issue: Labor

A Note From PPI President Will Marshall on Obama’s “Way Ahead”

Posted on by The Progressive Policy Institute
I’d like to draw your attention to this extraordinary essay by President Obama in The Economist. It stands out for two reasons. First, it provides what has been sorely missing from the bizarre 2016 presidential race – a progressive roadmap for restoring America’s economic dynamism.

Second, President Obama’s approach to reversing nearly two decades of slow economic growth is uncannily parallel to the Progressive Policy Institute’s policy blueprint for pro-growth progressives: Unleashing Innovation and Growth: A Progressive Alternative to Populism.

Both documents reject populist claims that the U.S. economy is a “disaster” or a game hopelessly rigged by Wall Street or billionaires and focus instead on the main driver of meager wage gains and growing inequality – slumping productivity growth. As the President notes, one reason for the slowdown is lagging private investment – a problem PPI also has been highlighting in multiple studies of the nation’s “investment drought.”

We also agree with many of the President’s key prescriptions for putting America back on a high-growth path. To highlight just a few:
  • Pro-growth tax reform, including lowering business taxes and closing special interest loopholes.
  • Expanding U.S. exports and passing the Trans-Pacific Partnership to strengthen global trade rules.
  • Lowering college costs, not just expanding education subsidies.
  • Making work pay by expanding tax credits for low-income workers.

Why is all this important? Because despite all the rhetoric about “inclusive growth,” in this election, we’re hearing a lot more about distributing existing wealth than creating new wealth. To speak to the hopes and aspirations of working families, Democrats need to balance that equation.

Marshall & Tucker for The Hill: Congress should get to work on overtime

Posted on by The Progressive Policy Institute

After a long stretch of economic stagnation, the stars may be aligning at last for America’s hard-pressed middle class. The U.S. economy’s growing strength, plus a push in Washington to update overtime rules, could combine to boost incomes and give working families a long overdue raise.

New government figures show that the Obama recovery is finally reaching average Americans. Median household income rose by five percent in 2015, the biggest single-year spike since 1967. Families at all income levels made progress, with the bottom 10 percent reaping the largest gains. Rising incomes lifted 3.5 million people, including one million children, out of poverty and modestly reduced inequality.

Reinforcing the good economic news is a move in Washington to ensure that millions of low-paid white-collar workers can once again qualify for overtime pay. The question is whether it will fall victim to partisan deadlock.

Continue reading at The Hill.

The Hill: Universal Pensions: A Progressive Alternative to Retirement

Posted on by The Progressive Policy Institute

In the midst of the chaos of this election cycle, some important themes are emerging. In particular, voters are highly worried about retirement security. Indeed, 91 percent of voters in four swing states agree that most Americans are not prepared for retirement. That’s according to a poll by the Progressive Policy Institute (PPI), in partnership with veteran Democratic pollster Peter Brodntiz.

That’s why it’s time for a Universal Pension system that would help all U.S. workers save for retirement by eliminating the need to navigate the maze of tax-favored retirement plans, and making their job-based pensions portable. Specifically, the UP would reduce today’s welter of tax-favored retirement accounts into one universal IRA account (with a choice between a traditional or Roth-style IRA).

The accounts would be managed by private firms, under the supervision of the individual rather than the employer, giving workers more control over their investment choices. Furthermore, when workers switch jobs, they can rollover their existing 401(k) or other company pension plans into their Universal Pension reducing paperwork burdens and financial fees for both employers and employees.

And by helping all workers start saving for retirement from their very first day of work, the Universal Pension would harness the power of compound interest for everyone. It would help to close a yawning wealth gap at a time when wealth inequality is roughly 10 times wider than income inequality.

Continue reading at The Hill.

The Daily Beast: Donald Trump and Bernie Sanders Are Delusional on Trade Policy

Posted on by The Progressive Policy Institute

In this campaign season of populist anger and demagoguery, bad ideas are bubbling to the surface like marsh gas. Among the worst is protectionism, which would wreak havoc on a U.S. economy that’s finally picking up steam.

