tax-free from the estate of a couple. There is simply no good reason that a wealthy heir should pay less in taxes than a middle-class schoolteacher or an entrepreneur who earns their wealth through hard work. Replacing the estate tax with a progressive inheritance tax (one that taxes inherited income at the recipient’s ordinary tax rate plus a 15 or 20 percent surtax) would raise an enormous amount of revenue while deconcentrating wealth in America. Every dollar raised from taxing the unearned income of the super-wealthy is a dollar the government does not need to raise by taxing work or productive investment.
Reduce Tax Preferences for Capital Gains. Capital gains are currently taxed up to 23.8 percent and while ordinary income is taxed up to 37 percent. Capital accounts for roughly 40 percent of income for households in the top 1 percent of the income distribution, compared to less than 2 percent of income for households in the bottom half, so reducing the disparity in tax treatment is an essential component of a progressive tax system. To ensure this change raises significant revenue, lawmakers should also repeal the “step-up basis” provision that allows recipients of inherited assets to permanently avoid paying taxes on untaxed capital gains that accrued during the original owner’s lifetime – otherwise, many wealthy Americans will simply choose to hold assets until death to avoid higher capital gains tax rates.
Institute a Value-Added Tax (VAT). Many developed countries, including Canada and all of those in the European Union, fund their generous social safety nets through a consumption tax collected incrementally at each step in a product’s supply chain. Economists prefer these consumption taxes over income taxes because they are harder to evade and reward people for saving and investing in growing the economy. Pairing a value-added tax with subsidies to hold harmless lower-income Americans could raise significant revenue in a progressive way without harming economic growth.
Put a price on carbon pollution. Congress should use our tax code to harness the power of market mechanisms to limit the damage of climate change. Placing a fee equal to the social cost of carbon on producers puts those social costs on the emitter and ensures that carbon is only emitted when the benefits outweigh the true costs. Carbon-intensive businesses would pay higher taxes for producing more carbon and businesses that invest in reducing their emissions would gain a competitive advantage. A carbon price would especially help frontline communities most vulnerable to the impacts of climate change by reducing emissions, and these benefits could be further enhanced by earmarking some of the revenue raised to be invested in targeted climate mitigation efforts.
Transition to mileage-based fees. Revenue raised by federal taxes on motor fuels have failed to keep up with transportation funding needs, both because Congress never indexed the rates to inflation and because improvements in vehicle fuel efficiency are reducing the amount of gasoline that the average driver needs to buy. That shortfall will only grow worse as our country makes the transition to electric cars and trucks. A mileage-based fee would be neutral as to fuel type while ensuring that what you pay to use the roads is related directly to how much you use them. Although a national vehicle-miles traveled (VMT) fee for all vehicles may not be not practical now, adopting a VMT for commercial trucks and launching pilot programs for passenger vehicles would put our transportation infrastructure on the road to sustainable funding for the future.
Raise the corporate income tax rate. Real corporate tax reform would have lowered the corporate income rate and paid for it by broadening the tax base. But while the GOP tax law’s corporate tax changes did curtail some deductions, it did not do nearly enough and gave away hundreds of billions of dollars more in revenue than it raised. The net revenue loss was an unaffordable tax giveaway to the wealthy that should be recouped by raising the tax rate.
Cap itemized deductions. Itemized deductions are worth more to taxpayers in higher tax brackets because they would have owed more on each dollar deducted if it had been taxed. Capping itemized deductions at 24 or 32 percent ensure that people in higher tax brackets receive no greater benefit per dollar deducted than people in the tax bracket at which the cap is linked.
Increase resources for IRS enforcement. The IRS estimated 10 years ago that taxpayers failed to pay over $400 billion in tax obligations annually. But instead of trying to reclaim that money by spending more on tax law enforcement, Congress has cut the IRS’ budget in inflation-adjusted dollars by nearly 20 percent since then. As a result, the IRS is now 80 percent less likely to audit people earning over $1 million than it was in 2011. Spending more money on tax enforcement will help the IRS crackdown on tax evasion by the wealthy and reduce federal budget deficits.
Now is the time to pass a big, bold recovery package that funds America’s future. With your leadership, we can set our country on the path to sustainable and equitable growth.
The Biden administration released its American Jobs Plan yesterday – a bold package with critical investments in infrastructure and America’s workers. Among its more ambitious aims is $100 billion set aside for workforce development. This includes a long overdue investment to diversify career pathways, through approaches such as apprenticeship programs, a focus on sector partnerships, and a new and robust program for dislocated workers. There is a lot to cheer for in the AJP—here are five ways it gets it right in pairing job creation with next-generation training programs.
Investing in Workforce Development and Worker Protection. For decades, the United States has lagged other high-income countries in workforce development. The AJP calls for a $48 billion investment in workforce development and worker protection, which includes funding for registered apprenticeships and pre-apprenticeship programs. In total, this would create one to two million new registered apprenticeships. PPI has long-called for the U.S. to increase apprenticeships 10-fold and provide workers with career pathways that do not require a four-year degree. We’ve also advocated for two specific ways to modernize apprenticeships: Congress should formalize and incentivize intermediaries (public or private) by subsidizing them to create “outsourced” apprenticeships, and government at all levels should create public service apprenticeship opportunities and programs, including in industries such as information technology, accounting, and health care.
Expanding Career and Technical Education. The plan recognizes the need for investments to expand career and technical education (CTE) and workforce-readiness programs for middle- and high-school students. The 10 million jobs lost by Americans at the pandemic’s onset disproportionally impacted young adults between the ages of 16 and 24, and some estimate that as many as 25 percent of our youth will neither be in school nor working when the pandemic ends. According to the U.S. Department of Education, high school students enrolled in programs with a CTE concentration are more likely to both graduate and earn higher median annual salaries than those who did not participate. These investments will set up students to be better prepared to enter the labor force upon graduation and gain their economic footing as they transition to adulthood.
