Casey Quinlan, Author at Missouri Independent

Unemployment ticks down, labor market remains strong, latest numbers show

Casey Quinlan — Mon, 07 Oct 2024 18:50:26 +0000

(Joe Raedle/Getty Images).

A month before voters cast their ballots, the U.S. Bureau of Labor Statistics released a report showing a strong labor market with growing wages, a lower unemployment rate, and the addition of 254,000 jobs to the economy.

Eighty-one percent of registered voters say the economy is key to their vote for president this fall, according to a September Pew Research report.

“We saw job creation beating expectations, unemployment rate ticking ever so slightly down, and we saw great wage growth which has continued to outpace inflation,” said Kitty Richards, senior strategic advisor at Groundwork Collaborative, a progressive economic policy think tank. “We don’t have the new inflation numbers for last month, but wage growth is strong and has been outpacing inflation for about 16 months now and those are all really good things.”

The unemployment rate in September was 4.1% compared to 4.2% in August and 4.3% in July. A rising unemployment rate earlier in the year had caused some economists to worry that the Federal Reserve’s decision in the past few months not to cut the federal funds rate was beginning to hurt the labor market. In September, the Fed decided to cut the rate by half a percentage point, allaying those worries.

The Fed began an aggressive campaign to beat inflation by raising rates in March 2022 and stopped in mid-2023 but the rate remains high and has affected the economy, particularly the housing market, economists say. Inflation has significantly cooled since its peak in June 2022.

“If today’s job report had said that the labor market was softening further, I think a lot of us would be more aggressively concerned about the risks posed to the labor market by high interest rates,” Richards said. “It’s great to see that those risks have not tipped over yet … But there are risks and we need to be really mindful of what it would mean if we started to see the unemployment rate picking up again.”

The report also showed continued job growth in healthcare, government, social assistance and construction last month. Wage growth was strong, rising 4% over the past year. Adult men saw their unemployment rate fall, at 3.7%, last month. Women, Black people, Asian people, white people, Hispanic people, and teens all had little or no change in their unemployment rates in September.

The prime-age employment-to-population ratio, which is a measure of how well the economy provides jobs for people who are interested in working, remains at a 23-year high in today’s jobs report.

“I think the labor market continues to be healthy and strong and it’s great to see labor force participation and employment-to-population rates staying high,” Richards said. “That’s what we want to see in the kind of economy that is going to drive wage gains for working people and continue some of the gains that we’ve seen since the COVID recession.”

But she added that there is still room for those measures to grow.

“We’ve seen that the economy can outperform what a lot of people thought before we had this really prolonged period of low unemployment coming out of the COVID recession. And I hope that we continue to see this kind of growth,” she said.

When business is booming but daily living is a struggle

Casey Quinlan — Wed, 25 Sep 2024 16:35:34 +0000

Kristie Hilliard opened her new shop, Kristie Kandies, in downtown Rocky Mount, N.C., after getting tired of her factory job at the local Pfizer plant. She’s seen a steady flow of customers, but says she’s doesn’t think either Vice President Kamala Harris or former President Donald Trump would change her economic fortunes. (Kevin Hardy/Stateline)

7 States + 5 Issues That Will Swing the 2024 Election

Editor’s note: This five-day series explores the priorities of voters in Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin as they consider the upcoming presidential election. With the outcome expected to be close, these “swing states” may decide the future of the country.

ROCKY MOUNT, N.C. — The signs on the empty historic buildings envision an urban utopia of sorts, complete with street cafes, bustling bike lanes and a grocery co-op.

“IMAGINE What Could Be Here,” gushes one sign outside the empty, Neoclassical post office. “IMAGINE! A Vibrant Downtown,” reads another mounted on the glass front of a long-ago closed drug store.

In a place like Rocky Mount, North Carolina, it’s not such a stretch: Just across the street, white-collar workers peck away at laptops and sip lattes at a bright coffee bar lined with dozens of potted tropical plants. A few blocks away, a mammoth events center routinely brings in thousands of visitors from across the country. And alongside a quiet river nearby, a meticulously redeveloped cotton mill would be the envy of any American city, with its modern breweries, restaurants and loft living.

An industrial community long in decline, Rocky Mount is slowly building itself back. But in this city of about 54,000, sharply divided by race and class, many residents struggle to cover the basic costs of groceries, housing and child care.

North Carolina reflects the duality of the American economy: Unemployment is low, jobs are increasing and businesses are opening new factories. But high housing and food costs have squeezed middle-class residents despite the gains of rising wages.

“The economy stinks,” said Tameika Horne, who owns an ice cream and dessert shop in Rocky Mount.

Her ingredient prices have skyrocketed, she said, but she can’t continuously raise prices on ice cream cones or funnel cakes. She said last month was her slowest ever, with only $2,000 in sales.

It’s not just the slow sales at her store: Only a few years ago, she paid $700 a month to rent a three-bedroom apartment. Now, her similarly sized rental home costs her $1,350 a month.

Aside from the ice cream shop, Horne also runs a cleaning business with her family and just started a job delivering packages for FedEx.

“It’s just hard right now,” she said.

The economy, a top issue for voters during any election, is particularly important this presidential cycle: Prices of necessities such as groceries aren’t rising as fast as they were, but years of post-pandemic inflation have soured voter attitudes.

It's just hard right now.

– Tameika Horne, ice cream shop owner in Rocky Mount, N.C.

And across the country, millions of families are struggling with rising housing costs. In four of the seven swing states — Arizona, Georgia, Michigan and Nevada — more than half of tenant families spend 30% or more of their income on rent and utilities, according to the 2023 American Community Survey.

In North Carolina, voter anxiety about the soaring rents and grocery bills could tip the scales.

“In terms of its political influence, it’s not actually your personal financial situation that is important, it’s your vision of the national economy,” said Matt Grossmann, a political science professor at Michigan State University. “So if I get a raise, I tend to credit myself. If I see higher prices, I tend to blame the government or the current situation.”

Around the corner from Horne’s ice cream store in downtown Rocky Mount, Kristie Hilliard greets a steady flow of customers to her new shop, Kristie Kandies. An armed cop, a nurse in scrubs and waist-high kids trickle in to grab a sweet treat.

After getting tired of her manufacturing job at the local Pfizer plant, Hilliard started making confections at home. As her following grew, she got a concession trailer and now has a storefront selling candied grapes, plums, kiwis and pickles.

Hilliard’s treats have attracted attention on social media, causing some buyers to drive in from as far away as Pennsylvania, she said.

A Democrat, she said she still hadn’t made up her mind on the presidential race. But she doesn’t believe either a Harris or a Trump administration would drastically change much for her business.

“They ain’t doing nothing for me now,” she said. “So, what would change?”

A community divided looks to the future

About 60 miles northeast of the state capital, Rocky Mount lies between the prosperous Research Triangle area and North Carolina’s scenic beach communities.

Railroad tracks and a county line slice through the middle of downtown. On the one side is the majority Black and lower-income Edgecombe County. On the other, the more prosperous and whiter Nash County.

The setting sun’s glow reflects off a building near the intersection of SW Main Street and Sunset Avenue in Rocky Mount, N.C. The railroad tracks that run down the center of Main Street also serve as a dividing line between Nash and Edgecombe counties, and have historically split the city by race and class. (Kevin Hardy/Stateline)

While some officials say long-standing attitudes centered on division are fading, the county line has for decades provided a clear delineation of class, race and politics.

Edgecombe County is a Democratic stronghold, but the more populous Nash County is a bellwether of sorts. It was among the 10 closest of North Carolina’s 100 counties in the last presidential election, and one being closely watched this cycle. With 51,774 ballots cast, President Joe Biden took Nash County by 120 votes.

Around Rocky Mount’s downtown area, stately red brick churches and banks line the wide streets. But just a few blocks away, weeds overtake vacant lots, glass is smashed out of abandoned buildings, and razor wire tops the fencing of no-credit-needed car lots and used tire shops.

While the nearby Raleigh metro area has experienced explosive suburban growth, Rocky Mount Mayor Sandy Roberson said his community has seen an erosion of its middle class with the loss of corporate headquarters and factory jobs.

But he’s optimistic.

Young business owners are investing in downtown. Industries with operations in the Raleigh area are moving east. And both Republicans and Democrats just celebrated the news that Natron Energy plans to build a $1.4 billion electric vehicle battery plant nearby that will employ more than 1,000 people.

“We’ve got a lot of great things that are happening,” the mayor said. “But the key is, how do you build and retain a middle class? Because that’s who does the living and the dying and the investing in a community.”

The mayor’s position is nonpartisan, but Roberson is a Republican who in 2022 ran in the Republican primary for a congressional seat here. This election, however, is a difficult one for him.

Roberson said the economy and his financial position were unquestionably better during Trump’s term, but the Jan. 6, 2021, insurrection and the chaos of the last Trump presidency make him hard to support. At the same time, Roberson worries about Harris’ economic policies; he believes the current administration has accelerated inflation by pumping too much money into the economy.

“At some levels, it feels like I’m voting for somebody who wants to either be a dictator or somebody who wants to create a socialist state,” Roberson said. “And I’m not in either place.”

A former cotton mill built and once operated by slave labor, Rocky Mount Mills closed in 1996, reopened in 2015 and is now home to breweries, restaurants and dozens of high-end apartments. (Kevin Hardy/Stateline)

‘Nobody is immune’

In North Carolina and other swing states, Trump’s television ads hammer the vice president over high prices and “Bidenomics.”

Nash County Republican Party volunteer Yvonne McLeod said the economy, along with immigration, are the top concerns locally. Businesses still struggle to hire, rents have soared and food prices are still up, she said.

“Economically, we’re hurting,” she said.

Democrats must be honest about the financial pressures facing voters, said Cassandra Conover, a former Virginia prosecutor who now leads the Nash County Democratic Party. She noted that Harris ads running in North Carolina speak directly to middle-class concerns.

“Nobody is immune from what’s going on,” Conover said. “She’s telling all of us who are hurting, ‘I know, and we’re working for you.’”

Low-wage states with cheap housing dominated the post-pandemic jobs boom

Polling has shown voters are sour on the economy, with 63% saying the economy was on the wrong track in a Harvard-CAPS-Harris poll released this month. Republicans take a far dimmer view than Democrats.

“From past experience, we would expect Harris to inherit some of the blame or credit for the current economy, but so far in the polls, I would say there has been a surprising willingness of voters to not extend the blame for inflation that they had for Joe Biden onto Kamala Harris,” said Grossmann, the Michigan State University professor.

Housing anxiety

Housing costs have outstripped income gains in the past two decades, but those challenges have intensified since the COVID-19 pandemic, when demand increased, construction costs soared and interest rates spiked.

“It doesn’t matter if you’re a buyer or a renter,” said Molly Boesel, an economist at CoreLogic, a financial services information company. “You’re seeing your housing costs increase.”

Affordability is “the No. 1 issue” among voters in Nevada this year, said Mario Arias, the Nevada director of the Forward Party, a centrist political party founded by former Democratic presidential hopeful Andrew Yang.

A resident of the Las Vegas area, 30-year-old Arias said housing is his biggest financial concern. Throngs of Californians have moved into Nevada to lower their housing costs, but it’s driven up costs for everyone else, he said.

“If you want to get out of being a renter, you have to be in not just a good financial situation, but in a very stable financial situation,” he said.

The Federal Reserve cut interest rates last week for the first time in four years, whichcouldopen the housing market to more homebuyers as mortgage rates ease in the coming months.

The Biden administration has proposed several housing-related policies, including incentives to loosen zoning regulations and capping rent increases from corporate landlords. Harris has announced a proposal to provide up to $25,000 in housing assistance for a down payment to some potential first-time homeowners and promised tax incentives that she say’s would lead to 3 million more housing units by the end of her first term, if she’s elected.

Trump has not waded far into the details of how he would address the affordability issue in a second term. He has said he plans to bring down prices by barring immigrants in the country without legal authorization from getting mortgages. But his proposed immigration policies could further reduce the labor force for building homes. Previously, Trump’s administration talked about trying to cut state and local housing regulations, and it suspended federal regulations on fair housing.

If I get a raise, I tend to credit myself. If I see higher prices, I tend to blame the government or the current situation.

– Matt Grossmann, a political science professor at Michigan State University

In North Carolina, more than a quarter of the state’s households are cost burdened, meaning they spend more than 30% of their income on housing costs. It’s particularly challenging for renters, nearly half of which are cost burdened, according to the North Carolina Housing Coalition, a nonprofit affordable housing organization.

Stephanie Watkins-Cruz, housing policy director at the coalition, noted that the federal government’s calculation of fair market rent in North Carolina has shot up 14% in just one year — and 38% over the past five years.

“So unless everybody and their mama’s getting 14 to 20 to 38% raises, the math begins to not math,” she said.

It’s a familiar challenge in every swing state.

Rent is eating up a greater share of tenants’ income in almost every state

Wendy Winston, a middle school math teacher in Grand Rapids Michigan, said that though no one political candidate is responsible for the state of the economy, the cost of groceries and housing is hard to ignore.

“I don’t think the economy is terrible. It is sometimes difficult to make ends meet,” Winston said. “I don’t believe that it’s the fault of the government or policies of the government. I feel like it’s the individual corporations trying to make profit off the backs of the middle class.”

The average rent for a two-bedroom apartment in Grand Rapids is about $1,550 a month, according to rental site Apartments.com. Though Michigan ranks fairly average compared with other states for rent prices, the state saw some of the steepest rent increases in the country in recent years, and wages have not kept up. Residents unable to rent new, “luxury” apartments find themselves short of options for places they can afford.

“It’s not just cost, it’s availability,” Winston said. “There are a lot of new housing developments. Apartments and condos and things are being built, but I’m priced out of them. And I have a college degree, so I don’t think that’s helping our families.”

Hoping for revival

Back in North Carolina, near the banks of the Tar River, Rocky Mount Mills has a healthy waiting list for the apartments and the revamped homes it rents.

A former cotton mill built and once operated by slave labor, the campus closed in 1996, reopened in 2015 after a $75 million renovation, and is now home to breweries, restaurants and dozens of high-end apartments.

Melanie Davis, the co-owner of Davis Furniture Company in Rocky Mount, N.C., says business has been good lately, though she believes customers are anxious about the presidential election. She’s excited about downtown’s future. (Kevin Hardy/Stateline)

Chapel Hill native and entrepreneur Cameron Schulz never had Rocky Mount on his radar. But the development’s brewery incubator helped him launch HopFly Brewing Co., now one of the state’s largest self-distributing breweries.

After outgrowing its original space, HopFly relocated to Charlotte, but still operates a taproom in Rocky Mount. The Mills project has reinvigorated the city, Schulz said.

“Rocky Mount’s got one of the most beautiful, quintessential downtown strips that I’ve ever seen anywhere,” he said. “We’ve just got to fill it up with cool places to go, and people to go into those places.”

Main Street suffered for decades after the arrival of malls and a highway bypass. Over at Davis Furniture Company, two employees keep watch over an empty storeroom of sofas, beds and home decor.

Co-owner Melanie Davis said business has been good, though she believes customers are anxious about the presidential election. Pointing down the sidewalk to new restaurants and some loft apartments overlooking the railroad tracks, Davis said she’s bullish on the trajectory of downtown.

“I do feel like we’re on an upswing,” she said.

Michigan Advance’s Anna Liz Nichols contributed reporting.

The Fed says its long-awaited rate cut is apolitical, even close to the presidential election

Casey Quinlan — Thu, 19 Sep 2024 20:27:26 +0000

Home mortgage rates are posted outside a real estate office in Los Angeles after the Federal Reserve interest rates announcement on Wednesday, Sept. 18, 2024. Federal Reserve Chairman Jerome Powell announced a half-point cut to its benchmark interest rate in the first rate cut since the early days of the COVID pandemic (Mario Tama/Getty Images).

The Federal Reserve’s first key interest rate cut in four years coincides with another major four-year event: the homestretch of the presidential election.

Fed Chair Jerome Powell downplayed the central bank’s role in the race between Vice President Kamala Harris and former President Donald Trump on Wednesday, in announcing the half-percentage point cut in its benchmark rate. But that didn’t stop the candidates’ campaigns from weighing in, and it could prove a key factor for voters.

“This is my fourth presidential election at the Fed, and it’s always the same. We’re always going to this meeting in particular and asking what’s the right thing to do for the people we serve,” Powell said. “Nothing else is ever discussed.”

The decision to cut for the first time during the Biden Administration indicates the Federal Reserve’s Board of Governors believe the economy has beaten the COVID-19 pandemic-induced wave of inflation that has plagued it since mid-2021. The Fed hiked its key rate 11 times between March 2022 and July 2023.

Inflation peaked at 9.1% in June 2022. The Consumer Price Index, a measure of inflation, rose 2.5% over the past year, according to the latest release from the Bureau of Labor Statistics in August. The unemployment rate was 4.2% in August, down from 4.3% in July, but still much higher than 3.5% in July 2023 when the Fed made its last rate hike.

“We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks of both sides of our dual mandate,” Powell said.

Wednesday’s was the first in what is expected to be a series of key rate cuts. For now, that benchmark rate is 4.75 to 5%

One member of the Fed’s governing board, Michelle Bowman, dissented with the rest of the group, marking the first time a governor has done so since 2005. Bowman preferred a 25 basis point – or quarter percentage point – cut.

Timing of the rate cut

Both campaigns quickly reacted to the news from the Fed.

Trump, speaking at a crypto-themed bar in New York, said the cut should have been smaller.

“I guess it shows the economy is very bad to cut it by that much, assuming they’re not just playing politics,” the Republican nominee said. “The economy would be very bad or they’re playing politics, one or the other. But it was a big cut.”

Harris, in a prepared statement, was forward-looking.

“While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down,” the Democratic nominee said. “I know prices are still too high for many middle class and working families.”

Sarah Binder, a senior fellow in governance studies at the nonpartisan Brookings Institution and author of, “The Myth of Independence: How Congress Governs the Federal Reserve,” said there is a long history of presidents pressuring the Fed, from John F. Kennedy to Richard Nixon and Trump, as a president and now as a presidential candidate.

In order to be effective in its role in keeping the economy moving, Binder said, the Fed needs to be trusted as legitimate, and its political support is contingent on doing a good job.

“The Fed doesn’t have the liberty of sitting it out or not doing enough, which can also bring the Fed into politicians’ crosshairs where they really, really don’t want to be,” she said.

Skanda Amarnath, executive director of Employ America, a research group that advocates for full employment, said the Fed should be examining the economic data.

“That’s what they should look at, not where they are in the electoral seasonal cycle,” she said. “I think that’s the case, by and large. I don’t see anything that’s just a real politicization here.”

What a Fed rate cut means for the economy

Many economists and economic advisers have argued for the Fed to cut rates for months to avoid significant damage to the labor market and in the worst case, a recession.

Now, consumers should begin to see lower costs for borrowing money to buy houses, cars and other necessities.

Kitty Richards, senior strategic adviser at Groundwork Collaborative, a progressive think tank based in Washington, D.C., said the Fed should not hold back on cutting rates now that inflation is slowing.

“The Fed pursued four back to back 70-basis-point rate hikes when inflation was heating up. There’s no reason they should allow inertia to hold them back from normalizing rates now that inflation is under control,” she said.

Because shelter makes up so much of inflation, Richards has expressed concern that by keeping rates where they are, mortgage rates have been pushed so high that the housing market is unaffordable for many Americans. This, in turn, affects inflation, she said, creating a vicious cycle.

Dean Baker, senior economist at the Center for Economic and Policy Research, a progressive economic policy think tank, stated that the Fed decision is a good sign for the housing market.

“It is good that the Fed has now recognized the weakening of the labor market and responded with an aggressive cut. Given there is almost no risk of rekindling inflation, the greater boost to the labor market is largely costless,” Baker said in a statement. “Also, it will help to spur the housing market where millions of people have put off selling homes because of high mortgage rates.”

Inflation has slowed, but the economy remains a big issue for voters in picking a president

Casey Quinlan — Fri, 13 Sep 2024 16:00:55 +0000

People watch the ABC News presidential debate between Democratic nominee, U.S. Vice President Kamala Harris, and Republican nominee, former U.S. President Donald Trump, on Tuesday, Sept. 10, 2024, at a watch party at The Abbey, a historic gay bar in West Hollywood, California. The economy will remain central to both campaigns even as inflation cools and wages increase (Mario Tama/Getty Images).

Inflation hit a three-year low last month, just as the presidential election is heating up.

But the high cost of housing and other necessities will keep the economy central to both of the major campaigns, as seen this week in the first debate between Kamala Harris and Donald Trump.

The Consumer Price Index, a measure of inflation, rose 2.5% in the past year, which is the smallest jump since February 2021, according to the latest Bureau of Labor Statistics data released Wednesday. The main driver of this increase was shelter, which moved up 0.5% in August. Airline fares, car insurance, education, and apparel also rose that month. But wages also rose 0.4% in August and 3.8% over the past year, and the average workweek increased by 0.1 hour — welcome news for workers trying to keep up with the cost of living.

Voters continue to say the economy is key in deciding who should be president, at 81%, and four in 10 say the economy and inflation are the most important issues guiding that decision.

Trump, the former president and Republican nominee, blamed the Biden administration for high prices early on Tuesday’s debate in Philadelphia, falsely claiming the post-pandemic wave of inflation is the worst ever.

“We’ve had a terrible economy because inflation, which is really known as a country buster, it breaks up countries, we have inflation like very few people have ever seen before, probably the worst in our nation’s history,” Trump said.

The worst inflation rate in U.S. history was actually in 1980, at 14%. The current wave – the highest inflation spike since then – peaked at 9.1% in June 2022.

Democratic nominee andVice President Harris responded to Tuesday’s question about the economy by touting tax cut proposals to combat housing costs.

“The cost of housing is far too expensive for far too many people. We know that young families need support to raise their children and I intend on extending a tax cut for those families of $6,000, which is the largest child tax credit that we have given in a long time so that those young families can afford to buy a crib, buy a car seat, buy clothes for their children,” she said.

Harris also pitched a proposal for a $50,000 tax deduction for small startup businesses.

Taylor St. Germain, an economist at ITR Economics, a nonpartisan economic research and consulting firm based in New Hampshire, said the latest data shows inflation is slowing enough to suggest it’s time for the Federal Reserve to start cutting interest rates.

“It’s encouraging to see that inflation is slowing and slowing to these much lower levels,” said St. Germain said. “However, it is, of course, still elevated and one of the reasons it’s still elevated is that shelter costs are driving a significant portion of that inflation, with rents rising as well, especially as we looked at this latest CPI report.”

The Fed began raising interest rates in March 2022 to bring down inflation, raising interest rates 11 times, and made its last rate hike in July of last year.

Economists are watching closely to see if the Fed cuts rates during its meeting next week, which is expected to have an impact on the housing market and other costs.

Kitty Richards, acting executive director at Groundwork Collaborative, a progressive think tank based in Washington, DC, said the Fed’s decisions are contributing to housing costs.

“The problem with housing is fundamentally a supply problem. And the Fed’s actions are actually making that supply problem worse by locking up the housing market and making it more expensive to buy, build or rehab housing,” she said. “Housing is such a big part of people’s experience of the economy and it really matters to folks when they might want to move and look around and they can’t. They can’t even afford to buy a house that is the same price as the house they live in because the interest rates are so high.”

States are pushing back with anti-labor laws as union popularity grows, policy experts say

Casey Quinlan — Wed, 11 Sep 2024 14:00:14 +0000

Porchá Perry demonstrates with other workers in Lansing, Michigan, in favor of bills restoring local control to pass workforce and labor policies on Sept.13, 2023. A new report finds growing union organizing across the country has triggered an anti-labor legislative response in some states, but cities and counties are increasingly pushing back (Photo courtesy of SEIU Local 1).

Growing union organizing across the country has triggered an anti-labor legislative response in some states, but cities and counties are increasingly pushing back, a new report found.

The report, released this month by the New York University Wagner Labor Initiative and Local Progress Impact Lab, a group for local elected officials focused on economic and racial justice issues, cites examples of localities all over the U.S. using commissions to document working conditions, creating roles for protecting workers in the heat and educating workers on their labor rights.

In the face of increased worker organizing and Americans’ higher approval of labor unions in the past few year (hitting levels not seen since the 1960s), many states have introduced bills aimed at stopping payroll deduction for union dues and punishing employers that voluntarily recognize a union through the card check process. In April, several governors in Southern states, including Tennessee, Alabama, Georgia, and Mississippi, advocated against auto workers voting for a union.

“We know that there has been an increase in worker organizing and definitely an increase in high-profile worker organizing and certainly that action has had a reaction,” said Terri Gerstein, director of the NYU Wagner Labor Initiative and co-author of the report.

However, state preemption laws, which can make local ordinances void and could prevent many localities from implementing more worker-friendly policies, are also on the rise. There was a surge in preemption laws from 2015 to 2017 on everything from the minimum wage to paid leave, according to a June 2024 analysis from the Economic Policy Institute, a left-of-center think tank.

Although the passage of preemption legislation has slowed, according to the EPI analysis, the effects on localities are still damaging to workers’ rights, authors of the report explain. But labor and policy experts say there are still opportunities for localities to push back against efforts to limit labor organizing and gut the enforcement of labor protections.

“Localities are doing more to fight for working people and advance workers’ rights, and I think in states where there is rampant state hostility and abusive state preemption, local governments are also the leaders of trying to advance workers rights in those states and address new challenges and threats like heat, for example,” said the report’s other co-author, LiJia Gong, the policy and legal director at Local Progress.

Some business organizations, such as the National Federation of Independent Business, say preemption laws help small businesses, which don’t have the capacity “to navigate duplicative, overlapping and potentially contradictory local labor laws.”

“NFIB has supported legislation that creates statewide, uniform standards for minimum wage rates and legislation that establishes a preemption of paid sick leave proposals by local governments,” the group said in a prepared statement.

Gerstein and Gong argue that these efforts are not always concerned with uniformity, such as taking away a locality’s ability to raise the minimum wage when the state does not set a higher minimum wage itself.

In states where there isn’t state-level wage enforcement, localities can pass ordinances that allow workers to file complaints and get stolen wages back without a lawyer, as some Florida localities have done.

There are also things cities and counties can do to prevent heat-related injuries and illnesses, including in the workplace. Miami-Dade County, Phoenix, and Los Angeles have chief heat officers whose role it is to protect people from the effects of extreme heat.

“Unlike a lot of other hazards, people don’t really understand how dangerous workplace heat is and that there are workplace fatalities. But research also shows that there are high rates of worker injuries and accidents of various kinds on hotter days,” Gerstein said.

Amid state efforts to weaken child labor laws, schools are also some of the best tools localities have to ensure kids aren’t working in dangerous conditions, the authors said. School boards could use their power to include workers’ rights education in the curricula, for example.

“School districts can do a lot to educate families on child labor laws and age-appropriate employment opportunities, and they can also play an important role in identifying students who might be working in prohibited occupations and refer those cases to state and federal labor enforcers,” Gong said.

Worker boards can also document and seek to improve working conditions on the local level. The boards, created by local governments, have worker representation and can conduct worker outreach and make policy recommendations on wages and benefits. Last year, the Detroit City Council voted to create an industry standards board for workers at pro sports facilities including Ford Field, Little Caesars Arena, and Comerica Park.

Board member Porchá Perry, a mother of two children who works at Comerica Park and Ford Field, said her role is reaching out to workers to share their experience of working conditions. Workers say they are concerned about low wages, child care, transportation and safety. Perry said that although she is personally less concerned about finding child care, she wouldn’t have to work multiple jobs if wages were higher and she would be able to see her kids more.

“It’s hard to have quality time,” she said.

The board also has spots for city council members and the mayor’s office.

“It’s a voice for everybody – government officials, employees, the management department. It’s somewhere for everybody to sit at the table and speak,” she said.

Britain Forsyth, legislative coordinator for Step Up Louisiana, a group that organizes for economic and education justice, said New Orleans has focused on becoming a model employer. New Orleans increased the minimum wage to $13.25 for city employees, which became effective in 2022, and rose to $15 in 2023. In 2023, the New Orleans City Council codified city employees’ right to organize. Louisiana does not have a state minimum wage law, so the city’s minimum wage is far above $7.25, the federal minimum wage.

Step Up Louisiana is also working to pass a workers’ bill of rights on the November ballot in New Orleans. It would add to the bill of rights in the city’s home rule charter that workers deserve a living wage, paid leave, safe workplaces and health care coverage and says that all laws and regulations regarding unions should be respected.

“We call the question to the city about what we believe in, and we make it clear to employers here and folks who want to open businesses here that this is how we think workers should be treated,” he said.

Authors of the report also suggest that more localities should take on wage theft, since state and federal authorities frequently struggle to enforce wage judgments and recover wages.

These agencies are often under-resourced, have frequent staff turnover and manage complex cases, Gerstein said. Local labor agencies could provide help conducting interviews or prepare cases for state or federal agencies to follow up on. San Diego County has a fund for staff to pursue employers for wages and provides $3,000 to people who are victims of wage theft and have final unpaid wage orders from the state.

Gerstein said she’s seeing cutting-edge approaches to enforcing worker protections in places like Seattle, Boston, New York City and Denver, where the state is friendlier to workers. For example, in Sept 2022, Boston Mayor Michelle Wu created the Worker Empowerment Cabinet, including the Office of Labor Compliance and Worker Protections.

Jodi Sugerman-Brozan, Boston’s deputy chief of worker empowerment and the director of the office of labor compliance and worker protections, said her office has done educational outreach, including free OSHA training sessions for over 1,200 people and a set of trainings for how to create a heat illness prevention plan. Last year, Wu signed an ordinance that requires certain safety standards and training for city construction projects.

“Cities and countries don’t have a lot of power but they can use the power of contracting and vending to drive labor standards,” Sugerman-Brozan said.

But Gerstein added that local governments in more employer-friendly states are also stepping up to advocate for workers.

“It’s a very different landscape where the local government may be the only place where the government is standing up for workers,” she said. “There is largely stagnation in Congress because of the filibuster and other reasons, an unfriendly state government, and your state department of labor isn’t particularly worker protective and is more focused on being employer and business-friendly. State AG offices aren’t really doing anything.”

Even a small local office can make a difference, Gerstein said.

“Hire dedicated staff to be the worker rights person. Create an office and an army of one. That’s how these things can start.”

US credit card debt continues to rise as housing and other costs remain high for the lowest earners

Casey Quinlan — Thu, 22 Aug 2024 11:56:56 +0000

Equifax credit files through June show that credit card delinquency is still rising. Americans’ total credit card balances are at $1.14 trillion, up 5.8% compared to a year ago, according to a recent report from the New York Fed (Justin Sullivan/Getty Images).

Americans are racking up credit card debt as they struggle to keep up with the cost of living, and experts say those who earn the least are the hardest hit.

Total credit card balances rose 5.8% from a year ago, to $1.14 trillion, according to a recent New York Fed report. Equifax credit files through June show that credit card delinquency is still rising but that delinquency on consumer finance loans and retail cards fell and auto loan delinquency was flat.

People use credit cards for all kinds of purchases, and despite the stereotype of consumers getting themselves into too much credit card debt so that they could buy a few extra flashy clothes or vacations, many of them are for necessities.

So what does it mean for the economy that the average rate for people with a credit card balance was 22.76% in May, that there is an expansion of financial tech products like “buy now, pay later,” and that many Americans find themselves unable to pay off that debt? It depends on your role in the economy, financial experts and economists say.

“If you’re in that half who’s paying your cards in full and taking full advantage of rewards and buyer protections, life is great for you. That’s a very different story from someone who’s trapped in that expensive cycle of 20 to 25 to 30% interest month after month,” said Ted Rossman, Bankrate senior industry analyst.

Still, the rate of growth in credit card debt has accelerated, which Rossman calls “potentially troublesome.”

It’s impossible to look at rising credit card debt without acknowledging the high cost of living, such as housing prices. The Consumer Price Index, a measure of inflation, showed that in July, shelter increased 0.4% and made up 90% of that month’s rise in the all items index.

“Inflation is definitely contributing to higher balances. Even if it’s a category like rent, which most people are not putting on a credit card, if you’re getting squeezed on rent, you have less money to go around for groceries and gas and other things that maybe you are putting on a credit card now,” he said.

The Federal Reserve’s campaign to raise interest rates to bring down inflation also affects credit card debt and some economists say it is fueling economic inequality. Although the Fed paused rates last year, they are still fairly high and influence credit card rates. The Fed may cut rates in its September meeting if it continues to see cooling inflation data.

“People who rely on credit cards and other forms of borrowing to finance all sorts of things in their lives, whether that’s food or purchases for investments in their education or purchases for their home or their children, disproportionately folks who are poor – they’re really hurting because interest rates are really high,” said Rakeen Mabud, chief economist and a senior fellow at Groundwork Collaborative, a progressive think tank. “These interest rates are really taking a toll on people’s day-to-day ability to live and finance their lives. It looks to me that the high interest rates at this point are actually causing more pain than the inflation that it is trying to combat.”

In addition to the impact of the federal funds rate on credit cards, consumers are facing high annual percentage rate margins, or APR margins, which the Consumer Financial Protection Bureau said were an all-time high in a February report. The agency said rising APR margins are driving people into persistent debt and delinquency.

“Credit card companies are gouging consumers with record high APR margins, which sit on top of the Fed’s already high interest rates. Profiteering by credit card companies cost people an extra $25 billion last year and is yet another example of corporations using inflation as a cover to rip people off,” Mabud said.

A lack of competition in the credit industry doesn’t help matters for those struggling with credit card debt, added Mark Zandi, chief economist of Moody’s Analytics, which provides financial intelligence products.

“There is some evidence that there’s less competition in that market and that’s allowing credit card lenders to enjoy wide margins,” he said.

Mitria Wilson-Spotser, vice president and federal policy director at the Center for Responsible Lending, said she partly attributes the rise in credit card debt to some major credit card companies not reporting payment data, which does not make it to their credit reports, hurting their credit score and leaving them with higher credit card rates or extending credit without basing it on an ability to repay.

Consumers also have access to more financial tech products, like earned wage access programs, which let employees access their pay earlier for a fee, and buy now pay later products, said Wilson-Spotser. These products are not regulated in the same way as credit cards. The Consumer Financial Protection Bureau issued a rule in May to apply the same regulations to “buy now pay later” lenders as traditional credit cards.