Both Donald Trump and Bernie Sanders have seized on trade as a convenient scapegoat for the nation’s economic woes. There’s deep irony here. The popular frustrations on which they feed stem mainly from the productivity and wage slump America has experienced since 2000. Yet their proposed fix—shredding international treaties and walling off the U.S. economy—is a textbook formula for economic stagnation.

It’s a perfect negative feedback loop. And it won’t be the “one percent” who suffer if the populists get their way; it will be U.S. companies with global supply chains and millions of middle-class American workers and consumers.

Continue reading at The Daily Beast.

CNN: America needs more than populist message

Posted on by The Progressive Policy Institute

With Donald Trump and Ted Cruz locked in a bitter battle for the Republican nomination, the stakes in 2016 rise dramatically. The likely victory of either one of these deeply flawed candidates will give Democrats a chance not only to hold the White House, but also to realign U.S. politics. No wonder Republicans are panicking.

To seize the opportunity, however, Hillary Clinton will need to transcend the limits of a “populist” message based on identity politics, economic victimhood and redistribution. Thus far such themes have dominated the nomination battle with Sen. Bernie Sanders, but they won’t help Democrats forge a broader political coalition that includes suburban moderates, college-educated independents and many Republicans who are aghast at the prospect of branding the White House with a giant “T.”
Of course, with yet another caucus victory on Saturday, this time in Wyoming, Sanders will stay in the race, if only to keep tugging Clinton to the left. But Clinton needs to resist this ideological gravity, because Sanders’ left-wing populism is not an effective answer to the right-wing populism that Trump channels with such diabolic cunning.
Before the Bernie Bots clank into action, let me hasten to say I’m not positing moral equivalence between Sanders and Trump. Sanders is honest, principled and decent; Trump is, well, none of those things. But the lifelong socialist’s dream of turning America into a paternalistic, European-style welfare state isn’t the right prescription for what ails our country.
Continue reading at CNN.

Press Release: PPI Unveils New Blueprint for Shared Prosperity

Posted on by The Progressive Policy Institute

FOR IMMEDIATE RELEASE
March 15, 2016

Contact: Cody Tucker, 202-775-0106
or ctucker@ppionline.org

A Progressive Alternative to Populism

PPI Unveils New Blueprint for Shared Prosperity

WASHINGTON—The Progressive Policy Institute (PPI) today released Unleashing Innovation and Growth: A Progressive Alternative to Populism, a new blueprint for renewing America’s economic dynamism.

The plan offers an array of creative proposals for accelerating the “digitization” of the physical economy; lowering regulatory obstacles to innovation and entrepreneurship; launching a new public works push; adopting pro-growth tax reform; grooming the world’s most talented workers; and enabling working families to escape poverty and build middle class wealth.

The blueprint also takes aim at the populist anger that has figured prominently in campaign 2016:

…[P]opulists do Americans no favors by claiming the economic game is hopelessly rigged against them, that the leaders they elect are incompetents, or that our democracy is rancid with corruption. None of these claims is true, and such demagoguery undermines public confidence in America’s boundless capacity for self-renewal. Populist anger fosters an ‘us versus them’ mentality that, by reinforcing political tribalism and social mistrust, can only make it harder to build consensus around economic initiatives that benefit all Americans.

“We believe progressives owe U.S. voters a hope-inspiring alternative to populist outrage and the false remedies of nativism, protectionism and democratic socialism,” writes Will Marshall, PPI President.

“I encourage anyone looking for optimistic ideas to create more jobs, wealth, and prosperity for hard working Americans to read PPI’s new report using innovation to spur growth,” said Congressman Ron Kind (D-Wis.), Chairman of the New Democrat Coalition. “This report is full of forward thinking policy initiatives that help grow the American economy.”