Addressing Inequities. Women and minorities have been disproportionately impacted by job losses during the pandemic and have historically been excluded from infrastructure jobs. Acknowledging these inequities, the plan calls for “strengthening the pipeline for more women and people of color to access apprenticeship opportunities,” such as through the Women in Apprenticeships in Non-Traditional Occupations program. Another option would be to increase training programs and increase apprenticeship slots in industries dominated by women that face worker shortages, such as early childhood education and care, and pair these jobs with competitive wages.
Supporting Job Training with Smart, Evidence-Based Policies. The AJP acknowledges that we need forward-looking, evidence-based approaches to train the next generation of American workers and help those who might need to reskill or upskill, including laid off workers during the pandemic. The White House calls for a “a $40 billion investment in a new Dislocated Workers Program and sector-based training.” These funds would be allocated to help train workers get trained with skills in high-demand industries, such as clean energy, manufacturing, and caregiving. To ensure the success of such programs, the White House draws on evidence that completion rates are highest when workers are provided with wrap-around services, income supports, counseling, and case management to overcome the barriers to finishing their training.
Empowering Workers and Unions. Lastly, the AJP emphasizes the important role of union jobs as the backbone of the American middle class. The proposed legislation includes important provisions for strengthening the rights of workers to organize and for making sure that employers who benefit from the plan adhere to appropriate labor standards and do not interfere with workers’ exercise of their rights. Enhancing the power of workers in our economy is critical to supporting good jobs and a strong middle class.
The Covid recession has left over 10 million Americans out of a job and millions of workers might not have a job to return to when the pandemic is over. For them, the AJP would create a diverse set of pathways to connect them with quality jobs offering livable wages. We hope that when Congress takes up this package in the coming months, they will pursue equity not just for underrepresented groups in workforce development, but also for those who lack a college degree yet make up a majority of the labor market. For them, access to pathways that do not require a four-year degree will be critical to help them regain their economic footing. Overall, the AJP meets the moment to address historic job losses and infrastructure in need of significant public investment.
After passing President Biden’s $1.9 trillion American Rescue Plan, Congress is beginning to move on enacting the rest of his “Build Back Better” recovery agenda. This next bill presents a unique opportunity to finally fund long-neglected public investments in infrastructure and scientific research that lay the foundation for robust economic growth. But at a time of skyrocketing budget deficits and rising inequality, lawmakers should also be pursuing changes to our tax code that equitably and efficiently raise enough revenue to fund these and other national priorities.
Unfortunately, Republicans in Congress seem to believe the opposite: on the same day they voted unanimously against giving aid to help lower- and middle-income Americans weather the pandemic, Senate Republicans introduced a bill to cut taxes exclusively for multi-millionaires who inherit their wealth. The GOP’s tone-deaf pursuit of their tax-cuts-at-any-cost agenda is galling: there is simply no good reason that a wealthy heir should pay less in taxes than a middle-class schoolteacher or an entrepreneur who earns their wealth through hard work. Lawmakers should raise taxes on inheritances, not cut them.
Barring some 11th hour drama in the House, President Biden is expected to sign his $1.8 trillion American Rescue Plan into law this week. It’s a landmark achievement that gives us reason to hope our government may not be broken after all.
Although he’s only been in office 46 days, Biden already has done more to lift the nation’s morale and make the economy work for everyone than his predecessor managed in four turbulent years. In case we’ve forgotten, this is what a real president looks like.
Biden’s plan focuses intently on defeating the coronavirus pandemic that has frozen normal life for a full year. It provides ample money to ramp up vaccinations, enable schools to reopen, help people who have lost their jobs and businesses, keep state and local governments running – all of which will speed economic recovery.
In shaping and steering the package through Congress, Biden has drawn on a deep reservoir of political experience and cordial relationships. He also has been abetted by qualified and competent White House staff (another contrast with the man he replaced). He has radiated calm and showed impressive discipline in ignoring political distractions and media sideshows to deliver swiftly on his core campaign promise.
The record will show the relief bill passed with almost zero votes from Republicans. But it will also show that Biden got the job done without vilifying his opponents or deepening the country’s paralyzing cultural rifts.
Plenty of pragmatic progressives – myself included – have misgivings about parts of the bill. Its cash payments are not well-targeted, and $350 billion appears to be more than state and local governments actually need. Those dollars would be better spent on science and technology, high skills for non-college workers, clean energy infrastructure and other essential public investments. Amid $5-6 trillion deficits and cascading public debt, we could face some difficult fiscal adjustments in the years ahead.
On the other hand, the Biden package is deeply progressive. It throws lifelines to vulnerable Americans who have borne the brunt of the virus and the Covid recession: the old, low-income workers, poor and minority communities with severe health challenges and hungry families. Through an expanded child tax credit, the bill also would create the equivalent of a child allowance that is expected to cut child poverty in half.
Policy disagreements aside, Biden correctly gauged the magnitude of the nation’s health and economic emergency. After a long, grinding year of loss, suffering and social isolation, his instinct to go big is right. So is his desire to cultivate national “unity” and reach out to reasonable Republicans, who are beset by extremists in their party.
This is what governing in a Constitutional democracy is supposed to look like. The public seems to approve, even if Biden’s left-wing detractors don’t. The most recent AP poll shows the president’s approval rating hitting 60 percent.
By clearing his first big hurdle, Biden has dealt himself a strong political hand for the next one: Winning passage of his coming “Build Back Better” plan for building a more just, clean and resilient U.S. economy.
In the coming days, the Senate will take up the $1.9 trillion covid relief bill that passed the House of Representatives last week on a party-line vote. It’s an essential measure that would fund a robust public health response to end the covid pandemic and provide vital economic assistance to struggling families. But no bill is perfect, and the Senate should seize the opportunity to better target relief funds and thereby position the U.S. economy for the strongest post-pandemic recovery possible.
Representative Ron Kind of Wisconsin’s 3rd District joins the PPI Podcast this week, offering the perspective of a Democrat in a district twice-won by Donald Trump. Kind discusses the work of the New Dem Coalition in the first few weeks of the Biden administration, the impact of Trump’s trade war on farmers, and the need for Democrats to step up in rural areas.