“There’s no obligation to ensure an ability to repay for the consumer, so that debt, which is kind of this phantom in the room, is combining with credit card debt, which I think is probably one of the reasons why we’re seeing an increase in delinquency among some consumers,” she said.

Zandi said the people most likely to suffer financially from their credit card debt, lower-income people, only account for a sliver of the consumer spending driving the economy.

“[High interest rates] is adding to the pressure on households who have revolving debt, that aren’t paying off their cards and are using the card as a way to borrow money and have outstanding debt. So that’s a real problem for those households,” he said. “… The economy can move forward and be just fine even if the folks in the bottom third are struggling. The economy can’t flourish but it can do what it’s doing.”

That doesn’t mean the impact of the harms of high credit card rates and inflation, which is cooling but has done damage to households, will go unnoticed, however, Zandi said, alluding to building political pressure to improve people’s economic well-being.

“But the political and social implications are enormous. You can see it in our fracture of politics and what’s going on in terms of the presidential election,” he said. “… Politics has been affected by the fact that lower-income households have seen their share of the economic pie decline from where it was when it was at its peak back in the late 70s, early 80s.”

A look at how federal plans could make the costs of housing more affordable

Casey Quinlan — Tue, 20 Aug 2024 19:15:15 +0000

As renters and would-be homeowners struggle with the high cost of housing, the Biden administration has announced policies to address this strain on household budgets.

That includes $100 million in funding for a program to incentivize affordable housing production and streamlining loan application processes to expedite building more housing.

Some of those proposals – such as a cap on rent increases from corporate landlords – call for Congressional action, while others are rules and grants that can be done without legislative approval. The U.S. Department of Housing and Urban Development will also be finalizing a rule to allow different kinds of housing, such as duplexes and triplexes, to be built under the agency’s manufacturing and safety standards.

The Biden administration and the Harris campaign are making their housing policy case to the American people as Vice President Kamala Harris and former president Donald Trump compete for voters’ trust on economic issues. An August Financial Times/Michigan Ross poll shows that Harris is slightly ahead of Trump when it comes to who voters trust more on the economy, by one percentage point. Although that is a very small advantage, it is a change from July, when 35% of voters approved of President Joe Biden’s job on the economy compared to 41% for Trump.

Plans would cut red tape, but housing stock is still low

The administration’s plans to address supply and soaring prices also include repurposing federal land in Nevada and a cap on rent increases from corporate landlords, which would require Congressional action. Housing and homelessness experts say many of these changes are positive, particularly zoning changes, while others argue that a few of these actions are insufficient for the crisis at hand.

On Friday, Vice President Kamala Harris announced her plans for boosting housing affordability if she wins the presidency. Harris’ plans are similar to some of the Biden administration’s approaches to housing policy, with an emphasis on stopping corporate landlords from driving up rents and knocking down local zoning barriers to building affordable housing. She also announced a policy to provide up to $25,000 in payment assistance for first-time homebuyers on the condition that they paid rent on time for two years.

“We will take down barriers and cut red tape, including at the state and local levels, and by the end of my first term, we will end America’s housing shortage by building 3 million new homes and rentals that are affordable for the middle class,” Harris said at a campaign event in Raleigh, North Carolina on Friday.

Indivar Dutta-Gupta,who focuses on policy research and seminars at the Georgetown University McCourt School of Public Policy, applauded developments to make it easier and less costly to build affordable housing through the Pathways to Removing Obstacles to Housing program, which provides funding for communities getting rid of barriers such as “outdated” zoning policies and a “lack of neighborhood amenities.”

“It’s very difficult for a builder to just kind of copy and paste their plans from one community to another. Secondly, we’re not just talking about requirements for special permitting and land use that are tedious,” he said. “They’re time consuming and that dramatically increases the cost of housing, so if you can knock down a process that takes 12 months to six months, that can make a big difference for housing affordability.”

Kenneth Chilton, professor at the department of public administration at Tennessee State University, said there are certainly homes being built – just not enough affordable ones between $100,000 and $300,000 in the area he lives in Nashville. Wages have also not caught up to those prices, he added.

“The market has catered to the more affluent households, so there are new houses being built, but they’re million dollar-plus houses for people who can afford or are willing to put themselves in a financial burden to afford a million dollar house,” he said. “… It’s becoming harder and harder to afford the discretionary income needed to save up for down payment.”

The Biden administration and Congress has also focused more on corporate landlords of late, who are influencing the housing market. Dutta-Gupta and Chilton said that even in situations where they make up a smaller percentage of landlords, their practices influence other landlords and drive up rents.

Chilton, who has studied how firms that can quickly snatch up all kinds of properties can influence regional housing markets, said it’s hard for the average homeowner to compete.

“You have a lot more corporations and investors who are buying up housing,” he said. “Some of those are institutional, but there’s been recent reports that even smaller local landlords are kind of adopting the same business practices of one-year leases with built-in cost of living adjustments. They’re operating like corporate landlords.”

He said that none of the Biden administration proposals he saw accounted for potential homebuyers, who have to apply for loans, failing to compete with groups and investors making all-cash purchases without inspections. Democratic lawmakers have introduced legislation in Congress to limit corporate landlords’ power, but it has not passed.

Dutta-Gupta said the Biden administration’s recent efforts are putting “meaningful dollar amounts” into the quest for affordable housing through grant opportunities, even though they are probably below the demand.

He said he’s also heartened to see that the U.S. Department of Transportation is making sure its discretionary infrastructure grants give preference to communities with more “pro-housing policies,” to give localities more incentives to favor affordable housing. But he said the administration has to make sure it effectively communicates this through outreach.

“There’s going to have to be a meaningful effort to explain to the communities that there’s a new preference and this is how those communities can potentially fall into that category of the preference,” he said. “You don’t want to just let them know there’s a preference and then no change in behavior happens.”

Although Trump has talked about mortgage rates during his campaign, he hasn’t provided a lot of detail on housing policies. The Federal Reserve’s federal funds rate has an influence on mortgage rates and Trump has said the president should “have at least a say” in Fed policy. The Republican Party’s 2024 platform also includes a section on housing affordability, which mentions tax incentives to “promote homeownership,” allowing for new home construction on some federal lands, and reducing regulations that “raise housing costs.”

The challenge of keeping people housed

Given the challenges to building the supply of more affordable housing, the National Alliance to End Homelessness would like to see broader policy approaches to prevent more people from becoming homeless. Homelessness reached a record high in 2023.

Although the Biden administration has taken steps to expand housing access for groups particularly vulnerable to homelessness, such as veterans and survivors of intimate partner violence, Steve Berg, chief policy officer at the National Alliance to End Homelessness, would like to see more of a universal approach, such as housing vouchers that meet the scale of the need. He said targeted emergency rental assistance combined with eviction moratoriums in places where homelessness is particularly high and rising quickly would also be effective at reaching the people who need it most.

“The eviction moratorium combined with subsidies for landlords to help when people got behind on their rent were very effective interventions,” Berg said of earlier pandemic policies to keep people housed.

Why political leaders are focused on housing

The Federal Reserve has signaled it is close to cutting key interest rates as inflation has slowed and the housing market has begun to cool in response to high mortgage rates. The Fed started to raise interest rates in 2022 and hiked them 11 times until late 2023, putting pressure on the housing market during a time of high demand for housing and a shortage of affordable homes.

In May, U.S. rent growth was up 3.2% from a year ago, which was the biggest gain there has been in more than a year, according to CoreLogic’s single family rent data. A lack of housing affordability is also closely tied to homelessness. From 2019 to 2023, the number of people who had to go to emergency shelters for the first time rose more than 23%, a 2024 report from the National Alliance to End Homelessness shows.

“The Federal Reserve primarily slows the economy by making construction of residential housing, and generally taking out loans, more costly. People are certainly experiencing the higher cost of housing right now due to the higher interest rates, so the timing [of the policies] may be fortuitous,” Dutta-Gupta said.

Senators urge better access to disability payments for Long COVID patients

Casey Quinlan — Thu, 08 Aug 2024 21:42:08 +0000

People with symptoms of Long COVID attend a Senate Committee on Health, Education, Labor and Pensions hearing on Long COVID in January. A group of senators is now urging the Social Security Administration to grant greater access to disability payments for people with Long COVID symptoms (Drew Angerer/Getty Images).

Several U.S. senators have called on the Social Security Administration to take steps to make it easier for people with Long COVID to access disability benefits, actions that disability rights advocates and patients say are desperately needed.

Sens. Tim Kaine , Ed Markey, Tammy Duckworth, Bernie Sanders, Tina Smith, Angus King, and Richard Blumenthal signed the letter released on Monday. They said the agency should make the process more transparent, track and publish data on Long COVID applications, and consider expanding the listing of impairments the SSA considers in applications for benefits.

“In some situations, these symptoms can be debilitating and prevent an individual from being able to work, take care of their family, manage their household, or participate in social activities,” the senators wrote to SSA Commissioner Martin O’Malley.

Long COVID is a chronic health condition, which often includes fatigue, brain fog, and shortness of breath, following a COVID-19 infection. About three in 10 American adults have had Long COVID at some point, according to KFF’s April analysis of Long COVID data. About 17 million people had it in March 2024. In 2021, the U.S. Department of Health and Human Services released guidance on Long COVID as a disability under the Americans with Disabilities Act.

Kaine has been outspoken about his own experience with Long COVID and Sanders introduced legislation this month to provide $1 billion in funding each year for 10 years to support Long COVID research by the National Institutes of Health.

Lisa McCorkell, co-founder of the Patient Led Research Collaborative, a group of Long COVID patients and patients with associated illnesses, told States Newsroom, that creating a ruling or listing would be a huge improvement.

“Having that specific guidance for how to document Long COVID, its related diagnoses, and its associated impairment wo in uld assist physicians who may not be as knowledgeable about Long COVID,” she said.

The SSA administers disability benefits through Social Security Disability Insurance and Supplemental Security Income programs. The former program requires past employment payment into Social Security. The latter one does not have those restrictions and is based on financial need but to receive benefits, applicants have to prove they qualify as having a disability. The average monthly disability benefit for Social Security Disability Insurance is $1,538.

Long COVID’s economic cost

Researchers and economists are still trying to understand the full impact of COVID-19 infections and Long COVID on the workforce. A 2023 study estimated that COVID-19 brought down the labor force by 500,000 people and that the average loss of labor is equivalent to $9,000 in earnings. More than 25% of people with Long COVID said their condition had an impact on their employment or work hours, according to a 2022 Minneapolis Fed paper.

Long COVID is not going to go away, particularly as government protections on the federal, state, and local level to reduce the spread of COVID are “severely lacking,” said Marissa Ditkowsky, who serves as the disability economic justice counsel at the National Partnership for Women & Families, an organization focused on health, economic justice, and reproductive rights for women and families.

“While COVID continues to be a reality, we know that COVID disproportionately impacts women, disabled folks, and people of color, and the folks who are most impacted already have issues with access to appropriate health care, access to employment, and access to equitable wages,” said Ditkowsky, who has Long COVID. “A lot of folks might be working in low-wage jobs where they’re in the service industry and constantly out there and more likely to contract COVID. It starts not just with the programs for how to deal with folks with Long COVID, but how to prevent people from getting Long COVID.”

In the meantime, she said people with Long COVID, as well as other people with disabilities, would benefit from the changes senators are advocating, such as restoring the treating physician rule, which was repealed in 2017. The rule allowed the agency to give greater weight to medical evidence from a physician who treated a patient for years compared to, say, a doctor who examines a patient once.

“Giving your own doctor the weight [they] deserve is huge,” Ditkowsky said.

Mia Ives-Rublee, senior director of the disability justice initiative at the Center for American Progress, a liberal think tank, said there is an opportunity for the Biden administration or the next administration to revamp how the agency administers disability benefits.

She said that given the aging population, there is more reason than ever for the agency to make significant improvements to the application process. Advocates for people with disabilities say it’s also imperative to boost funding for the agency.

“Not only are we seeing an increase in disability in younger folks, but we’re also looking at the big boomer generation getting older … We’re going to see a huge pressure on the [SSA] and we need to see real changes and funding and think of ways to manage the wide variety of experiences that people have in order to deal with differences in applying for these benefits,” she said.

U.S. home prices hit a record high as sales fell. Here’s how housing experts explain the trends

Casey Quinlan — Fri, 26 Jul 2024 15:37:11 +0000

A sign advertising a home for sale is displayed outside of a Brooklyn brownstone on April 11, 2024, in New York City. U.S. house sales continued to fall in June as median home prices hit a record high for the second month (Spencer Platt/Getty Images).

U.S. median home prices hit a record high for the second month in a row as sales continued to fall, according to a report released this week, as potential buyers continue to lie in wait for lower mortgage rates.

Existing home sales fell 5.4% in June and median home sales reached its highest level on record since prices were first tracked by the National Association of Realtors in 1999. The median price rose the most in the northeast region at 9.7%. In June, existing home sales plummeted 8% in the Midwest, the greatest fall among the regions, according to the report released on Tuesday.

New home sales, released on Wednesday by the U.S. Census Bureau, fell 0.6% in June and is 7.4% lower than new home sales a year ago. The median sales price of a new home was $417,300, lower than the existing home sales median price of $426,900. Housing experts say that this closeness in price is unusual, since new homes have usually sold for much more in the past 10 years and may be reflective of changing demands for smaller and more affordable homes.

Despite that change, these two measures have shown that home prices still remain out of reach for many and that in response, sales have been slow. What is driving these prices and when will they abate? Housing economists say there are many factors at play, including Fed policy and an aging population.

Why are home sales low and home prices high?

High demand for homes and lower inventory levels have contributed to higher home prices in recent years. These expensive home prices and high mortgage rates have resulted in this housing market shift.

Matthew Walsh, economist at Moody’s Analytics, said low housing affordability and the “persistently high” mortgage rate is contributing to cooling housing activity. Unless housing becomes more affordable soon, he said he expects to continue to see lower existing home sales. The 30-year fixed mortgage rate was 6.78% as of July 25, according to Freddie Mac.

“Buyers are very responsive to mortgage rates and with the information being so readily available and the anticipation that mortgage rates are going to come down, I think that’s keeping people on the sidelines,” said Selma Hepp, chief economist at CoreLogic.

But she said homebuyers face a double-edged sword. When mortgage rates do come down, there will be a lot of pent-up demand that will also put pressure on home prices. A rise in cash buyers could also be pushing prices higher, Hepp said. All cash buyers were 28% of home transactions in June.

“A lot of these cash buyers are actually baby boomers who maybe cashed out on their existing home. We do know that home equity is at an all-time high and if you’re moving from a very expensive home price area to a lower-priced area, you obviously will have a lot of cash,” she added.

Housing inventory is changing but is it enough?

One bright spot for homebuyers is that total housing inventory has been rising. Inventory increased 3.1% from May and was up 23.4% from a year ago according to the June existing home sales report. Walsh said some households may be deciding they can’t wait to make a life change and are moving out of homes for larger or smaller options.

“It’s a lot of households that can no longer postpone plans to sell, whether that’s because their household is expanding because they’re having children or it’s shrinking and they need to sell their larger home in the Northeast and move to a smaller home to retire in the South,” Walsh said. “They can no longer put up with the homes that they’re in and sacrifice their low mortgage rate for a higher rate.”

Still, Hepp said the inventory is far lower than pre-pandemic levels and where demand has picked up — in Boston, New York, and Chicago, for example — there’s not a proportionate increase in the supply of housing.

Some homebuyers may be watching the Fed’s plans to cut interest rates, which affect mortgage rates, for some financial relief. A majority of economists say they believe the Fed will cut rates in September and December, according to a recent Reuters poll. Cutting rates may help bring some buyers back into the market and pump up inventory, but the effect will likely not be strong enough to bring home sales back to where they were before the pandemic, Walsh added.

What is the government doing?

The Biden administration announced a flurry of proposals this month to make housing more affordable, some of which would impact homebuyers as well as the repurposing of public lands in Nevada to bring at least 15,000 affordable rental and homeownership units to the area. In February, the White House also announced the opening of grant applications for assistance to homeowners to replace dilapidated homes.

Donald Trump, the Republican nominee for president, said at a July rally in Iowa that he would address problems in the housing market through cutting interest rates, according to Newsweek. Although presidents nominate the chair of the Fed for a four-year term, they do not have power over whether the Fed cuts rates.

States have been pursuing their own policies to improve housing inventory and affordability, including Utah and Oregon, which passed legislation to use funds for loans to developers who plan to build more affordable homes. A Maryland bill signed into law by Democratic Gov. Wes Moore in May would push property owners to make plans for vacant properties by letting cities raise taxes on those properties.

Experts say the economy is getting better, but consumers don’t feel that way. Here’s why

Casey Quinlan — Mon, 01 Apr 2024 14:18:16 +0000

A customer shops for food at a grocery store on March 12, 2024 in San Rafael, California. High prices at the grocery store and consumers’ memories of their pre-pandemic budgets may be playing a role in how Americans feel about their finances as recession fears recede (Justin Sullivan/Getty Images).

Americans are still worried about their financial stability even as their recession fears lessen. High prices at the grocery store and consumers’ memories of their pre-pandemic budgets may be playing a role. Here’s what financial and economic experts have to say about what last week’s economic indicators tell us about people’s perception of the economy.

What is driving consumer confidence?

The Consumer Confidence Index, released by the business nonprofit and research organization the Conference Board, is a survey indicating how optimistic or pessimistic consumers feel about their financial well-being and the economy.

The Consumer Confidence Index fell slightly in March from 104.8 to 104.7, well below some economist expectations of 106.5. Although consumers’ perception of the likelihood of a recession fell this month, consumers were less confident about their family’s financial situation in the next six months. The percentage of consumers who expected their incomes to fall rose from 11.9% in February to 13.8% in March.

Elizabeth Pancotti, director of special initiatives for the Roosevelt Institute, said that consumers’ experience of the economy and their financial situation may come down to crises they’re feeling that may not show up at a macro level but may strike their budgets particularly hard.

“When egg prices finally come down and chicken prices finally come down, but orange juice is high because of some random citrus greening disease or some other shocking food item, your total grocery bill doesn’t come down and that really highlights it,” she said. “There’s one crisis after another at a micro level, which I think is really why we’re not seeing that divergence between overall economic strength and at a very micro level, the feelings of average consumers.”

Pancotti acknowledged that housing is also one of the highest expenses for consumers right now, and those prices aren’t showing as much movement as other areas of consumers’ budgets.

“For most families, it is the largest purchase they make every month,” she said.

Why isn’t consumer sentiment higher?

Consumer sentiment, a smaller survey conducted by the University of Michigan, also gauges people’s sense of the economy overall, the labor market, and how they see inflation. On Thursday, U.S. consumer sentiment jumped to 79.4 from 76.9 in February and 62 a year earlier, making this its highest level since July 2021.

Joanne Hsu, director of the survey, said in the report that this number is an indication that consumers believe the economy is “holding steady.”

“As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead,” she added.”

Kevin Kliesen, business economist and research officer at the Federal Reserve Bank of St. Louis, said consumer confidence and consumer sentiment are still far below pre-pandemic levels and that it’s a puzzle as to why when the economy has “been growing fairly strongly” in the past year and a half. But like Pancotti, he added that high prices at the store compared to pre-pandemic prices may be playing a role in those measures.

“If you’re like me, you look at something, and you go, ‘Oh my gosh. I remember when it was so much less before the pandemic.’ So I think that calls into question, probably, a lot of people’s perceptions of the overall state of the economy and importantly their consumer finances,” he said.

What can we expect from inflation and the Fed?

As the Federal Reserve looks to its favorite inflation measure, the personal consumption expenditures price index, economists are watching the PCE closely for signs the Fed will cut rates in the coming months. This policy change is expected to have effects on the housing market as well as the growth of businesses.

The PCE rose 0.3% from January to February and 2.5% over the past year, according to the Bureau of Economic Analysis’s Friday release. Fed Chairman Jerome Powell responded to the news when he spoke at the San Francisco Fed and said the numbers were “in line with expectations” but not as reassuring as the numbers Fed officials saw last year.

Despite this reception from Powell, some financial experts believe inflation will ease up soon. Cristian Tiu, associate professor of finance at the University at Buffalo, said that although the economy is adding jobs, he doesn’t believe the quality of those jobs is high enough to sustain this price growth for much longer.

“Prices basically on consumer goods can’t be driven up forever just by the very top of the wage distribution. The rest of the wage distribution actually looks pretty modest. So I don’t think these price increases can actually be sustained,” Tiu said.

For this reason, he doesn’t think the Fed should continue to put brakes on the economy through restrictive monetary policy. Tiu added that he sees inflation as driven partly by corporate profit-seeking, with companies taking advantage of inflation to continue to keep prices higher than they can justify for the American consumer.

Federal Reserve declines to cut interest rates, saying it’s not clear inflation has slowed enough yet

Casey Quinlan — Wed, 20 Mar 2024 20:27:34 +0000

The Federal Reserve said Wednesday that it has insufficient evidence that inflation is slowing fast enough to justify a rate cut. Chair Jerome Powell said cuts are possible later in the year (Anna Moneymaker/Getty Images).

The Federal Reserve declined Wednesday to cut interest rates, saying it remains uncertain inflation is slowing enough, but some economists warned the financial regulators risk waiting too long to make cuts.

Fed Chairman Jerome Powell said the Fed has a lack of sufficient data that inflation is slowing enough to justify taking the pressure off interest rates yet. The Fed started raising the federal funds rate in March 2022 to battle inflation and continued until the latter half of last year, when it decided to pause rates

The Fed issued a statement that it is waiting until it “has gained greater confidence” that inflation is moving toward its 2% goal to begin cutting rates.

The Fed’s preferred inflation indicator, the Personal Consumption Expenditures Price Index or PCE for short, rose 0.3% from December to January compared to 0.1% from November to December, which some economic experts say may be partly behind the decision to hold off on rate cuts. The PCE climbed 2.4% from a year ago compared to 5.4% from January 2022 to January 2023, an indication that inflation has been slowing in the long term.

Powell said, “We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

He added that the Fed does not want to ease too much or too soon if that would risk a chance that inflation returns. Powell did not rule out pausing the rate for longer.

Skanda Amarnath, executive director of Employ America, an economic policy research group, and a former analyst at the New York Fed, said the Fed should avoid being too reactive to monthly inflation data, particularly in January and February, which have been hotter months for inflation in the past few years. A lot of businesses revise pricing with the new calendar year, Amarnath added, which can contribute to the rise.

Powell acknowledged on Wednesday that seasonal factors could have affected the data but that they didn’t add to the Fed’s confidence in slowing inflation either.

“Inflation is a volatile beast. Month to month, it can do weird things. But by and large, we’re seeing if you look at the year-over-year change in the [Consumer Price Index] and PCE, you’re broadly seeing progress,” he said.

The economy has also not shown signs of overheating for some time, Amarnath added.

“From everything we’re learning from the past, especially the last three to six months, it is a more normalized pace of job growth, a more normalized pace of wage growth … It’s largely moved in totality towards a still respectable and strong labor market,” he said.

Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, an economic think tank, said she is worried that the Fed could wait too long to cut rates and damage the economy.

“All the Fed can do at this point is break this really strong recovery that we’ve had … I’m worried now because rate hikes are a really imprecise tool that acts with lags. I don’t know exactly when the full impact of these rate hikes are going to play out and neither does Jerome Powell,” she said.

Amarnath said that because Fed policy, although it is far from the only factor, has played a role in the past three recessions, the Fed should be careful with how it uses the federal funds rate in its campaign against inflation.

“You may not need to cut at this very meeting. But if you press your luck a little too long in terms of ‘OK, the economy is not collapsing right this second,’ and if you wait till something breaks, it may prove to be too late,” he said.

Americans say their top policy priority this year is strengthening the economy, according to a Pew Research Survey taken in January.

The Fed’s interest rate policies also affect housing supply and affordability. Mabud said that the Fed’s approach to meeting one of its stated goals — lowering prices — is helping to drive up housing costs, which in turn affects inflation measures. The Consumer Price Index, another inflation measure, shows that in February, shelter and gasoline were responsible for more than 60% of the index’s rise.

“Shelter costs continue to be a significant driver of inflation,” she said. “We’re seeing high mortgage rates which are driving up the cost of buying a house, which then pushes folks back into the potential rental market, which also pushes rents higher. The Fed’s high interest rate regime is also making constructing new houses more expensive. We have a shortage of 6.5 million homes, at least, in this country.”

The number of people recorded as unhoused on a single night rose to its highest level in January 2023, according to U.S. Department of Housing and Urban Development data released in December. The department attributed the rise in the number of unhoused people to the rental market, which has had high rent growth, and the ending of programs implemented early in the pandemic to keep people housed during an economic downturn.

Know what an APR margin is? If you have credit card, it’s likely driving up your interest rate

Casey Quinlan — Fri, 08 Mar 2024 12:30:19 +0000

A credit card decal is displayed on the window of a business on Feb. 7, 2024, in San Rafael, California. The Consumer Financial Protection Bureau says the rise in the APR margin has contributed to roughly half of the swelling of credit card interest rates over the past decade. U.S.credit card balances now stand at a record high $1.13 trillion (Justin Sullivan/Getty Images).

You’ve probably heard of junk fees, as well as credit card late fees – the onerous banking fees you may incur as a credit card consumer.

But there’s a lesser-known factor that could be driving up your credit card costs and placing your household at risk of further debt, as total U.S.credit card balances now stand at a staggering $1.13 trillion – a record high.

This driver of high interest rates is known as the annual percentage rate margin – APR margin for short – and it is the additional interest credit card companies tack on beyond the prime rate. Banks use the prime rate, which is considered a stand-in for the cost of lending. So the APR margin is how credit card companies drive up their profits. Combined with the prime rate, this is your total credit card interest rate, known as the APR.

APR margin rates have reached an all-time high, according to the Consumer Financial Protection Bureau. The agency says this rise in the APR margin has contributed to roughly half of the swelling of credit card interest rates over the past decade.

The consumer watchdog agency says a deceptive credit card shopping process and lack of competition in consumer credit markets only exacerbates the problem.

On Feb. 29, the agency issued guidance to law enforcement and regulators on credit cards and other consumer products. The agency provided information on deceptive user experiences and potential anti-competitive business practices in the credit card industry. The bureau added that it is still working on a public-facing tool for consumers that would make it easier to compare credit card interest rates.

Between 2015 and 2022, the average APR margin increased 1.6 percentage points for someone with an excellent credit score – 800 or above – despite no rise in late payments. The cost of an excess APR margin to the average credit card holder in 2023 totaled more than $250, the agency said.

One of the problems with this rise in APR margins is that it can “push consumers into persistent debt,” and possibly even delinquency, the brief stated. The Consumer Financial Protection Bureau defines “persistent debt” as charges for interest and fees that are more than half the payment amount within a year.

At the same time, consumers have been hit by changes in the federal funds rate, which is set by the Federal Reserve, and influences the prime rate used by banks, contributing to higher credit card rates. The Fed hiked interest rates starting in March 2022 and the central banking system began to hold rates steady late last year. Despite these changes, the watchdog agency says more attention should be paid to the rising APR margin.

“That margin is what’s been going up over the years. The CFPB says the interest rate on your credit card is going up, not because of the Fed rate, but because the margin that they slap on top of the index rate has been increasing over the years,” said Chi Chi Wu, senior attorney at the National Consumer Law Center.

In February 2022, consumers paid a 16.17% interest rate compared to November 2023, when they paid a 22.75% interest rate on credit cards, according to the Fed. In the last few months of 2023, delinquency rates increased 8.5% for credit card balances and rose for all age groups.

“This signals increased financial stress, especially among younger and lower-income households,” said Wilbert van der Klaauw, an economic research advisor at the New York Fed.

Part of the problem with these high interest rates is that consumers don’t have enough options, there is a lack of transparency on rates when shopping for credit cards, and current regulations aren’t up for the task of reining them in, Wu said. The Consumer Financial Protection Bureau also pointed to consolidation of the credit card market and less transparency from banks on interest rates when consumers shop. The top 10 issuers for credit cards make up more than four-fifths of credit card loans.

Wu said people also shop on rewards rather than on interest rates because consumers don’t have enough information on rates.

“Why do people shop on rewards? Is it just that they’re so much more valuable? Well, no. You can’t shop on interest rates,” she said. “You have to look at the credit card registration and you try to look at what the interest rate is.”

Banks may provide a range of interest rates or multiple possible rates but the consumer won’t know what the interest rate is going to be until after they have already applied because it will be based on their credit score, Wu explained. That allows banks to increase the rate to something as high as 28%, she said. Meanwhile, the credit card rewards are the least regulated aspects of credit cards.

Customers can’t rely on the law to stop banks from charging very high interest rates because there isn’t a limit on interest rates in the Credit Card Accountability Responsibility Disclosure (CARD) Act, a federal law passed in 2009. Many state laws don’t protect credit card consumers in this way either and companies are often chartered in states that don’t have strong usury caps or any usury caps, such as South Dakota and Delaware.

These companies don’t have to follow the usury law of the state they’re doing business with customers in — only the state they’re chartered in, Wu explained.

“There’s no federal law that says you can’t charge above 36% which is sort of like the cap we think should be for all small loans,” Wu said.

A Senate bill, the Veterans and Consumers Fair Credit Act, which was introduced in 2021, would have implemented this consumer protection. Ultimately, it did not pass.

When will housing affordability improve? Spoiler alert: It will take some time

Casey Quinlan — Wed, 21 Feb 2024 13:00:58 +0000

Construction workers build a residential high rise on Oct. 2, 2023, in Miami. Inflation is slowing and job growth has surged, but housing costs are still high, partly because of high demand, low inventory and mortgage rates (Joe Raedle/Getty Images).

Inflation is slowing and job growth has surged, but many Americans still feel the burden of expensive housing — fueled in part by high demand, low inventory and mortgage rates.

Home prices across the U.S. rose 5.5% over the past year in December 2023 and they are projected to increase 2.8% year over year by December 2024, according to CoreLogic, a consumer and business information company. None of the states in CoreLogic’s data showed home price declines.

Rents shot up 23.9% between the beginning of 2020 and the start of of 2023 and home prices rose 37.5% according to Harvard University’s Joint Center for Housing Studies’ 2023 state of the nation’s housing report. The median sales price of a home sold in the U.S. is $417,700, according to the St. Louis Fed.

Given the state of housing affordability in the U.S., here’s what to know about ongoing construction shortages, high interest rates, where housing prices are climbing, and what policymakers could do about it.

How did the housing market get this way?

Much of the current predicament renters and homebuyers face is linked to high housing demand, low housing inventory and the Fed’s cycle of hiking interest rates.

Very low mortgage rates – January 2021 saw the lowest recorded mortgage rate at 2.65% – fueled demand but drove up prices, exacerbated by low housing inventory, Matthew Walsh, economist at Moody’s Analytics explained. The Federal Reserve then raised interest rates in 2022 to combat inflation, which in turn influenced mortgage rates.

Those rates reached near 8% in October, and higher rates put constraints on housing supply, with more homeowners staying put. It’s now 6.77% for a 30-year fixed rate mortgage.

A lack of housing stock, both in for sale and overall inventory, is a key long-run problem for housing affordability, said Robert Dietz, chief economist for the National Association of Home Builders. A lack of accessible rental inventory that provides both single family and multi-family rental housing is a problem, he said.

“We simply don’t have enough developed land to build on, particularly in the places where it’s needed the most, which tends to be highly dense, more regulated markets in the largest metros where there’s a lot of population growth,” he said.

He added that a lack of construction labor as well as expensive building materials – partly affected by supply chain problems – have exacerbated the problem.

A 2023 Home Builders Institute report found that construction would need to add hundreds of thousands of workers to meet residential construction demand. An HBI survey done in 2021 found that around 90% of home builders for single family homes said there was a shortage of carpenters and that more than 80% of remodelers said there was a shortage in most of the construction trades they needed subcontractors for.

What is the Federal Reserve doing with interest rates?

The Fed is expected to cut rates this year, which should have some impact on housing prices. The Fed may not cut rates until May or later, but economists have forecast multiple rate cuts this year.

Many homebuyers and renters are hoping that a cut in interest rates could provide lower home and rental prices, since a lack of homebuying can drive up rental costs.

But economists say there won’t be meaningful relief anytime soon.

“It should push mortgage rates down into the low 6% range and perhaps in 2025 moving into the high 5s,” Dietz said. “That’s not the 2 to 3% rate that we saw earlier, but it will help price in some demand by lowering the monthly payment on a hypothetical mortgage. It is going to have a disproportionate impact on first-time buyers who tend to be particularly sensitive to changes in rates because they don’t have any home equity as first-time buyers.”

Selma Hepp, chief economist at CoreLogic, said home prices will remain pricy for quite some time, even when mortgage rates come down.

“Because home prices have gone up 40%, no matter how much you adjust mortgage rates — and we’re not expecting them to come down to 2% any time soon if ever again — you’d really have to get them to 2% to get that affordability back,” she said.

What are home price trends in different parts of the U.S.?

New Jersey, Connecticut and Rhode Island saw the highest home price increases in December, according to CoreLogic’s data, but no states saw home prices go down.

Hepp said that is significant because until this report, a couple of states continued to show year-over-year declines: Utah and Idaho as well as the District of Columbia. She said that change may have been fueled by people moving from parts of California and from Seattle who drove up home prices in their new states.

A Moody’s Investor Service report released in October showed Florida, Montana, Nevada, and Idaho had the largest decline in affordability, due in part to growth in new residents.

But no part of the country is being spared by the effects of rising housing prices. Walsh said some of the fastest price appreciation he’s seen is in parts of the northeast and midwest because some of those markets are more affordable compared to parts of the country that saw an influx of residents earlier in the pandemic, such as metro areas in Mountain states including Colorado and Arizona

“The places where we’ve seen the most moderation in home prices have been in the places that lost that affordability edge…,” he said. “… Some of the fastest growing places in the northeast, like upstate New York, a place that really hasn’t seen quick increases in home prices in a long time, have been showing signs of life over the past year.”

How are policymakers helping?

Some states and cities are stepping up to the challenge of improving its affordable housing stock.

A program in Maine is funding more affordable rental housing, which includes the improvement of existing housing. Minnesota’s Family Homeless Prevention and Assistance Program is expanding rental assistance.