“In the midst of today’s populist uprising, it’s up to our leaders to recognize the real reasons why our economy isn’t working for everyone and to fight for effective solutions,” said Governor Jack Markell (D-Del.). “PPI’s blueprint gives policymakers a roadmap to create opportunity for all Americans by harnessing the unstoppable forces of globalization and technological innovation, while opposing the impractical, and sometimes dangerous, proposals offered by the political extremes.”

The anger on which populists feed is rooted in a real economic problem: America has been stuck in a slow growth trap since 2000. This long spell of economic stagnation has held down wages and living standards and shrunk the middle class. What the nation needs is a forward-looking plan for moving the U.S. economy into high gear. Instead, as the PPI blueprint notes, today’s populists peddle nostalgia for our country’s past industrial glory but offer few practical ideas for building new American prosperity in today’s global knowledge economy.

Unleashing Innovation and Growth seeks to fill this vacuum in the presidential campaign, offering bold ideas for unleashing the collective ingenuity of the American people—harnessing disruptive change, raising skills, lowering tax and regulatory barriers to individual initiative and creativity, and experimenting with innovative ways to rebuild middle class wealth and enable more Americans to exit poverty.

Summary of Key Proposals

Unleash Innovation
• Spread innovation across the economy: Adopt a new “Innovation Platform” aimed at stimulating public and private investment in new ideas and enterprises, and at diffusing innovation across the entire economy.
• Improve the regulatory climate for innovation: Tackle the mounting costs of regulatory accumulation, the constant layering of new rules atop old ones; Make systemic changes to regulatory agencies to make promoting investment, innovation and new enterprises part of their core mission; Rein in occupational licensing requirements that screen out many low-income entrepreneurs; Lift outdated restrictions on lending to small business; give businesses incentives to offer more flexible work, including paid leave.
• Innovate our way to clean growth: Implement a more innovative energy strategy that simultaneously advances two vital interests: powering economic growth and assuring a healthy environment; Recognize that, for the foreseeable future, the U.S. and the world will have to tap all fuels—renewable, nuclear, and fossil—to meet growing energy demand and sustain global economic growth; Institute a nationwide carbon tax to curb greenhouse emissions while driving investment to clean and efficient energy.
• Democratize trade: Sell more of America’s highly competitive exports to a growing global middle class; promote the free flow of data across global borders; support innovative trade agreements, like the Trans-Pacific Partnership (TPP), that lift labor, environment and human rights standards in developing countries and enable more Americans to benefit from trade; Seize new opportunities for U.S. small businesses and entrepreneurs to use low-cost digital platforms to tap into global growth.

Align Fiscal Policy with Innovation and Growth
• Embrace pro-growth tax reform: Advocate for a dramatic shift from income to consumption taxes to stimulate investment in productive economic activities rather than those favored by the current tax code; Close loopholes that benefit special interests and dramatically simplify taxes for most Americans; Raise enough money to cut corporate income taxes down to globally competitive levels, and reduce taxes that penalize innovation and hiring.
• Modernize public works: Accurately measure the true economic impact of infrastructure spending; open infrastructure markets to private capital; define a strategic role for Washington through a national infrastructure bank; impose firm deadlines on project approvals and licensing process.

Groom the World’s Most Talented Workers
• Reinvent public school: Champion new models of school governance that enable more school autonomy and innovation, more customized learning, rigorous standards, and genuine accountability and results.
• Create new pathways into middle class jobs: Create a more promising approach to “career pathways” by combining classroom training and work experience through a sequence of jobs, within or across firms in an industry, and a sequence of credentials that signal their growing skill levels.
• Cut college costs for everyone: Rein in costs and decrease debt by encouraging colleges to offer three-year degrees rather than the traditional four-year program and focus policies on competency, rather than credit hours.