President Biden’s upcoming address to Congress is an opportunity to speak directly to the more than 10 million Americans who find themselves out of a job because of the pandemic recession. On the question of how to help these workers, Biden need look no further than the Build Back Better platform he campaigned on. A key element of the BBB platform is a $50 billion investment in workforce development, including apprenticeships.
Americans, especially young adults, need more pathways to careers that don’t require a traditional four-year college degree. While Millennials are the most educated generation in history, as of 2015, only about a third of Americans ages 25 to 34 were college graduates. That number is even lower for older Americans. Most people don’t go to college, and apprenticeships are an underappreciated way for finding jobs for the millions of job seekers who will have to find work after the pandemic, including those whose pre-Covid jobs might never come back. Compared to other high-income countries, the U.S. lags significantly when it comes to apprenticeships and other “active labor market” policies and it’s time for us to make investments to fill this gap.
Recently, the White House announced several ways that the Biden administration is strengthening registered apprenticeships across the country.
President Biden has endorsed Congressman Bobby Scott’s bipartisan National Apprenticeship Act of 2021, which will “create and expand registered apprenticeships, youth apprenticeships and pre-apprenticeship programs.” This legislation had been passed in the House in November 2020, in the last Congress, but the Republican Senate Majority failed to take up the bill for a vote. With Democrats now in the majority, there is renewed hope that the country’s underfunded and outdated apprenticeship system can finally be modernized to meet our 21st-century workforce needs. The reauthorization of the National Apprenticeship Act is estimated to create nearly one million high-quality apprenticeship opportunities and includes provisions that target opportunities for key groups, such as young adults, childcare workers, and veterans. The bill also aims to increase apprenticeships in industries that do not require a four-year degree for well-paid jobs, such as healthcare, IT, and financial services. We’ve supported this bipartisan legislation in the past and we look forward to seeing it make its way through Congress.
Additionally, the White House has reversed a harmful Trump-era policy by rescinding the industry-recognized apprenticeship programs (IRAPs), which threatened to undermine registered apprenticeship programs across the country and weakened employer-protections for trainees.
These are important steps, but the White House and Congress should go even further to modernize the current apprenticeship system. First, they should formalize and incentivize intermediaries (public or private) who create “outsourced” apprenticeships programs that get paid for each placement when they hire candidates who meet certain criteria (such as eligibility for Pell grants), provide them with an apprenticeship that pays minimum wage or better, train them, and place them in permanent positions. Second, they should create relationships with high schools to set up apprenticeships and career and technical education programs that begin in the 11th or 12th grade and pair students with local employers. These have shown promise in other high-income countries that employ a high percentage of their younger workers through apprenticeships. And, lastly, they should create public service apprenticeship opportunities and programs at all levels of government, including in industries such as information technology, accounting, and healthcare.
As President Biden crafts his address to Congress in the coming weeks, we hope that he acknowledges that millions of Americans who are out of a job lack a college degree. For them, other pathways to jobs, such as through investing in apprenticeships, will be a critical step forward in regaining their economic footing.
The restaurant industry is hurting. Between February and April of last year, more than 6 million food service workers lost their jobs.1 As of December, more than 110,000 restaurants had closed permanently or long-term.2
The industry has some big chains, but most restaurants are quintessentially small businesses. More than 9 in 10 restaurants have fewer than 50 employees. More than 7 in 10 restaurants are single-unit operations.3 Restaurants also offer lots of entry-level jobs for less-skilled workers (almost one-half of workers got their first job experience in a restaurant).
There is almost no safe way to allow indoor dining during an outbreak of a lethal, airborne, and highly contagious virus. Customers must remove their masks to eat and restaurant dining is traditionally done indoors with tightly packed groups of people. Some restaurants have chosen to remain open by relying on pickup and delivery orders instead of indoor dining, and for certain kinds of food, like pizza, this is a natural extension of their previous business model. For others, it’s a difficult transition to figure out pricing and what types of food work for takeaway. Many restaurants rely on third-party services for aggregating online orders and for fulfilling the delivery to customers.
Delivery services have been one of the few sectors expanding during the pandemic, providing work for those who need it and helping many Americans stay safe during the pandemic. With the goal of helping restaurants, some states and cities have temporarily capped the commissions these platforms can charge restaurants for delivery. These price controls are popular with elected officials because they look like a cost-free way to help struggling restaurants, but their costs are hidden, not free, and will hit small restaurants and their workers hardest.
While well-intentioned, imposing price controls will slow the economic recovery in a sector that’s among the hardest hit by COVID. To understand why, it’s important to know how these platforms work. Food delivery services are multi-sided markets, meaning the platform owner is trying to connect multiple “sides” of the market in mutually beneficial exchange. In this case, the business is trying to connect three groups: drivers, restaurants, and consumers. The balance of fees, commissions, and prices on all three sides of this market is set to achieve a high volume of orders, meaning revenue for restaurants and earnings for delivery drivers. Price controls on one side of the market upset this delicate balance.
In general, most economists view price controls as an ineffective and inefficient means of achieving lower costs for underserved groups. In a classic example, rent control leads to underinvestment in construction and maintenance of housing. Landlords are incentivized to convert their apartments into condos or let friends and family live in the units. Under rent control, property owners often charge a large upfront payment to secure a lease. Economists are also skeptical of vaguely written price gouging laws or price controls on essential medical supplies during a public health emergency. A much better solution, many economists argue, is for the government to step in and pay the market rate (to encourage supply) and redistribute the goods based on need.
There is a narrow range of circumstances when price controls can be beneficial for social welfare. In static and monopolistic markets, price controls can make sense to prevent dominant incumbents from charging monopoly prices and harming consumers. A second exception to the rule is during a natural disaster or other emergency. If supply is extremely inelastic (meaning non-responsive to price changes) during a crisis, then price-gouging laws can be beneficial on net. But to be clear, these laws need to be precise and narrow in scope.