Voters in Phoenix and Albuquerque, New Mexico, last year supported bond measures that will spend millions on affordable housing. In 2022, voters approved housing bonds to fund more affordable housing for Buncombe County, North Carolina; Columbus, Ohio, and Kansas City, Missouri. Localities in Colorado and Montana voted to use tax revenues on affordable housing development and projects in 2023 as well.

On the federal level, the Biden administration announced in July it would address low housing supply by incentivizing projects with greater density and creating a program to fund projects that focus on zoning reforms.

In October, the administration also introduced new housing initiatives to increase homeownership, such as loans to boost affordable housing on tribal lands and letting homeowners use prospective rental income from “dwelling units” at their home as part of their income when they want to qualify for FHA-insured mortgages. Some economists say that zoning is far too restrictive to increase housing supply and make it more affordable.

Government policies to address housing affordability should include, Dietz said, “thinking about ways to incentivize state and local governments to reduce regulatory burdens and enact zoning reform to promote density where the market demands it.”

Fed keeps interest rates same, as expected, with changes likely months away

Casey Quinlan — Thu, 01 Feb 2024 12:30:54 +0000

Cutline: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on January 31, 2024 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged (Anna Moneymaker/Getty Images).

The Fed held key interest rates steady again Wednesday, as expected, and signaled that a decision that could affect everything from credit card rates to the housing market to new business creation could still be months away.

It was the fourth consecutive time the central bank has left the rate unchanged since its September 2023 announcement. In March 2022, the Fed began aggressively raising rates to stop ballooning inflation.

Following the announcement, Federal Reserve Chair Jerome Powell said that confidence is growing that inflation is coming down to meet the Fed’s target of 2%, it needs to see more data to decide to cut rates, particularly in the 12-month core inflation data.

But Powell said its confidence likely won’t be strong enough to cut rates by March as many economists believed would happen, meaning it could be May before a decision is made to cut rates.

“I think to get to that place where we feel comfortable starting the process we need some confirmation that inflation is in fact coming down, sustainably to 2%,” Powell said.

Powell added that serious changes to the labor market would affect the Fed’s decisions about when to cut rates.

“If we saw an unexpected weakening certainly in the labor market, that would weigh on cutting sooner,” he said. “And if we saw inflation being stickier or higher, or those sorts of things, we’d argue for moving later.”

The decision to hold rates steady was in line with economists’ expectations for the meeting. The issue of when to stop increasing rates and when to begin cutting rates, to avoid harming the economy and cause high unemployment, has been a matter of intense debate among economists and policymakers during this latest cycle of rate hikes. ver the past six months, core inflation or the Personal Consumption Expenditures price index is 1.9%, leading some economists to argue that it’s time to begin cutting rates.

Konczal said it would make sense for the Fed to begin cutting rates soon.

“[A cut] is appropriate given how much inflation has fallen, both faster and in a more broad way than the Federal Reserve thought even six or nine months ago,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a progressive think tank. “The Fed is targeting a level of inflation that is just not the reality right now in the economy.”

The Federal Reserve has a pivotal decision to make in the coming months — when to start cutting interest rates after an aggressive campaign of rate hikes to combat inflation. Some economists worry that if the Fed doesn’t cut rates soon enough, now that the rise in core inflation over the past six months is in line with the Fed’s 2% inflation target, it could damage the labor market and send ripples through the economy.

There is some risk to waiting too long to cut rates, Konczal said. Although the economy is adding jobs and decent wage growth continues, he’s looking for signs of cracks underneath the surface of an otherwise stable labor market. He said that the rate for people leaving their jobs and being hired for new ones has slowed.

If the Fed waits too long to change course, he said there could be some danger of the unemployment rate ticking up too fast.

“Once those things start to fall, they fall very quickly,” he said.

Several Democratic senators have urged the Fed to begin cutting rates, arguing that it could hurt the economy not to do so as soon as possible, a reminder that the economy will be a big issue in the fall elections. Sen. Sherrod Brown (D-OH) , chair of the Senate Committee on Banking, Housing, and Urban Affairs advocated for Powell to lower rates in a letter addressed to the chairman this week.

Brown wrote his own letter, which highlighted the struggles of Ohioans he said are not able to rent or buy homes, a problem he said has been exacerbated by higher interest rates.

“I hear from so many Ohioans that they feel trapped – those who rent feel like they’ll never be able to afford to buy and those who already own their homes feel like they will never be able to afford a larger one if they decide to grow their family,” Brown wrote.

Sometime after the Fed cuts rates, Americans can expect to see relief in the housing market, where homeowners have struggled with low housing supply and high prices, and high demand for rentals that has also pushed up rental prices.

“The first place where we see the reaction in the economy is the housing market and is in those mortgage applications, like some refinancing, for example,” Lara Rhame, chief U.S. economist and managing director of FS Investments. “The other places we see it are things like auto sales, which are very interest-rate sensitive. It’s worth noting that credit card interest payments have really increased, but that doesn’t move until the Fed actually cuts rates. That’s a shorter term interest rate, but when the Fed cuts, that will start to come down a little bit.”

William Hauk, associate professor of economics at the University of South Carolina, said it could take a while for the average person to feel a shift in the economy as a result of Fed policy changes.

“How quickly this translates into changes for the rest of the economy is a matter of some debate. Making it easier for people and firms to borrow and/or refinance loans does typically have a positive impact on economic demand,” he said. “And people spending money is good for keeping the economy out of recession. However, this effect typically hits the broader economy with a lag, perhaps as long as 12 to 18 months.”

Overdraft fees, late fees could be slashed as White House continues attack on junk fees

Casey Quinlan — Fri, 26 Jan 2024 20:58:04 +0000

Wells Fargo is one of the major banks that would be affected by a new overdraft rule proposed by the Consumer Financial Protection Bureau (Justin Sullivan/Getty Images).

The cost of overdrawing your bank account could ease considerably under a rule proposed recently by the Consumer Financial Protection Bureau. The proposed regulation is in line with a larger effort that the Biden administration has championed the past few years to crack down on “junk fees,” which are tacked onto everything from ticket prices to hotel bills.

The agency says roughly 23 million households use overdraft fees each year, and while most consumers’ overdrafts on debit cards are less than $26, they usually have to pay overdraft fees around $35. Regulators are proposing instead three options for banks: They could offer overdraft loans that comply with lending laws, set a fee that reflects the actual cost or charge a standard fee set by the agency. And while regulators haven’t settled on that benchmark fee yet, amounts being considered range from a low of $3 to a high of $14.

The overdraft rule would apply to insured banks and credit unions with more than $10 billion in assets. The regulation, which has to go through a review and public comment period, would likely take effect in October 2025.

President Joe Biden called on federal agencies to come up with a plan for lowering and disclosing junk fees at a White House Competition Council meeting in September 2022, and in February of 2023, Biden devoted a portion of his State of the Union speech to his agenda on lowering junk fees. He said that although these costs may seem small to some, they are burdensome to many households. In financial services, these fees may include onerous overdraft fees or credit card late fees that the CFPB says are often profit-driven..

Marc Jarsulic, a senior fellow and the chief economist at the Center for American Progress, a progressive think tank, said deceptive and unfair fees are prevalent and that this is backed up by estimates of the cost to consumers when they can’t easily understand prices and compare them to other options.

“There’s a second kind of cost aside from this, the search cost, which is when you can’t figure out easily what the price of something is and what the price of alternatives or substitutes might be. … They can spend limited income on things that they normally wouldn’t if they knew what the relative prices were,” he said.

Although regulators and policymakers have been aware of the problems with junk fees for a decade or more, the prominence of this issue for the Biden administration and the awareness it brings to consumers is unusual, and putting it all into one non-industry specific effort is a substantial change from previous approaches, said Sharon Tennyson, an economist and a professor at Cornell University in the department of policy analysis and management.

“We’re all aware that we’re facing these fees and they’re a big annoyance but to actually get consumers to realize that, hey, this might even be an illegal practice, I think is an important advance of what we’re seeing in the new policy environment,” she said.

Tennyson said it’s fairly rare to see presidents talk about consumer rights.

“It’s highly unusual for presidents in these high level speeches to focus on citizens as consumers at all,” she said.

Credit card regulations, banking fines

The new overdraft regulations follow a rule proposed last year that aims to bring down credit card late fees, which the CFPB estimates cost Americans $12 billion each year. The rule, which could be finalized as soon as this month, could reduce those fees by $9 billion each year, the CFPB says. Under current regulations, a credit card company can charge $30 for a first late payment and $41 for subsequent ones, and up to 100% of the required payment, if it can prove the costs it incurs are higher than $41. But under the CFPB’s proposal, the late fee could never be more than $8 or 25% of the required payment, if the credit card issuer proves that its costs exceed $8.

Banking groups, including the American Bankers Association and Consumer Bankers Association, oppose the rule, claiming that it will make it harder for consumers to obtain credit cards and that consumers will be forced to turn to payday loans, which will end up costing them more money.

The agency also has released guidance for banks on what it calls “surprise depositor fees” and “surprise overdraft fees,” which they said may be illegal under the Consumer Financial Protection Act.

The crackdown on these types of fees has already had an effect on banks’ behavior.

“There have been financial penalties on individual banks that have caused banks to change their behavior and we’ll know more about that as the CFPB continues to monitor reports of abusive treatment of customers,” Jarsulic said.

In July, Bank of America was fined and ordered by the CFPB to stop charging customers repeat non-sufficient fund fees. Wells Fargo paid more than $2 billion to customers and $1.7 billion as a civil penalty in December 2022 for surprise overdraft fees and freezing accounts based on mistaken fraudulent activity. As a result, Wells Fargo has been ordered not to charge overdraft fees to banking customers who had money at the time of their transaction. The agency took a similar enforcement action against Regions Bank in 2022 for its surprise overdraft fees.

Regulating wallet apps

In addition to monitoring banks, regulators say they want to make sure that non-banking companies’ fees and other business activity adheres to the law as well. In November, the CFPB proposed a rule to apply the same banking safeguards it provides to banks — such as deposit insurance — to businesses like Venmo and Apple Pay that provide “digital wallets.” Under the regulations, the agency would be able to monitor these companies to make sure consumers’ rights to privacy and the transfer of money are being protected.

“What they’re saying is there are potentially deceptive practices, and that there is some risk that people are being surveilled by the operators of these apps in ways they might not like and that those data can be misused potentially by big digital firms to manipulate consumers algorithmically or otherwise try to influence their behavior,” Jarsulic said. “That proposal is essentially a beginning step to get the data that’s needed and figure out what’s going on in an area that is itself not transparent.”

December jobs report: Wages up, hiring steady as job market ends year strong

Casey Quinlan — Fri, 05 Jan 2024 22:23:10 +0000

The health care industry continues to add jobs, in part because of the U.S.’s aging population (Mario Tama/Getty Images).

Friday’s jobs data showed a strong, resilient U.S. labor market with wages outpacing inflation — welcome news for Americans hoping to have more purchasing power in 2024.

The December jobs report unveiled another unemployment rate below 4%, as it has for two years, at 3.7%, the same as it was for November. The economy added 216,000 jobs, many of which were concentrated in health care, local government, construction and social assistance, which includes child care, social workers and home care aides, according to the Bureau of Labor Statistics data.

Democrats celebrated the news and took it as an opportunity to voice their frustrations with Republicans as policymakers grapple with another possible government shutdown over U.S.-Mexico border policy and other issues. Congress has deadlines of Jan. 19 for four government spending bills and Feb. 2 for eight government spending bills.

President Joe Biden stated on Friday morning that the jobs data “confirms that 2023 was a great year for American workers.

“The strong job creation continued even as inflation fell to the pre-pandemic level of 2 percent over the last six months …,” he added.

Rep. Bobby Scott (D-VA), ranking member of the House Committee on Education and the Workforce, touted the strong jobs report and stated, “Now is not the time to reverse our progress on the economy. I remain committed to opposing any effort that gambles with the lives of everyday Americans in order to engage in political grandstanding.”

Economists and data analysts provided States Newsroom with their takeaways on key news in the report, from wages to job growth in healthcare.

Wage growth and cooling inflation provide relief

Wages are outpacing inflation, with average hourly earnings increasing by 15 cents and rising by 4.1% over the past year, well over 3.1% inflation. With inflation coming down fairly quickly, wages are solidly above inflation, economists said.

Moody’s Analytics Chief Economist Mark Zandi said wage growth is now firmly above the rate of inflation, which means people’s real purchasing power is improving.

“They got creamed back in 2021 and particularly in 2022 when inflation outpaced wages,” Zandi said. “And I think that’s one reason why people are so uncomfortable with their financial position, but that’s improving now and improving very quickly as wage growth remains strong and firm and inflation is lower and continues to moderate.”

Elise Gould, senior economist at the Economic Policy Institute, added that lower wage workers in particular have seen that increased purchasing power for longer.

“For the last six months, the average hourly earnings for private sector workers has been beating inflation so their purchasing power has increased and on average, over the last few months, we also know from other data that lower wage workers have been seeing stronger wage growth,” she said. “They’ve been beating inflation for a lot longer. Overall, the purchasing power has certainly been increasing as inflation has been coming down faster.”

Health care and government continue to add jobs

The government workforce grew by 52,000 people with the majority of those jobs — 37,000 — in local governments. According to the Bureau of Labor Statistics, the average gains of jobs per month in 2023 was more than double the average for job growth in 2022.

Gould said there still seems to be room for government employment to continue to grow.

“We still have a lot of catching up to do there because when we think about government employment, it has not kept up with population growth in any way,” she said. “You would think that the services that are being provided by the government would need to grow even more. So I think there’s a fair amount of room there that we are not back to normal in that sense.”

Health care also continues to see job growth, which Gould expects to continue partly because of the U.S.’s aging population. Health care jobs rose by 38,000 in December. Ambulatory health care services and hospitals added 19,000 jobs and 15,000 jobs, respectively.

Zandi sees these sectors as mostly playing catchup after the private sector crowded out some of these jobs during the recovery by offering higher pay.

“Private businesses were willing to pay up big wage increases to hold on to workers and hire new ones,” he said. “And that was impossible for local governments or for hospitals to keep up with. But now that the private sector is fully recovered, we’re now starting to see these other sectors be able to hire again, find workers and bring them on the payrolls.”

Economists watch for signs of a slowdown

Economists had mixed responses to the changes in the labor force participation rate and employment-population ratio, which both fell 0.3% percentage point in December. The labor force participation rate sheds light on the economy through the percentage of working age people in the labor force, which includes both those actively seeking work and people who are currently employed. The employment-population ratio shows the number of people employed as part of the working age population.

Gould said she’s watching this data closely to see whether these changes are a source for concern but she says it’s important to keep in mind that unemployment is still very low.

“Is that just volatility in the series or is there something to watch for?” she said. “…It’s not indicative of some huge problem but it’s something we want to keep watching. I didn’t like the drop in employment, particularly prime-age employment and participation is soft.”

Zandi said it’s hard to read too much into any month-to-month change in this data yet but that the labor market is slowing down a bit.

“I think the general pattern in the data shows that the job market is resilient, continues to create lots of jobs, and unemployment remains low. But it is throttling back. Job growth is definitively slowing and other measures of the strength of the labor market are, are moderating. You’re seeing fewer hours of work and temp employment is declining,” he said.

On the labor force participation rate, Zandi said he suspects that participation is not going to continue to rise.

“Boomers are retiring en masse and that’s going to wash out any increase in participation by other groups. Broadly speaking, I think the report is consistent with an economy that remains strong but is slow and consistent with getting inflation back to something we all feel comfortable with,” he said.

Trends in state pay

Data released by ADP, a payroll processing firm, on Thursday, confirmed Zandi’s view on a cooling labor market as pay increases for people staying at their jobs were down in December from November. ADP’s median year-over-year pay change was higher in states such as Montana, where pay shot up 8.2% and Idaho, where pay rose 7.5%. New Mexico and Arizona also had higher increases in pay compared to many other states at 6.7% and 6.2%. Washington, Oregon, Wyoming, North Dakota, and South Dakota also had pay growth over that time period.

Liv Wang, lead data scientist at the ADP Research Institute, told States Newsroom that ADP saw higher pay growth for lower-paid workers during the recovery.

Wang added in an email, “….some of the states with higher percentage increases in pay have lower median pay levels. This is true for some states in both the Northwest and Southwest. This same trend also applies to the Leisure and Hospitality industry, which has been leading pay increases. However more broadly, pay gains have slowed down recently and the pay premium for changing jobs has been falling.”

The US avoided a recession in 2023. What’s the outlook for 2024?

Casey Quinlan — Tue, 19 Dec 2023 14:00:16 +0000

Economists told States Newsroom that they don’t expect consumers to change their spending habits enough to hurt the economy in 2024 (Justin Sullivan/Getty Images).

Next year is packed with potential shifts in the economy but many economists and investment analysts expect that the country will likely avoid a recession in 2024 even as growth slows in the first half of the year.

States Newsroom talked to economists about their expectations for some key metrics as well as their concerns about what could change their outlook.

The job market will remain strong but not as hot as 2023

The unemployment rate has remained below 4% for nearly two years, with the unemployment rate falling to 3.7% in November. But hiring has cooled off from the start of the year and retail employment dropped by nearly 40,000 jobs in the most recent jobs report, which leaves the question: How stable will the labor market be in 2024?

Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a New York-based think tank, said that although there has been a slowdown in the hiring rate, there have not been many layoffs, which bodes well for next year if the Federal Reserve does not “overshoot” in its efforts to slow the economy. The Fed has paused its campaign of raising interest rates, which it began in March 2022, and economists expect the central bank will hold rates steady when it meets Dec. 12-13.

“Imagine the unemployed as a pool of water. Instead of more unemployed people going in, it’s just draining a little less. That’s a different kind of dynamic,” he said. “We normally are used to, in a slow labor market, hires essentially just stop and layoffs increase. Some people pointed out that a lot of the change in employment has happened among younger people. It’s not been a broad-based slowdown in 25 to 54 year-olds.”

Mark Zandi, chief economist of Moody’s Analytics, said he thinks the labor market for 2024 will remain stable and that job growth will be resilient but slow.

“I think 2024 should be an OK year for workers — still plenty of jobs and low unemployment and while wage growth will moderate, it should remain strong enough to outpace inflation,” he said.

According to the Bureau of Labor Statistics in November wages rose 4% over the past year, compared to inflation which has been easing with November’s report showing overall prices rising 3.1% over 12 months, and down from 3.2% in October.

Jesse Rothstein, professor of public policy and economics at the University of California Berkeley, said the strength of the labor market partly depends on how successful the Fed’s interest rate policies are.

“If inflation is coming down and unemployment isn’t going up, and they can continue this tight roadblock, I think we’ll see the economy cooling off a bit and wages continuing to increase, to catch up to the inflation that we saw over the last couple of years, but not dramatically outpace that,” Rothstein said. “ … If they’re not successful, the risk is that they overtighten and tip us over into a recession, but thus far there’s no sign that that’s what’s going on.”

Workers will have the power to keep organizing

Workers in retail, auto-manufacturing, media, and shipping have made news through their labor organizing this year, particularly during what was dubbed the “hot labor summer,” when thousands of workers went on strike or heated up contract negotiations with threats to strike. The tight labor market and greater profits in some industries gave workers the power to demand better working conditions, higher wages, and contracts that were more inclusive of lower-paid workers, and that’s not expected to change in the coming year.

For workers to lose significant leverage in their fights for safer workplaces and higher wages the unemployment rate would have to rise significantly, Konczal said. Organizers will also still enjoy the advantage of a very pro-union National Labor Relations Board, he said.

“When I think more about the background conditions for which workers can exercise some power, I think the issue is less like 3.9% versus 3.6% unemployment, but whether or not the unemployment rate is in the threes or in the fives or sixes or sevens,” he said. “The labor market as a whole is still going to be a strong input to the resurgent labor campaigns.”

He does have some concerns about whether the service sector is going to face headwinds in its workers’ efforts to organize unions as employment starts to slow for these jobs.

“Then again, if demand remains robust and workers do have an edge, I think they will still have the opportunity to push further,” he added.

The housing market will continue to be a challenge

Federal Reserve policy changes and pent-up demand for homes will result in an even more competitive housing market in many states, and continuing challenges for people seeking affordable homes and rentals. However, some U.S. housing markets, particularly in the Sun Belt, will see housing prices stabilize. Prices will increase, but less quickly than in the past, as they come down from the unsustainable growth they experienced earlier in the pandemic.

Selma Hepp, chief economist for CoreLogic, said, “This year when mortgage rates were slightly below 6%, we had quite a bit of surge in demand, so that’s telling me there’s quite a bit of pent-up demand out there but people are sitting on the sidelines and waiting out for mortgage rates to fall.”

She said baby boomers and first-time homebuyers are the biggest competitors in the housing market right now. With mortgage rates coming down slightly, first-time homebuyers have a higher share of the recent mortgage application growth, she said. Those buyers leaving the rental market will, in turn, affect rental prices.

Hepp said that while rents will continue to rise in 2024, they won’t shoot up as they have in the past few years and will begin to moderate in price.

“Historically, rents are up on a 3% year over year basis and I think what’s what we’re going to revert back to, the reason being because folks who are priced out of the market for purchase are going to bring in renters or remaining renters because they’re not ready to buy or there isn’t inventory out there,” she said.

Zandi said that he doesn’t think the housing market will become affordable for many of the Americans currently priced out in the next year.

“I think we need to see some modest price declines but that’s going to take some time because all those people who have 3.5% mortgages are going to be very reluctant to move. They’re only going to move when they have to divorce, death, children, or a job change and that could take some time,” he said. “It’s not that I think the worst is at hand in terms of home sales and affordability, but I don’t see the market becoming affordable to most Americans any time soon, certainly not in 2024.”

The Midwest will also continue to see some increased housing demand because of the federal government’s investment in semiconductor manufacturing, Hepp said.

Consumer spending will ‘push the economy forward’

Konczal and Zandi said they aren’t concerned that there will be enough of a significant change in consumer spending to hurt the economy in 2024, and that so far, they are encouraged by what they see. Core prices, which excludes food prices and energy, rose 0.3% in November, up slightly from 0.2% in October, keeping the increase for the year at 4%. But neither Konczal or Zandi see this as cause for alarm.

“In aggregate, there’s still a lot of strong savings and strong spending,” Konczal said. “Obviously for many people, too many people, [savings] and other things are a real concern. But when we’re looking at the economy as a whole, it does seem like the spending is remaining quite strong and financial conditions haven’t deteriorated either. … I think there’s every reason to assume that it will continue, especially if the Fed is willing to take yes for an answer with the fact that they brought down inflation.”

Despite higher housing prices, the financial health of many Americans has improved, Zandi said.

“People are still a lot wealthier than they were before the pandemic hit and in the high-income households, low-income households, folks in the top two-thirds of the distribution of income, still have a lot of extra savings they built up during the pandemic that they appear willing to use when they need to to maintain their purchasing power,” he said. “I think that the consumers are not going to spend with abandon and that’s good because that would be the fodder for inflation and more rate hikes. But I think (they’ll) just do their part and continue to push the economy forward.”

What could go wrong?

Economists said that there is potential for economic gloom, depending on the political outcomes next year. Although the general election is about a year away and the numbers could change significantly between then and now, some polls have shown President Joe Biden and former President Donald Trump running neck-and-neck. The political and social upheaval that close results could bring, could also spell economic turmoil in 2024.

“It feels like it’s going to be very close and therefore the potential for it being contested is very high and there’s no upside to that,” Zandi said. “It’s just a matter of how much downside there will be, how much social unrest and violence there will be. Hopefully we have none … But that’s certainly something to watch for sure. It is a risk to my optimism about the economy in 2024.”

He said that some of these worst-case scenarios could impact the stock and bond markets.

“A close and contested election could result in social unrest that would manifest most quickly and significantly in the stock and bond markets. Given how fragile consumer and business confidence already is, this could upend it, causing consumer spending and business investment to falter, and a recession ensue,” he said.

Rothstein, the Berkeley professor, said a repeat of a candidate refusing to accept their loss, as Trump and his supporters did in 2020, could be a major issue for the country, and although the economy isn’t his first concern when assessing the potential damage, it could pose a “big problem” for financial markets.

In addition to worries about the economic impact of the presidential election, economists are keeping their eye on the risk of a government shutdown. Although it was averted this year with approval of a stopgap spending bill, Congress is staring down deadlines in January and February to work together on spending bills to avoid a shutdown.

“I think a government shutdown is always a threat to the economy,” Rothstein said. “If it’s shut down for more than a couple of days, you end up with huge impacts that ripple through the economy and it may cause a recession. Even if it doesn’t cause a recession, it definitely makes our economy more fragile and poorer. So I think we have to hope that the signs that we’ve avoided a shutdown so far will continue.”

Census Bureau’s proposed changes threaten to undercount people with disabilities, advocates say

Casey Quinlan — Mon, 18 Dec 2023 14:42:53 +0000

States rely on federal funding for programs that can aid the disabled. Advocates say changes proposed by the U.S. Census Bureau could undercount the number of people with disabilities and decrease the funding each state receives. Here Prosthetist Erik Lindholm adjusts a prosthetic leg for 75-year-old Karl Sowa on Nov. 10, 2021 in Hines, Illinois (Scott Olson/Getty Images).

The Census Bureau has proposed a major change to disability questions on its annual American Community Survey that advocates say will reduce the number of people who are counted as disabled by 40%.

The change in available data could affect federal funding allocations and the decisions government agencies make about accessible housing, public transit, and civil rights enforcement, they argue.

Catherine Nielsen, executive director of the Nevada Governor’s Council on Developmental Disabilities, said having correct data is vital not only because it helps identify gaps in the system but because it affects federal funding levels.

“Many providers are not reimbursed at 100% for the services they provide,” Nielsen said. “When we take into consideration this cut to the data, we’re essentially saying we have even less people that will qualify for support. If we have less people that qualify, that in turn tells the Feds they have less of a need to support these programs. The snowball effect of such a significant change will be greater than most can even anticipate at this time.”

Although some opponents of the change have said that the ACS disability questions needed revising because the survey currently undercounts the number of disabled people, they say they are worried that the new approach is worse.

Instead of the current yes or no answers to the six disability questions on the survey, respondents will be asked to provide a range of responses on how difficult it is for them to perform certain functions. The Census Bureau is recommending that only people who answer “a lot of difficulty” or “cannot do at all” be considered “disabled” by Federal terms, advocates say.

“Part of the issue with what they proposed is they are asking this scale and then excluding every person who says they have some difficulty in terms of these functions. Even if you say you have some difficulty with all of these functions, you would not be included as disabled,” said Kate Gallagher Robbins, senior fellow at the National Partnership for Women & Families.

“What does ‘some’ look like?” she said. “Is that some of the time or some difficulty all of the time? For my own dad, who had a stroke and walks with a cane and a brace, is that difficulty for when he has those mobility aids or absent those mobility aids?”

The Census Bureau has stated that the revised questions will “capture information on functioning in a manner that reflects advances in the measurement of disability and is conceptually consistent with” the World Health Organization’s International Classification of Functioning, Disability, and Health framework. The changes “reflect the continuum of functional abilities” and include a new question that includes psychosocial and cognitive disability and problems with speech, according to the notice for public comment.

Time for comment

When a federal agency proposes rules or changes to a standing process, it typically has a public comment period. The Census Bureau goes through a very long process where it tests the questions. Then it asks for public comment from stakeholders. The deadline for comments on the disability questions as well as other changes to the American Community Survey, which include asking about electric vehicles and changing the household roster questions, is Dec. 19.

Many organizations focused on civil rights issues, including disability advocacy groups, are weighing in.

The Consortium for Constituents with Disabilities, which includes 100 groups, commented that the new approach will likely miss identifying many people with chronic conditions and mental or psychiatric conditions.

The National Partnership for Women & Families, joined by more than 70 groups, including many state entities such as the Alabama Disabilities Advocacy Program, Disability Rights Iowa, and Nevada Governor’s Council on Developmental Disabilities, also has commented.

They say that there was not enough consultation with the disabled community and that the changes are overly restrictive, which could affect disaster preparedness responses, emergency allocations for the Low Income Energy Assistance Program (LIEAP), enrollment efforts for Medicaid and funding for State Councils on Developmental Disabilities.

Who will be left out

The National Partnership for Women & Families released an analysis on Dec. 5 that estimated the new questions would leave out 9.6 million women and girls with disabilities. The organization notes that women are more likely to have disabilities related to autoimmune disorders, chronic pain, and gastrointestinal disorders.

Robbins said she’s concerned about the effects this will have on people who apply for help paying utility bills or who rely on Medicaid.

“When people go to apply for those [LIEAP] funds, what is going to happen? Are there not going to be enough funds left? Will they do another application?” she said.

States are also going through the process of unwinding a pandemic-related Medicaid policy, which allowed people to stay enrolled in Medicaid without going through a renewal process. People who are no longer eligible for Medicaid or couldn’t finish the renewal process are being disenrolled. Robbins said data excluding many people with disabilities could affect efforts to re-enroll people.

“People are losing their Medicaid and we’re in a situation where we don’t know how to figure out who needs Medicaid and [Children’s Health Insurance Program] and direct our efforts to make sure people don’t lose health insurance,” she said.

Eric Buehlman, deputy executive director for public policy at the National Disability Rights Network, has a disability that includes not having vision from the left side of his face and attention issues, according to the organization’s website. He said the new questions could affect him and other people with disabilities who use public transportation if the data doesn’t show a need for more paratransit programs.

“I’m not supposed to drive, so I use public transportation to go everywhere. But under these [current] questions, I would have checked yes, for a person with a disability as they currently are. But under the way these [new questions] are, I’m not sure I would consider myself to be incapable of doing any of the six questions listed,” he said.

Buehlman said this could hit areas of the country that are more impoverished, which likely have a higher level of people with disabilities, harder than others. The connection between poverty and disabilities have been well documented, including by the Census Bureau. Its Supplemental Poverty Measure shows that in 2019, 21.6% of disabled people were considered poor, compared with just over 10% of people without disabilities. And in 2021, the American Community Survey found that the South had the highest disability rate.

Of the five states with the highest poverty rates that year, four were in the South — Kentucky, Louisiana, Mississippi and West Virginia. The fifth was New Mexico.

“All of a sudden this connection between poverty and disability which does exist out there, doesn’t appear like it is (under the new survey). And these are areas of the country that may not have as many resources … It could have a higher negative impact in areas that are already underfunded,” Buehlman said.

Timing of changes particularly bad

The change in the survey questions could also have an impact on civil rights enforcement, said Marissa Ditkowsky, disability economic justice counsel at the National Partnership for Women & Families. Disparate impact claims, which focus on the effect a policy has on a protected class, including people with disabilities, could be affected by a change in data, she said.

“They are literally using math in these disparate impact claims to make these claims,” she said. “When you don’t have the ability to do that, I can’t imagine the [Equal Employment Opportunity Commission], [the U.S. Department of Health and Human Services], all of these agencies that enforce civil rights laws, I can’t imagine it will make their lives any easier.”

Opponents of these changes add that the timing of this new approach is particularly harmful when so many Americans are experiencing disabilities as a result of the COVID-19 pandemic. Long COVID symptoms can include shortness of breath, fatigue, and difficulty thinking and concentrating. In 2021, the Biden administration released guidance on how Long COVID can be a disability under the Americans with Disabilities Act.

Ditkowsky, who herself has Long COVID, said it seems counterintuitive to narrow the definitions for people with disabilities at this time.

“We’ve had one of the biggest mass disabling events in a long time with COVID-19 pandemic,” she said. ” … But the questions don’t necessarily get at a lot of the issues that Long COVID patients or patients with chronic conditions and people with chronic pain experience.”

To comment on the changes to the American Community Survey go to regulations.gov and click on comment. Deadline to comment is Dec. 19, 2023.

Spending on health care in US rises to $4.5 trillion in 2022; a return to pre-pandemic growth rates

Casey Quinlan — Fri, 15 Dec 2023 14:47:16 +0000

The percentage of Americans with health insurance reached an all-time high of 92% in 2022, in part because of the coverage for Medicaid patients required during the pandemic. But millions of Americans continue to lack insurance. Earlier this year, more than a thousand people came to get free dental, medical and vision care at a mobile clinic in Grundy, Virginia, staffed by students and volunteer medical teams (Spencer Platt/Getty Images).

After skyrocketing in the first year of the COVID-19 pandemic and then tempering almost as dramatically a year later, health care spending in the U.S rose just over 4% in 2022, hitting $4.5 trillion, the federal government announced Wednesday.

The annual growth in the nation’s health care spending appears to be returning to pre-pandemic trends, according to a new report from analysts at the Centers for Medicare & Medicaid Services (CMS). The report was published online Wednesday in the journal Health Affairs.

In the four years before 2020, the first year of the COVID-19 pandemic, health care spending rose 4.2% to 4.6% a year, according to CMS.

While last year’s increase was higher than the 3.2% growth in health spending in 2021, it was less than half the 10.6% growth of health spending in 2020.

“This pattern reflects the volatility tied to the COVID 19 pandemic and the significant response by the federal government,” said Micah Hartman, a CMS statistician at a briefing for journalists on the report.

CMS produces the annual report on national health care expenditures, which various government agencies, including the White House Office of Management and Budget rely on as they produce economic and budgetary forecasts and plans.

With the slower growth in spending compared with 2020 and 2021, health care accounted for 17.3% of the nation’s overall economy in 2022. That was a decline from the first year of the pandemic, at 19.5%, the highest share ever recorded by the National Health Expenditures Accounts.

In 2020, national health expenditures “accelerated substantially due mainly to unprecedented COVID-19 supplemental funding and public health spending,” Hartman said. “The result was that the share of the GDP devoted to health reached 19.5% in 2020.”

The 2022 findings echoed the pre-pandemic picture from 2016 through 2019, when health care’s share of the economy hovered between 17.4% and 17.6%.

The current trend is less dramatic than longer-term CMS forecasts, which project health care spending to grow by 5.4% a year on average through 2031 and to take up one-fifth of the nation’s economy by then.

Higher spending on drugs

Spending on prescription drugs — about 9% of total health care spending — increased faster than other segments. Retail spending on medications totaled $405.9 billion in 2022 — an 8.4% increase from 2021, after growing by 6.8% from 2020.