Build Middle Class Wealth
• Narrow the wealth gap with universal pensions: Champion “universal pension” accounts that would enable all workers to save for retirement, navigate the maze of tax-favored retirement plans, and take their pensions with them when changing jobs.
• Help families save for homeownership: Tackle the twin problems of declining homeownership and souring housing costs for both owners and renters by creating a new, tax-preferred mechanism for down payment savings—“Home K”—to lower obstacles to homeownership, like tight credit and down payment requirements, for first-time homebuyers and to promote savings.

Fight Poverty with Empowerment
• Empower people with smart phones: Use modern technology to cut through bureaucratic barriers to government safety net programs, consolidate benefit streams, enable people living in poverty more access to the information they need, and apply online for social supports; Encourage federal, state, and local governments to create online H.O.P.E. (Health, Opportunity, and Personal Empowerment) accounts and action plans.
• Expand housing choices for low-income Americans: Convert some federal rent subsidies into incentives for homeownership to relieve the burden on low-income families of high housing costs and reduce the waiting list for subsidized housing, without raising taxes or adding to the federal deficit.

Download Unleashing Innovation and Growth: A Progressive Alternative to Populism.

Financial Times: Democrats struggle to harness economic feelgood factor

Posted on by The Progressive Policy Institute

Will Marshall, president of the Progressive Policy Institute, said that once Democratic strategists have moved past the primaries and into the general election they will need to portray a hopeful economic picture to voters — learning from the 2014 midterm elections in which he said the party had failed to capitalize on economic improvements under Obama.

The great issue in this campaign remains the great stagnation — the slow growth trends in this century,” he said. “But it is not for a semi-incumbent [like Mrs Clinton] to bemoan how terrible things are. You have to give people a sense of hope that the policies put in place in the last eight years have begun to put the country back on the path of full recovery.”

To read more, go to the Financial Times.

Dallas Business Journal: Texas finds roughly half of its mobile application-related jobs in DFW

Posted on by The Progressive Policy Institute

The Dallas Business Journal cites data collected by PPI’s chief economic strategist Michael Mandel on the growth of App Economy jobs in Dallas, Texas:

The Progressive Policy Institute based in Washington, D.C., reported that the DFW region comprised 44 percent of the states workforce within the space in the month of December. The data includes development jobs as well as jobs that are indirectly related to the mobile app economy.

‘It was kind of a surprise,’ said Michael Mandel, PPI chief economic strategist, adding that the area is not the first region typically expected to have a high percentage of this specific workforce. ‘We saw a lot of growth in places like Chicago, Dallas and New York – outside the traditional tech areas.’

Read the article in its entirety at Dallas Business Journal.

The Hill: In TPP review, focus on small business and digital trade

Posted on by The Progressive Policy Institute

With the release of the full text of the Trans-Pacific Partnership (TPP) trade agreement last November, the American people and their representatives now have an extensive opportunity to analyze the specific provisions of the proposed deal. In addition, as required by recent trade legislation, the U.S. International Trade Commission (USITC) is conducting a detailed, independent review of the likely economic impact of the TPP on specific industry sectors and the overall U.S. economy.

In recent comments filed in the USITC investigation, the Progressive Policy Institute (PPI) urged the Commission to pay particular attention to the beneficial economic effects of the TPP’s groundbreaking provisions on small business trade, international e-commerce, and the digital economy.

PPI has highlighted in recent reports the transformative role that digital tools—including Internet platforms like eBay—are playing in “democratizing” trade. Increasingly, smaller, digitally enabled American exporters can often sell products and services to customers around the world as easily as their large, established competitors.

But, for the digital economy to continue to transform trade, countries must resist a growing trend toward “digital protectionism.” As PPI’s submission explains, the TPP would support the continued growth of digital trade through groundbreaking rules that would require countries to allow commercial data flows; restrict “data localization” requirements that mandate where data or facilities must be located; and require privacy, consumer protection, and other rules to promote more secure and robust international e-commerce.