If the emergency lasts beyond a few days or weeks, then relaxing price controls might be necessary to encourage an increase in supply.
Neither of these exceptions applies to the food delivery market in this crisis. The market for food delivery services is highly competitive (aggregate profits in the industry are negative4) and the current public health emergency has already lasted for more than a year. Instead, we can expect price controls on food delivery to have the usual negative effect. And based on early data from the cities that have capped commissions, that’s exactly what’s happening.5 Companies are shifting the costs from restaurants to consumers in the form of higher fees, and because consumers are generally more sensitive to price increases, this is leading to a reduction in output in these markets.6 Fewer orders means less business for restaurants and less income for drivers.
There’s a better way forward. The federal government can provide (and has provided) direct bailouts of the businesses and their workers. Unemployed workers have received extended and bonus unemployment benefits. These benefits should be continued for the duration of the public health emergency. Restaurants should receive grants and loans so they can continue paying rent and other fixed costs while closed. These programs should be funded to the level that every restaurant can benefit from them. “Just give people and businesses cash” sounds simple (and expensive), but the alternatives are much worse. Providing no help to restaurants would force them to choose between closing permanently or staying open — thus exacerbating and prolonging the pandemic. Imposing price controls will likely lead to a reduction in output, harming consumers, drivers, and restaurants in the process. The answer is for the federal government to help bridge the gap to the end of the pandemic by continuing and increasing its support for workers and businesses.
INTRODUCTION: RESTAURANTS NEED HELP
The restaurant industry has been hit especially hard by the pandemic. COVID-19 is an airborne respiratory illness that spreads most easily when people are (1) indoors (2) unmasked (3) and close together for an extended period of time. Unfortunately, that description matches restaurants perfectly, which is why many states forced them to close indoor dining during various stages of the pandemic. It’s not the fault of restaurant owners or workers that they were unable to stay open, so policymakers have a duty to make them whole.
More than one in six restaurants have been forced to close permanently — about 110,000 establishments — according to data from the National Restaurant Association.7 Small local restaurants are doing much worse than large chains, which have the advantages of “more capital, more leverage on lease terms, more physical space, more geographic flexibility and prior expertise with drive-throughs, carryout and delivery,” according to the Wall Street Journal.8
Understandably, federal, state, and local governments are trying to support the restaurant industry during this difficult time. The federal government supported restaurant workers with extended and bonus unemployment benefits and it supported businesses through the Paycheck Protection Program (PPP) with $350 billion in April 2020 and $284 billion in December 2020.11 Of course, state and local governments, most of which have balanced budget rules12 (and none of which can print its own currency), are unable to serve as lender or insurer of last resort. Good intentions — the desire to help local restaurants — have unfortunately led some states and cities to adopt a shortsighted and counterproductive policy response: price controls.
San Francisco was one of the first cities to institute a commission cap on meal delivery services, limiting the fees they can charge restaurants to 15 percent.13 Seattle, New York, Washington, D.C., and other cities soon followed suit. As expected, the food delivery apps raised consumer fees in response. DoorDash added a $1.50 “Chicago Fee” to each order after the City Council capped restaurant commissions at 15 percent.14 Uber Eats added a $3 “City of Portland Ordinance” surcharge after the city imposed a 10 percent commission cap.15 In Jersey City, in response to a 10 percent commission cap, Uber Eats added a $3 fee and reduced the delivery range for restaurants.16
To understand why these measures haven’t achieved their stated aims, and why they will likely continue to have unintended consequences, first we need to understand what price controls are and the limited contexts in which they are effective.
WHY PRICE CONTROLS ARE USUALLY BAD
A price control is a government mandate that firms in a given market cannot charge more than a specified maximum price for a good or service (e.g., rent control for apartments) or they cannot charge less than a specified minimum price for a good or service (e.g., minimum wage for labor). Governments usually implement price controls with a noble aim of reducing costs of essential goods (e.g., shelter, fuel, food, etc.) for low-income people or supporting the revenues of a favored industry (e.g., price supports for farmers).
Policymakers tend to justify the imposition of a price control by arguing that the unrestrained forces of supply and demand will not ensure an equitable distribution of resources in essential markets. For politicians seeking to retain their jobs, price controls have the added benefit of being “off-budget,” meaning elected leaders don’t need to raise taxes to pay for them. While the costs of price controls may be unseen from a budgetary perspective, they are certainly not zero. Consumers, workers, and businesses are harmed by the lost output due to shortages under a price ceiling and excessive output under a price floor.
As Fiona Scott Morton, a professor of economics at Yale University, wrote, “If government prevents firms from competing over price, firms will compete on whatever dimensions are open to them.”17 And there are a multitude of dimensions beyond price. In response to price controls during World War II, hamburger meat producers started adding more fat to their burgers. Candy bar companies made their packages smaller and used inferior ingredients. During WWI, consumers who wanted to buy wheat flour at official price often had to buy rye or potato flour too.18
Generally speaking, after rent control takes effect, landlords reduce their maintenance efforts on rent-controlled apartments.19 They also pull rental units from the market and either sell them as condos or let friends and family live in them. Landlords can also capture some of the original economic value of their rental units by adding a fixed upfront payment to rental agreements. When airfare prices were set by the Civil Aeronautics Board between 1938 and 1985, airlines competed on other non-price dimensions, including improving the meal quality and increasing the frequency of flights and the number of empty seats.
The stricter the price controls are, the more likely bribes and other black market activity will substitute for previous white market activity. Even worse, the black market has higher prices than the legal market because sellers need to be compensated for the risk of being caught and punished by the authorities. Queuing and rationing are also extremely common under price controls. Hugh Rockoff, a professor of economics at Rutgers University, explains how price controls on oil had this effect in the 1970s:
Because controls prevent the price system from rationing the available supply, some other mechanism must take its place. A queue, once a familiar sight in the controlled economies of Eastern Europe, is one possibility. When the United States set maximum prices for gasoline in 1973 and 1979, dealers sold gas on a first-come-first-served basis, and drivers had to wait in long lines to buy gasoline, receiving in the process a taste of life in the Soviet Union.20
Henry Bourne, an early twentieth century economist, perhaps summed it up best when describing price controls in France during the French Revolution:21
It was the honest merchant who became the victim of the law. His less scrupulous compeer refused to succumb. The butcher in weighing meats added more scraps than before…other shopkeepers sold second-rate goods at the maximum [price]… The common people complained that they were buying pear juice for wine, the oil of poppies for olive oil, ashes for pepper, and starch for sugar.