The Biden administration has attempted to rein in prescription drug prices through the Inflation Reduction Act, which includes provisions to reduce the cost of monthly insulin and negotiate lower drug prices for some drugs covered under Medicare. And last week, Biden said the administration could break the patent on drugs made using taxpayer money if their costs were too expensive.

As overall spending on health care increased modestly, the cost of care — how much patients and their insurance providers, public or private, pay for the care that they receive — rose less sharply in 2022. The medical price index increased 3.2%, according to the report, while that same year overall inflation hit 7.1%, a rate not seen in four decades.

Insured at all-time high

The percentage of Americans with health insurance reached an all-time high of 92% in 2022, CMS reported. That was due both to the pandemic continuous coverage for Medicaid patients as well as to measures that gave more U.S. residents access to health insurance through the health insurance marketplace established under the Affordable Care Act, said Aaron Catlin, deputy director of the CMS national statistics group.

Medicaid enrollment grew by 6.1 million in 2022, a result of the requirement for continuous Medicaid coverage that Congress enacted in early 2020, CMS economist Anne Martin said. That requirement ended earlier this year and Medicaid programs are in the process of “unwinding” by requiring enrollees to establish their eligibility for the program.

Medicaid saw the single largest growth in spending on health care — 9.6% — totaling $805.7 billion in 2022. Spending on Medicare was up 5.9%, to $944.3 billion, in 2022, said Martin, while enrollment in Medicare was up 1.9%.

Enrollment through the ACA marketplace was up by 1.7 million and employer-sponsored insurance enrollment increased by 1.5 million. The 1.5% increase in private insurance coverage in 2022 marked “the fastest growth and enrollment since 2015,” Martin said.

Subsidies on premiums for individual insurance purchased through the ACA marketplace, first put in place under the American Rescue Plan Act and later extended in the 2022 Inflation Reduction Act helped drive the stronger enrollment in the marketplace plans, Catlin said.

Private health insurance and Medicare each saw spending increase 5.9%. Consumers’ out-of-pocket health care spending, which includes copayments and other forms of unreimbursed medical expenses but not health insurance premiums, rose 6.6%.

Retailers pare back their seasonal hiring to prepare for ho-hum holidays

Casey Quinlan — Wed, 22 Nov 2023 11:50:36 +0000

Retailers, worried that shoppers are cutting back their holiday spending this year, are hiring fewer seasonal workers. Shown is the Flatirons Crossing mall on Nov. 26, 2021 in Broomfield, Colorado (Michael Ciaglo/Getty Images).

Black Friday shoppers may notice longer lines and fewer retail associates in some of their favorite stores than in past holiday seasons as retailers scale back seasonal hiring over concerns about consumer spending.

JCPenney is hiring 12,000 fewer workers than last year. Macy’s 3,000 fewer. Meanwhile a Walmart executive said the retail giant has been hiring “throughout the year” and plans to serve customers with the workers it has. And Challenger, Gray, and Christmas, which tracks employment trends, reported that so far, this year has had the fewest announcements of large-scale seasonal hiring plans since 2013.

“Hiring is a really good indication of retailers’ sentiment of the expectation of holiday (sales) and when they’re kind of ho-hum about increasing the numbers, that really does demonstrate their number one concern for less than gangbuster sales,” said Marshal Cohen, chief industry analyst at the NPD Group, a market research company.

The careful approach to hiring reflects the mixed messages in the economy. The labor market has remained resilient with an unemployment rate below 4% for the 21st straight month, inflation has fallen and wages have risen. Since 2021, inflation-adjusted consumer spending on retail goods has remained fairly high. But the personal savings rate has fallen since May and credit card delinquency rates are up.

Economists, as well as retailers, have signaled that they are worried about the effects of the return of student loan payments on the health of the economy, since consumer spending represents so much of the U.S.’s economic activity. The Fed’s long campaign to raise interest rates, although paused at the moment, has also affected consumers.

Adrian Mitchell, chief operating officer and chief financial officer at Macy’s Inc., said in the second quarter earnings call in August that Macy’s is thinking about “consumers’ ability to pay debt using their disposable income.”

“This is about credit card balances, this is about student loans, which we know is going to come into focus in the next month or two, auto loans, mortgages,” he said. “So we just believe the customer is coming under pressure because of these new realities that they have to continue to deal with as we get through the back half of this year and move into next year.”

Cohen said retailers are basically trying to protect their margins. “The retailer this year is basically saying we’re going to do what we have to do to get the volume, but we’re also going to protect the margin and what that means is hire and have less than what we need, but we are better off than having more than what we need,” he said. “And that’s the same for merchandise … Instead of chasing one sale by buying more merchandise, I’m better off as a retailer, saying, ‘OK, I’ve sold out. Maybe you should buy something else and this way I don’t have to discount it all that much.’ ”

Sales growth slow but steady

More customers — 79% compared to 74% last year — said that they will either look for cheaper alternatives this holiday shopping season or not make the purchases at all, according to a Nov. 6 McKinsey report. A smaller percentage of customers said they were willing to “splurge” on gifts this year and fewer people plan to shop at traditional stores.

Still, holiday sales are expected to grow, just less than the past three years. The National Retail Federation estimates that retail sales during November and December will increase 3 to 4%, down from a 5.4% increase last year. But what people are buying may be different. “Service spending growth is strong and is growing faster than goods spending,” said the NRF’s Chief Economist Jack Kleinhenz.

The NRF also pointed out that online sales are expected to increase between 7% and 9%, an increase reflected in Amazon’s plans to fill 250,000 positions, 100,000 more than the past two years. UPS plans to hire 100,000 people, as it did in 2022. FedEx would not disclose a specific number.

Retail recovery

Overall, the retail industry appears to be healthy with employment having remained steady since January though softer than last year. Elise Gould, senior economist at the Economic Policy Institute, said, “We have recovered more than the number of jobs that were lost in the pandemic when millions of people lost their jobs.”

Gould said one explanation for the hiring this year may be that employers, particularly in retail, are more likely to keep staff on in this tighter labor market because it has been harder to attract and retain employees.

“It’s possible that employers over the last few months and over the last year are holding on to workers because they don’t want to have that business of trying to find workers when they need them. And so it’s possible that you’re not seeing that same pickup because they’re already staffed up to some extent in some of those jobs,” she said. “… It’s too early to tell really.”

Local leaders call for auto workers’ gains to spread to EV plants, Southern Black workers

Casey Quinlan — Mon, 06 Nov 2023 12:32:53 +0000

Ford F-150 Lightning underbodies at Fords Rouge Electric Vehicle Center are inspected in Dearborn, Michigan. Black city officials across the country want to see recent union gains extend to electric vehicle plants, and are calling on President Joe Biden to help (Sarah Rice/Getty Images).

Local Black elected leaders aligned with racial and economic justice groups want to build on the labor gains made through the United Auto Workers’ six-week strike. The union’s tentative deals with the big three automakers include major wins such as a 25% rise in pay and getting rid of the two-tier worker system.

More than 60 Black political leaders, many of them city council members and mayors and school board members in Washington D.C. and 20 states, including North Carolina, Tennessee, Georgia and Michigan, wrote President Joe Biden this week asking him to use his political power to push for higher standards in the rapidly growing electric vehicle industry.

A few weeks ago, GM also agreed to cover electric vehicle battery manufacturing under the contract.

Biden, who spoke in support of the auto workers’ demands and marched in a UAW picket line during the strike, should continue to support changes in the industry, the letter says, by mediating conversations between workers, unions and automakers.

The elected officials say standards of compensation, safety and health for workers should be a priority for those talks. The Biden administration has made investments in electric vehicles a big priority in its economic agenda and has stated that the federal dollars spent on these investments will benefit workers and “expand high-paying manufacturing jobs” and help them “capture the economic benefits of the clean energy transition.”

Nearly $1.7 billion in funding from Biden’s Bipartisan Infrastructure Law will be spent on electric buses, and organizers of the letter say they don’t want to see the money spent on plants that don’t provide good jobs for workers.

Advocates say these efforts are needed to protect Black auto workers in the South, where pay is often lower and unions are not as strong. All three major automakers have established or are building electric vehicle manufacturing plants and battery plants in southern states, with many of the facilities being placed in rural, Black communities.

Erica Smiley, executive director of Jobs With Justice, said the Biden administration has acknowledged that it received the letter but Smiley and others are still waiting on next steps.

“I do think that there is some urgency in this moment for the administration to act, given the upcoming election and not just the presidential election itself but all the congressional elections and down-ballot elections that the Democrats would need to secure the House or even to make a dent,” Smiley said. “Certainly, Black mayors and local elected leaders and school board leaders signing a letter saying, ‘We don’t want to use federal dollars to exploit Southern workers, particularly Southern Black workers, is a powerful message to do that.’”

The majority of Black people live in the Southern U.S., at 56%, according to 2021 American Community Survey data. Bureau of Labor Statistics data shows that in 2022, 17.7% of workers in motor vehicles and motor vehicle equipment manufacturing were Black, and Black workers make up 19% of the Southern automaking region, an Economic Policy Institute’s analysis of 2016-2020 BLS data showed.

The letter also stresses the importance of including Black workers in labor gains given the history of their exclusion from many of those gains.

“Moving jobs to the US South to exploit low labor costs built on a history of white supremacy is a pattern we have seen again and again,” the letter read.

Smiley said Democrats should be interested in ensuring that Black voters have enthusiasm to go to the polls and vote in the 2024 election.

“You applaud the victory in Detroit and assume that everything’s all said and done, but meanwhile, (if) they’re choosing between $17 an hour at McDonald’s and $16.50 at a local EV manufacturing place, they’re not going to feel really excited about that. They aren’t going to feel like you did a lot for them,” she said.

Yterenickia “YT” Bell, a member of the city council in Clarkston, Georgia, said she signed the letter because it’s a good opportunity to center the majority of her community, which is 64% Black. She added that Biden’s support can bolster unionization in a region of the country where it is often challenging to unionize.

“Regarding the EV supply chain plans, they don’t automatically unionize all of the plants, so there’s still a process with that and that’s a big fight. He showed up in the picket lines before and he needs to show them that he’s in this with them to get their wages and to have a voice,” Bell said.

Black people also bear the brunt of many of the effects of climate change, advocates say. One 2019 paper found that Black people breathe in 56% more particulate matter, or air pollution, than they are responsible for with personal consumption.

“[Biden] needs to be mindful that a lot of [Black people] in their communities have been disproportionately impacted by climate change and they’re not able to transition from one place to another,” she said.”We need to be very mindful about how this industry comes into play when we talk about sustainable energy and that he needs to ensure that standards of the current agreement are the norm and not just an exception.”

Borrowers weigh personal, professional options as student loan payments resume

Casey Quinlan — Wed, 01 Nov 2023 13:12:23 +0000

Nearly 45 million Americans collectively owe more than $1.7 trillion in 2023 and have an average outstanding loan balance of less than $25,000, according to a Federal Reserve report in 2022 (Getty Images).

Justin Brown, a father of a 2-year-old who lives with his wife in the St. Louis area, has $20,000 in student loan debt. Before the pause on loan payments at the start of the pandemic in 2020, he paid $300 a month. But now that Brown has a family, his financial responsibilities have grown — paying for child care, a mortgage for a house he bought in 2022 and car notes, to name a few.

“I have to look at that $300, like where do I carve it from? Because my income is not going to increase in the next month, and maybe in the near future, but here and now it is what it is and my wife’s is what it is,” said Brown, who works in marketing. “I have to now make a sacrifice and the sacrifice is not going to come at the expense of my kid and it’s not going to come at the expense of my marriage. But it will come at the expense of something that I can live without that I otherwise would choose to [spend money on]. It may mean I may eat out two times a month instead of 10 times a month or that I won’t go to the movies ever again.”

Many borrowers, like Brown, are facing similar decisions this month as student loan payments resumed. Nearly 45 million Americans collectively owe more than $1.7 trillion in 2023 and have an average outstanding loan balance of less than $25,000, according to a Federal Reserve report in 2022. They pay an average between $200 and $299 monthly, according to the Fed.

Economists say that hundreds of dollars spent on monthly student loan payments is a loss to the economy and could hurt consumer spending, affect workers’ decisions to stay at their current job or look elsewhere, and delay new home purchases or renting a nicer apartment.

According to a CNBC online poll in January 2022 of 5,162 adults, 81% of borrowers surveyed said they delayed major decisions because of their debt, with 33% deferring a home purchase, 35% setting aside travel plans, and 12% waiting to look for a new job.

“It will be a decline in demand, a decline in overall spending in the economy,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute. “A year ago, people were very worried that there was too much spending in the economy. Now, there’s a little less worry about that and a lot more worry about the real uncertainty that’s going to happen over the next year.”

Konczal said that he sees the resumption of student loan payments as the biggest headwind the economy is facing right now. Less spending in the economy has historically helped trigger a recession, he said. Consumer spending represents two-thirds of economic activity.

Higher education has been associated with higher homeownership rates, but having student debt is associated with lower rates of owning a home, according to findings from a 2017 New York Fed report.

Early in the pandemic with interest rates low and the pause on loan repayments, younger buyers took advantage of the market to buy homes. And while student debt isn’t the biggest roadblock today to home ownership (high mortgage rates are), such purchases will be impacted as potential buyers are faced with student loan repayments, instead of putting that money toward a down payment, according to Selm Hepp, chief economist for CoreLogic.

“If you’re saving that much on a monthly basis over a year, how much of that could help you with the down payment,” Hepp said.

The same holds true for those seeking to upgrade their rentals. “… While we expect to see rent growth go back to the rate that was pre-pandemic, which is like 3% to 4% on a year-over-year basis, which is what we’ve historically seen, that may be subdued because of the student loan payments. So people may not be able to upgrade to that nicer apartment but they’ll just kind of stick it out wherever they are because they now have that student loan [payment],” Hepp said.

Major retailers have already expressed concern over the impact of student loan payments on their businesses. Executives from Macy’s, Walmart, and Target said in August that they were keeping it in mind as a source of financial pressure on consumers.

The Biden administration’s plans last year to cancel up to $20,000 of student loan debt would have helped many borrowers, particularly Black and Latino borrowers. But the U.S. Supreme Court struck down the policy in June. Then in August, the administration announced steps to reduce the financial burden of making payments for some borrowers by basing them on their income and family size and not borrowers’ loan balance.

The Federal Reserve also has recognized the return of student loan payments as it considers future policy. On Sept. 20, Fed Chair Jerome Powell was asked what he thought the looming government shutdown, rising oil prices, and the UAW strike meant for the course of Fed policy.

Describing a “collection of risks,” Powell said “there is a long list and you hit some of them. It’s the strike, it’s the government shutdown, resumption of student loan payments, higher long-term rates, oil price shock. There are a lot of things that you can look at, so what we try to do is assess all of them and handicap all of them. Ultimately though, there’s so much uncertainty around these things.”

Labor market

Economists point out that research has shown that student debt and debt cancellation affect borrowers’ decisions about the jobs they take or don’t take. When people have their loans discharged, they are more likely to move, which researchers say suggests they are able to pursue opportunities they wouldn’t otherwise have with the student debt. Some research has also shown that debt motivates graduates to favor higher-paying jobs over lower-paid jobs that are more focused on the public interest.

“There is evidence that holding student debt affects people’s choices early in their careers. I found that it affected people’s occupational choices,” said Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley, and co-author of the research on job choices.

Because a college degree doesn’t bring the same accumulation of wealth that it once offered, economists are also concerned that there is little payoff for households constrained by payments. A St. Louis Fed report released in 2019 found a decline in the wealth a college degree brings over the past few decades. Families whose head of the household was born in the 1980s have a weaker college wealth premium, “to the point of statistical insignificance.” The exception is white families where the head of the household has a bachelor’s degree, but even then the wealth enjoyed by those families is much smaller than in older groups.

Lissa Knudsen, a PhD candidate at the University of New Mexico, who is studying health communication, has an 18-year-old who will head to college in a year herself. Knudsen has three streams of income as a freelance journalist, cheesemonger, and a teacher that have helped support her as she makes her way through school, which she said is not really enough for her to live on. She has $230,000 in student loan debt.

Unlike some borrowers, who look for well-paying jobs after graduation, she said that she is worried that if she takes a more lucrative job in her field of study, student debt will swallow up her income anyway.

“I’m afraid that there’s a disincentive for me to try to use my PhD to its fullest potential and to make say $70,000 or $80,000 a year because I think almost all of that would go to student loan payments,” she said. “Versus, if I stay in the lower income bracket, I might be able to have the minimum amount of payment. Then I could hopefully get some of it forgiven in a while. That would be great.”

Policy implications

Bilal Baydoun, director of policy and research at the Groundwork Collaborative, observed that the return of student loan payments will undo some of the positive changes the recovery brought to households that previously felt greater financial precarity. For example, the rise of younger people, many of them millennials, buying homes earlier in the pandemic when interest rates were low and student debt payments were on pause, was a sign of a changing economic tide.

“My fear overall is that the sort of muscle memory of our pre-pandemic plutocracy is starting to redevelop … [Policymakers] want to grow different muscles. We want to grow the muscles that we’ve seen over the last couple of years of major public investment, of labor activity, of rising wages that outpace inflation and this really threatens all of that,” he said.

To address the burden of student debt on the U.S. economy, experts and economists say that the federal government needs to undertake major policy efforts on debt cancellation and overhauling the way higher education is financed.

Baydoun said that debt cancellation, once a fringe policy idea years ago, is “considered one of the most important interventions when it comes to our affordability crisis.”

“I think continuing to find ways to [cancel student debt] is not only great economic policy, it’s also great politics. All of these borrowers through the course of the pandemic, when payments were on hold for three years, they saw very clearly that nothing bad happened as a result of that … In fact, if anything, it was one of the factors that helped supercharge our economic recovery,” he said.

Not all borrowers plan to resume payments on their student loans. Kyle Guzik, a high school art teacher who lives in Richmond, Virginia, has more than $200,000 in student loan debt, most of it from William & Mary, which he attended for graduate school. He spends $1,350 in rent each month and has more than $10,000 in medical debt, which he also can’t pay. He said his daily life expenses take up the rest of his budget and that there simply isn’t anything left over.

“The money just disappears. It might seem like a lot at first but it just disappears and [student loan servicers] want whatever the amount is that they want. Alright. It isn’t there to be had,” he said. “ … You can’t get blood from a stone.”

Guzik said his decision is one of financial necessity. But he added that he hopes this refusal will result in policy changes.

“I hope that others in my situation will also think about what is really in their own rational self interest and that, by organizing a debt strike, we will collectively force a change in policy so that housing, healthcare, education, and a dignified retirement are recognized politically in this country as human rights,” he said.

Rothstein said he believes the pressure for policymakers to address student debt is building but that most of it has been around canceling payments rather than redesigning the college finance system.

“We are going to need to redesign the way we pay for college and that will be a major lift before we get to the point where Congress passes something,’’ he said. “ … In the long run, our failure to do that is going to be a drag on educational attainments in this country and on economic growth.”

Disclosure: Lissa Knudsen has freelanced for Source New Mexico, an affiliate of States Newsroom.

Women workers could bear economic brunt as federal child care funding ends

Casey Quinlan — Fri, 29 Sep 2023 19:35:19 +0000

Shona Lamond, executive director of the Downtown Children’s Center in St. Louis, says she applied for every grant she could find to keep her center open and teachers paid during the pandemic (Rebecca Rivas/Missouri Independent).

A huge chunk of pandemic relief funding that kept child care programs afloat for the past few years is set to run out Saturday, and policy advocates say the economic impact will be profound — with the ripple effect hurting labor force participation and consumer spending at a time when the country is still trying to avoid a recession.

Parents struggled to pay for child care and child care centers strained to retain workers well before 2020, but the pandemic accelerated many of the industry’s struggles and without the federal money many would have shut their doors.

Now some of that money is going away. American Rescue Plan Act stabilization funds — $24 billion distributed by states that allowed child care to continue for 9.6 million children — will run out Sept. 30.

According to The Century Foundation’s analysis of the impact of the loss of these funds, Arkansas, Montana, Utah, Virginia, Washington, West Virginia, and the District of Columbia can expect the supply of child care programs to be cut by half or more as a result. The end of this funding will cost states $10.6 billion in economic activity according to the TCF report because of the loss in tax and business revenue that results from reduced productivity and staff turnover.

States will have to liquidate another $13.5 billion — provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Coronavirus Response and Relief Supplemental Appropriations Act that funded child care and development block grants — by the same date.

Meanwhile, $15 billion in increased funding for the Child Care Development Block Grant expires in September 2024.

The House passed a legislative package in 2021 which would have expanded the Child Care Development Block Grant to apply to far more families, ensuring they had universal pre-K and reliable child care, as Congress approved relief funds to deal with the immediate problems of families and child care providers. But $400 billion to address longer-term problems in child care did not make it through the Senate.

“We have this temporary funding in this context where we thought when we were at the end of the temporary funding, we’d actually have a system we’d be building. We still need that system. Just because it didn’t happen doesn’t mean it’s not necessary. It just means that politics got in the way,” said Julie Kashen, senior fellow and director for women’s economic justice at The Century Foundation.

Karen Schulman, director of state child care policy at the National Women’s Law Center, said the relief funds that will expire in 2024 also served many purposes to keep child care centers afloat. The American Rescue Plan Act Child Care and Development Block Grant supplemental funds were used for many different purposes.

“They also use a portion of those funds to improve quality, which can be a range of activities, whether professional development or wage supplements for child care providers or training or licensing and health and safety — just a variety of initiatives to help providers,” she said. “That money supplemented the existing child care and development block grant program, which is very important for families, but has always been vastly underfunded.”

Demand for child care, competition for workers

The Downtown Children’s Center in St. Louis was able to stay open for working families during the pandemic by using federal grants (Rebecca Rivas/Missouri Independent).

Shona Lamond, executive director of the Downtown Children’s Center in St. Louis, said she took advantage of every grant she could find to keep her center open.

“The federal [Paycheck Protection Program], the American Rescue Plan Act [funds] … Anything that we qualified for, I applied for, and for the most part we received the grants that I applied for to help us,” she said.

Lamond said the nonprofit has used most of the ARPA money on the center’s biggest expense — teachers’ salaries. It has increased salaries in the past few years to try to keep up with inflation and stay competitive, which has involved an 8% increase over the past three years.

“I think it’s really tough to compete with these other places, these major corporations that have that ability to start paying $17 or $18 an hour …” Lamond said. “I don’t fault people for people who get out of education. We do a really difficult job … It’s stressful. It comes with a lot of responsibility and if you don’t do it right, you could lose your license and your livelihood and they’re getting paid rock bottom wages.”

Lamond said the center is still short-staffed and that two classrooms have been closed for more than a year.

“We’ve been low enrollment pretty much since COVID hit. We’ve never returned to our regular capacity,” she said.

Charles Gascon, senior economist at Federal Reserve Bank of St. Louis, said that because workers at child care centers were also more exposed to COVID-19 and it took time for child care centers to figure out how to adhere to different social distancing requirements and maintain capacity, a lot of workers left.

“The policy standpoint played a role but then the fact that these were not very desirable jobs to have in the middle of a pandemic and the wages really didn’t compensate workers for the added risk they were taking on,” he said.

Gascon said a lot of today’s challenges in child care were the same issues it had in 2019.

“In some cases, it may be a little more exacerbated as older people left the workforce so there are shortages in the sector just like other sectors. The labor market has recovered really quickly so the demand for care is there,” he said. “… Now we can add to that a couple compounding factors: one, the population demographic that is having kids now is larger than the demographic from about 10 years ago, so that means there is likely going to be more people that are demanding these kinds of services. We’ve also seen a shift in where the jobs are at so we see women’s labor force participation rates are higher.”

The lack of affordable child care options is pushing more families to consider informal child care that doesn’t necessarily have an educational component, Lamond said. Other than families reaching out to grandparents and the nextdoor neighbor as well as watching kids as they work remotely, she said she’s seeing people connect through local Facebook groups to find parents who come with good references to watch their kids.

“As long as your kid is safe and being really well cared for and loved, sometimes that’s the best you might be able to do so that you can get to work,” Lamond said.

She said she regularly works with families who have to make hard decisions about whether they take a new job or stay home because they struggle to afford child care.

Katherine Gallagher Robbins, senior fellow at the Partnership for Women and Families, said that the end of the funding is bad news for women’s labor force participation, consumer spending, and for the economy in general. Women ages 25 to 54 have played the biggest role in boosting overall labor force participation in the economic recovery, according to Brookings’ August analysis. But Gallagher Robbins said that it’s still much lower than countries with better caretaking support.

“… It’s very clear that women’s labor force participation will take a hit,” she said.

And, in turn, consumer spending will be affected, she said.

“As the supply of child care decreases, you’ll very likely see an increase in cost that will be borne by families,” Gallagher Robbins said. “This will lead to less disposable income to spend on other essential items. And for some families the balance will tip and a parent may have to leave the labor force altogether which will decrease income in both the short- and long-term. I suspect these effects will be largest for Black and Latinx families with low-incomes for whom child care is already the least affordable.”

She also argues that by expanding the labor supply by offering policies that are more supportive of caregiving, the government could reduce inflation without trying to cool the labor market.

Advocates in Congress, state leaders push for better funding

Legislation introduced in the U.S. Senate this year to address these issues did not pass, but some senators have continued to call for more funding of child care. U.S. Sens. Bernie Sanders, I-Vt., and Patty Murray, D-Wash., released a report in May to draw attention to the child care funding cliff. Murray reintroduced comprehensive child care legislation in April.

Sen. Tina Smith, D-Minn., and co-sponsor of the Expanding Childcare in Rural America Act of 2023, told States Newsroom this summer, “The whole business model for childcare in this country is not working — not for families, not for businesses, and not for providers themselves. Addressing our country’s looming childcare cliff will require significant, federal investments in childcare so that our kids, their parents, and our economy can reach their full potential.”

The Biden administration has also taken steps this year to improve access to child care and stabilize the industry. A Health and Human Services Department proposed rule, announced on July 11, would cap co-payments for child care to 7% of a family’s income, encourage states to take online applications for families trying to access the Child Care Development Block Grant, and pay child care providers participating in those block grants in a timely manner to stabilize child care operations.

The rule would also make it clear to states that they should consider siblings of children who already receive subsidies to be eligible for the Child Care Development Block Grant.

On July 19, White House officials met with more than 90 state legislative leaders and child care advocates to discuss how to address the funding needs, according to the White House.

Kashen said New Mexico and Maine are some of the states taking the most advantage of these funds but states need federal help. Maine has provided 7,000 child care workers with $200 stipends but is using state funding to make the stipends permanent. New Mexico allocated $77 million for a program to fund raises for about 16,000 child care workers.

“There are states that are really taking leadership here,” Kashen said. “That said, when you talk to advocates in those states, they will tell you it’s not enough money … This is an emergency and Congress needs to do something and put money in quickly because I think we’re going to keep losing the workforce.”

Student debt relief scams on the rise. Here’s what borrowers need to know

Casey Quinlan — Fri, 29 Sep 2023 11:15:36 +0000

Activists protest outside of The White House to “Cancel Student Debt” on March 15, 2022 in Washington, DC. The Supreme Court’s decision that the Biden administration didn’t have the authority to cancel student debt helped sow confusion that scammers are using to their advantage (Paul Morigi/Getty Images for We The 45 Million).

Complaints about student debt relief scams are increasing as the date approaches for borrowers to restart payment on their student loans after more than a three-year pause.

Consumer protection advocates say that the Biden administration’s student debt relief efforts, the subsequent halting of those policies by the courts, and the restart of student loan payments have bred confusion that allow companies to take advantage of borrowers.

“There is sort of this perfect storm out there that I think is allowing these fraudsters to prey on people,” said Dan Zibel, vice president, chief counsel, and co-founder of Student Defense, a nonprofit focused on student rights.

Zibel said that there has been a lot of policy and legal news on student debt relief for borrowers to absorb in a couple years.

“There is news about repayment plans, news about cancellation, different types of cancellation, whether it’s public service loan forgiveness or fraud-based cancellation, the COVID pause, and then the courts get involved. Debt forgiveness is happening. Debt forgiveness is not happening. There’s new debt forgiveness,” he said. “ …I think that sows confusion for a lot of people.”

And with 44 million owing more than $1.7 trillion — the third highest consumer debt in the U.S. — the appetite for relief is great and makes many easy prey for scammers.

Many of the debt relief scams often start with a telemarketing call where borrowers are promised debt relief if they pay a regular fee. The callers ask for sensitive personal information, and mislead borrowers about being affiliated with the U.S. Department of Education and student loan servicers. Some mention “Biden Loan Forgiveness.”

The number of complaints coming to the FTC about student debt relief scams has steadily risen in the past few months as the restart of student loan payments approaches, from 385 in June to 562 in July and 610 in August. And the FTC and Department of Justice have been cracking down on the scammers.

In August, the agencies returned $9 million to people who paid up to $800 in upfront fees to Ameritech Financial, to take part in what they thought was a federal loan assistance program. The scam also led borrowers to believe that their membership fees would help pay their student loan balance. Arete Financial Group, which said it was affiliated with the Department of Education, had a similar scam that convinced people to make upfront payments. The FTC sent $3.3 million to those consumers in June.

The FTC also has started working with law enforcement agencies and attorneys general to stop illegal telemarketing calls. Some telemarketing campaigns have included scammers pretending to be the government or businesses, luring unsuspecting student loan borrowers.

How we got here

The Biden administration has undertaken a number of policy efforts in the past few years to reduce the burden of student loan debt, including a program announced in August 2022 that borrowers who qualified could have up to $20,000 of federal student loans canceled. Twenty-six million people applied or sent enough information to the U.S. Department of Education applying for the relief.

However, the U.S. Supreme Court ruled against the plan in June of this year, finding that the administration did not have the authority to cancel the debt. Since then, the administration returned with the SAVE Plan, a new income-driven repayment plan that allows some lower-income borrowers to pay nothing each month and lets some receive early student loan cancellation, among other benefits. Students who have been defrauded by for-profit colleges are also continuing to receive student loan cancellation.

Zibel said that student debt relief scams tend to target borrowers who are the most vulnerable, whether they’re struggling economically or have language barriers that could make people less able to identify fraud.

But anyone could potentially be tricked by these schemes, said Kyra Taylor, staff attorney at the National Consumer Law Center. She said scammers are getting more sophisticated.

“I’ve heard reports from borrowers that scammers spoofed their student loan servicers email. And the only way you could tell that it was a spoof was by rolling your mouse over the links,” she said. “The scammers are so sophisticated and because the student loan system is so complicated, anyone could be vulnerable, especially if you’re getting an email that looks like it’s from your [student loan] servicer on its face. I think it’s getting harder and harder to tell.”

How to spot a scam

Taylor offers some advice to borrowers who may find themselves wondering whether they’re being scammed. For example, she tells borrowers not to provide sensitive information such as a Social Security number to someone they believe is a student loan servicer.

“We’re getting closer to restarting payment and people are expecting that their servicer is going to reach out to them. The servicer could be calling you but if they’re asking for personally identifiable information, I would hang up and call them back just to make sure that you’re talking to the right person,” she said. “The other piece is that it’s very unusual for the Department of Education to call folks. Any time you’re getting a call from someone saying they’re from the Department of Education, I think folks should be more skeptical.”

Mark Kantrowitz, an expert on financial aid and author of “How to Appeal for More College Financial Aid” told States Newsroom in an email that it’s a bad idea to share your financial student aid ID, which is your username and password, with a third party, because they can make changes you may not be aware of and will end up being responsible for. When borrowers log in, the federal student aid website makes it clear that the use of this information by a third party “for purposes of commercial advantage or private financial gain” is prohibited and subject to criminal prosecution, he added.

Taylor and Zibel said there are things the government can do to reduce the damage done by student debt relief scams. Taylor said that if the government automated relief to borrowers, scammers would have fewer opportunities to insert themselves into the process. Zibel said that the government should continue to educate people as return to payment begins on where to find legitimate sources of information on their student loans.

The FTC also offers advice on how to spot scams. The agency says it’s a red flag if someone tries to charge you for debt relief services before they have done anything for you as a borrower. Ari Lazarus, a consumer education specialist at the FTC, explained in an August blog, “ …Nobody but a scammer will ever offer you quick loan forgiveness.” Experts on these scams also remind borrowers that no one has to pay for help with student loan relief and advise borrowers to look at the federal student loan website.

Janet Yuen learned too late that she did not have to pay for help. In 2019, after receiving a phone call from A Better Solution Student Loans, or ABS Student Loans, she agreed to pay the company $33 a month to lower her debt.

Yuen, a social worker in Southern California, told States Newsroom that she quit making payments on her student loans because she thought ABS Student Loans was doing so on her behalf. Yuen said she paid $33 a month from October 2019 to November 2021 to ABS Student Loans and provided the company with the username and password to her student loan website.

She has about $263,600 in student loan debt and is out almost $900 — the money she paid ABS Student Loans that she said would have otherwise been spent on financial needs such as paying medical bills.

Yuen said she has contacted the FTC but the agency could not tell States Newsroom whether it is investigating the company because it does not make investigations public.

There is at least one government investigation into ABS Student Loans through Minnesota Attorney General Keith Ellison’s office. On Sept. 6, Ellison announced that 52 student debt relief companies are suspected of violating state law by not registering before offering debt settlement services and possibly misrepresenting fees and services, including ABS Student Loans. Deputy chief of staff for the attorney general, John Stiles, told States Newsroom that the office has asked ABS Student Loans how many customers it has in the state but the company has not yet responded.

ABS Student Loans’s website includes information that it is not affiliated with a government agency and that borrowers do not have to use a third party to apply for student debt relief under a link to its privacy policy at the bottom of its website. The California-based company did not respond to States Newsroom’s multiple requests for information.

Millions more workers would receive overtime pay under proposed Biden administration rule

Casey Quinlan — Thu, 07 Sep 2023 17:17:28 +0000

The amount a salaried worker would need to be paid before an employer could avoid paying overtime would rise to $55,068 annually under a proposed rule from the Department of Labor (Brandon Bell/Getty Images).

Salaried workers who have been ineligible for overtime pay would benefit from a proposed Biden administration regulation.