PPI’s comments also underscore the importance of the TPP’s many pioneering provisions to help small and medium-sized enterprises (SMEs) to export. These include the creation of a special committee to assure that the agreement works for SME traders; a requirement that countries create user-friendly digital information portals to assist SME traders; and eliminating or significantly reducing high duties, regulatory barriers, and customs delays that the studies by the Commission and others show can place disproportionate burdens on smaller traders.

PPI’s submission emphasizes that these and other TPP provisions have significant potential to support substantial expansion of American SME exports and economic growth that is shared more widely by more Americans. Studies by the Commission and others have found that smaller firms that export are more productive, hire more employees, and pay higher wages than non-exporting SMEs. And PPI’s own analysis shows that woman- and minority-owned firms that export employ three to five times more workers—and pay salaries some 60 percent higher—than their non-exporting counterparts.

In short, TPP points toward the next frontier in international trade—new opportunities to promote digital trade and engage more small firms and entrepreneurs in global commerce. The International Trade Commission should assess the potential of such new forms of trade to reinvigorate U.S. economic growth and competitiveness.

This is cross-posted from The Hill‘s Congress Blog.

Agenda 2016: Reviving U.S. Economic Growth

Posted on by The Progressive Policy Institute

The Progressive Policy Institute (PPI) teamed up with Columbia University’s Richard Paul Richman Center for Business, Law, and Public Policy to co-host a compelling symposium Nov. 6-7 in New York on revitalizing the U.S. economy. The event featured a distinguished roster of Richman Center economists and scholars, as well as PPI analysts and special guests, and more than two-dozen top policy aides to Members of Congress, Governors, and Mayors.

Held on Columbia’s Manhattan campus, the symposium examined the U.S. economy’s recent performance, as well as the causes of the long-term decline of productivity and economic growth. Against the backdrop of the 2016 election debate, the participants grappled with specific ideas for unleashing more economic innovation, modernizing infrastructure, reforming taxes, improving regulation, expanding trade and reducing inequality by ensuring that all children have access to high-quality public schools.

The discussions, which were off-the-record to encourage maximum candor, featured the following speakers and topics:

  • An overview of the U.S. economy’s recent performance by Abby Joseph Cohen, President of the Global Markets Institute and Senior Investment Strategist at Goldman Sachs.
  • A roundtable on key elements of a high-growth strategy, led by Michael Mandel, Chief Economic Strategist at PPI, Andrew Stern, former head of the Service Employees International Union and now Ronald O. Perelman Senior Fellow at the Richman Center, and
Philip K. Howard, Founder of Common Good, a nonpartisan reform coalition. The conversation touched on ways to improve the regulatory environment for innovation, including reducing regulatory accumulation and requiring faster permitting for big infrastructure projects, as well as a lively debate on the future of work in a tech-driven knowledge economy.
  • An insightful macroeconomic analysis of why productivity and economic growth have slowed, by Pierre Yared, Associate Professor at the Columbia Business School and Co-director of the Richman Center. Yared highlighted three potential contributors to the slowdown: labor demographics and participation; “capital intensity” or business investment; and the “production efficiency” of U.S. companies.
  • A detailed examination of the impact of energy innovation—from the shale boom to renewables and the construction of a new, “smart” grid—on jobs and economic growth. Leading this segment were Jason Bordoff, formerly energy advisor to President Obama and Director of Columbia’s Center on Global Energy Policy, and Derrick Freeman, Director of PPI’s Energy Innovation Project.
  • A dinner conversation at the Columbia Club with Edmund Phelps, the 2006 Nobel Laureate in Economics and Director of Columbia’s Center on Capitalism and Society at Columbia University. Drawing on his recent book, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change, he stressed the importance of indigenous innovation in creating the conditions for broad upward mobility. He also emphasized the crucial role of “modern” or individualistic cultural values in sustaining the mass innovation and entrepreneurship America needs to flourish again.
  • A detailed look at business taxation and reform as a potential driver of economic growth. It featured Michael Graetz, Alumni Professor of Tax Law at Columbia Law School, David Schizer, Dean Emeritus and the Harvey R. Miller Professor of Law and Economics at the Columbia Law School and Co-director at the Richman Center, as well as PPI’s Michael Mandel. The discussion ranged widely over global tax frictions, including the OECD’s new “BEPS” project; the need for corporate tax reform; “patent boxes” and mounting U.S. interest in consumption taxes.
  • A roundtable on trade and productivity growth with Ed Gerwin, PPI Senior Fellow for Trade and Global Opportunity and the versatile Michael Mandel. Noting President Obama’s controversial call for a Trans-Pacific Partnership, Gerwin stressed the agreement’s potential for “democratizing” trade by making it easier for U.S. small businesses to connect with customers abroad. Mandel underscored another PPI priority: raising awareness among policymakers of the growing contribution of cross-border data flows to growth here and abroad, and the need to push back against proposals that would impede “digital trade”
  • A luncheon presentation on “financial regulation after the crisis” by Jeffrey Gordon, Richard Paul Richman Professor of Law at Columbia Law School and Co-director of the Richman Center. Gordon described the new regime put in place by Dodd-Frank and other rules to guard against “systemic risk” of another financial meltdown, and suggested its “perimeter” may been to be expanded beyond banks.
  • The symposium’s final panel featured a vigorous discussion on K-12 education reform and the economy. The discussants were Jonah Rockoff, Associate Professor at the Columbia Business School and David Osborne, who directs PPI’s Reinventing America’s Schools Project, and is a co-author of the seminal “Reinventing Government.” Rockoff highlighted research showing that the returns to school improvement are enormous, and recommended reforms that could increase school quality. Osborne traced the evolution of school governance in America, and offered detailed looks at new models emerging in cities like New Orleans and Washington, D.C., both of which are leaders in the public charter school movement.

The symposium gave the policy professionals who participated a rare opportunity to delve deeply into complicated economic realities, guided by presenters of extraordinarily high caliber. The conversations were highly illuminating and will inform PPI’s work on Agenda 2016—a new blueprint for reviving U.S. economic dynamism and opportunity.

The Guardian: ‘New Democrats’ sound alarm over Sanders and Clinton’s leftward march

Posted on by The Progressive Policy Institute

PPI President Will Marshall was quoted in a piece by The Guardian addressing the 2016 Democratic presidential candidates and the party’s shift to the left:

At Columbia University in New York this weekend, the Progressive Policy Institute, which helped Bill Clinton and Tony Blair pioneer so-called third way politics in the 1990s, held a closed-door strategy session for congressional staffers that was designed to find ways of promoting growth.

“There is no question that the prevailing temper of the Democratic party is populist: strongly sceptical of what we like to call capitalism and angry about the perceived power of the monied elite in politics,” said PPI president and founder Will Marshall.

“But inequality is not the biggest problem we face: it is symptomatic of the biggest problem we face, which is slow growth.”

Continue reading at The Guardian.

CNN: What Democrats should talk about Friday

Posted on by The Progressive Policy Institute

Compared to the Republicans’ presidential cattle calls, the next Democratic debate will be an intimate affair, since the field has shrunk to just three candidates. They will gather in South Carolina Friday for a “candidate forum” moderated by MSNBC’s uber-progressive Rachel Maddow.

That sounds like a recipe for another rousing round of populism, business-bashing and exhortations by Sen. Bernie Sanders to Americans to stop worrying and learn to love democratic socialism. If so, it will spell trouble for the candidate everyone expects to emerge with the prize — Hillary Clinton.

After their first debate in Las Vegas, Democrats congratulated themselves on having been more substantive than the Republicans. True enough: No sentient viewer could confuse the GOP Gong Show with the PBS NewsHour.