Indeed, price controls do not make competitive pressures magically go away; they merely get sublimated into other dimensions of competition — and those who abide by the spirit of the law are punished the most. The aforementioned problems are why economists dislike price controls and favor market-clearing price mechanisms. The Initiative on Global Markets (IGM) regularly surveys a group of leading economists on various questions of public interest. The questions related to different kinds of price controls have been quite lop-sided.
A 2012 survey about rent control asked the following question:22
Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.
And here are the results:
A 2014 survey asked about surge pricing:23
A 2020 survey points to an alternative mechanism for achieving the efficiency benefits of high prices without incurring the distribution costs:
Governments should buy essential medical supplies at what would have been the market price and redistribute according to need rather than ability to pay.
THE EXCEPTIONS WHEN PRICE CONTROLS ARE GOOD
There are two general exceptions when the benefits of price controls might outweigh the costs. First, in markets with natural monopolies and static competition, price controls can prevent dominant incumbents from harming consumers by charging monopoly prices (and restricting output). This is generally how utilities regulation works in the US. Electricity, natural gas, water, and sewage are examples of natural monopolies. It would be highly inefficient to lay two sets of water, gas, or sewage pipes to every house. Similarly, it wouldn’t make sense to have two electrical grids that connect to every house.
There are also low risks to investment efficiency by imposing price controls on these services. We have very likely reached the end of history in terms of innovation in water, sewage, and natural gas. Firms don’t need the incentive
of large monopoly profits to invest in water innovation because it’s just water. The optimal number of competitors in these markets is likely one. Utility regulators work closely with these companies to set prices that allow the firms to recover their fixed costs while earning a reasonable but not extortionate profit.
As Noah Smith, a columnist for Bloomberg, pointed out recently, economists have warmed to one other type of price control over the last few decades: the minimum wage.24
And this shift has occurred for the same reason economists are less worried about price controls in utilities markets: lack of competition. Empirical evidence has started to pile showing significant monopsony power in labor markets, particularly in rural areas.25 As this annotated chart from Noah Smith shows, when a firm has monopsony power in a local labor market, a minimum wage can actually increase employment.
This isn’t the case in all labor markets, of course. Urban markets have much more competition for low wage workers than rural markets. And economists are still worried that a national minimum wage of $15 per hour might lower employment in many states.26 But modest minimum wage increases are a price control that economists feel increasingly comfortable supporting.
The other axis to consider in addition to competition is time. Is the price control permanent or temporary? In the event of natural disasters and public emergencies, price controls (such as price gouging laws) can be reasonable. The normal reason policymakers should allow prices to spike in response to surging demand is to incentivize more supply to enter the market. But in a period of days or a couple of weeks during a disaster, supply may essentially be fixed (due to lack of outside access to the affected market). For very limited periods of time, caps on prices can ensure that a fixed quantity of supply is not allocated merely on willingness to pay (which is often a function of wealth as much as preferences).
PRICE CONTROLS AND MULTI-SIDED PLATFORMS
Before we examine how price controls are likely to affect the food delivery market, let’s first review the basic business models in question here, because they are distinct from traditional markets with only one type of customer. Food delivery apps are operating what are known as multi-sided platforms or markets.
What’s a multi-sided platform?
First it’s important to understand network effects. There are direct network effects and indirect network effects. Direct network eff
ects are when a product becomes more valuable to an individual user as more total users start using it. The telephone is the classic example. A telephone is only valuable insofar as it can be used to call other people who also own telephones. Indirect network effects are when consumers derive value from a distinct group of users on a platform. For example, consider shopping malls. The shopping mall owner needs to appeal to tenants to ensure the mall has lots of attractive stores for shoppers. But stores only want to sign lease agreements for space in shopping malls with lots of shoppers. The shopping mall owner is in a sense a matchmaker for these two groups. Newspapers and magazines are another example from the analog era. Advertisers want to advertise in publications with a lot of readers and readers want to read engaging content at a low cost. Publishers bring readers and advertisers together in a mutually beneficial exchange.
Digital markets often have these indirect network effects, too. For example, drivers want to drive on ride-hailing apps with lots of riders and riders want to ride on ride-hailing apps with lots of drivers. It’s Uber and Lyft’s job to set the price schedule (the commission it charges drivers, incentives it offers drivers and riders) at the optimal level. The same is true for operating systems. App developers want to develop apps for platforms with lots of users and users want to use platforms with lots of apps. Ditto for video game consoles: video game developers want to develop games for consoles with lots of gamers; gamers want to buy consoles with lots of games. The charts to the right show which products and services have direct network effects, indirect network effects, or both.
One of the most important questions for the owner of a multi-sided platform is how to set the prices on each side of the market. Economic research shows that the platform owner should charge lower prices to the side of the market that has relatively elastic demand (meaning consumers are sensitive to price changes and will change their quantity demanded sharply) and higher prices to the side of the market that has relatively inelastic demand.27 The most elastic side should pay the lowest price, and often it makes sense to charge them below-cost prices (“free shipping” or “free delivery”). That’s the “subsidy” side of the platform. The side with the lower elasticity of demand is the “money” side. Generally speaking, consumers have a higher elasticity of demand and suppliers (e.g., drivers, merchants, developers, hosts, etc.) have a lower elasticity of demand.
What are the likely effects of a price control on a multi-sided platform?