The Department of Labor’s new rule would require employers compensate full-time workers in management, administrative, or other professional roles for any overtime worked if they make less than $55,068 annually. Currently, the salary threshold is $35,568. The change is expected to affect 3.6 million workers.

The rule would also provide automatic changes every three years to the salary level to keep up with changes in earnings. U.S. territories that are subject to the federal minimum wage would have these same overtime protections, which rolls back a Trump administration change made in 2019.

“I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifice,” said Acting Secretary of Labor Julie Su in a statement.

The new standard salary level proposed by the agency would be tied to the 35th percentile of weekly earnings of salaried workers in the lowest-wage region of the country. There is voter support for a change in the current regulations. According to a 2022 Data for Progress survey of likely voters, 65% said they either strongly supported or somewhat supported raising the salary threshold for overtime pay.

The rule will go through a public comment period as part of the rulemaking process to give supporters and opponents time to offer feedback. The process can take months, which could mean it won’t be finalized until next year. Labor rights advocates and economists say that people working in retail, restaurants and healthcare would be among the workers most affected by the regulation.

Judy Conti, director of government affairs at the National Employment Law Project, a worker advocacy nonprofit, said many workers who do overtime eligible work are paid just over the current threshold so their companies can avoid paying time-and-a-half. The proposed rule would help address this, she said.

“A lot of these dollar stores call people managers and supervisors and pay them $36,000 a year. Then they claim that they’re overtime exempt and they may do a little managing and they may do a little supervising, but mostly they’re working the cash register or they’re stocking shelves or they’re unloading in the back. They’re not doing work that is considered truly bona fide executive, professional or administrative work,” she said.

Conti added that this rule would provide incentive to employers to manage employee time wisely or hire more workers to handle the workload.

“… There’s [currently] no incentive to really manage that time wisely and see if it should instead be spread to other people,” Conti said.

Erica Groshen, senior economics adviser at the Cornell University School of Industrial and Labor Relations, said the regulation should be fair on employers.

“I think the important thing to realize is that this will affect all of those employers equally,” she said. “It’s not putting some at a disadvantage compared to others. It’s going to change the playing field for everybody. You could argue that it’s going to change the playing field more for employers who were actively trying to take advantage of the erosion of the applicability of the law.”

In terms of the potential effects on the economy, Groshen said there could be some pass through to prices for consumers depending on how competitive the industry.

“To the extent that these companies are quite profitable, then the employers might try to hold on to market share by not increasing prices as much. Their profits might be a bit lower. Right now, nationally profit rates are actually quite high. They’ve been high for a while and rising. This would tend to reduce inequality if it comes out of profits. Otherwise, then the money is going to come from somewhere,” Groshen said.

That may mean that some employers will automate more services such as electronic ordering at restaurants or buying equipment for food preparation, she added.

The Trump administration last changed the salary threshold in 2019 from $23,660, set in 2004, to its current $35,568 salary level, which was significantly lower than the $47,476 level the Obama administration tried to implement in 2016. A federal judge blocked the Obama administration’s effort saying that the threshold was too high and that the administration did not have the authority to make that particular change.

Twenty-one states, including Nevada, Arizona, Kentucky and Wisconsin, brought the lawsuit. The states argued that the rule “could deliberately exhaust state budgets” and was unconstitutional. In 2017, the same judge, an Obama appointee, ruled against the regulation again.

Conti said she’s optimistic that the rule is less likely to be blocked this time. She argues that the judge’s reasoning for stopping implementation of the rule lacked “legal or economic support.” Attorneys for law firms specializing in employment and labor law, however, are still anticipating legal action against the rule. Some attorneys suggest that the lack of a Senate-confirmed labor secretary makes the regulation more vulnerable to legal action. Biden nominated Su for labor secretary six months ago.

Many of the same groups that opposed or were critical of the overhaul of overtime regulations during the Obama administration have taken similar positions on the Biden administration’s effort. The U.S. Chamber of Commerce has called on the Department of Labor to “adjust” the rule. It did not release any specifics for what it wants the agency to do, but criticized the department’s proposal to automatically change the salary threshold every few years.

“The Department of Labor’s proposed overtime regulation is the wrong rulemaking at the wrong time,” Marc Freedman, vice president of the U.S. Chamber of Commerce Workplace Policy, said in a statement. “It represents a more than 50% spike in the salary threshold and will increase costs for small businesses, nonprofits, and other employers at a time when businesses already face persistent workforce shortages that are hindering the economy.”

Industry groups such as the National Restaurant Association and National Association of Manufacturers have been critical of the rule for similar reasons.

Conti said she sees the proposed rule as stimulating for the economy and good for employees as well as employers.

“Adding jobs and getting more money into more people’s hands is good for the economy,” Conti said. “We’ve seen a lot of workers over the past couple of years walking away from jobs when they’re overworked, when they don’t have time for themselves and when they don’t have time for their families. Making sure that workers have moderate work weeks that are 40 hours is good for employers. They’re not going to burn out their employees.”

Federal call center workers join March on Washington to call attention to workplace inequities

Casey Quinlan — Mon, 28 Aug 2023 10:45:01 +0000

Keaira Mark, a former call center worker for Maximus, and current Maximus employees Katherine Charles Sasha Tyson, and Deondra Bridges on Friday in Washington, D.C. The women were in Washington to take part in the 60th anniversary of the March on Washington. (Casey Quinlan/States Newsroom)

Call center workers that help Americans navigate the ACA marketplace and Medicare are demanding more paths for advancement, higher pay, and more breaks between calls at this year’s March on Washington.

They’re looking to bring government attention to their cause after previous efforts to get the attention of officials with the Department of Labor and Department of Health and Human Services have not yielded results.

They say that the issues they are facing are connected to racial and gender inequities at Maximus, a Virginia-based private company that contracts with U.S. Health and Human Services as well as other federal agencies. A 2023 report found only 2% of managers with frontline customer service experience were internally promoted.

Sixty-nine percent of frontline workers were Black, Latino or other people of color, while the same demographics composed only 21% of executives and senior managers, according to the report from NAACP, Communication Workers of America and Strategic Organizing Center.

For the 60th anniversary of the historic march for civil rights and economic opportunities for Black Americans, a group of organizations with a diverse set of focuses — racial justice, labor rights, student debt, LGBTQ equality, and voting rights, to name a few — gathered in Washington, D.C., on Saturday. The march began at the Lincoln Memorial and ended at the Martin Luther King Jr. Memorial, and 75,000 people were expected to attend.

The march came on the heels of what has been called a “hot labor summer” after everyone from hotel workers to actors have gone on strike, and UPS drivers secured a generous new contract after threatening to strike.

Maximus employees are hoping to achieve their own gains. Katherine Charles, a call center worker from Tampa, Florida, who came to D.C. for the march, said she wants federal officials to investigate the company because of the way it treats workers.

Maximus has made multiple rounds of layoffs this year. In January, 143 workers in Hattiesburg, Mississippi, and more than 100 workers in Bogalusa, Louisiana, were laid off and did not receive severance, according to the Louisiana Illuminator. In May, Maximus laid off more than 700 workers, who received severance packages.

The CWA filed an unfair labor practice complaint in May, accusing the company of using the layoffs and other union-busting tactics as retaliation for organizing. Call Center Workers United held demonstrations after the layoffs, including a May protest outside of the Department of Health and Human Services office in Washington D.C., and a June protest at a Maximus office building in Chester, Virginia.

Victoria Miller, an organizer at the CWA, said it’s been challenging to organize because of all the layoffs this year.

“I don’t believe it is fair for a place where the workforce is majority female, single mothers, to be laid off massively without any notice like they have done before …,” she said. “We have a federal contract, but we are not treated as federal employees.”

Keaira Mark, a former Maximus worker who was laid off in May and lives in Hattiesburg, Mississippi, came to D.C. to march to support the many people she knows who still work there. “Even though I don’t work there, I still have friends who work there. My mom still works there,” she said. “We’re looking to get more exposure and hopefully community support and government support, and put some pressure on Maximus to change.”

Maximus workers also told States Newsroom that they need more time off between calls, because some of the calls they receive can be abusive, and it’s challenging to go right from one like that to the next.

They argue that their employer has enough money to improve working conditions. The business expects to generate $4.875 billion to $4.975 billion in revenue this year, according to Maximus’ August investor presentation. Maximus employs more than 35,000 employees in the U.S. and internationally, and its workers handle 7 million contact center inquiries per month and 43 million calls annually about federal health insurance enrollment.

The NAACP, CWA, and SOC wrote to Department of Labor officials in March bringing attention to a lack of workers of color and women in leadership positions at the company, which brought in 48% of its revenue in fiscal year 2022 from U.S. federal services according to the August presentation. The groups said that Maximus should be investigated for what they say is a noncompliance with laws protecting against discrimination.

Maximus employees have engaged in multiple walkouts to bring attention to calls for improved working conditions. In November, call center workers held walkouts in Mississippi, Virginia, Kentucky, and Louisiana to fight for pay of $25 an hour and more breaks in between their calls. At the time, Maximus said workers received two 15-minute breaks and one half-hour lunch break.

In response to questions about whether Maximus plans to improve working conditions, a spokesperson for the company told States Newsroom in an email, “We are always focused on ways to strengthen benefits for our employees. For example, we improved pay and compensation above the minimum wage and reduced employees’ out-of-pocket health care expenses.”

Maximus said it increased pay and compensation before an executive order finalized the minimum wage increase for federal contractors and said it pays call center employees a starting wage of $16.20.

“In certain geographies, and depending on the time of year, Maximus exceeds that wage,” the spokesperson said.

Disclosure: Casey Quinlan was previously a member of the Washington-Baltimore NewsGuild as a reporter for the American Independent. The NewsGuild is a sector in the Communications Workers of America.

Pregnant workers have new protections. Here’s what to expect from your boss.

Casey Quinlan — Sat, 26 Aug 2023 10:45:06 +0000

For roughly a decade, advocates, legislators and workers pushed to pass legislation offering better workplace protections for pregnant workers. The Pregnant Workers Fairness Act passed in December and became effective on June 27, 2023. (Paul Morigi/Getty Images for A Better Balance)

Almost two months after workplace accommodations for pregnant workers became law, the rules surrounding what employers can and cannot do have yet to be finalized — but that doesn’t mean the protections are not in place.

The Equal Employment Opportunity Commission’s proposed regulations are expected to offer more clarity once finalized, but workers can still access their rights under the new Pregnant Workers Fairness Act and employers are still required to understand the law and follow it.

Here’s what you need to know about why workers say the law was needed, what workers’ rights are under the law and employers’ obligations to employees.

Why the law was needed

Other federal laws cover the rights of pregnant workers but advocates have long argued that many of them are too narrow to address the situations pregnant workers face when they seek accommodations. The Americans with Disabilities Act, for instance, does not consider pregnancy to be a disability but pregnancy-related complications, such as preeclampsia, do qualify. Under the ADA, a pregnant worker can’t seek out an accommodation in the hope of preventing dangerous pregnancy-related complications.

The Pregnancy Discrimination Act, passed in 1978, prohibits discrimination against pregnant employees but it’s difficult in practice for workers to receive accommodations under the law, because it requires finding another worker who received accommodations like the ones they’re seeking. This can be a challenging and time-consuming process because workers may not be aware of what kinds of accommodations their coworkers are seeking or may not have access to this information in the way their employer does.

Despite those laws, 23% of mothers said in a survey last year that they had weighed whether or not to leave their job because their workplace lacked reasonable accommodations or they were worried about pregnancy discrimination.

The Pregnant Workers Fairness Act, which passed in December, has been in the works for a decade. In the intervening years, states began taking their own action. As of April, 30 states — including Alaska, Colorado, Minnesota, and Tennessee — as well as the District of Columbia, and four localities, had similar laws to the Pregnant Workers Fairness Act, some of which may offer stronger protections in certain situations than the PWFA, according to A Better Balance, a worker advocacy nonprofit. Twenty states did not have state protections like these at the time of its state analysis, including Alabama, Missouri, Pennsylvania, Wisconsin, and Michigan. The nonprofit has a comprehensive list of state policies on pregnant workers’ rights.

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What are your employee rights

Congress and federal agencies, employment agencies, labor organizations, private employers with 15 or more workers, and state and local governments with 15 or more workers are subject to the law, according to the EEOC.

While the rules haven’t been finalized, if you think your rights have been violated, you can already take action. On June 27, the EEOC began allowing workers to file charges under the law for violations that occurred on that day or later. Workers need to take this step before they can file a lawsuit against their employer. The law protects employees and job applicants who need accommodations because of pregnancy, childbirth, or conditions related to pregnancy and childbirth. Under the PWFA, pregnant workers should be able to make requests for reasonable accommodations, such as closer parking, uniforms in their size, and additional rest time.

The PWFA is similar in many ways to the Americans with Disabilities Act. It does not require an employer to provide an accommodation if doing so would bring it “undue hardship,” or in other words, it would come at great difficulty or expense to the employer.

But the law is also a bit different than the ADA. Unlike the ADA, where the employee has to be able to do the essential functions of their job or they no longer qualify for accommodations, the PWFA says that workers do not always have to be able to perform an essential function temporarily because of their pregnancy. It is expected that they will be able to resume those duties in the near future.

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The EEOC’a proposed rules define the “near future,” or when workers will be able to perform essential functions of their job after being temporarily unable to do so, as generally going up to 40 weeks. This does not mean workers will always have 40 weeks but that needing 40 weeks doesn’t disqualify an employee for the accommodations. The regulations also say that if there are multiple options for effective accommodations, the employer should favor the worker’s preferred accommodation.

Liz Morris, deputy director for the Center for WorkLife Law, said applicants and new employees who want to work remotely because of their pregnancy will also be covered in the PWFA. Applicants can request accommodations during the hiring process itself, such as making modifications to a physical test. If a pregnant applicant anticipates that they will need adjustments from an employer because of their pregnancy, the applicant can agree to a general policy without accommodations and then request them once they are employed.

The EEOC regulations also get into detail about pregnancy-related medical conditions that apply to workers under the PWFA, A Better Balance Vice President Elizabeth Gedmark said.

“…The proposed rule discusses pregnancy-related issues ranging from preterm labor to anxiety and depression while also making clear that limitations can also be ‘modest, minor, and/or episodic,’” she told States Newsroom over email.

Lactation, potential pregnancy, miscarriage, infertility and fertility treatments, and having an abortion are also listed in the regulation. An employee who needs to take leave because of a limitation due to a condition related to pregnancy and childbirth should qualify for that leave under the PWFA, according to the proposed rules. The EEOC gives miscarriage and childbirth as examples of reasons for workers to take different forms of leave. The same definition of “near future” also applies. I

A Better Balance provides sample letters for employees to use when requesting work accommodations related to pregnancy.

What employers need to know

The rules are going through a public comment period through Oct. 10, and Victor Chen, director of communications at the EEOC, told States Newsroom that employers are not required to follow the proposed rules just yet. But he added that the PWFA itself provides direction for employers. He suggested employers read the EEOC’s list of commonly asked questions and listen to its webinar. He said the EEOC “will move as quickly as possible to finalize the regulation” after the comment period closes.

Morris said that although the regulations aren’t set in stone, “If I were an employer, I would certainly follow them for now, as they are an excellent indication of how the law will ultimately be interpreted.”

The rules specify that employers can’t deny work to an applicant or employee because of their need for an accommodation, make a decision for a pregnant worker without any discussion on which accommodation they will receive or force them to go on leave if there is an accommodation they could take to continue working. They also can’t retaliate against workers for advocating for themselves under the law and reporting discrimination nor can they try to stop workers from enjoying their legal protections.

Michael Fallings, the managing partner of Tully Rinckey PLLC’s Austin office, who specializes in federal employment law, said he thinks it will be useful for employers to have more information on how to fairly treat pregnant workers seeking reasonable accommodations.

“I think it could be helpful for employers because I think some employers are in fear of litigation at times and now that you have a law in place that says what you can or cannot do, it provides some basis for the employers,” he said.

Morris said that employers should keep in mind that they need to swiftly provide accommodations and if they can’t, they should think about interim accommodations. The proposed EEOC regulations explain that an “unnecessary delay” could result in a violation of the law.

The future of the law and its regulations

The law’s regulations may be tweaked during the rulemaking process and could be eventually challenged in the courts. The Alliance Defending Freedom, which has been involved in numerous lawsuits challenging abortion rights, called the proposed regulations “federal overreach.” The ADF, a legal advocacy group, has argued that the administration doesn’t have the legal authority to include abortion in its implementation. Morris said that accommodations related to abortion are reasonable to include because the EEOC has always defined pregnancy, childbirth and related medical conditions in the courts as including abortion.

Organizations that supported or opposed the law will also have the opportunity to suggest changes to the regulations. The U.S. Chamber of Commerce advocated for the passage of the law and will provide a public comment on parts of the rule that could be changed, the group told States Newsroom, but declined to elaborate on what should be revised.

Morris said her organization also plans to submit a public comment on the proposed EEOC regulations. She wants to see some revisions on the issue of medical certification to make it even easier for employees to receive accommodations.

“A shocking number of people don’t receive prenatal care because they don’t have access to it either because of financial barriers or because they live in a remote area where it’s difficult to travel to, to receive prenatal care,” she said.

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Consumers seeing relief in some food prices as inflation continues to slow

Casey Quinlan — Thu, 10 Aug 2023 21:12:02 +0000

Food prices overall increased a tad in July over the previous month, but seafood, eggs and milk prices all declined, according to the Department of Labor’s consumer price index (Scott Olson/Getty Images).

Consumers are getting some relief from higher prices as core inflation, which excludes food and energy, continues to show signs of cooling — an encouraging sign for the U.S. economy, according to economists.

The Department of Labor’s report on Thursday showed the consumer price index rose 0.2% in July, in line with expectations, and 3.2% in the past year compared to 3% in June. Despite that slight uptick, economists say that it’s still good news for the economy overall and for consumers.

This is the second month core inflation has reached pre-pandemic levels, according to an analysis of Department of Labor data by the Roosevelt Institute.

“We now have two straight months of low, honestly, quite normal levels of inflation,” Kitty Richards, acting executive director of the progressive think tank Groundwork Collaborative, told States Newsroom. “That’s a huge drop from last summer’s peak. And that is something that we should be celebrating, especially given that it has happened in the context of growing real wages and a job market that is still really delivering for American workers. I’m really glad to see that in the inflation report.”

Food prices increased 0.2% from June to July and 4.9% from July 2022. However, egg prices, which families have been complaining about at the checkout line, are falling. Milk prices have also continued to decline. Frozen fish and other seafood prices also fell in July after increasing a bit in June.

David Ortega, a food economist who is an associate professor at Michigan State University, said food price inflation is starting to moderate.

“A 3.6% increase in grocery prices is a welcome relief from what we saw last year. We were talking about double-digit increases, year-over-year for grocery prices,” he said. “They peaked in August [of 2022]. There’s signs that things are moderating and, and they’re definitely improving.”

But it’s still important to consider that these changes, while promising, are not necessarily affecting the average American’s experience of prices at the supermarket in a big way, he cautioned.

“If you talk to consumers, people are like, ‘Things are still expensive at the grocery store.’ And that’s correct because inflation is the rate of increase in prices over a period of time,” he said. “Just because the rate of increase starts to come down, it doesn’t mean that prices are coming down or that things are necessarily getting cheaper. It just means that they’re not increasing in price as quickly.”

Some factors still adding inflationary pressures include climate change and Russia’s war in Ukraine, Ortega said.

“We’ve seen some of those factors start to improve and in some cases, not really be much of a problem like in the case of bird flu for egg prices. But we still have some factors at play that are still adding inflationary pressures ….,” he said. “That’s why inflation has been very persistent. And there’s also a demand story that we’ve seen, especially in the data that we have for last year, that consumer spending on food has been pretty strong.”

Housing costs lagging

Thursday’s inflation numbers have implications for the Federal Reserve’s efforts to bring inflation down to its 2% target. In July, the Fed raised interest rates by 0.25% to the highest it has been in 22 years.

Fed Chairman Jerome Powell said in a July press conference that the Fed was waiting to see whether the June CPI report, as well as other economic data, was a blip before deciding to pause the raising of interest rates. Fed meeting details show that officials wanted to see how interest rate hikes, as well as the spring bank collapses, were affecting the economy before making another policy decision.

Powell said the Fed would be watching this CPI report and the following one to see if there is a trend in the moderation of inflation as it considers its next decision.

“Between now and the September meeting, we get two more job reports, two more CPI reports …,” he said. “All that data I recited we will be looking at all that and making that assessment then. Really, we did have that one good reading but it is just one reading as everybody knows and we’ve seen this borne in the data. Many forecasts call for inflation to remain low but we just don’t know until we see it in the data.”

Shelter also continues to have a significant effect on inflation. It made up 90% of the increase this month according to the U.S. Bureau of Labor Statistics. But there is additional context to consider for shelter data since it is a lagging indicator, Richards said.

“Affordability of housing is a huge concern for Americans … The data is really telling us shelter costs in the CPI lag by up to a year and market data, which is much more current, shows that housing costs have cooled dramatically since last summer,” she said. “…What that means is that inflation right now is actually lower than the CPI headline number.”

Richards said that because prices for all items without shelter is only 1% for the past 12 months, the Fed may take that data into consideration in September when it makes its next call on interest rates.

“That’s good news. But we also need to start to ask whether the Fed continuing to pursue a 2% CPI inflation target aggressively has a real risk of overshooting.”

There’s only so much effect the Fed can have on demand for food, however, Ortega said.

“The raising of interest rates has little effect on demand for food, especially at the grocery store because food is a necessity. … That may make it more difficult for people to go out and eat at restaurants or maybe not splurge as much when they go to the grocery store. But that is not going to have that significant of an effect on the overall prices and, and what we’re seeing with overall inflation.”

VP Kamala Harris unveils new wage rule for federal projects

Casey Quinlan — Wed, 09 Aug 2023 10:55:08 +0000

Vice President Kamala Harris, shown here at an event in June, touted a new Department of Labor rule while in Philadelphia on Tuesday, Aug. 8, 2023. The new rule would improve wages and workplace protections for people working on projects that get federal funding (Alex Wong/Getty Images).

Construction workers who work on federal projects are poised to receive better wages and worker protections under a Department of Labor rule touted by Vice President Kamala Harris on Tuesday.

Speaking at a union hall in Philadelphia, Harris praised the Biden administration’s economic agenda and pointed out that the new rule would be the first update in more than 40 years to the Davis-Bacon Act, which requires paying prevailing wages on public works projects. The Reagan administration changed the definition of prevailing wages in 1983.

“Let’s agree these workers deserve our recognition and appreciation and they deserve something more,” Harris said. “They deserve a raise. … Many workers are paid much less than they deserve, much less than the value of their work … in some cases by thousands of dollars a year, and that is wrong and completely unacceptable.”

The final rule transforms how prevailing wages, or the hourly rate of wages paid to workers in a given area, are calculated. It would base wages off of at least 30% of workers instead of 50% of workers in a trade in a certain locality, which the Biden administration said will help ensure workers’ prevailing wages aren’t dragged down by employers who pay low wages.

The regulation also makes it easier for the agency to withhold funds from contractors to ensure workers are paid properly and protects workers from employer retaliation, Biden administration officials have stated.

The rule will be effective in about two months and would affect an estimated 1.2 million workers.

Harris praised the work of union leaders during her speech. She called Sean McGarvey, president of North America’s Building Trades Unions (NABTU), who was present at the speech, “a partner,” and thanked Jimmy Williams, the general president of the International Union of Painters and Allied Trades. After the speech, she planned to tour Interstate 95. In June, part of I-95 collapsed when a gasoline tanker exploded, and the man driving the vehicle died. Harris applauded the swift rebuild of the section, which took only 12 days. The rebuilding effort received federal funding.

Sharita Gruberg, vice president for economic justice at the National Partnership for Women and Families, said that the original formula for wage standards was supposed to make sure that federal contracts are paying workers a competitive wage but the Reagan administration’s changes in the 1980s weakened the rules.

“There’s just been all of these artificial barriers constructed since the ’80s that weaken this really strong rule that’s supposed to protect the local economy and protect workers,” Gruberg said. She added that the idea was “to make sure that these local economies are not subject to a large influx of federal dollars going to construction companies that are paying less than market rate and creating a race to the bottom.”

The administration is prioritizing these changes after it has invested billions in manufacturing facilities and repairing roads through the CHIPS and Science Act and the Infrastructure Investment and Jobs Act. Gruberg said the administration is trying to make the most out of those investments by making these reforms.

“There’s two paths here,” she said. “One, we update these rules and make sure that these investments are reaching their full potential for communities, or we don’t and lose workers a lot of money.”

Progressive think tanks have argued that such changes will make it easier for workers to receive higher pay and better benefits. In its comment on the proposed rule in May 2022, the Economic Policy Institute said research has established that prevailing wage laws increase worker pay, help more workers get pension plans, and improve workers’ health care coverage as well as make the construction industry more equitable for women and workers of color.

The Laborers’ International Union of North America also supports the change and said it will protect many LIUNA members.

“With massive investments in infrastructure through the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act creating hundreds of thousands of new jobs with prevailing wage rules, construction workers across the nation will benefit from the strengthened wage floor,” LIUNA stated.

There is still opposition to the rule from the Associated Builders and Contractors, a non-union trade group, which has said it will take legal action in response to the rule. The trade association said there’s no timeline yet for when they will bring a lawsuit.

Ben Brubeck, vice president of regulatory, labor, and state affairs at the Associated Builders and Contractors, a non-union trade group, called the rule a “handout to organized labor on the backs of taxpayers, small businesses and the free market” and said the regulation is “unnecessary, costly and burdensome.”

Teamsters-UPS reach ‘game-changing’ labor deal to avert strike

Casey Quinlan — Tue, 25 Jul 2023 20:20:48 +0000

A UPS worker on his daily rounds on July 24, 2023, in New York City. UPS workers had threatened to walk off the job on Aug. 1, if UPS didn’t agree to higher wages and better working conditions. The Teamsters union, representing some 340,000 UPS workers, reached a tentative agreement with the nation’s largest package carrier on Tuesday (Spencer Platt/Getty Images).

UPS and its workers, represented by the Teamsters, reached a tentative deal on Tuesday to prevent an Aug. 1 strike of 340,000 union members at the package carrier. A work stoppage could have cost the U.S. economy billions by disrupting supply chains and upending distribution to both large and small businesses, hospitals and homes.

Representatives of the UPS Teamsters locals will meet to review the deal on July 31 and members will vote on it between Aug. 3 and Aug. 22.

The five-year contract includes a wage increase to bring part-time workers’ pay to at least $21 an hour immediately and full-time workers to an average top rate of $49 an hour. UPS also agreed to workplace safety protections such as air conditioning in vehicles purchased after January 2024, and to stop the practice of requiring overtime on days off. UPS drivers have been demanding better protections for working in the heat after instances where workers have been hospitalized, and in some cases died, on the job.

Teamsters General President Sean O’Brien said in a statement, “UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers.”

Carol Tomé, CEO of UPS, called the deal a “win-win-win agreement.”

President Joe Biden congratulated UPS and the Teamsters on the tentative deal and stated, “While this agreement still awaits final ratification by Teamsters members, today’s announcement moves us closer to a better deal for workers that will also add to our economic momentum.”

A strike could have cost the economy $7 billion, according to an analysis from Anderson Economic Group. A 10-day strike would have cost consumers $4 billion and UPS workers $1.1 billion in lost wages, according to the analysis. In 2021, UPS made up 37% of parcel market share in the United States. UPS announced in April that its first quarter revenue was $22.9 billion and its operating profit was $2.5 billion.

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“Workers are all powerful right now, particularly in this sector where it takes roughly twice as many workers to process the same volume of product that goes out in e-commerce as opposed to brick and mortar retail,” said Thomas Goldsby, Haslam chair in logistics at the University of Tennessee.

Goldsby said that he doesn’t see demand for e-commerce going away as so many consumers have become accustomed to receiving their items quickly and efficiently, which requires a lot of labor.

“You think about a big store that would receive a full pallet of product and it might have hundreds or thousands of items on that pallet. Well, e-commerce takes it upstream and says we’re breaking down the pallets in a regional distribution center and it’s going to be a worker in a warehouse that unpacks the box that grabs the items, that repackages, that labels, and ships,” he said. “Then ultimately, it takes people to deliver the item. So it’s much more labor intensive and I just don’t see us moving away from e-commerce, even if growth kind of tempers and tapers off a bit.”

Goldsby, who has closely followed the developments in the UPS-Teamsters negotiations, said he believes it’s likely membership will vote to accept the deal because of the broad gains workers made in the agreement.

“In so many categories — economic, non-economic, wages, benefits, holidays, work conditions, there were gains virtually across the board,” he said.

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States, cities turn to community organizations to battle wage theft

Casey Quinlan — Mon, 03 Jul 2023 13:30:22 +0000

Demonstrators participate in a protest outside of McDonald’s corporate headquarters on Jan. 15, 2021 in Chicago, Illinois. The protest was part of a nationwide effort calling for minimum wage to be raised to $15 per hour (Scott Olson/Getty Images).

About five years ago, most of Minneapolis’ Subway, Little Caesars and McDonald’s franchise restaurants did not comply with city wage standards. Now workers at each of the locations that violated the law receive the required minimum wage and time off when they’re sick.

This is all thanks to a co-enforcement program, where the city’s labor enforcement agency works with community organizations to ensure workers are aware of their rights and have the tools to advocate for themselves. Last year, it reached more than 12,000 workers and provided training on worker rights for more than 400 people. Since the program began in 2018, it has recovered more than $3 million in unpaid wages.

“Pretty consistently, since we started, we have received a disproportionate number of complaints or reports of violation from restaurant workers,” said Brian Walsh, director of labor standards and contract compliance at the Minneapolis Department of Civil Rights, pointing out that the restaurant industry historically has had the majority of its workers at, or barely above, the minimum wage. “… It’s kind of the front lines where some of these municipal labor standards are the rubber hitting the road if you will.”

Wage theft, which can include not paying workers minimum wage, misclassifying workers as independent contractors or as management to avoid paying overtime and taking tips meant for employees, is a $50 billion problem for U.S. workers. It is committed by large corporations, small businesses and even state governments, and it disproportionately affects low income workers, including women and workers of color.

Funds from the American Rescue Plan Act, the federal government’s response to the economic and health ramifications of the COVID-19 pandemic, allowed more states and cities to experiment with using community groups to connect with workers as Minneapolis did, according to a report from the Economic Policy Institute and the Center for Labor and a Just Economy at Harvard Law School. When labor enforcement agencies, which the average worker may not be aware of, work more closely with community organizations that connect with those workers, workers get better results, experts say.

Now that most of the ARPA funds have been appropriated, some policy advocates are pushing for states to continue this work, by making employers, rather than the public, shoulder the burden for the cost of enforcement and for the U.S. Department of Labor to support it through grants, among other funding options.

“If there are workers in a worksite who the employer knows … know their rights and that they’re ready to stand up for themselves, it makes the employer less likely to try to do things intentionally to steal wages so that then becomes like prevention,” said Veronica Mendez Moore, co-director of Centro de Trabajadores Unidos en Lucha (CTUL), a worker-led organization in Minneapolis focusing on racial, gender, and economic justice. “We’ve seen that in multiple instances where once workers stand up about one thing, the employer sort of shies away from the other.”

Walsh regularly meets with Mendez Moore’s group as well as New Justice Project MN, a Black-led organizing center focusing on economic issues, and ROC Minnesota, a labor advocacy nonprofit to discuss new developments, such as the wage theft trends they see emerging.

He said a closer relationship with these groups has helped strengthen enforcement.

“[There are] roughly 300,000 employees across the entire city and then three investigators,” he said. “That’s a really hard, almost impossible task, to be all places, all the time.”

Walsh said the total amount of ARPA funding allocated for the program is $750,000.

ARPA Funds to the rescue

“The American Rescue Plan [Act] funds provided some more opportunities for that experimentation,” said Rachel Deutsch, campaign director at the California Coalition for Worker Power and one of the co-authors of the EPI/Harvard report. “There’s now this question of ‘Are we going to just abandon that infrastructure because we’re acting like COVID has ended or are we going to build on it to create mechanisms that really are needed whether or not we’re in an emergency response moment in order to inform low-wage workers of their rights and inform employers of their obligations?’ ”

The report highlighted efforts in several cities and states.

In 2021, Maine started a program with $1 million in ARPA funds for job training, help accessing unemployment benefits, and worker outreach with the support of community organizations, the AFL-CIO, and a legal aid group, according to the EPI report. In Seattle, the city’s Office of Labor Standards staff have monthly and quarterly meetings with community-based organizations. Chicago, Philadelphia, and San Francisco also have close partnerships with community organizations as do San Diego and Santa Clara counties in California.

In Iowa, the cities of Coralville, North Liberty, and Iowa City and Johnson County allocated $322,000 in ARPA funds over five years to the Center for Worker Justice in Eastern Iowa, which investigates wage theft cases and helps put community pressure on employers to pay their employees, and has assisted workers in recovering lost wages.

The help is needed because Iowa Workforce Development doesn’t have enough staff. Jesse Dougherty, the agency’s marketing and communications officer, told States Newsroom in an email that the Workforce Development Division has four positions to investigate unpaid wages. Two of those positions were vacant for part of the past year, Dougherty said. Overall about 15 to 20 people work on wage or misclassification issues on a regular basis.

Mazahir Salih, who until recently was the executive director at the Center for Worker Justice of Eastern Iowa, told States Newsroom that workers don’t always know how to file a complaint or that there is a labor enforcement entity they could file it with. They come to CWJ through word of mouth, she said. On this particular day, she was coordinating with organizers of a protest aimed at recovering the wages for a former worker at a local Mexican restaurant. He’d learned his employer couldn’t cover his paychecks only after he’d tried to deposit them at his bank.

Sometimes CWJ can work things out with the employer on the phone but if they can’t, then the group sends a letter, and from there it can ramp up community pressure, including protests and a delegation of elected officials.

“If it’s really miscommunication, we can figure it out on that phone call,” Salih said. “But some of them, either they don’t want to talk to us over the phone or they don’t want to give us any information.”