But amid all the wonkery, something big was missing — a sense of economic optimism, buttressed by fresh ideas for stimulating innovation and growth. Working Americans want to know how they and their children can find opportunities and win in the global knowledge economy. Instead, Democrats dwelled at great length on how badly they are losing. They had plenty to say about inequality, but almost nothing about how to create new jobs, enterprises and wealth.

Continue reading at CNN.

Quartz: The TPP could help tiny companies become global exporters

Posted on by The Progressive Policy Institute

Ed Gerwin, PPI Senior Fellow for Trade and Global Opportunity, was quoted by Ana Campoy of Quartz talking about the importance and influence of Obama’s proposed Trans-Pacific Partnership:

Aside from the lower tariffs that are part of any run-of-the-mill trade agreement, TPP has a whole chapter on international e-commerce, and another on small- and medium-sized companies. The specific provisions of the pact have not been released yet, but a public summary of its contents shows that the TPP ‘could be potentially transformative,’ Ed Gerwin, a trade expert at the Progressive Policy Institute, tells Quartz.

For example, the treaty promises to speed up the process of getting merchandise across borders by making import rules more easily accessible and transparent. If the agreement is approved, express packages would be expedited and customs officials would be encouraged to adopt time-saving measures such as electronic forms and signatures.

‘That stuff is a big deal,’ says Gerwin. ‘Having uniform rules is really important.’”

Read the article in its entirety at Quartz.

The Hill: No injury. No lawsuit. No service.

Posted on by The Progressive Policy Institute

The Supreme Court this month received the first round of briefing in a case that could cure one of the newest, most significant abuses in our civil justice system: massive class actions that lawyers file on behalf of people who are not injured. In these cases, the class action plaintiffs’ lawyers use novel legal theories and damage models to get their classes certified and then count on companies to settle the claims and pay them attorney fees – sometimes for more than the class members will end up collecting from the settlement.

The whole point of civil litigation is to make people whole for their losses. Any person who is not injured and has no loss to be corrected should have his or her claim dismissed. The person has no substantive legal basis for the claim, and Article III of the U.S. Constitution gives federal courts jurisdiction only over cases where people allege actual injury traceable to the defendant. But, what happens when uninjured people are nonetheless swept into federal class actions?

This is the issue before the Supreme Court in Tyson Foods, Inc. v. Bouaphakeo. The plaintiffs’ counsel used a controversial damages model to turn discrete wage-and-hour claims for some Tyson employees into a much larger class action. They created an “average employee,” claiming that this “average employee” would be due overtime pay if the time taken to put on and take off protective gear was included in the work week. They then sought to have every class member – some 3,300 people – paid the same overtime as the “average employee,” regardless of how much the real employees actually worked, spent putting on and taking off gear, or were paid.

The problem is that hundreds of class members had no injury at all. It was clear under the plaintiffs’ own statistical sampling model that these employees were fully paid, even accounting for the time to put on and take off gear. Yet, the district court certified the case as a class action with these uninjured people. At trial, the jury found that the modeling majorly overstated the damages and about half of the class had no or only a de minimis injury. Yet, the court allowed all class members, including the uninjured, to get the same pro rata share of the award.

Continue reading at The Hill.

What New Data Says about Debt-Free College

Posted on by The Progressive Policy Institute

New data shows that young people who don’t fit within the current college system are facing great hardship in today’s workforce. This sheds valuable insight into the debt-free college debate, the charge for injecting more money into the federal student aid system at the top of Democrat’s 2016 election talking points.

With outstanding student loans topping $1.2 trillion, it’s little wonder that Democrats from Bernie Sanders, Martin O’Malley, Elizabeth Warren, and even Hillary Clinton are choosing to make tackling student debt a priority.

But student debt is the biggest problem for non-completers, who are increasingly unable to find decent work. Good job options have become so limited for non-graduates that the millions of young Americans who do not perfectly fit into the standard college mold now find themselves at an inherent disadvantage.