Research from Rob Seamans and Feng Zhu studied how Craigslist’s entry into various local markets affected the classified ads business of local publishers.28 Remember, newspapers are also operating multi-sided markets. They need to attract a large number of readers so they can then attract a large number of advertisers. Most classified ads on Craigslist are free, so its market entry represented a marked increase in competition on one side of the publisher’s market. For publishers, this leads to “a decrease of 20.7 percent in classified-ad rates, an increase of 3.3 percent in subscription prices, a decrease of 4.4 percent in circulation, an increase of 16.5 percent in differentiation, and a decrease of 3.1 percent in display-ad rates.” The authors go on to show that “these affected newspapers are less likely to make their content available online.” Changes on one side of a multi-sided market ripple throughout the other sides.
While the research literature on multi-sided platforms offers some insight about what might happen in the event of a price control on one side of food delivery platforms, we can also just look at real world evidence to see what’s happening. According to a recent article in Protocol:
On May 7, Jersey City capped delivery app fees charged to restaurants at 10%, instead of the typical 15% to 30% many such platforms take. The next day, Uber Eats added a $3 delivery fee to local orders for customers and reduced the delivery radius of Jersey City’s restaurants.
Now, fewer people are ordering from the restaurants via Uber Eats and instead are shifting to other platforms, the company and the town’s mayor both confirmed to Protocol.29
When cities or states impose a price control on the commissions delivery apps can charge restaurants, they are unknowingly destroying the delicate balance platform owners have struck to attract enough consumers and suppliers on the platform to make the economics work. In cases where the government hasn’t capped commissions and fees across all sides of the platform, the first step for the app owner is to raise fees on consumers to make up for the lost revenue from the restaurant. But as mentioned earlier, the consumer side has a higher elasticity of demand than the restaurant side, so an equivalent price increase will disproportionately decrease demand on that side of the market.
Poorly designed price controls can also have a disparate impact on different business models in the same market. In the food delivery business, for example, there are two common business models with starkly different cost structures. Some companies merely aggregate online orders and leave the restaurant to handle final delivery on its own. The commissions for these services tend to be 15 percent or lower because the costs are much lower than full delivery services. Other services are full stack — they handle the transaction from the beginning of the order until it’s been delivered to the customer. These services charge higher commission rates (up to 30 percent) because paying drivers for their time and expenses is much more costly than merely aggregating online orders. Naive commission caps favor the aggregators over the full stack delivery service providers because the cap is usually non-binding on the low-cost business model. But that low-cost business model is also less innovative. Full-service delivery platforms are reducing transaction costs low enough to bring an entire new category of restaurants into the delivery market.
Price controls would also disproportionately hurt small restaurants. Large chains like McDonald’s negotiate commission rates as low as 15 percent with delivery platforms because they can offer a high, steady volume of orders as well as their own large marketing budgets.30 Smaller restaurants are riskier partners and therefore pay higher commission rates — meaning price controls would disproportionately impact small restaurants. Commission caps might also lead to more vertical integration between restaurant chains and delivery services. Some large chains like Domino’s Pizza already employ their own delivery drivers.31 If enough cities and states implement price controls on third party delivery services, then more chains with high order volumes might decide to bring delivery services in-house to avoid the caps (because there are no commissions in a vertically integrated company).
So, what is the likely effect of these commission caps? Higher consumer fees. Longer wait times. Lower quality service. Reduced restaurant and delivery zone coverage. A switch from full service delivery apps to aggregators. And an increased incentive for the largest restaurant chains to vertically integrate with delivery services.
Lastly, it’s important to note that neither of the two exceptions for the general rule against price controls hold in this case. First, food delivery service markets are highly competitive.32 Most of the companies in this market haven’t been able to reliably turn a profit yet. As Eric Fruits, the chief economist at the International Center for Law and Economics, noted,
Much attention is paid to the ‘Big Four’ — DoorDash, Grubhub, Uber Eats, and Postmates. But, these platform delivery services are part of the larger foodservice delivery market, of which platforms account for about half of the industry’s revenues. Pizza accounts for the largest share of restaurant-to-consumer delivery.33
He goes on to point out that restaurants can also always offer their own delivery service, which serves as a check on the market power of third-party food delivery apps. And restaurants also have the option of apps like ChowNow, Tock, and Olo that offer online ordering as well at substantially lower commissions, largely because they do not offer delivery.
Second, the pandemic is a chronic rather than acute public health emergency. It is now entering its second year and we are still months away from readily available vaccinations for all groups. Price controls would reduce supply at a time when people desperately need delivery services to maintain social distancing.
CONCLUSION: A BETTER WAY FORWARD
While bailouts are never uncontroversial, bailing out the restaurant industry is an easy call. There is no moral hazard risk as there was with the bank bailouts in 2008, when it was reasonable to worry that bailed out financial firms would increase their risky behavior in the future knowing that they would be bailed out in the event of a crisis. In this case, restaurants won’t change their behavior in the future in a way that increases the odds of a deadly pandemic.
A viral pandemic is a perfect example of an exogenous shock — an Act of God (or “force majeure” as insurance contracts put it). By definition, the pandemic affects everyone. Private insurance markets don’t work for pandemics as well as they do for fires or natural disasters because a pandemic occurs everywhere all at once. The private insurance provider would be forced to pay out to all its insured entities simultaneously. Normally,
a majority of an insurer’s clients would be unaffected by an event and their premiums would be used to finance payouts for those harmed. In the case of a pandemic, everyone is harmed.
The federal government is the appropriate entity for collectively insuring the population against these kinds of macro-level risks. Using its fiscal and monetary capacity, the government can efficiently insure the entire population across time. Fiscal support comes in the form of deficit-financed spending (we’re effectively borrowing from our future, richer selves) and monetary support comes in the form of lower interest rates and guaranteed loans for businesses and state and local governments.
Deficit spending will need to be paid for in the future, either via inflation or taxes. But deficit-spending during a crisis is consistent with welfare-enhancing public policy. Income has diminishing marginal returns. In a time of crisis, we want to be able to borrow against our collective future income, which is exactly what deficit spending allows us to do. Just give people money — don’t mess with prices.