Deutsch said she would like to see more states in the South and Southwest adopt these approaches to enforce labor protections and prevent labor violations. She said that historically, these programs have started in cities with their own wage standards. One barrier could be preemption laws that have been used by state governments to prevent cities from increasing worker pay and protections beyond the state minimum wage. Many of the minimum wage preemption laws are concentrated in southern states.

Community-based organizations also need the proper financial support to dedicate time and resources to working with labor enforcement agencies. Funding issues could be resolved by dedicating revenue streams to labor standards enforcement and making employers pay for the costs through the penalties they pay for violating labor law, according to the report. Deutsch said that if philanthropic funding supports a pilot program and that program is successful, it can also make the case for more public funding of these partnerships. She added that she’s hopeful the Department of Labor will also use its granting power to support these models.

“As a society, we really systematically underfund the agencies that are supposed to enforce our workplace laws,” Deutsch said. “You’ll hear about recent anxieties about shoplifting or whatever and wage theft has always dwarfed retail burglaries and all of those things. It is a crisis and we just don’t fund it as such.”

The scope of the problem

The Fair Labor Standards Act requires workers be paid at least the federal minimum wage and overtime for any hours worked over 40 hours, but it’s a law that is often flouted. Last year, the Wage and Hour Division of the Department of Labor recovered back wages for workers in 13,122 labor violation cases in high-violation and low-wage industries. The industries that saw the largest number of workers affected were food service, construction and retail.

Low-wage workers in the 10 most populous states in the U.S. said they were paid less than the minimum wage, which means they lost $8 billion a year, according to a 2017 study. While a National Employment Law Project in 2019 found that $9.27 billion was stolen from workers who earned less than $13 an hour.

More recently, a January report from the National Bureau of Economic Research found that companies routinely deny workers overtime pay by labeling them managers even though the majority of the work they do is not managerial. Among the companies they singled out were restaurant chains Bojangles, Sonic, Arby’s, and Domino’s as well as businesses such as H&R Block, Spirit Halloween and 84Lumber. The report prompted Democratic U.S. Sens. Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts to send a letter to identified companies identified in the report asking them to answer questions regarding their overtime practices, as reported by the Washington Post.

Wage growth remains high, jobs are steady and inflation is falling so why are people worried?

Casey Quinlan — Thu, 22 Jun 2023 14:58:00 +0000

Inflation continues to drop but lingering high prices, particularly for groceries, have left consumers grumpy, says one economist. (Brandon Bell/Getty Images)

Economists have been predicting a recession for months, but the labor market has remained resilient, wage growth is higher than before the pandemic, and inflation continues to drop, now at 4% compared to 9.1% in June of last year. Despite this good news, consumers don’t feel confident about the future, according to the consumer confidence index, which is at a six-month low.

The consumer confidence index fell to 102.3 in May from 103.7 in April. The present situation index, which shows how consumers feel about current conditions in business and labor, dropped to 148.6 from 151.8, and the expectations index inched down to 71.5 from 71.7. According to the Conference Board, an economic research and business membership organization that releases the index, an expectations index below 80 is associated with a recession within the next year. People aged 55 or older were especially pessimistic about the economy. The next consumer confidence survey results come out on June 27.

“The technical term for the type of economy that we’re in now is weird,” said William Hauk, associate professor of economics at the University of South Carolina. “On the one hand, there’s a lot of very good news. We have a very low unemployment rate, really almost historically low at this point. The job market is doing well. At first, coming out of the pandemic, some people were concerned that the low unemployment rate was driven in part by low labor force participation. But that’s really kind of caught up to where it was in pre-pandemic terms.”

Although inflation is easing up, consumers are still paying more at the store than they’re used to paying in recent history, Hauk said. A lack of affordable housing, the Federal Reserve’s raising of interest rates before the survey ended, and news about bank failures and policymakers’ discussions over the debt ceiling may have all contributed to a gloomier outlook, economic experts said.

“Since the late ’80s to the ’90s, and 2000s, really, up until the last couple of years, we got used to having an inflation somewhere between 0% to 2% a year,” Hauk said. “So 4%, even though that’s certainly better than 8% or 9%, that’s higher than people are used to. I think it makes people feel kind of grumpy when they’re going to the grocery store, filling up their cars with gas and a lot of the other, you know, day-to-day purchases that they make, so I think that’s a big thing that’s dragging down consumer confidence.”

Why does the consumer confidence index matter? Economists and other economic experts say it’s a useful, if imperfect measure because it can provide information about future consumer behavior, which affects the economy. About 70% of the GDP is consumer spending.

“If consumers are nervous, that can mean less spending on the part of households and as a result that would make a recession more likely,” Hauk said.

Anastassia Fedyk, assistant professor at the Haas School of Business at UC Berkeley, said there are pros and cons to looking at the consumer confidence index to understand what it means for the health of the economy.

“The benefit is that this measure is forward-looking: how consumers feel towards future spending. This means that the measure can indeed be helpful in predicting future behavior,” Fedyk said in an email to States Newsroom. “Declines in consumer confidence now can forecast declines in consumer spending in the future. The drawback is that this measure is based on opinions rather than actions, and opinions stated in surveys don’t always perfectly translate into future actions. So consumer confidence is not a perfect forecaster of future consumer spending.”

A preliminary report for the Michigan Consumer Sentiment Index’s June survey found that it was up 7.9% from May’s final report, but noted that it’s still low by historical standards. Retail and food services sales were up 0.3% in May from April and rose 1.6% from May of last year. According to Reuters, economists polled by the outlet predicted a 0.1% fall from the month before. Consumer spending ticked up 0.8% in April.

Lara Rhame, economist and managing director at FS Investments, said consumer sentiment in particular will be important to watch to understand the direction of the economy.

“Our economy wants to grow. It naturally grows and the difference between sluggish growth and a real recession is household sentiment and when it starts to crack or buckle, I think it does get a lot of attention from policymakers,” she said.

Unemployment reached its lowest level in 54 years earlier this year and remains fairly low, at 3.7% in May. Wage growth, which was 3.7% in December of 2019, reached 6.7% in July 2022, though it has since fallen to 6%, according to the Atlanta Fed. But Americans still have justified economic concerns, economists say. Housing is still expensive for many families. Although single-family rent growth has been slacking off for the past year, rents have risen 26% since February 2020, according to a June 20 analysis from CoreLogic, a business that produces consumer analytics and business intelligence.

“Part of what I think is probably going on is that the crises that we’re facing, the affordability crisis, the crisis of low-quality jobs with low wages and stability — these are crises that have long predated the pandemic.”

– Rakeen Mabud, chief economist and managing director of policy and research at Groundwork Collaborative

In the first quarter of 2023, student loan balances totaled $1.6 trillion, a $9 billion increase from the last quarter, St. Louis Fed data shows. The people carrying that debt will have to make student loan payments again in October after a pause that began in March 2020. Interest on those loans start up in September. Many of the programs people relied on earlier in the pandemic to ease their economic pain, such as emergency SNAP allotments, have been discontinued or are set to end soon.

Rakeen Mabud, the chief economist and managing director of policy and research at Groundwork Collaborative, said the economy is “remarkably strong” right now given the challenges of inflation and the pandemic.

“I also think that it’s important to recognize that the pre-pandemic economy is not good enough,” she said. “… Part of what I think is probably going on is that the crises that we’re facing, the affordability crisis, the crisis of low-quality jobs with low wages and stability — these are crises that have long predated the pandemic.”

She added, “We’ve seen the cost of education, of health care, of child care, of housing, the prices have skyrocketed over the last several decades and wages have not kept pace. I think it’s important when we’re asking why are the vibes so off to really zoom out and think about not just this particular period of remarkable resiliency that we have seen with the labor market in particular, but what is the economy that people really want? People want an economy where they have stability, they have security, and they have ability to make ends meet without a huge amount of stress.”

The Federal Reserve has also raised interest rates since March of 2022. It paused these rate hikes for the first time since then on June 14, but indicated that there may be interest rate increases later this year.

Hauk said that in addition to the bank collapses this year, consumers may be feeling the effects of the Fed’s rate hikes.

“There have been a lot of, you know, sudden, very sharp interest rate hikes by the Fed and that makes credit tighter and that does make it harder to get a loan,” he said. “If you do have a loan, you’re paying higher interest than you were used to. If you’re thinking about going out and buying a car or if you’re looking for a new home or refinancing a mortgage, it’s not very easy anymore. All of these things do dampen consumer confidence as well.”

Fedyk said that for older populations that had particularly low consumer confidence, the debt ceiling talks that occurred before the survey’s cutoff date could have contributed to their point of view.

“Certainly the political discussions regarding the debt ceiling at that time likely had an effect,” she said. “(It) could reflect anxiety about potential cuts to social programs such as Medicare and Social Security.”

Half a million people in less than a dozen states have lost Medicaid coverage since April

Casey Quinlan — Fri, 02 Jun 2023 10:55:56 +0000

Some states began disenrolling people from Medicaid earlier than others, with health policy researcher KFF finding nearly 500,000 in 11 states have lost their health insurance (Getty Images).

More than 500,000 people across 11 states have lost their Medicaid coverage since the unwinding of a policy that allowed people to stay in the program throughout the pandemic.

The data, reported by the states and tracked by health policy researcher KFF, shows that of the five states providing data on people who lost Medicaid coverage for procedural reasons rather than not meeting eligibility requirements, Indiana and Arkansas have the largest share.

The rate of disenrollment is highest in Florida among the nine states that provided public data for the number of people renewed for Medicaid and the number of people who lost coverage.

In Missouri, it’s estimated 200,000 people could eventually lose Medicaid coverage. But the state is getting a later start than most, as the earliest impacted group has until June 30 to return any required information to the state or lose coverage July 1.

Missouri agency says it’s increasingly utilizing more efficient Medicaid renewal process

State officials are utilizing a more-efficient method to process Medicaid renewal applications in the hopes of avoiding procedural issues leading to eligible Missourians losing coverage.

At the start of the COVID-19 pandemic in 2020, Congress passed legislation that boosted Medicaid funds to the states. In return, the legislation required state Medicaid programs to guarantee recipients continuous coverage and suspended a requirement for patients to prove annually that they qualified.

In April, KFF researchers estimated that between 8 million and 24 million people would lose their coverage by May 2024. They also pointed out that many people eligible for Medicaid would lose coverage simply because of problems with paperwork or other procedural reasons.

That has proved true in several states. In Indiana and Arkansas, 88.5% of those who lost coverage did so because they did not complete the enrollment process. The numbers were also high in Florida, with the state unable to confirm eligibility for more than 82.2% of those dropped.

Jennifer Tolbert, director of state health reform and an associate director for the program on Medicaid and the uninsured at KFF, said there needs to be more data to understand how widespread the procedural problems are. But nearly two-thirds of Medicaid enrollees said they did not have a change in circumstances that would make them ineligible in a survey from KFF taken in February and March.

“Even among these states where we have early data, I think we need another month or two of data to understand whether what we’re seeing is sort of a trend and indicative of … an underlying issue or whether the people some of these states are targeting were people that hadn’t responded to requests, and that the groups going forward, the subsequent renewals, people will be more likely to respond, and so we won’t see such high procedural disenrollment rates,” she said.

Nearly 250,000 Floridians have been disenrolled since the process began in April. In Arkansas, 72,800 people lost Medicaid and 53,000 people were disenrolled in Indiana.

The lowest disenrollments were in Idaho, Pennsylvania, and Nebraska. Idaho paused disenrollments in April because of technical problems and Pennsylvania decided to only report disenrollments for people who had maintained coverage because of continuous enrollment, not the full number of people who lost coverage, according to KFF. The disenrollment rate also ranges widely from state to state, with a 54% disenrollment rate in Florida compared to 10% in Virginia and Pennsylvania.

“We don’t know exactly why that is the case, but possibly because states are taking different approaches to these early renewals, and you have states like Florida and Arkansas that are targeting people they think are no longer eligible,” Tolbert said.. “Other states like Pennsylvania, like Virginia, are just doing a time-based approach where they’re renewing people in the month that their renewal is due. So they’re not targeting individuals who they think are no longer eligible. That could partially explain some of the differences.”

Tolbert cautioned that it’s important not to wait too long to assess the data for possible policy issues that are contributing to people losing Medicaid.

“The challenge is,” she said, “you don’t want it to go too far because if it truly is a problem that warrants addressing in some way, you don’t want to get to the point where you’re six months down the road and millions of people have lost coverage inappropriately.”

KFF has not revised its estimate for the Medicaid coverage loss from its April analysis. The timeline for people losing Medicaid began in some states earlier than others.

In April, five states started the disenrollment process and in May, 14 states began theirs. By October, the last state to start its process, Oregon, will join the rest of the country. But that doesn’t mean we’ll know the disenrollment numbers when the states have them. Although states are required to communicate that data to the Centers for Medicare and Medicaid Services (CMS), states won’t necessarily release it to the public immediately, Tolbert said. However, CMS is required to make this data public.

CMS has the ability to pause procedural disenrollment if states have “compliance issues,” Tolbert said, but it’s unclear what kinds of problems would be severe enough to warrant CMS taking action or how long that pause could last.

“… That’s a little bit of a subjective decision, to decide when the state has taken enough steps to correct whatever issues that CMS has identified,” Tolbert said. “That hasn’t come into play yet.”

States see record low unemployment across the U.S.

Casey Quinlan — Thu, 25 May 2023 11:20:12 +0000

The labor market is still leaning toward greater power for workers as well, which has been positive for labor organizers (Spencer Platt/Getty Images).

Across much of the country, the jobs market is as strong as it’s ever been, and Black women, young people and people with disabilities are among the workers benefiting, recent U.S. Bureau of Labor Statistics data show.

Twenty states reported an unemployment rate under 3% in April, while 15 states saw record lows, led by South Dakota at 1.9%, followed by Nebraska at 2%, and New Hampshire and North Dakota at 2.1%. The national rate was 3.4%.

Missouri’s unemployment rate in April was 2.5%. The lowest ever recorded in the state was 2.1% last June.

Mark Vitner, chief economist at Piedmont Crescent Capital in Charlotte, North Carolina, said major metropolitan areas and emerging metropolitan areas in the south have benefited from recent shifts in the labor market. In Florida, the labor market in Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville has been growing rapidly, he said.

“… Huntsville, Alabama, is one of the fastest growing markets and it’s a big tech market in aerospace and in defense. We’ve seen a huge influx from California into Huntsville and Chattanooga, Tennessee, has seen an influx of investment in the automotive industry,” he said. “The Port of Savannah has been the fastest growing port in the country. It’s just fueled enormous growth in the industrial market in Savannah and more broadly in south Georgia. These markets have low unemployment rates and very strong job growth and so that’s what you want to see that mix of.”

Vitner added that the rural areas of states with low unemployment may have a different story to tell.

“States that have a larger rural population tend to have lower labor force participation and given the stronger overall job growth, it results in some very low unemployment rates without particularly strong nonfarm employment,” Vitner said.

To be sure, in some states, the number of people who have lost work has increased. Ten states had rates of 4% or higher than the nation. Nevada, which had the highest unemployment rate in the country in 2020, has seen job gains but still had the nation’s highest rate in April, at 5.4%.

States like Washington and California, which have seen large layoffs among tech companies, also have seen their job markets slightly worsen.

But the recovery has also lifted up workers often sidelined in worse economic times. Bureau of Labor Statistics data on the demographics of workers and their unemployment rates for April showed that employment among Black women climbed to a 22-year high. Women’s labor force participation is also moving up. It increased by 0.6 percentage point in the past year.

That growth is affecting women of all ages and education levels, and Black women and Hispanic women have had some of the biggest labor force participation growth, at a 2.2% and 2.1% increase over the same period, according to an analysis from University of Michigan’s Betsey Stevenson, professor of economics, and Benny Docter, a senior policy analyst.

The unemployment rate for people with disabilities, while still high compared to the overall unemployment rate, is 6.3% compared to 8.3% a year ago. In March, the unemployment rate for people aged 16 to 24, who are already benefiting from pre-pandemic labor market conditions, marked a 70-year low at 7.5%, according to the Economic Policy Institute. In April, it dipped further for that age group, to 6.5%.

“What happens when the economy is strong is that you can bring marginalized groups of workers off of the sidelines because employers are more open to different folks essentially,” said Katherine Gallagher Robbins, senior fellow at the National Partnership for Women & Families.

“Part of the consequence of this strong labor market is that you're seeing low unemployment rates for Black workers, and in particular Black women and for disabled workers," she said. "The rates for disabled workers have been both in terms of unemployment, but also in terms of participation, really strong compared to what we have seen in years gone by.”

Gallagher Robbins added that Gen Z workers came into a very strong labor market which bodes better for them than previous generations, but it also means they have more to lose if the economy falters soon.

“They're hopefully in a position of setting themselves up for lifelong higher earnings and yet they will be amongst the first to go. They tend to work in industries where there's more churn,” she said, such as retail and hospitality.

Many industries are also showing fast job growth right now, Docter said, and growth has been largest in education and healthcare.

The labor market is still leaning toward greater power for workers as well, which has been positive for labor organizers, Gallagher Robbins said. Americans’ approval of labor unions has increased from 64% before the pandemic to 71% in 2022.

“[Worker bargaining] is on the rise and not accidentally. … Not everything has been successful but those [organizing efforts] coming to the fore now, I think are no coincidence,” she said. “That is also something that is interacting and intersecting with the economy of the moment and if we shift back towards a place where workers have less bargaining power, I think that that's gonna have an impact on the ability to organize.”

Vitner said the retirement of Baby Boomers provides many workers with greater labor power than they previously enjoyed.

“Workers clearly have more negotiating power today," he said. "One of the things that's in their favor is that we have a rising tide of Baby Boomers that are leaving the workforce. And that makes for a very tight labor market and certain industries have even greater challenges because their workforce skews a bit older."

Inflation has made it more difficult for many workers to enjoy these gains but that could be changing. Although inflation is still far above the Federal Reserve’s 2% target, inflation is moderating, and wages are now outpacing inflation, at a 6.1% increase in median weekly earnings for January, February, and March compared to a year before. During the same period, there was a 5.8% rise in consumer prices. In April, average hourly earnings rose by 4.4% over the past 12 months.

GOP work requirements for federal aid would kick roughly 21M from anti-poverty programs

Casey Quinlan — Mon, 22 May 2023 10:51:47 +0000

The U.S. Capitol dome rises near the U..S. Supreme Court building (Jim Small/Arizona Mirror).

Congressional Republicans’ efforts to slash federal spending by tying work requirements to Medicaid and SNAP would have far-reaching consequences for people with mental health issues, chronic health problems, and some people with disabilities if enacted, policy experts on anti-poverty programs say.

They say the work requirements as laid out by House Speaker Kevin McCarthy’s “Limit, Save, Grow Act of 2023” — the Republican plan to raise the country’s debt ceiling — would be devastating for many Americans and hard for states to implement, especially in the thick of the pandemic public health emergency ending. The bill narrowly passed the House in April, 217 to 211 with four Republicans joining Democrats in voting against it. If a deal isn’t reached, the U.S. will default on its debt as early as June 1.

Democrats have pushed back on the work requirements, but McCarthy has said they are non-negotiable. Reports that Biden is showing some flexibility on the issue have upset some Democrats. The House Freedom Caucus has also pushed for McCarthy to stop the discussions with the White House until the Senate passes the bill.

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Ten million Medicaid expansion enrollees are at risk under the bill, according to the Center for Budget and Policy Priorities. The Health and Human Services Department estimated that 21 million people are vulnerable to the work reporting requirements. The Congressional Budget Office found that 1.5 million people would lose coverage and 600,000 would become uninsured. It’s possible that the CBO could be underestimating how many people would lose their coverage, some experts say. Although the requirements apply to every state, the CBPP explained in its analysis of the bill that “it would heavily impact people covered by the Affordable Care Act (ACA) Medicaid expansion.”

“People with mental health issues, people with substance use disorders, people with chronic health conditions and even forms of disability could be encompassed within the expansion population and would need to navigate an entirely new system that’s really not well-specified in the bill to get an exemption and we know that that sets up a massive coverage loss potential,” Allison Orris, senior fellow at the Center for Budget and Policy Priorities, told States Newsroom.

The bill includes work-reporting requirements for Medicaid that are even more severe than a 2018 Arkansas lawthat has since been blocked by the courts, said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy. Unlike other work requirement proposals, the bill would not exempt people during their pregnancy and into their postpartum period and there isn’t an automatic exemption for people receiving Supplemental Security Income because they have a disability or Social Security Disability Insurance. It would undercut gains made by Medicaid expansion because even people eligible could lose coverage because of the complexity of the “red tape” they would be forced to navigate, Park said. The unwinding of pandemic policies adds to the potential complications.

“You have all the coverage losses where some people are going to be inappropriately disenrolled, particularly for procedural reasons. They won’t return in the mail. They never got their renewal packet. … And then you have on top of that, this onerous work-reporting requirement with red tape and because states are so overwhelmed with unwinding over the next year or so, it’s hard to see how they could implement a work-reporting requirement that implements the exemptions,” he said.

Park added that House Republicans who characterize this provision of the bill, which requires recipients to work 80 hours per month, do community service or be involved in an employment program, as only affecting able-bodied adults without children is inaccurate.

“… Based on how this proposal has been designed, you know, it’s not targeted to that group at all,” he said.

He explained, “We know that many people who are disabled who are receiving disability benefits do work to a limited extent and they aren’t necessarily unfit for employment. There’s limits on how much they can work to maintain their benefits. But federal policy, up to this point, has been encouraging those with disabilities to work to increase their employment hours while being able to maintain their health coverage.”

Expanding SNAP work requirements

The SNAP work requirements are equally concerning to advocates. Currently 18- to 49-year-olds without children at home can only receive benefits for three months in any three-year-period unless they prove they’ve worked a 20-hour week. Under McCarthy’s bill, those work requirements would be expanded to include people up to age 55.

Craig Gundersen, an economics professor at Baylor University whose research focuses on food insecurity and food assistance, said it may look like that the work requirements are successful because cases will fall, but the reality will be different.

“What’s going to happen is if you impose work requirements you’re going to have an increase in food insecurity in our country,” he said.

He said the bill’s provision on SNAP doesn’t make sense.

“SNAP doesn’t discourage work. So why would you want to impose work requirements? The second thing is that SNAP is an anti-hunger program full stop,” he said. “That’s what it was designed to do. If that’s its main goal, why would we ever want to say to people that you have to work to get these benefits.”

Nine-hundred thousand people in the U.S. aged 50 to 55 are at risk of losing SNAP, according to CBPP.

The SNAP restrictions also make it harder for states to provide support for SNAP recipients dealing with unique circumstances that would exempt them from the three-month time limit to receive benefits. The number of exemptions states can use are currently tied to their caseloads and if they aren’t used, states can roll them over into the next year. McCarthy’s bill wouldn’t let states carry over unused exemptions.

Temporary Assistance for Needy Families (TANF) would also be affected by the stricter work requirements in the House debt ceiling legislation. Families subject to work requirements — 540,000 families — could potentially lose their cash benefits, the CBPP estimated, worsening child poverty.

Housing assistance, student loan forgiveness targeted

In addition to these effects on anti-poverty programs, many other services and benefits in housing and education would likely suffer from the huge cuts proposed in the bill. The CBPP’s analysis of this bill shows average cuts of 13% in 2024 even if cuts were evenly spread across discretionary programs.

The legislation would also kill Biden’s student loan forgiveness plans regardless of the outcome in the courts and nix student loan repayment plans that were designed to be more affordable for people with student debt. It would “likely eliminate Pell Grants altogether for 80,000 students,” according to the Department of Education.

“Here you are cutting one of the premier programs that serves low-income students who are trying to access this level of education, who have long been marginalized in the labor market,” said Katherine Gallagher Robbins, senior fellow at the National Partnership for Women & Families. “And what you’re saying to them is, ‘Oh, hey, by the way, we’re not even going to give you the support that will pay dividends for years to come in your own earnings.”

Department of Housing and Urban Development Secretary Marcia Fudge has estimated that nearly 1 million people could lose housing assistance and that nearly 120,000 people may be cut off from homelessness services.

“Stable housing is such an essential part of any family’s economic security,” Gallagher Robbins said. “ … The cuts that they’re talking about here …, you’re going to end up eliminating almost 300,000 families’ support for their housing. Not all of those families will end up being unhoused, but some of them will. It creates this downward spiral that is very challenging to recover from, especially as other benefits are cut …”

The ending of the pandemic public health emergency has already resulted in the loss of financial support for some families, and now with these potential cuts, the people who benefited most from the recovery would be hurt the most from this bill, Gallagher Robbins said.

“We’re already seeing things like less access to school lunch, less access to the child tax credit,” she said. “So families are already struggling with what that looks like and that has been mitigated to an extent, obviously not fully, by the current strength of the economy. Everything is up for grabs here, basically, in terms of harming families who are already absorbing this most recent kind of cut in support.”

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Fast federal response to pandemic key to US economic recovery, economists say

Casey Quinlan — Fri, 12 May 2023 11:15:50 +0000

Workers demonstrate in Miami Springs, Florida, in September 2020, in support of continued federal unemployment benefits in the pandemic economy. Economists say that direct support to workers helped spur the country’s economic recovery (Joe Raedle/Getty Images).

The public health emergency declaration ended on Thursday, and with it some of the policies that helped the U.S. recover from the many of the economic effects of the coronavirus pandemic.

Although COVID-19 is still a public health threat, the national economic crisis it created has subsided with the U.S. economy back to its pre-pandemic growth rate.

Economists say that the federal response to mass unemployment and business closures, through legislation that includes the CARES Act, Families First Coronavirus Response Act, American Rescue Plan Act, and other policies, helped fast-track the recovery. But the lasting effects of the pandemic on the labor force and how well prepared policy makers are to handle a potential recession or another pandemic is unclear.

“I think that this recovery was tremendous compared to any recovery in recent history because of the scale of the investments that were made by policymakers,” said Elise Gould, senior economist at the Economic Policy Institute, pointing to the child tax credit as one example that helped fuel the strong recovery. “So I think the incredible bounceback that we saw in employment and wage growth was driven directly from, in large part, to the kinds of investments that policymakers made in things like shoring up the unemployment insurance system, making that stronger, making it a better safety net for many workers.”

Lessons learned from federal investments

The policies that helped the economy recover from the effects of the pandemic could have reached more vulnerable people, however, and some sectors, like healthcare, are still suffering because of it. There are also many potential long-term effects that economists don’t yet understand, such as how Long COVID is going to affect the workforce or whether more remote work is here to stay and how that will influence the economy. They added that the lessons learned from the federal government’s reaction to the pandemic could prepare us for a recession or another pandemic.

Lindsay Owens, executive director of the Groundwork Collaborative, said lawmakers should take a similar approach in the future and focus on direct support to workers.

“Workers are the backbone of the economy,” she said. “If our workers are home sick, we’re going to have to kick into high gear on the safety net again and the good news is we know how to do that, with student loans, the eviction moratorium, unemployment insurance, extended unemployment insurance for freelancers, child tax credits, and so on.”

Still, the business stimulus in particular could have been better targeted, said Connel Fullenkamp, economist and professor of the practice in economics at Duke University. The Small Business Administration’s inspector general, found that at least 70,0000 of the Paycheck Protection Program’s loans were fraudulent. Other loans went to businesses that possibly could have survived the economic fallout without assistance.

“I think what we’re finding out now is that it was a little too easy for a lot of unscrupulous players to grab a piece of that pie,” he said. “Some of that’s being clawed back, of course, but a lot of it is just going to be lost and up in the wrong pockets. … It’s really hard to do targeted stimulus to anybody and especially for business. If Biden actually gets his proposal across to increase funding to the IRS, they and other government agencies could do a much better job of simply tracking taxpayers and businesses in order to do things like more targeted stimulus stimulus payments.”

States used funds from the American Rescue Plan Act of 2021 for eviction prevention, food programs, mental health services, and wiping people’s medical debt, but also spent the monies on building more prisons and offsetting tax cuts. More of it could have also been spent on modernizing unemployment insurance, economists said.

Lauren Bauer, fellow in economic studies at the Brookings Institution, said states could have done more to improve the administration of their programs as they received this huge influx of federal funding.

“The support for state and local governments was very, very generous in part because in the Great Recession, the lack of generosity to state governments really slowed the recovery. But because revenues didn’t actually fall that much, they were made more than whole,” Bauer said. “And so because of that, asking them to do some investment in administration of these social insurance programs seems like a pretty reasonable way to have them take responsibility for the role that they play in both protecting households but also getting money down to the ground so that it can be spent to stimulate a recovery.”

What the pandemic has meant for workers

The effects of COVID on the workforce, and certain sectors and industries in particular, are still developing, but economists say healthcare, education, child care, and public sector workers have all been seriously impacted. Fullenkamp said that it can be hard to disentangle labor market changes that happened because of expected generational shifts versus workers leaving the labor force because of the pandemic.

“I think one of the things that we can say for sure is that the pandemic accelerated the Baby Boomer retirement and brought a lot of retirements forward that would have otherwise played out over many, many years, much more slowly,” he said. “… I think we’re seeing that great resignation is more of a temporary phenomenon. We’re seeing people being drawn back into the labor market for a number of reasons. One is simply that the wages are going up finally and also that people did run out of stimulus money and prices are going up and that is going to pull some people back into the labor market.”

Low pay for “frontline” or “essential” workers needs to be addressed before the next pandemic, some economists said.

Gould said pay for public sector jobs such as those in healthcare and education, need to improve if we’re going to prepare for future economic challenges.

“We’ve seen this tremendous bounceback in private sector employment. Public sector employment, particularly state and local jobs, are still down. We have seen slow progress over the last few months but they’re still down a significant amount,” she said. “… I would have hoped that more of that [stimulus] money would have been used to help shore up that employment when the services that are being provided are in health care and education.”

Child care is also a huge issue, said Owens, of Groundwork.

“Between December 2019 and March 2021, about 9,000 child care centers closed,” she said. “The shortage of child care workers is gonna have to be addressed and that only gets addressed by making those jobs better. You’re going to have to pay child care workers more. … We will be weaker going into the next pandemic because we haven’t solved this for child care.”

The question of how COVID-19 illnesses will affect the labor force is still being researched and will take time to understand, economists say. Sixteen million working-age people have Long COVID, a 2022 Brookings Institution report found.

“I think it’s going to take a bit for someone to really carefully figure out how Long COVID and the changing health status of people and generally people’s feelings about public health and their own health are changing the labor force,” Bauer said.

Looking ahead to the next crisis

Is the U.S. prepared for the next pandemic or next recession? We’re better prepared for remote work and unemployment insurance isn’t going to hold people back from joining the labor force, some economists say. Policymakers have also demonstrated that they can mobilize quickly on vaccine rollouts.

“The very generous unemployment insurance didn’t really seem to hold people back from trying to get a job when jobs are available, which is a pretty big lesson for how to use the unemployment insurance system in the next recession to sustain consumption without preventing a labor market recovery,” Bauer said.

It’s still unclear what the effects of increased remote work will have on the economy overall, but some research has shown that the savings in time commuting to work can benefit employers because 40% of that time has been used to get more work done. However some employers have pushed back on remote work. An EY-Parthenon report released this month said that worker productivity fell 2.7% in the first quarter. Gregory Daco, chief economist at EY-Parthenon told Yahoo News that remote work could be a factor but that job churn may also be responsible. But in any case, businesses are better prepared for a sudden shutdown of offices than they once were.

“Businesses kind of figured out work from home pretty fast and were able to maintain, you know, decent levels of productivity in the workforce. We obviously won’t be kind of starting that process over from scratch if we have to send people home again,” Owens said.

Bauer added that more workplace flexibility could be better for keeping women in the workforce. Early in the pandemic, 9 million men lost jobs, but 11.5 million women did, and some women decided to take on child care and leave their jobs as it became more difficult to receive support outside the home.

She said a “no-brainer” in every recession is making sure that unemployment insurance and SNAP, and Medicaid are working swiftly and covering as many people as they can.

The pandemic has also exposed the problems in our supply chain, which have to be addressed before the next big economic vulnerability.

“A big part of the economy that we experienced really beginning in 2021 was because of our broken supply chain,” Owens said. “…We don’t have a spare semiconductor, a spare COVID test, a spare frozen pizza. … That left us really vulnerable to shortages and we have got to build resilience in our supply chain.”

The pandemic also showed us that for the next major health threat, the federal government is capable of moving quickly and should do so again, Owens added.

“The vaccine got done relatively fast and it’s worth remembering that there was massive federal incentive and investment in that, and that allowed it to lift off,” she said. “In the next pandemic, I would do all of that again.”

Fed’s fault-finding on bank failures could lead to stronger regulations

Casey Quinlan — Mon, 08 May 2023 14:25:35 +0000

A Federal Reserve police officer guards the entrance to the Federal Reserve’s William McChesney Martin Building as government financial institutions join force to bail out Silicon Valley Bank's account holders after it collapsed on March 13, 2023 in Washington, DC. (Alex Wong/Getty Images).

New banking regulations proposed by federal watchdogs don’t go far enough in countering potential problems, but could help lower bank fees and calm financial markets and nerves, leading to a more stable financial system, according to some economists.

The Federal Reserve, FDIC and Government Accountability Office released reports blaming mismanagement of risk, including overreliance on uninsured deposits and rapid growth on problems at California-based Silicon Valley Bank and New York-based Signature Bank, which were shut down in March. The Federal Reserve report also criticized its own delay in recognizing and addressing problems at SVB, and changes in the supervision of banks resulting from the 2018 banking deregulation law.

In the Fed’s report, Michael Barr, vice chair for supervision at the Fed, said the regulator would “re-evaluate a range of rules for banks with $100 billion or more in assets.” In March, several Democratic senators called for the Fed to exercise its discretion to enforce stricter requirements for banks that have assets between $100 and $250 billion. Lawmakers are also considering options for holding bank executives accountable for their mismanagement.

Barr said that the Fed could require higher capital or liquidity requirements in some cases until there are better safeguards in place at a bank to protect against risk. He also mentioned the possibility of limits on incentive compensation in some cases. The report said that Silicon Valley Bank’s incentive compensation was “primarily based on SVBFG’s financial performance, with minimal to no linkage to risk management and control factors.”

Barr also said the Fed’s approach to “stress testing,” or weighing how some scenarios would affect banks, and whether they have sufficient capital to absorb losses, should be “revisited.”