Indeed, my analysis of the latest labor force data highlights the plight of young people with some college but no degree. Since 2000, young people aged 16-24 neither enrolled in school nor in the labor force in June with some college or an Associate’s degree has increased by 700,000, or about 120%.  (Overall, young people aged 16-24 neither enrolled in school nor in the labor force in June increased by 1.4 million, or 27%, since 2000.) This chart considers June to get best sense of underlying trends in young people not in school.*

LaborForce

The implication is that we need better workforce preparedness options for those without a college degree, not simply debt-free college. The policies that comprise “debt-free college” merely throw more resources at propping up the current higher education system. For Bernie Sanders, that means free tuition. For Martin O’Malley, it means regulating tuition and expanding federal grants to schools and students. For Hillary Clinton, it’s just a conceptual endorsement that everyone should graduate college, and without debt.

Such policies are short-sighted. Rising student debt is a symptom not of inadequate federal funding, but of a broken federal financial aid system and of a higher education system in need of a shake-up. Greater transfers of money from taxpayers to students and schools will only exacerbate the challenges young people face in today’s labor market, by discouraging needed innovation in higher education. It quickly turns into an expensive and inefficient way to match workers with jobs.

Indeed, with the falling costs of information-sharing, thanks to the proliferation of high-speed broadband, and promising rise of innovation in education technology, there should be a downward pressure in college tuition. And with more people than ever graduating college, we should see an overall rise in real earnings. Yet college costs continue to rise at a faster pace than inflation, and the real earnings of young graduates have fallen 12% in the last decade.

By perpetuating the status-quo, policies that comprise debt-free college will not enhance opportunity and social mobility for those who need it – it will only widen the gap between young Americans with and without a degree. The barriers to innovation in higher education will remain, along with a lack of incentive to provide higher education more efficiently and effectively. Instead of introducing productivity-enhancing reforms to deal with rising enrollments and falling state funding, such as customized education or hybrid learning, higher education institutions can continue to use federal student aid to fill budget holes. In fact, groundbreaking new research from the NY Federal Reserve directly ties increases in federal student aid eligibility to increases in tuition.

Without serious reform, we cannot possibly hope to realize the enormous potential coming from the tech sector to transform the design and delivery of higher education and workforce training. Happily there is promise for real progress: a Senate HELP hearing last week focused on need for breaking down barriers to innovation in higher education. Still, until Democrats move past the “debt-free college” approach, and the notion that college degrees are the only answer, 2016-themed rhetoric on college affordability will be little more than that.

*Note: Enrollment and labor force figures in June have been comparable with those in July over time, for those who are interested in complete mid-summer analysis.

The California Tech/Info Boom: How It Is Spreading Across the State

Posted on by The Progressive Policy Institute

Here’s an astounding fact. Since the recovery started in 2009, California businesses have created 1.5 million new private sector jobs. That puts California number one in private sector job creation among all states, slightly ahead of second place Texas, and more than double that of third place Florida. Moreover, total job creation in California since 2009 exceeds that of Germany, Europe’s largest and most successful economy.

How can this spectacular performance be explained? The answer: creativity and innovation. Since 2009, the Golden State’s economy has ridden the power of the sizzling tech/info revolution. From mobile to social media, to online video and the Internet of Things, California-based companies are leading the way.

This paper has two main goals. First, we document how the tech/info boom is helping propel the California economy. We carefully define the tech/info sector, building on our previous studies of California and other tech hubs around the world. We then show that the tech/info sector has directly accounted for more than 30% of the increase in real wage payments in California. These gains have boosted tax revenues and helped California run a budget surplus. In addition, the strong growth in California’s tech/info sector has translated into faster non-tech job growth than the rest of the country.

Download “2015.07-Mandel_The-California-Tech-Info-Revolution_How-It-Is-Spreading-Across-the-State”