It discusses the valuable policies contained in President Biden’s recent executive orders and the proposed American Rescue Plan legislation and also identifies additional policies to address hunger, including reducing concentration in the food industry, using modern information technologies to help low-income Americans cut through siloed bureaucratic obstacles, and expanding food aid for low-income children.
Key recommendations from the brief include:
• Extend the Pandemic EBT program through the pandemic and economic recovery to provide low-income children with free or subsidized meals during weekends, holidays, and summer break. To be better prepared for a future crisis, Congress should also leverage the P-EBT program to create a permanent authorization for states to issue replacement benefits, giving them more flexibility to respond in a crisis.
• Study the success of the P-EBT program with an eye to converting it into a Summer EBT program post-Covid to bridge the gap in nutrition during the summer months and reach more low-income children in rural and underserved communities.
• Pass legislation, such as the Pandemic Child Hunger Prevention Act, in future recovery legislation, to allow all children free access to breakfast, lunch, and after school snack programs either in school or through “grab and go” and delivery options, as well as reduce bureaucratic barriers for schools to deliver meals to kids.
• Focus on stricter antitrust enforcement in the food industry to help consumers facing increasing prices for basic nutrition staples, such as meat and eggs.
• Use information technology to modernize social service delivery and reduce the administrative burden on low-income people. For example, Congress should enact the HOPE Act, which would create online accounts that enable low-income families to apply once for all social programs they qualify for, rather than forcing them to run a bureaucratic gauntlet.
• Pass the bipartisan Healthy Food Access for All Americans (HFAAA) Act, put forth by Sens. Mark R. Warner, Jerry Moran, Bob Casey, Shelley Moore Capito, which provides incentives, including tax credits or grants, to food providers who serve low-access, rural communities. Draft legislation that provides grants to states to fund the establishment and operation of grocery stores in rural and underserved communities.
Veronica Goodman, PPI’s Director of Social Policy, and Crystal Swann, Senior Policy Fellow, are co-authors of the brief, and said this:
“The Trump administration’s feeble response to America’s hunger crisis was a national disgrace, one of the many ways in which it thoroughly bungled the nation’s response to the Covid pandemic. The contrast with the Biden administration’s sharp focus on hunger and decisive moves to alleviate it couldn’t be more dramatic.
Nonetheless, it should be just the beginning of a new national commitment to wiping out hunger and malnutrition in America. It’s time for a vigorous public response to growing concentration in the food industry, as well as a new push to use modern information technologies to help low-income Americans cut through burdensome bureaucratic obstacles and take charge of their economic security. We’ve also learned lessons during the pandemic for how to provide meals to families outside of the traditional systems, and we should preserve these going forward in the effort to be better prepared for a future crisis and to curb hunger in America.”
The Congressional Budget Office has dealt another blow to progressive hopes for swift action to raise the U.S. minimum wage to $15 an hour. It released a new study this week estimating that while the wage hike would lift 900,000 Americans out of poverty, it also would cost 1.4 million workers their jobs.
Liberal economists challenged the job loss figures, calling CBO’s methodology outdated. But the report feeds growing doubts that Senate Democrats will be able to shoehorn the measure into the big relief bill they hope to pass under “reconciliation” rules that allow for a simple majority vote. That means Republicans could filibuster it to death.
These setbacks raise an important tactical question: In a commendable effort to give working Americans a raise, are progressives fixating too narrowly on the minimum wage? After all, there are other policy tools at their disposal that could lift workers’ earnings without sacrificing jobs or harming small businesses. And these policies — essentially rewards for work delivered through the tax system — could be taken up under reconciliation.
It is abundantly clear that progressives, led by Sen. Bernie Sanders, have made several mistakes in their single-minded pursuit of the $15 wage boost. The first was claiming that it could pass through reconciliation. However, CBO had previously found that Sanders’s proposed “Raise the Wage Act” would have a negligible effect on the federal budget.
So Sanders pushed CBO to produce a new score using different methodology that he thought would make a persuasive fiscal case for the increase. Instead, CBO’s new analysis said that raising the minimum wage to $15/hour would kill over one million jobs while adding $70 billion to the federal deficit. As President Biden has noted, it’s unlikely the measure could get around Senate rules that prohibit the inclusion of non-fiscal policies for which the budgetary impacts are “merely incidental” in a reconciliation bill.
Moreover, West Virginia Sen. Joe Manchin already made clear he would oppose a $15 minimum wage because of the impact it would have in his low cost-of-living state, meaning the proposal wouldn’t have the simple majority needed to pass it.
Nonetheless, most Democrats, including Sen. Manchin, are united in their desire to raise the federal minimum wage, now stuck at a paltry $7.25 an hour. And not just Democrats: polls show solid majorities in favor of a $15 wage. Last November, even as Democratic candidates up and down the ticket got shellacked in a reddening Florida, 60 percent of voters backed a referendum to raise the state minimum to $15.
But as with many ideas that are simple and popular in concept, the apparent consensus breaks down when policymakers plunge into the devilish details: How high should the wage go, how quickly, and how uniformly should it be applied? Does it make sense to mandate $15 an hour in all 50 states, or allow for differences in the cost of living? What’s the impact of a big hike on jobs and small businesses in America’s less prosperous places?
Since Democrats evidently lack the votes to pass a $15 minimum wage, they should get what they can from Republicans who favor more modest increases, and look for other ways to make up the difference.
Specifically, they could expand tax credits designed to make work pay. The model here is the federal Earned Income Tax credit, which matches the earnings of low-wage workers dollar for dollar up to a certain threshold, after which it begins to phase out. It’s both an incentive and reward for work that’s become, after Social Security, America’s most successful anti-poverty policy.
What’s needed now is to move this “work bonus” principle up the income scale, with an eye toward raising incomes of non-college educated workers who have seen meager wage gains in recent decades.
For example, Brookings Institution economist Belle Sawhill has proposed giving all U.S. workers a 15 percent raise up to some annual ceiling, phasing out as earnings rise $40,000 a year.