Without the banking deregulation law signed into law by President Donald Trump in 2018, a 2019 tailoring rule that followed the law, and related rulemaking, Silicon Valley Bank would have had to meet additional requirements such as more management of liquidity risk and annual and semiannual company-run stress test requirements, the Fed report explained.

Aaron Klein, senior fellow in economic studies at the Brookings Institution, said the Fed report doesn’t take enough responsibility for the magnitude of its mistakes or reasons for those mistakes even though it did admit its approach was “too deliberative.”

“It’s still too uncomfortable to admit publicly the magnitude and reason for its mistakes,” he said.

“Nowhere in the report does the Fed acknowledge the impact of the SVB CEO serving on the board of the San Francisco Federal Reserve Bank that was in charge of its supervision, so absent more fundamental structural reforms, there will be further mistakes … Bank CEOs need to be taken off the boards of the Federal Reserve Banks who regulate them.”

Silicon Valley Bank CEO Greg Becker, left the board in March.

Klein said Congress also needs to force larger structural reforms at the Fed but said it’s unlikely to happen.

He added that stress tests are only as valuable as the scenarios they contemplate, and that they still failed to take into account one the Fed should have seen coming — higher interest rates.

“No stress test would have predicted COVID. Any stress test should have predicted interest rate hikes and they missed them both,” he said. “When you miss the one that no one could see coming and you miss the one that everyone should have seen coming, it ought to set off deeper alarm bells about the over reliance on the test to begin with.”

Proposed rules already having effect

Some of these changes wouldn’t go into effect for several years because federal rulemaking requires a notice and comment period and a period to phase-in these changes. But some economists say that the mere consideration of those rules is already having an effect.

“The same tipping points that caused SVB to go under are being closely examined at every bank already regardless of the new regulation that’s coming down,” said Lara Rhame, economist and managing director at FS Investments. “… Just the signal that some banks have gone under and the regulators are going to be looking at this is already going to cause that reaction.”

“For some people that will just mean less money to spend elsewhere and for some businesses, it will mean that where before 10 of them would have taken out a loan, maybe now, only nine of them will be able to and one of them won’t either be able to afford it or won’t qualify. So it’s just less growth out there,” she added.

Although the banking system will be more resilient as a result, there will be shorter-term economic challenges ahead as a result of these changes.

“More regulation will, in theory, prevent some of these issues from cropping up again, thus, ensuring the safety of consumers’ deposits at those particular institutions. And that, in turn, will calm financial markets and nerves,” Jennifer Lee, senior economist at BMO Capital Markets, stated in an email to States Newsroom. “… Yes, it may require all banks to hold more reserves and that would mean less credit but longer term, it would mean a more stable financial system.”

On Monday, Moody’s responded to potential regulatory changes in a report for investors that said they would affect more than just regional banks, which would be “a credit positive for US banks.” The report added that, “The potential strengthening of US bank regulation and supervision would likely help address weaker capital, interest rate risk and funding risk at some US banks.”

Rhame said that from Moody’s perspective these regulations would result in better capitalization and improve the credit rating of bonds or other investment vehicles in banks.

“From the point of view of the consumer or business owner, tighter credit standards will be a headwind for credit availability and financing. So net this is a positive for the financial investments in banks, but a negative for the economy in the form of incremental tightening of lending standards,” she said.

Klein said that more regulation could result in lower bank fees, a plus for consumers “because ultimately FDIC bailouts end up being paid back disproportionately by the lowest-income Americans in the form of higher bank fees.”

Congress responds

Congress is also looking closely at how to prevent more bank failures and incentivize better risk management by banks. A bipartisan Senate bill, proposed by U.S. Sens. Elizabeth Warren (D-MA), Catherine Cortez-Masto (D-NV), Josh Hawley (R-MO), and Mike Braun (R-IN) would force bank executives to give up some or all of their compensation, which includes bonuses, performance pay, and salaries, for the five years that led up to the failure of their bank. According to CNBC’s reporting, Silicon Valley Bank employees were paid bonuses hours before federal regulators took over the bank.

On Thursday, the Senate Committee on Banking, Housing, and Urban Affairs held another hearing in a series of hearings on recent bank failures, where senators spoke to law professors and a U.S. Chamber of Commerce executive about how current law could hold bank executives accountable for their mismanagement.

Da Lin, assistant professor at law at the University of Richmond said there are limitations in federal regulators’ authority to remove bankers from office and prohibit them from continuing to work in the banking industry and that their enforcement tends to affect the rank and file workers more than executives. Executives are often shielded from knowledge of bank problems even though they have also not set up structures to prevent mismanagement of risk and other issues, law professors explained.

“Instead regulators have primarily excluded rank and file workers (from the industry) for low-level misconduct such as embezzlement that has little impact on banks’ safety or administration,” Lin said.

“… This disparity exists because the current law is not well-designed to be applied to senior bank leadership. … The culpability requirement for removal and prohibition is overly demanding, requiring, as I have mentioned, personal dishonesty or a willful or continuing disregard for safety and soundness of the institution. Yet, failed management is seldom a deliberate act and is even less likely to be provable as one.”

Credit bureau CEOs face tough questions at Senate hearing; Democrats push to remove medical debt

Casey Quinlan — Fri, 28 Apr 2023 11:30:49 +0000

Six percent of adults — 16 million people — in the United States have debt above 1,000, according to Kaiser Family Foundation’s 2022 analysis (Getty Images).

WASHINGTON — U.S. Senators grilled the executives of three major credit reporting bureaus Thursday on whether their practices are transparent and fair to consumers, with Democrats frequently pressing the CEOs to remove medical debt from the reports.

Ohio Democratic Sen. Sherrod Brown, chair of the Senate Committee on Banking, Housing, and Urban Affairs, said all medical debt should be removed from credit reports. Equifax, TransUnion, and Experian announced on April 11 that all medical debt below $500 was removed from credit reports, but Brown said that move is not enough.

“Medical debt does not correlate with credit risk – it correlates with illness,” he said. “No one should have their financial future destroyed because of an emergency, or a sick family member. … If you have $1,000 in medical debt, you’re no less credit-worthy than someone with $500. It stems from the same problem – someone in your family or you got sick.”

Brown asked the CEOs to commit at that moment to removing all medical debt, but all dodged the request.

Credit reports can affect people’s ability to find new housing and can have errors that are in no way the fault of the consumer. Twenty-three percent of Americans have medical debt, according to a 2022 LendingTree survey.

Nearly 1 in 10 adults have significant medical debt, and 6% of adults — 16 million people in the U.S. — have debt above 1,000, according to Kaiser Family Foundation’s 2022 analysis. People in states that haven’t adopted Medicaid expansion, people in southern states, and Black people were more likely to live with this financial burden, KFF found.

Consumer advocacy groups, progressive think tanks, and civil rights groups have been pushing the Consumer Financial Protection Bureau and IRS to address the medical debt issue through regulations.

Sen. Elizabeth Warren, D-MA, asked Equifax CEO Mark Begor several times whether medical debt was less predictive of someone paying their bills than other kinds of debt before Begor responded that he didn’t have that information.

“You don’t have that information available? Are you kidding me? You are the head of one of the biggest credit reporting agencies in the country and you don’t know the relative predictability of one of the major forms of debt that you report on?” she asked.

Warren added, “The reason that medical debt is a poor predictor of credit worthiness is our medical system is a mess. Most hospitals charge you one price. They charge insurance companies another, so medical bills are often a moving target. Bills are routinely sent to the wrong party, often a patient can’t even figure out what it is in terms of supplies or services that they’re being billed for.”

She then turned to Begor to ask whether he would remove that information if the CFPB found that medical debt was so full of errors that it no longer belongs on reports. He said, “We’d certainly support that.”

TransUnion CEO Chris Cartwright said he would comply if directed to remove it by the CFPB.

“You’re going to wait until you’re ordered. That’s what you’re saying? You’re not going to do anything unless you’re ordered to do it?” she said, before moving on to Experian CEO Brian Cassin.

“If the CFPB directs us, of course we would comply with that. If the CFPB concluded that it was so problematic and that the industry also agreed that it wasn’t an issue to remove that data from credit reports, we would do so too, but I think it is a complex issue, senator, and I think it needs to be looked at in the broad,” Cassin said.

Republicans call for financial literacy

Republicans on the committee advocated for other approaches to ease the burdens that credit reports have on Americans, such as financial education. Sen. Tim Scott, R-SC, said that he hoped the credit reporting bureaus were working on financial literacy and Sen. Katie Britt, R-AL, asked the three executives how to “help more Americans no longer be credit invisible.” Scott also accused the CFPB of “exploring new avenues of regulatory overreach,” providing its proposed rule on credit card late fees as an example.

Organizations that include the Debt Collective, Human Rights Watch, and Consumers for Affordable Health Care wrote letters to the U.S. Department of the Treasury, IRS, and Consumer Financial Protection Bureau on March 6 to call for more regulations and more enforcement of existing regulations to mitigate the harms of medical debt on people’s finances.

The groups advocated for the IRS to ramp up enforcement of a regulation that requires hospitals to make a reasonable effort to find out whether a patient could receive assistance through the hospital before sending their information to a credit reporting bureau and selling their debt to another party. They also called for the CFPB to “prohibit reporting of all medical debt or all debt for medically necessary procedures.”

An April 2022 CFPB report that looks at consumer complaints found that people were being contacted for bills that were already paid and for debts they didn’t recognize. People also said that they didn’t have enough information to verify the debts attributed to them.

“The most common issue in debt collection is about attempts to collect a debt that the individual says is not owed. In medical debt collection complaints, this issue makes up nearly half of complaints and, importantly, complaint volume about this topic has been increasing,” the CFPB report stated.

In February, the agency said a decline in medical collections between 2018 and 2022 may be connected to the fact that the data has more inaccuracies or is more prone to being outdated, which can lead to more credit disputes.

Several federal agencies have taken steps to address problems affecting consumers and their credit reports. In February, the CFPB and the Federal Trade Commission, began to seek information from consumer reporting agencies, tenants, landlords, and others on how background screening affects tenants.

Last year, the Biden administration announced several actions specifically targeted to relieve and lessen the financial burden of medical debt, which included the the CFPB providing more consumer education on the subject and the Federal Housing Finance Agency evaluating whether Freddie Mac and Fannie Mae’s credit models are “accurate, reliable, and predictive.”

Here’s where gas prices are headed (for now) and why

Casey Quinlan — Thu, 27 Apr 2023 11:30:32 +0000

Gas prices are starting to level off after jumping more than 20 cents a gallon earlier this month (Sean Rayford/Getty Images).

Drivers across the country have seen that seasonal given play out in recent weeks. The national average for a gallon of regular gas is $3.64 on April 26, up 21 cents over the previous month, according to AAA.

The good news is that gas is 49 cents below where it was on April 26 of last year, and more than a dollar below last year’s high of $5.02 a gallon, which it reached in June. And right now, economists aren’t expecting prices to surge this summer, though some slight increases are still expected.

“I do expect prices to move higher through the year but nothing dramatic …,” said John LaForge, head of global real asset strategy at Wells Fargo Investment Institute. “As far as 2023, there really isn’t much to do. We’re heading into the driving season … I don’t expect to see gasoline move up by a dollar. I think it’ll be 10 cents, 20 cents. It’s not going to be any fun. I don’t think we’re gonna get this big, big move. In the end, the answer really is conservation and just don’t drive as much.”

Of course, gasoline prices differ widely from state to state, with consumers paying an average $4.70 a gallon for regular in Arizona and an average $3.23 in Louisiana on April 26. Georgia drivers are paying an average of $3.35 per gallon.

So why the fluctuation from one state to the other? One month to another and even year over year?

Here is a look at the factors that play into prices.

Summertime blues

Due to environmental regulations, gas stations are changing gasoline to a summer blend, which has lower vapor pressure (making it cleaner) but costs more because it requires more refining. It could range from five cents more to 20 cents more depending on the region of the country you’re buying gas in, said Andrew Gross, spokesperson for AAA.

“In some places [the switch] already happened and in other places, like in the Northeast, it continues,” he said. “Retailers have until the end of May where they’re able to keep selling the winter blend because they’re allowed to sell what’s still in their tank essentially.”

And some New England states and California have stricter regulations than the EPA, making their gas pricier still.

Other circumstances influencing gas prices include what the market will bear at that particular gas station, proximity to refineries, and hurricane season lasting longer than it used to, which can disrupt refineries, Gross said.

And yes, we’re driving more in the summer and demand is a big factor, though not the biggest.

The big driver: Oil

The price of gasoline you pay at your local station is greatly influenced by the price of crude oil. According to the U.S. Energy Information Administration (EIA) April report, the price of crude oil makes up 57% of the retail price of gasoline, followed by refining, taxes and distribution and marketing.

OPEC producers’ announcement earlier this month that they would be cutting oil production by 1.2 million barrels a day pushed the price of crude oil over $80 a barrel. Russia and Saudi Arabia are making the highest cuts in production at 500,000 barrels per day, starting in May. The United Arab Emirates, Kuwait, Iraq, Kazakhstan, Algeria, Oman, and Gabon are also reducing production.

“The oil market is just like the stock market. It’s very headline driven and any kind of bad news will make it freak out and that’s what it did,” said Andrew Gross, spokesperson for AAA. “The price of oil immediately shot up to like $85 a barrel (after the OPEC announcement). Well, since then, it’s really had a hard time keeping its nose above $80. If it stays north of $80, that puts a lot of upward pressure on the price of gasoline. If it drops below $80, a lot of that pressure is removed.”

This week the price dropped to $76.73 a barrel.

OPEC reductions also drove up the price of oil last year, leading to a high of $123 a barrel. But other factors also weighed on the price at the pump, including the start of the war in Ukraine, a decrease in production of domestic oil during the pandemic and a surge in demand from a nation ready to get back to business after COVID restrictions eased. And while the war is ongoing, production both globally and domestically is expected to reach new records, according to the EIA.

Let’s not forget profits

Oil companies reported record profits in 2022, partly buoyed by Russia’s invasion of Ukraine:

Exxon Mobil: $56 billion
Shell: $40 billion
Total Energies: $36.2 billion
Chevron: $35.5 billion
BP: $28 billion
ConocoPhillips: $18.7 billion

In October, President Joe Biden said he would work with Congress to force companies to “stop war profiteering, meet their responsibilities to this country, give the American people a break and still do very well.” He suggested a higher tax on their excess profits and other possible restrictions, options that were not expected to go anywhere in the Republican-led House.

Instead of a windfall tax on profits, Biden’s budget calls for increasing the tax on stock buybacks from 1% to 4%, a move aimed in part at oil companies that had reported on earnings calls that they would buy back shares of their own stocks rather than invest in more production.

However, U.S. Sen. Sheldon Whitehouse (D-RI) did reintroduce a bill in February that would carry out a per barrel quarterly tax of oil companies that produce or import 300,000 barrels of oil a day or more and would allow taxpayers to receive rebates of hundreds of dollars. U.S. Rep. Ro Khanna (D-CA) introduced the bill in the House.

Can the U.S. do anything else to keep prices down?

Biden took action in 2022 to lower high gas prices by selling 180 million barrels of oil from the Strategic Petroleum Reserve, a move that received criticism from Republicans.

“After June, the prices began to drift lower. The administration helped out with tapping the Strategic Petroleum Reserve, which really played a key, a key role in that,” Gross said. “It could stop that trend of higher prices. Now can you say that it helped lower prices by 20 cents or 10? We will never be able to tell what it did but we know that it sort of stopped the momentum.”

It’s unlikely the Biden administration would take that measure again. The Strategic Petroleum Reserve is at its lowest level in decades.

But right now it’s not expected to be needed. The EIA originally estimated that gas prices would increase to a national average of $3.53 a gallon in April and forecast prices at $3.45 a gallon through August. But it hedged as well, saying: “Additional OPEC production cuts, refinery outages, or changes in underlying economic conditions could all contribute to changes in gasoline supply or demand and, therefore, change the gasoline retail price outlook.”

Higher domestic production will help. The U.S. produced 12,462,000 barrels of crude oil a day in January, a 9.6% increase over the year prior.

If demand changed, prices could also level off, but a lot would need to shift in the economy for that to happen, said Kevin L. Kliesen, an economist at the Federal Reserve Bank of St. Louis. Kliesen spoke to States Newsroom on April 19, before the Federal Open Market Committee’s media blackout period. Kliesen said demand could change significantly if the economy slows, but until the tight labor market changes, he expects to see some increase in gas prices this summer.

“ …The unemployment rate is 3.5% so as long as the labor market continues to be quite well, that’s going to hold up consumer spending and incomes,” he said. “That’s going to tend to increase the demand for energy and things like that, so people should expect a modest upward drift in gasoline prices.”

Long COVID is hurting business. Workplace accommodations could help

Casey Quinlan — Mon, 17 Apr 2023 10:50:22 +0000

Three years after the start of the pandemic, millions of working age people still suffer from long COVID-19 and some lawmakers and advocates, including people with long COVID, say not enough is being done to protect their well-being and ensure they can continue to be employed.

Proposed federal legislation, better workplace accommodations, and more federal funding could make a difference, advocates say. The mitigation of COVID spread would also serve to prevent more people from getting long COVID or worsening the health of those who already experience it.

Long COVID has a wide variety of symptoms, including fatigue, dizziness, rapid heart rate, and brain fog, and for some people those symptoms can come and go. The challenges in receiving a diagnosis, due to the similarity in other medical conditions and other barriers, can make it hard to document their illness for employers.

“There’s a lack of consistency in how long COVID is defined and diagnosed and that can directly impact whether accommodations are provided because employers often are not sure how to proceed,” said Tracie DeFreitas, director of training, services and outreach for the Job Accommodation Network (JAN), a consulting service for employers funded by the U.S. Labor Department. “… People may have a wide variety of symptoms that could come from other medical conditions and health care providers are sort of excluding other types of medical conditions first.”

DeFreitas said JAN’s practical guidance is for employers not to get stuck in determining whether someone’s long COVID is a disability through a diagnosis, since federal agencies including the Department of Health and Human Services and the Equal Employment Opportunity Commission have made it clear that it can be disability. Employers should instead focus on making accommodations for workers, she said.

With roughly 16 million people of working age reported to have some symptoms of long COVID, economists say there are long-term implications for the U.S. economy if workplace needs are not addressed.

The total cost of long COVID to the U.S. economy is a fluid figure. Last year, a Harvard University economist upped his initial estimate by roughly a trillion dollars to $3.7 trillion, with $997 billion of that amount being from lost earnings. In addition, studies have found that people with long COVID work 50% fewer hours and earn on average 18% less over the course of a year because of their illness.

Meanwhile, a January report from the New York State Insurance Fund analyzing its compensation claims found that 31% of claimants were experiencing long COVID or had had long COVID. The data, according to the report, highlighted an “underappreciated reason for the many unfilled jobs and the declining labor participation rate since the emergence of the pandemic.”

Those lost earnings, of course, can lead to reduced household spending, while the decline in labor participation caused many employers to raise wages, which has helped to fuel inflation.

Katie Brach, with the Brookings Institution, makes the case for more policy initiatives and workplace accommodations to enable long COVID sufferers to increase work hours, writing “long COVID is already a meaningful drag on U.S. economic performance and household financial health. And absent intervention, the situation is likely to worsen.”

Don’t abandon pandemic accommodations

Shelby Seier runs her own consulting practice in Omaha, Nebraska, All Kinds Accessibility Consulting, where she advises employers on how to provide accommodations, including for people with long COVID. Seier, who is disabled and chronically ill, has had firsthand experience with long COVID after getting COVID-19 last year.

“On a personal level, it was very mentally debilitating to have to rearrange my plans and just consistently wake up and not be able to do the things I wanted to do,” she said. “It’s a very heartbreaking experience and totally isolating, and it is emotionally compounding where if you have several days in a row of just not being able to stay on top of emails, which was a task that I could do prior, it just feels awful.”

Seier, who said she has suffered from post-viral illnesses since she was a teenager, said that running her own business allowed her to build accommodations for her own needs. Her experience informs her work with clients; showing them how to make the accommodations that previous workplaces did not provide her.

“A lot of my work is convincing people not to abandon all of the great accommodations that they so easily, or perhaps not easily, implemented early in the pandemic, like flexible work schedules, virtual options, and reducing the amount of labor that your team does,” she said.

Seier added that disability awareness and inclusion training can be a crucial step for employers to prevent poor communication and ableism in the workplace.

“The team needs to know how to communicate with a person who has fluctuating abilities and there needs to be capacity-building about learning to understand an onset of acute illness,” she said. “Without those crucial educational components, I often see that resentment builds within an organization, if a team member can no longer do what they were previously able to do.”

Bryon Bass, senior vice president workforce absence and disability practice leader at Sedgwick, a global business solutions business, said it is likely that many people with long COVID will meet the requirements under the ADA, where a mental or physical impairment prevents participation in one or more major life activities, including work. Restructuring someone’s job through flexible work hours would be one way to accommodate someone with long COVID.

Some employers can provide intermittent leave as an ADA accommodation when workers with long COVID say they feel sick and need time off, according to a guide from JAN and the Employer Assistance and Resource Network on Disability and Inclusion. If an employee is no longer qualified for their current position, employers could also train them for a different one so that they can remain employed at the company.

A March 9 webinar from Bass, DeFreitas, and other accommodation experts, included solutions for addressing memory deficits, such as providing written instructions, using voice recorders, creating the minutes of meetings and training, and making flowcharts to show the steps for a particular task. But most of all, many experts on accommodations say to go straight to the source, the worker, and ask what they need help with and what could work best for them.

In addition to JAN’s services for employers and guidance on long COVID as a disability, the Department of Health and Human Services created a guide in August on services and support for the long-term impacts of COVID-19, which also provides information for employers. In April, the department released a comprehensive fact sheet on defining Long COVID, workplace interventions, and research on Long COVID.

Federal legislation proposed

The Biden administration also proposed $130 million for Long COVID programs in fiscal year 2024 and $130 million for diagnosing and treating long Covid in fiscal year 2025 in his budget request.

Some lawmakers are intent on providing more resources and guidance to workers with long COVID as well as their employers. U.S. Sen. Tim Kaine, a Virginia Democrat, reintroduced the Comprehensive Access to Resources and Education (CARE) for Long COVID Act in March with Sens. Tammy Duckworth, D-Illinois, and Ed Markey, D-Massachusetts. Kaine has long COVID himself and said during his reintroduction of the bill that his symptoms included intense nerve tingling for three years.

Kaine’s bill, which hasn’t made progress in the Senate since it was reintroduced, would authorize $30 million to be spent for each of the fiscal years from 2024 to 2026 to create and disseminate information about long COVID to employers on the rights of people with disabilities as well as educational materials for school administrators, school nurses, and other school staff on support services and students’ rights.

It would also support long COVID research, interagency coordination to educate the public, and “recommendations to streamline the process of applying for benefits through the Social Security Administration.” The bill creates a grant program to support partnerships that help people with long COVID find health care services and legal assistance.

“Millions of Americans have had to step back from work or school due to Long COVID. This hurts families, communities, and our economy as a whole,” Kaine said to States Newsroom in an email. “… I’ve heard from many Virginians who have been sidelined from work by their debilitating Long COVID symptoms about the barriers they face seeking accommodations in the workplace, in schools, and applying for Social Security disability benefits. Barriers applying for benefits include long applications, difficulties accessing in-person appointments, a lack of clear-cut eligibility criteria, long appeals times, and an overly complex system.”

When asked how Seier pushes back when employers question the immediate costs involved in providing accommodations, she said employers can’t afford not to focus on them, as well as on measures preventing the spread of COVID, such as improving air quality.

“‘I want you to do the mental math of thinking about how much it costs to hire someone to replace anyone on your team,’ and just helping them understand that a post-COVID illness can happen to anyone at any time after infection … I also let them know that aging is often the experience of the onset of disability, so if you’re investing in accommodations now you’re going to allow people to stay with you for a longer period.”

Seier added that she doesn’t believe the government is doing enough to address Long COVID or the spread of COVID-19 in general. She said she’d like to see more resources spent on making schools, workplaces, and places of public accommodation safer, such as improving ventilation systems.

“I would like the government to do anything more than the bare minimum that they’re doing right now and I think ‘bare minimum’ is generous. I think we are witnessing the complete abandonment of the disability community at an alarming and inexcusable rate from all levels of government and elected leadership.”

High mortality rate of homeless highlighted in new report

Casey Quinlan — Mon, 10 Apr 2023 12:00:46 +0000

Members of a clean-up crew remove belongings that have been left behind by occupants as the National Park Service clears the homeless encampment at McPherson Square on Feb. 15, 2023 in Washington, D.C. Donald Whitehead Jr., executive director of the National Coalition for the Homeless, said that when cities force unhoused people to move out of encampments, they’re putting their health at risk (Alex Wong/Getty Images).

Barb Anderson, director of Haven House in Jeffersonville, Indiana, works with homeless people to place them into housing. It’s a job that has shown her firsthand the severe health issues facing unhoused people in southern Indiana, where many people live in tents in the woods and under bridges.

She is currently working with an older couple with limited options. The woman, 69, has two felonies for producing and selling methamphetamine; crimes, Anderson said, she committed about 20 years ago that prevent her from accessing housing. Anderson said she is working with them on getting that conviction expunged, but it is going to cost thousands of dollars.

“As a homeless woman, she has lost a leg due to diabetes because before she got to us, they were living in tents,” Anderson said. “How much more does she have to go through before somebody decides it’s OK for her to live in a regular home?”

Non-elderly unhoused people have 3.5 times higher mortality than housed people, according to University of Chicago researchers, who say their work is the first national calculation of mortality for unhoused people in the United States. The findings come as housing advocates say it’s as urgent as ever for policymakers to address homelessness, as more pandemic-era protections end and funding for programs benefiting vulnerable groups start to dry up.

An unhoused person who is 40 years old has a similar mortality risk to a 60-year-old with housing or a 50-year-old poor person with housing. More than a half a million people in the U.S. were unhoused in January 2020. Thirty-nine percent of unhoused people and 50% of unhoused families with children are Black.

The research, released in a March paper, uses a sample of 140,000 people who were homeless during the 2010 U.S. Census as well as Social Security Administration data on mortality from 2010 to 2022 to come to an estimate on the health disparities of unhoused people.

“The housing affordability situation just continues to get worse and worse and worse,” said Steve Berg, chief policy officer at the National Alliance to End Homelessness. “Even though the homeless programs are doing a better job than ever, they’re underfunded and then for every homeless person who gets moved into housing, another person or two people or three people lose their housing and fall into homelessness.”

The researchers also noticed a big change in mortality from the onset of the pandemic to March 2022. Homeless people’s mortality shot up by 33%. They said that although the rise was similar in proportion to the increase for housed people, the increase “affected a much larger share of the homeless population due to their substantially elevated baseline mortality rate.”

The paper doesn’t have information on their cause of death. One of the researchers, Angela Wyse, a Ph.D. student at the University of Chicago, told States Newsroom that other work in this research area has reasoned that in addition to COVID-19, people may have struggled to access emergency services because of an overcrowded and overburdened health care system, and that drug overdoses could be a factor as well. The pandemic also may have made it more difficult for unhoused people with substance use issues to access help.

Backlash against homeless increasing

Advocates for groups serving unhoused people and fighting for affordable housing say that policymakers need to address a long list of barriers to housing, including the criminalization of unhoused people and situations where people with criminal histories are denied housing. They also say the Department of Housing and Urban Development needs more federal funding to help prevent people from becoming homeless. The end of pandemic-era programs and services that benefited people who were unhoused or at risk of eviction also concerns advocates.

“As we’re seeing unsheltered homelessness increase in many communities, we’re at the same time seeing more of a backlash against people who are experiencing homelessness themselves, but also against proven solutions to homelessness,” said Sarah Saadian, senior vice president of public policy and field organizing, at the National Low Income Housing Coalition.

Saadian pointed to Missouri legislation that uses state and federal funds for short-term housing, mostly state-approved encampments, and other services, instead of permanent housing, and also outlaws people living and sleeping on state-owned land. The bill was signed into law in June 2022 by Republican Gov. Mike Parson. Similar bills have popped up in several states, which are close in language to model legislation from the Cicero Institute, a Texas think tank. It was founded by Joe Lonsdale, the co-founder of a surveillance tech company, who also advocates for “a competitive, market-based rewards system for private prisons,” Vice reported. Kansas lawmakers introduced a similar bill this session.

Donald Whitehead Jr., executive director of the National Coalition for the Homeless, said that when cities force unhoused people to move out of encampments, they’re putting their health at risk.

“When they come in with the bulldozers and they’re moving people out of these encampments, they’re taking medication. … They are taking Narcan from people in these places,” he said.

Advocates envision universal housing assistance

Saadian said President Joe Biden’s budget proposal, which calls for universal rental assistance for youth aging out of foster care and veterans at risk of homelessness is something she would love to see become a reality. But she isn’t optimistic that it will go anywhere in Congress.

“That sort of universal coverage for rental assistance is incredibly important. We would love to see that extend to all populations, not just those ones, but the fact that the president is pointing to this and calling for it shows that it would be bringing us one step closer to that vision of universal housing assistance for everyone who needs it,” she said.

She added that the proposal to expand rental assistance to another 180,000 households through the Housing Choice Voucher program is one of the best ways to prevent people from becoming homeless.

“Every year the cost to serve the same number of households goes up because most of HUD’s budget goes to rental assistance and when rents go up in your community because of inflation or other reasons, you know, the cost of providing that rental assistance also goes up. Even level funding is really a cut because you can’t serve the same number of people,” she said.

Some Republicans in Congress have proposed cuts in rental assistance, which House Democrats have pushed back against. Rep. Rosa DeLauro (D-CT) released letters from agency heads showing that hundreds of thousands of families could stop receiving rental assistance and be evicted from Section 8 housing as a result of the proposed changes.

Housing advocates said that they’d like to see more of the federal resources states received as pandemic-related assistance, such as American Rescue Plan Act funds, distributed in a way that serves the most vulnerable people. They said they’d also like to see states and localities do their best to retain at least part of the services and funding they expanded early in the pandemic that serve unhoused people and people at risk of eviction.

Whitehead said that the Housing is a Human Right Act, introduced in March by Democratic Reps. Pramila Jayapal of Washington and Grace Meng of New York, would also take several important steps to help keep people housed. The bill would invest $300 billion in housing infrastructure, $27 billion for homelessness services, and $200 billion for affordable housing and support services.

“Experiencing homelessness is not a failure of individuals,” Jayapal said in March, “but a structural failure of a country that has refused to make safe and affordable housing a priority.”

Mortgage rates are stabilizing but that may not be enough to help house hunters

Casey Quinlan — Wed, 05 Apr 2023 10:55:25 +0000

Economists warn that home construction loans could be affected by credit tightening at small and midsize banks. That, in turn, could cause home prices to rise as low inventory remains a problem (Getty Images).

Home prices are cooling off and mortgage rates fell last week, but the fallout from recent bank closures could continue to make it hard for some Americans to buy homes, economists say.

Mortgage rates fell to 6.32% for a 30-year fixed rate mortgage, Freddie Mac data released on Thursday shows. Last fall, the 30-year fixed rate mortgage climbed to 7.08% — the first time in 20 years that rates rose above 7%.

Lower mortgage rates appear to have given home sales a boost in January and February, due to “pent-up buyer demand,” said Selma Hepp, chief economist at CoreLogic, which provides property, financial, and business intelligence.

Last week, the CoreLogic S&P Case-Shiller Index showed a 3.8% year-over-year rise in home prices in January falling from a 5.6% bump in December. There have been nine straight months of slowing annual home price growth and this is the lowest annual increase since before the winter of 2019, according to Hepp’s analysis.

But regional banks, which saw depositors leave for bigger banks after the collapse of Silicon Valley Bank last month, are now tightening credit. The result, according to a report from Fannie Mae, could be fewer residential construction loans and jumbo mortgages as many originate from small and mid-sized banks. Less supply will keep prices high and all of that will likely affect spring home-buying, Hepp said.

“If we had more inventory, we wouldn’t have the rate of appreciation that we had during the pandemic and, and the rate wouldn’t impact people to the extent that it does because home prices wouldn’t be as high,” she said.

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Hepp is also watching the Federal Reserve’s action on interest rates. Many economists believe the Fed could stop raising rates after one more cycle. That would be good for mortgage rates but not every buyer will benefit, Hepp said.

“There’s two sides of this coin,” she said. “One is that we may see a more favorable mortgage rate during the spring home-buying season and into summer, but on the flip side, there may be some concern around the lack of mortgage lending,” Hepp said. “The mortgage lending that does end up occurring would be to very prime borrowers that have very strong credit, large down payments, and things like that.”

Lawrence Yun, chief economist at the National Association of Realtors, said he is concerned about how commercial lending would be affected by the banking crisis. Commercial real estate has already been affected by the pandemic and continuing remote work.

“Where someone wants to buy an office space or someone has a restaurant and they need to refinance their building, all this commercial real estate will come under stress just because it will be much more difficult to obtain those loans and community banks are trying to conserve as much cash as possible, not lend that out,” he said.

But that doesn’t mean that commercial real estate couldn’t end up affecting home-buying all the same, Yun added.

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“Weakness in commercial real estate could hinder job growth. Job creation indirectly impacts home-buying in a sense that there is a [lesser] job creation, and that means it’s creating fewer potential home-buyers down the line,” he said.

Hepp said that the Fed may not be particularly concerned with the housing market right now, since it is rebalancing, with the possibility of “maybe over-shooting on a downside.” But credit availability will likely remain a concern, and there are things the Fed could do to address it.

“To whatever extent that there is liquidity in the market or there may not end up being liquidity in the market, I think that’s the point at which the Federal Reserve may end up utilizing some of the tools that they did at the onset of the pandemic,” she said. “In particular, I’m thinking about mortgage-backed securities.”

At the beginning of the pandemic, the Federal Reserve made large purchases of mortgage-backed securities and took several other steps to keep the flow of credit going. Any policies that would improve the inventory and affordability of housing would also be helpful to the housing market right now, she said.

Help wanted: Women needed for U.S. chips manufacturing plan to succeed

Casey Quinlan — Mon, 27 Mar 2023 14:47:39 +0000

Ironworker apprentice Natalie Bell displays her Rosie the Riveter tattoo that she describes as a symbol of strength, March 22, 2023, at the Iron Workers 172 Training Center in Columbus, Ohio (Photo by Graham Stokes for States Newsroom).