PPI has proposed to absorb the EITC into an expanded Living Wage Credit that reaches deeper into the heart of the working class. The cost of these new credits could be defrayed by taxing the unearned incomes of wealthy Americans.
Such public subsidies for private work would lift wages for lower-skilled workers without pricing them out of labor markets or forcing the small companies that employ them out of business. And, as tax credits, they could be passed under budget reconciliation rules even without Republican support.
The minimum wage is a venerable policy, but progressives don’t need to put all of their eggs in this particular policy basket. Fortunately, there’s more than one road to establishing a genuine living wage in America that honors the dignity of work of all kinds and keeps working families from falling out of the middle class.
Last Friday, the U.S. House of Representatives voted to dramatically expand investment and access to apprenticeships with the passage of the National Apprenticeship Act of 2021 under the leadership of Rep. Bobby Scott. This legislation had been passed in November in the last Congress, however, the Republican Senate Majority failed to take up the bill for a vote. With Democrats now in the majority, there is renewed hope that the country’s underfunded and outdated apprenticeship system can finally be modernized to meet our 21st-century workforce needs.
The reauthorization of The National Apprenticeship Act is estimated to create nearly one million high-quality apprenticeship opportunities and includes provisions that target opportunities for key groups, such as young adults, childcare workers, and veterans. The bill also aims to increase apprenticeships in industries that do not require a four-year degree for well-paid jobs, such as healthcare, IT, and financial services.
For the more than 10 million workers who have lost jobs or been laid off, there is no guarantee that their jobs will be there once our country returns to normal. Some estimate thatat least 3.7 million Americans will not have jobs to return to. Many will have to reinvent themselves and apprenticeships can play a critical role in helping workers get back to work better after the pandemic.
As policymakers consider how to help American workers weather the Covid recession, PPI strongly supports an increase in public investment in apprenticeships and work-based “career pathways” training programs that connect workers, including those laid off during the pandemic, to well-paying careers. We look forward to its progress in the Senate Health Education Labor and Pensions Committee under Senator Patty Murray, and we encourage the Senate to pass this important workforce legislation.
PPI President Will Marshall welcomes Representative Suzan DelBene of Washington State’s First District to this episode of the PPI Podcast. The two discuss the Republican party’s identity crisis, the issue of Marjorie Taylor Greene, and the need for the GOP to come to the table on a broad relief package.
They also talk about DelBene’s involvement in the New Democrat Coalition, the House’s largest ideological caucus focused on a solutions-oriented approach to bipartisan legislation for economic growth and progress. Will Marshall hits on the importance of purple districts like DelBene’s, and she highlights the necessity of proving governance still works.
WASHINGTON, D.C. – A new report co-authored by the Progressive Policy Institute’s Caleb Watney and Doug Rand and Lindsay Milliken of the Federation of American Scientists, highlights a significant opportunity for the Biden Administration to boost entrepreneurship and create up to a million new jobs through a little-known immigration rule.
For the United States in particular, foreign-born entrepreneurs have made up an extraordinary share of our most successful companies and technological achievements. To encourage the vitally important flow of immigrant entrepreneurs, and to accommodate the growing need for an entrepreneur-specific pathway into the country, the Department of Homeland Security (DHS) adopted the International Entrepreneur Rule (IER) in early 2017.
The rule was quickly put on hold by the incoming Trump Administration but was never removed from the Code of Federal Regulations. According to the new report, with support from the Biden Administration, the IER could quickly become an essential pathway to attract and retain foreign-born entrepreneurs who seek to build their businesses within the United States.
Publicize the International Entrepreneur Rule and credibly signal to stakeholders that the IER will receive agency attention and resources
Issue new guidance documents to agency adjudicators to clarify evidentiary standards and make it reasonably straightforward for investors to prove they meet qualifying criteria
Issue new guidance directing U.S. Citizenship and Immigration Services (USCIS) and U.S. Customs and Border Protection (CBP) to grant beneficiaries the full initial 30 months of parole, absent extraordinary circumstances
Issue future rulemaking to improve the IER based on feedback from stakeholder groups
Pursue a long-term legislative solution to stabilize immigration pathways for entrepreneurs
Co-author Caleb Watney, the director of innovation policy at PPI, had this to say about the findings and key proposals: “Countries all over the world are competing to attract the best talent to their shores. Unlike Canada, Australia, and the United Kingdom, the United States has no statutory immigration pathway designed for entrepreneurs. The International Entrepreneur Rule is a powerful tool to help solve this gap and should be embraced by the Biden Administration to increase U.S. dynamism, economic growth, and job creation. Now is the time to build back better and ensure the United States’ place as the best place to start a new business and to welcome brilliant entrepreneurs from across the globe.”
President Biden met with 10 Republican senators on Monday to discuss their proposed $600 billion alternative to his $1.9 trillion American Rescue Plan. Both the White House and Sen. Susan Collins described the meeting as a productive exchange of ideas and the start of continued talks. But some Democrats believe these discussions are doomed from the start and want Biden to focus on passing his plan through reconciliation – a complicated process that allows budgetary legislation to pass with just 51 votes instead of the 60 required to bypass the filibuster on all other legislation. Although Democrats are right to move forward with reconciliation, there are several reasons why it makes sense for Biden to pursue the talks further and seek common ground beyond just a platonic ideal of “bipartisanship.”
ects are when a product becomes more valuable to an individual user as more total users start using it. The telephone is the classic example. A telephone is only valuable insofar as it can be used to call other people who also own telephones. Indirect network effects are when consumers derive value from a distinct group of users on a platform. For example, consider shopping malls. The shopping mall owner needs to appeal to tenants to ensure the mall has lots of attractive stores for shoppers. But stores only want to sign lease agreements for space in shopping malls with lots of shoppers. The shopping mall owner is in a sense a matchmaker for these two groups. Newspapers and magazines are another example from the analog era. Advertisers want to advertise in publications with a lot of readers and readers want to read engaging content at a low cost. Publishers bring readers and advertisers together in a mutually beneficial exchange.