Natalie Bell was thinking about a career in art after college when a welding class and a delivery of four pizzas changed her career trajectory.

“I was taking a delivery out to a construction site and I met an ironworker who I was taking the delivery to,” said Bell, who lives in Columbus, Ohio. “I asked him, I said, ‘Hey, are you looking for apprentices? I don’t want to do college anymore, but I’m a welder.’ He said, ‘Yeah,’ and he gave me the number to the ironworkers union.”

Bell, now 23, said she was worried at first about being accepted.

“I took my interview and I was so scared because I was like, ‘They’re not going to accept me. I’m a woman trying to do construction.’ I didn’t know how things worked at all,” she said.

Bell, who entered the industry in 2019, said working in construction has its challenges but the money provides her with a decent lifestyle and good health insurance.

“I live very comfortably … I’m going to Iceland in July just because I can,” she said. “I can go do that. I can take a vacation every year. I don’t have to worry about medical bills because I have phenomenal insurance.”

The Biden administration is counting on more women like Bell seeing the value of jobs in the construction industry. Over the next decade, the administration wants to add a million more women in construction jobs to aid in infrastructure projects across the country, including its effort to increase semiconductor manufacturing. The success of that effort will depend on the federal policies now being put in place and changes to an industry that’s not known for being welcoming to women.

According to Bureau of Labor Statistics data, 1.2 million women were employed in construction in 2020, and a University of Michigan analysis of the data found that women have gained jobs “at three times their share of the industry,” since the beginning of the pandemic.

Women were slowly but surely entering more male-dominated occupations before the pandemic, said Betsey Stevenson, an economist and professor of public policy and economics at the University of Michigan who did the analysis with Benny Docter, a senior data and policy analyst at the university. Women lost jobs in education and in the service industry during the pandemic and as they returned to work many shifted to new occupations that reflect changing market conditions, according to their analysis.

“I think that the important takeaway is that women can be an important source of labor for the construction industry,” Stevenson said in an email. “While child care is important for women, it is equally important to note that construction as an industry risks losing more male workers due to child care conflicts. The child care requirements in the CHIPS Act is there to help ensure a sufficient workforce is able to take on the work that is being funded.”

Joy Merryman, a fabrication shop steward for U.A. Plumbers and Pipefitters Local 189, poses for a portrait after work, March 23, 2023, in Columbus, Ohio (Photo by Graham Stokes for States Newsroom).

The CHIPS and Science Act, signed into law by President Joe Biden last year, aims to increase the country’s production of chips which are seen as essential for the military and for the economy because of their use in autos and all manner of electronics. The bill provides roughly $40 billion to build or expand plants, and already Intel is building a megaproject near Columbus, Ohio. But to receive federal subsidies, the law requires companies to ensure that the workers they hire, including construction workers building the plants, have access to affordable and high-quality child care.

Finding affordable, quality child care is an issue for many parents, but it can be even more of a struggle for construction workers because day cares typically open after they are already supposed to be at work. That can be particularly hard on single parents.

Grecia Palomar, a 29-year-old single mother of two in Little Canada, Minnesota, spent seven years hanging drywall at Reshetar Systems, a commercial drywall and carpentry business, before leaving to become a drywall instructor for Finishing Trades Institute of the Upper Midwest. Palomar said she was only able to manage when her children were younger because her employer allowed her to arrive later and work later.

Palomar said even though she had grown up around job sites because her father worked in construction, she hadn’t considered it as a potential career until she moved back to Minnesota from Illinois with two young children to support. With one child in need of occupational and speech therapies, Palomar said she needed to make more than the $8 an hour she had earned as a preschool teacher. Her father suggested construction. She made $13 an hour when she started in the industry, and now makes $40 an hour.

Who is turning to construction careers?

The Bureau of Labor Statistics survey doesn’t explain the employment background of women newly entering construction, but several people working in the construction industry said they have seen women coming from what are considered service jobs.

Mary Ann Naylor, communications and marketing director for Oregon Tradeswomen, an apprenticeship-readiness program in Portland, said that the women seeking out the program often come from retail, hospitality, restaurants and child care — industries that often pay low wages and offer few benefits. She added that since the pandemic, she has seen more unemployed people and people leaving health care jobs to look into the skilled construction trades.

Some of the advantages of construction that appeal to new workers are paid training and lack of student debt. Joy Merryman, a plumber and pipefitter who lives in Pickerington, Ohio, and works in Columbus, said she enjoys knowing that her labor will benefit the community, including her work on recreation centers. And she’s so happy with her career choice that she now does outreach — planning events, job fairs and school visits — for the Central Ohio Women in the Trades.

John Burcaw, director of academic education and CEO of the Finishing Trades Institute of the Upper Midwest in Little Canada, Minnesota, said he’s seen workers come from similar employment backgrounds as Naylor mentioned. He said there are also more opportunities for people starting a career in construction to possibly become project managers, estimators, entrepreneurs, educators, or labor leaders than when he began doing this work 33 years ago.

Harassment still a problem

But there are still challenges with both recruitment and retainment of women in construction.

Women’s experiences often depend on the kind of support they have inside and outside the job, such as unions, women’s trade groups and foremen who push back against gender-based discrimination.

In addition to the child care needs, work sites can still be rife with sexual harassment. All of the women working construction interviewed by States Newsroom said they have faced some kind of sexual harassment on the job, whether it was inappropriate comments on their appearance, nonconsensual touching, or “jokes that go too far.”

Bell, the welder, said she has walked off jobs and once filed a complaint over sexual harassment, but has also had experiences where she has talked for foremen and had problems taken care of.

“I’ve been touched on the job site without consent. I’ve been yelled at in my face. I’ve been told I don’t belong there. I’ve been belittled, and I’m a minority so I’ve been made fun of or talked down to in that sense,” Palomar said. “But I had an awesome contractor who always had my back and if I didn’t feel safe somewhere, I could just call them and they would be there for me and I think that helped me get through that. Without their support and their trust and my union backing me up, I don’t think I would have been able to have the patience and the determination to stay there because it is overwhelming.”

Merryman, 37, who has worked in construction for 10 years in Ohio, said having supportive people around you helps, and that it’s easy to understand why women without that advantage end up leaving construction.

“I think a big part of the issue with retaining people is you start to feel very alienated, you feel very alone and you question yourself,” she said. “Am I crazy for being grossed out by what that dude just said to me? Am I crazy for not wanting to have to listen to what he thinks about my body while I’m at work?”

There are educational efforts to make the workplace more welcoming to women, Burcaw said. The Finishing Trades Institute of the Upper Midwest is starting a program in the fall that advises men on how to be good allies to women in construction when they face gender-based harassment and discrimination.

Grecia Palomar guides a group of drywall finishing apprentices at the Finishing Trades Institute of the Upper Midwest on March 23, 2023 in Little Canada, Minnesota (Photo by Nicole Neri for the Minnesota Reformer).

Addressing the federal government’s ambitious goal to add 1 million more women in construction jobs at a Tradeswomen Build Nations conference last fall, Commerce Secretary Gina Raimondo said she had heard from women about the challenges they faced on sites. She then added, “Women don’t want to deal with the BS. They just want to do their jobs.”

Sharita Gruberg, vice president for economic justice at the National Partnership for Women and Families, said there will need to be sufficient monitoring and enforcement from the Office of Federal Contract Compliance Programs and Equal Employment Opportunity Commission to ensure that underrepresented workers aren’t being pushed out of jobs due to sexual harassment and discrimination.

“Because of these other barriers, it is in all of our interests to make sure that these investments are supporting good jobs, safe jobs, because we’re just not going to have the workforce that we need to translate these investments into successful outcomes without also prioritizing equal opportunity enforcement and making sure that women are safe and in these roles,” Gruberg said.

This month, the Department of Labor also announced it was launching an initiative “to promote equal opportunity by federal contractors in the construction trades on large federally funded projects.” The Office of Federal Contract Compliance Programs is going to work with the General Services Administration and the Department of Transportation to make sure contractors and subcontractors receive no-cost help to improve recruitment and hiring practices to ensure more women and other underrepresented workers are able to join the construction industry.

The initiative is connected to the OFCCP’s Mega Construction Project Program that rewards projects expected to last for one year and make a positive economic difference in communities. Gruberg said some of the construction work on semiconductor facilities and highways and transportation could qualify.

“One exciting thing about the Mega projects are that there are 16 affirmative action steps that are part of these projects to really make sure that on the front end, companies are supported in how they can comply with the equal opportunity requirements of these investments,” Gruberg said. “So making sure that they are increasing representation of qualified workers from underrepresented groups in the construction trades, which includes women.”

Silicon Valley Bank’s collapse differs from our last financial crisis

Casey Quinlan — Tue, 14 Mar 2023 13:30:32 +0000

After the largest U.S. bank failure in more than a decade, regional bank stocks plunged on Monday as the federal government — with the 2007-2008 financial crisis still a fresh memory for many — rushed to reassure Americans that the U.S. banking system was stable.

President Joe Biden told Americans that the risks taken on by failed banks will not be a burden on taxpayers, that management will be fired and held accountable, and that depositors’ money will be safe even above the $250,000 federally insured limit — but not investors’ funds.

Biden and U.S. Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., blamed the bank failures in part on the 2018 law signed by President Donald Trump that rolled back regulations for smaller and medium-sized banks that had been put in place under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.

Those rules were put in place after the 2008 financial crisis that saw the failure of investment banks Lehman Brothers and Bear Stearns and Washington Mutual Bank, the first of more than 300 banks to close from 2008-2010.

The new crisis started last week when Silicon Valley Bank, the 16th largest bank in the U.S. and a key financial institution for the tech sector, collapsed on Friday after a run on the bank. Federal banking regulators took over the bank and, on Sunday, New York regulators closed Signature Bank, which served cryptocurrency clients. Treasury secretary Janet Yellen announced that the FDIC would cover depositors for both banks.

Ted Rossman, senior industry analyst at Bankrate.com, said there is a big difference between the collapse of Silicon Valley Bank and Signature Bank and what happened in 2008. He said the big distinction is that what caused the current crisis is not the same as the 2008 issues, which were caused by “derivatives and credit default swaps, and exotic mortgages.

“Silicon Valley Bank was more of a true bank run where a lot of depositors wanted their money all at once,” Rossman said.
“And why did they want their money all at once? There were rumors spreading that the bank was in trouble and the bank was in trouble because of higher rates and mismanagement of their risk because all these underlying bonds had lost a lot of money because of higher rates and, rates rise and prices fall.”

Aaron Klein, senior fellow in economic studies at the Brookings Institution, agreed that the leeway Silicon Valley Bank was given led to its troubles. He told States Newsroom in an email statement that he hopes that Congress pays attention to what he calls the “highly problematic structure” of regional Fed banks.

“SVB was allowed by the Federal Reserve, their primary regulator, to build up a massive position on mortgage-backed securities with little to no hedging for interest rates,” he wrote.

“At the same time,” Klein continued, “SVB relied on uninsured bank deposits at a mammoth level far out of line with other banks. SVB is not a Main Street bank and never was. Most banks of that size ($200B) have 1,000 branches. SVB had 16. SVB’s assets quadrupled in 4 years with explosive growth that ought to raise flags,” he wrote.

Rossman said there may be more bank failures or rumors of bank failures, but that doesn’t mean that the average consumer will be affected right now.

“We see today a lot of community or regional mid-sized banks are under some pressure. It does seem that there’s more pain to come here in some corners, a lot of it tracking back to higher interest rates and some of the unintended consequences there, but from a depositor perspective, I wouldn’t worry about losing money, especially within that $250,000 threshold,” he said.

The Federal Deposit Insurance Corporation insures bank deposits up to $250,000.

“The FDIC is funded by member dues, so basically the banks pay into the system, and that’s the fund that’s being used to make depositors whole at Silicon Valley Bank and Signature Bank,” Rossman added. “And if the fund were to run out, the FDIC could impose additional fees on banks.”

One result of the banks’ collapse could be a little loosening of the Federal Reserve’s position on interest rate increases.

“The odds of a 50-basis-point hike from the Fed at its next meeting have pretty much come off the table, said Rossman, senior industry analyst at Bankrate.com. “ … Now, it seems like a quarter point is most likely, although there’s actually a decent chance that there may not be a hike at all at the next meeting next week.”

Goldman Sachs economists said on Sunday that they don’t expect any rate hike when the Fed meets, which was a change from their prediction of a 25-basis-point hike before the bank failures.

Sheila Bair, former chair of the FDIC when Washington Mutual collapsed, said that if the Fed chose to pause its interest rate hikes, the decision would have a “settling effect” on the markets.

Correction: A previous version of this story misstated the amount of funds that would be covered by the federal government for Silicon Valley Bank and Signature Bank depositors.

Powell signals higher interest rates. Here’s why Friday’s jobs report will affect Fed’s decision

Casey Quinlan — Thu, 09 Mar 2023 11:55:01 +0000

Fewer businesses hiring would actually be seen as a good thing for inflation right now (Spencer Platt/Getty Images).

Federal Reserve Chairman Jerome Powell said this week that interest rate increases could be higher and come faster if Friday’s unemployment data shows the nation’s labor market isn’t cooling off.

Stock indexes fell after his comments. That’s been a familiar pattern over the past year as the federal bank has tried to combat inflation.

A hot jobs market — when people who want work can find it — would seem to signal a healthy economy, so why the concern over a positive jobs report?

It’s not that the Fed is “anti-worker,” said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics and former visiting associate director for the division of monetary affairs for the Federal Reserve Board.

“If we could sustain 3% or 3.5% unemployment, a record low, the Fed would be delighted if we could stay there and inflation would come back down and everything would be fine,” he said. “ … The worry is that the economy is just overheating, that too much spending is going on for what the economy can produce. And we see that in the labor market. It’s not only the labor market that the Fed looks at, but it’s the labor market that probably has the clearest signs of it, the ones that are easiest to interpret. … It covers every worker who’s doing anything economic, who is producing anything in the whole economy.”

Federal Reserve members also will be looking at consumer price data, due on March 14, at their next meeting on March 21-22. The Consumer Price Index, an indicator for inflation, rose 6.4% in the past year, according to the January report, which was the smallest yearly increase since Oct. 21, but still higher than a Bloomberg survey of economists forecasted, according to The New York Times. That followed the January jobs report, on Feb. 3, which showed an unemployment rate of 3.4% — the lowest it had ever been since May 1969.

Andrew Korz, director of investment research for FS Investments, predicted the data was “running too hot for the Fed’s liking,” and Powell’s comments this week indicate Korz was correct.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell told the Senate Banking Committee on Tuesday. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The Fed’s target rate for inflation is 2%, and the Fed has repeatedly said that it won’t stop raising rates until it meets its goals.

“The Fed has really two things that it is trying to control and sometimes they can work against each other or in opposing directions,” said Lara Rhame, chief U.S. economist and managing director for investment research for FS Investments. “One of them being inflation and keeping inflation low and the other one being, they call it full employment but you know a healthy level of employment and right now they see both of these objectives and they’re weighing which one is more important to tackle and which one is further off course, and by far and away, inflation has been over the last year and a half, very far away from their targets — way too high.”

The stock market has responded strongly to the labor market data in part because of the importance of those numbers to the Fed when it makes decisions about interest rates. After the January jobs report showed that the labor market was continuing to add more jobs than economists previously expected and that unemployment remained low, the Dow Jones Industrial Average fell 0.38%, the S&P 500 dropped 1.04%, and the Nasdaq Composite slumped 1.59%.

The stock market responded positively to a December jobs report with a low unemployment rate of 3.46% that also showed slower wage growth than what economists anticipated.

How the market reacts to the jobs report largely depends on what it thinks the news of the report is, said Gagnon of the Peterson Institute.

“If the jobs report comes in very strong, sometimes the stock market doesn’t like it because it worries that the Fed is going to have to tighten,” he said. “ … If everybody knows the economy is strong but they think the Fed doesn’t know it and then the jobs report is news to the Fed, and the Fed is going to have to tighten, that makes sense. On the other hand, if nobody knew the economy was strong and the job market report tells you that it’s strong and that was news to you, that should be good for stock prices because it means there’s more sales and activity and profits.”

People are right to be concerned about the potential impact on the economy if the Fed continues to raise rates, Gagnon continued. Although the Fed has said it hopes for a “soft landing” for the economy as it continues to raise rates, it has sparked fears of a possible recession.

“If you just look at history, it doesn’t make you very optimistic,” he said. “The Fed has rarely caused a soft landing and held inflation in check, let alone pushed it back down without a recession. … To some extent, the Fed made mistakes in the past, and they might have raised rates too much, right? But also to some extent they made opposite mistakes, and they raised rates and they didn’t get inflation all the way back, and so it ratcheted up each cycle and it went higher.”

Gagnon said that he thinks there is a 30% to 35% chance of a recession as a result of the Fed raising rates too much.

Rhame, with FS Investments, said it’s important to keep in mind that despite layoffs at some large companies, the overall trend is that companies are still talking about trying to find workers and needing to pay them more to hire them.

“We had several negative quarters of growth at the beginning of 2022 and a lot of people wondered why we weren’t calling that a recession,” she said. “And it’s because we didn’t have job losses during that period. In fact we were adding millions of jobs over those quarters because we were still in that recovery phase of the pandemic and still getting folks back to work. I often talk to people who say job losses cause a recession. Job losses are the recession. … So folks should look out for job losses, which we have not seen yet.”

Child poverty dropped to a record low last year. A new report shows how to keep it that way

Casey Quinlan — Fri, 03 Mar 2023 12:30:36 +0000

Supporters attend a press briefing in December in Washington, D.C. Efforts to tie the child tax credit to research and development tax credits for corporations could resurface in Congress this session (Tasos Katopodis/Getty Images for Economic Security Project).

The expanded child tax credit that families received in 2021 helped reduce child poverty across the country, but particularly in the South where families lack a sufficient safety net, according to a paper released on Wednesday. The report by the Hamilton Project, the Brookings Institution’s economic policy initiative, comes as some Democrats appear ready to attempt another deal to revive the credit.

The analysis looked at the effects of the expanded child tax credit by grouping states together by factors such as their cost of living and poverty levels. Researchers found that the smallest reductions in child poverty came in states that had a high cost of living and low poverty rates even before tax liabilities and income sources such as SNAP, SSI, and unemployment insurance were considered. But even in those states, child poverty rates were reduced 40 percent after the expansion of the child tax credit.

The credit, which was part of the American Rescue Plan Act, not only boosted the amount of money families received (from $2,000 to $3,600 per child under age 6 and to $3,000 for all others) but also extended the age of qualifying children to 17. It also called for the credit to go to families with little or no income – people who previously did not earn enough money to qualify for a child tax credit.

It’s been credited with helping to bring the country’s child poverty rate down to a record low of 5.2 percent last year. If Congress hadn’t approved the expanded child tax credit in 2021, another 2.1 million children would have been in poverty that year, according to the Center for Budget and Policy Priorities.

“The poverty reductions [across the U.S.] were still pretty widespread and meaningful,” said Bradley Hardy, a nonresident senior fellow in Economic Studies at the Brookings Institution and associate professor at Georgetown University, one of the authors of the paper.

Last year, Democrats tried to reach a deal to keep the expanded child tax credit by tying it to support of the extension of a business tax credit for research and development spending, but did not succeed. Now they appear to be regrouping.

CNBC reported last month that members in both the House and Senate were planning to introduce R&D tax legislation, which could give lawmakers an opportunity to push for some kind of expanded child tax credit.

Roman Rodriguez, the press secretary for Rep. Ron Estes, a Republican from Kansas, confirmed that Estes plans to introduce a bill on the R&D tax credit but did not provide a timeline.

“This R&D provision is critical for American jobs and our economy, and I am actively working with my colleagues to ensure this legislation can be introduced with bipartisan support soon,” Estes said in a statement to States Newsroom.

New Hampshire Sen. Maggie Hassan, a Democrat, is also reported to be working on a draft bill.

Researchers said that the expanded child tax credit “yielded widespread reductions in poverty across states” in 2021. Every category of states analyzed had significant falls in child poverty:

States with a high cost of living and low poverty experienced a 40 percent reduction in child poverty, and included Illinois, Maine, Minnesota, Oregon, and Washington.
States with a high cost of living and high poverty rates saw child poverty fall 41 percent. Those states included California, Florida, Nevada, New York, and Texas.
States with a lower cost of living and low poverty rates had a 47 percent drop in child poverty. Many midwest and mountain states – Idaho, Iowa, Kansas, Montana, and Wisconsin – fell into this category.
The largest drop – 51 percent – was in 16 states that have a lower cost of living and high rates of poverty, including Alabama, Arkansas, Georgia, Kentucky, Louisiana, and Tennessee.

“You do have relatively higher poverty reductions in these sorts of states, with families that were previously left behind, or states with higher poverty and relatively lower costs,” said Hardy, with the Brookings Institution.

“There’s other evidence to show these are the states that typically have the weakest safety net protections,” Hardy said. “ … I think it amplifies the importance of some federal level programs that can be implemented.”

The authors said that the biggest drops in child poverty tended to be in states with a lack of generous policies that benefit moderate and low-income people, such as a dearth of state earned income tax credits and higher minimum wages as well as states where Temporary Assistance for Needy Families reaches far fewer families. Sixteen out of 20 states that haven’t raised the minimum wage higher than the federal minimum wage of $7.25 have a child poverty rate above 12 percent.

Groups of children that did not benefit as much from the policies before the expansion of the child tax credit were children in larger families, children in rural areas, Black children, and children in families with unmarried mothers, according to research from Columbia University’s Center on Poverty & Social Policy.

“The results confirm that child poverty reductions related to the CTC are larger in states with a higher proportion of children who were left behind,” according to the Hamilton Project. “The most striking differences are in states with a higher proportion of unmarried mothers, rural households, and large families; in those states, child poverty reduction hovered around 50 percent.”

A potential compromise

Authors of a separate Hamilton Project paper also released on Wednesday have proposed a possible compromise on the child tax credit that they said would address some of policymakers’ criticisms, such as the argument that a fully refundable child tax credit for parents with no earnings would shrink the labor supply.

Sen. Joe Manchin, D-W.Va., pushed for a work requirement and $60,000 family income cap in 2021 and last year, Sen. Mitt Romney, R-Utah, proposed his own version of an expanded child tax credit that wouldn’t allow families without earnings to receive any credit. The Center for Budget and Policies Priorities’ 2022 analysis on the Romney approach criticized that plan because some research has suggested that making the full credit available to parents would not have a large effect on their work participation.

Under the proposal outlined by the Hamilton Project, an enhanced child tax credit would again offer $3,600 for each child under 6 years old and $3,000 for children 6 to 17 years old but families with no earnings would receive only half the full credit amount per child. There would also be a faster phase-in rate than current law provides so that “for each additional $100 of taxable income, tax filers are refunded an additional $30 per child eligible for the tax credit.”

“Withholding the credit amount completely for children whose parents have no qualifying earnings would mean prioritizing labor supply incentives over the urgent needs around child well-being,” the authors of the paper wrote. “That choice is counter-productive, given the well-documented benefits – including greater educational attainment and earnings – that are associated with delivering additional income to children from low-income families.”

Families are taking a hit as pandemic aid ends, inflation continues

Casey Quinlan — Mon, 27 Feb 2023 16:00:21 +0000

Throughout the pandemic, families have turned to food banks for help. Harvesters, a private food bank, saw the amount of food distributed increase from 54 million pounds in 2019 to 65 million in 2020. In this picture, food is distributed at a drive-in in Kansas City, Kansas (Harvesters — The Community Food Network);

Forty million people in the U.S. are having difficulty affording household expenses, and a little more than 25 million people say they sometimes or often do not have enough to eat, according to the U.S. Census Bureau’s most recent Household Pulse survey data.

The survey is designed to collect data on household experiences during the pandemic as well as its economic recovery. The U.S. Census Bureau, working with other federal agencies to produce the data, started the surveys in April 2020.

The most recent survey, which was taken Feb. 1 to Feb. 13, also showed that 16% of those surveyed said it was very likely that they would be evicted in the next two months and 23.7% said it was somewhat likely. That’s up slightly from December, when 14.3% said it was very likely they’d be evicted in that time frame and 28% said it was somewhat likely.

The data reflects that Americans are continuing to struggle with inflation, a struggle made worse for some by the disappearance of pandemic relief across the country. Although inflation is moderating, it’s still high. The Consumer Price Index, released on Feb, 14, showed that the price of meats, poultry, fish and eggs rose 0.7% over the month and eggs rose 8.5% over the same time period. The Federal Reserve continues to raise rates in an effort to bring down inflation, which it said “remains elevated.”

In the meantime, much of the pandemic relief funds have been allocated, with 87% of American Rescue Plan Act funds being appropriated already by December. The unwinding of pandemic Medicaid coverage will likely leave millions of people without coverage. Early in the pandemic, Congress provided a temporary increase in benefits for recipients of SNAP, the federal nutrition assistance program, but that ends March 1. When that happens, the average person will get about $90 less in SNAP benefits a month, according to the Center for Budget and Policy Priorities.

SNAP emergency benefits expiring soon

As SNAP’s emergency benefits go away, the effects may eventually show up in Pulse data, said Lauren Bauer, a fellow in economic studies at Brookings Institution and associate director of the Hamilton Project.

The current Pulse data shows that since expanded COVID-19 unemployment benefits ended in the fall of 2021, fewer people are relying on unemployment insurance to buy food. When asked how they had paid for food in the past seven days, 13 million said they used SNAP benefits compared to 1.8 million who said they used unemployment insurance benefits. That’s up from 12.7 million who relied on SNAP in January and 12.1 million in December. In the survey from Feb. 17 to March 1, 2021 — before expanded unemployment benefits ended — 11.9 million people used unemployment benefits to buy food and 10.8 million used SNAP benefits.

“…What part of the safety net is still providing families with a material amount of income given all of the stuff that has gone away? And right now SNAP is the main program that’s doing that. Everything else is coming out of income, borrowing, spending down savings, etc.” Bauer explained.

Families of four at 200% of the poverty line are an example of who has the most to lose when emergency SNAP benefits go away, Bauer said.

“It’s families who normally, via the formula, would lose 30 cents for every dollar as you tick higher and higher up the income distribution who are going to see the biggest hit. Those are typically low-income workers,” she said.

In addition to these benefits drying up, Republican state lawmakers are targeting food stamps in a number of ways, such as adding stricter work requirements and limiting the food that qualifies. In Congress, House Republicans are using this year’s farm bill to restart a discussion on SNAP’s work requirements and waivers that exempt some recipients from certain SNAP rules.

Economic pain in the South

Southern states showed higher rates of financial stress in surveys collected in February, January, and December. Pulse data shows that in February, food scarcity rates were highest in Kentucky, Mississippi and Louisiana, and in January, they were highest in Mississippi, Louisiana and Florida. Mississippi, Kentucky, and Texas were the highest in December. Difficulty paying for usual household expenses was highest in Mississippi, Alabama and Louisiana in February, followed by West Virginia and Kentucky, and in January, people in Louisiana, Mississippi and Florida said they struggled most with these expenses.

“In general, a lot of these measures of benefit generosity are lower in the South of the U.S. and it would make sense that at the expiration of the federal expansion, they’re reverting to a less generous state,” said Alex Bell, a postdoctoral scholar at the University of California’s California Policy Lab.

Michael Leachman, senior vice president for state fiscal policy at the Center on Budget and Policy Priorities, said a lack of Medicaid expansion in many Southern states and stricter eligibility requirements for benefits may help to explain some of the data. With more pandemic aid ending, Americans all over the country will feel the pain of losing those resources, he said.

“The other provisions that were put in place during the height of the pandemic made a huge difference in terms of child poverty and other forms of hardship that people are experiencing,” he said. “… About 90% of [state ARPA funds] has already been allocated, and it’s made a huge difference in the lives of people who were particularly harmed, but with it winding down, even though the job market is relatively strong, the effects of the pandemic are lingering in all sorts of ways.”

Rural hospitals gird for unwinding of pandemic Medicaid coverage

Casey Quinlan — Mon, 20 Feb 2023 15:00:43 +0000

Millions of people are expected to lose their Medicaid eligibility in the coming months as states return the programs to pre-COVID-19 status. The loss of that revenue is expected to hurt struggling rural hospitals (Win McNamee/Getty Images).

Donald Lloyd, CEO and president of St. Claire HealthCare in Morehead, Kentucky, has spent more than a year dealing with higher costs for food and medical supplies for his regional hospital.

Now he’s trying to prepare for another financial hit — the loss of Medicaid reimbursements for treating people in rural Appalachia.

“We are all being forced to try to eke out a sustainable margin because of those (inflation) factors,” he said. “And then with the potential loss of reimbursement for those who did qualify, that’s just going to add an additional layer of burden upon rural institutions.”

Lloyd is referring to the unwinding of a policy that began in 2020 as a response to the public health emergency created by COVID-19. The Families First Coronavirus Response Act required states to allow Medicaid recipients to stay enrolled even if their eligibility changed. But that requirement ends on April 1, and with states once again able to remove people from the program, health care officials across the country are worried about how the loss of those Medicaid reimbursements will affect the financial health of their hospitals.

The loss of the federal revenue is expected to be particularly hard on rural hospitals that operate in areas with higher poverty rates and serve an older population and people with lower incomes — all factors that contribute to the financial pressure on hospitals, health care officials said. Rural hospitals were already closing at a rapid rate before the pandemic — more than 150 closed between 2005 and 2019, according to the Center for Healthcare Quality and Payment Reform. Without the federal money to prop them up, the Center estimates that 200 rural hospitals across the country are at risk of closing within the next two to three years.

A report released in January from George Washington University found that up to 2.5 million patients of community health centers, which treat both underserved rural and urban communities, could lose coverage as a result of eligibility redeterminations, costing the health centers somewhere from $1.5 billion to $2.5 billion in revenue. The Kaiser Family Foundation estimates that between 5 million and 14 million people will lose their coverage, and that two-thirds could be uninsured for several months up to a year.

Carrie Cochran-McClain, chief policy officer at the National Rural Health Association, a nonprofit focused on education and advocacy on rural health issues, said the financial impact will be twofold.

“It’s the loss of reimbursement for services, but then also a potential increase in the number of patients that are going to be uninsured who delayed care because they lose their coverage and they’re coming in when they have a more severe situation,” she said.

Simple mistakes in paperwork could result in many people losing Medicaid even though they’re still eligible for it, said Leighton Ku, professor and director of the center for health policy research at the Milken Institute School of Public Health at George Washington University. Ku said states can help by making the renewal process easier, and pointed out that people who can’t get Medicaid can find insurance at subsidized rates through the Affordable Care Act markets, and benefit from expanded premium subsidies through 2025 because of the Inflation Reduction Act. Still, there will be problems, he said.

“We still expect there’s going to be some increase in the number of uninsured people in the U.S. over the next year, no matter how hard we try, so hospitals and community health centers are going to have some rough times ahead,” Ku said.

Toni Lawson, vice president of governmental relations at the Idaho Hospital Association, said that the state department of health and welfare is sending out letters to tens of thousands of people alerting them to the change and their options. Still, she’s concerned about the effect of so many people losing coverage. Idaho has estimated that 150,000 people could be vulnerable to losing Medicaid, according to Idaho Capital Sun.

“We see a large percentage of our rural hospitals with a negative operating margin right now,” Lawson said. “We need to be particularly careful in making policy decisions that impact them negatively that maybe five years ago it would have been like, okay, this is a hit to your reimbursement, but you’ll survive. That same decision today could affect whether they stay open or close, she said.

Lloyd said he expects less than 3,000 people would lose coverage in the communities that St. Claire serves, which could cost the hospital about $5 million in Medicaid revenue.

The hospital is preparing for the decrease by slowing down its capital investments even though it needs to replace operating room tables and to repair and do maintenance on a wing built in the 1960s, he said. St. Claire is also looking at “reprioritizing a number of strategic growth projects,” Lloyd added, such as accommodating robotic surgery.

Family Health Centers in Louisville plans to cut back on the low-cost or free medical, dental, behavioral health and pharmacy services it has been offering to uninsured patients because of the expected revenue dip, according to the Louisville Courier-Journal. Hospitals also have announced other budget cuts, including layoffs, citing the end of pandemic payments.

Help from Medicaid expansion

The COVID-19 pandemic both helped and hurt rural hospitals.

“In rural communities, the majority of their revenue comes from outpatient-like business and it comes from doing outpatient surgeries and imaging and visits,” said Steve Lawler, president and CEO of the North Carolina Healthcare Association. “When you shut those things down to protect your hospital assets to take care of COVID patients, it has a significant financial impact and that has carried on through the current economic conditions where the cost of goods and services and talent for hospitals is up 30% but revenue is only up 2%.”

During the pandemic, billions in federal money from the Paycheck Protection Program, Provider Relief Funds and the American Rescue Plan Act helped keep rural hospitals afloat even as they dealt with revenue losses and higher costs for everything from protective gear to salaries.

“COVID sort of interrupted the long-term trend of unprofitability and closure of rural hospitals,” said George Pink, deputy director of the NC Rural Health Research Program at the University of North Carolina. “But that funding is now over.”

Health care experts say policy changes, including more states expanding access to Medicaid, is needed to keep rural hospitals viable.

Eleven states, including Alabama, Georgia, Florida, Kansas, Tennessee and Wisconsin, still haven’t expanded Medicaid coverage through the Affordable Care Act, and rural hospitals in those states are at a particular disadvantage, health care officials said. Researchers have agreed. A January 2018 research article found that Medicaid expansion was associated with better financial performance for hospitals and lower likelihoods of closure. This was particularly true for rural markets and counties that had many uninsured adults before states adopted expansion.

In North Carolina, where the legislature is currently considering a bill to expand Medicaid, 11 hospitals have closed since 2006, and ECU Health, which provides medical care to 29 counties, is shutting down five clinics in the coming weeks, mostly due to financial pressure, the Greenville Daily Reflector reported in January.

Brian Floyd, ECU Health chief operating officer and president of ECU Health Medical Center, told States Newsroom, “We’ve reached the point of operating loss that we are then at a place where we have to decide what’s the best way to ration out our resources and had to make some tough decisions about whether or not we close some clinics. … This is the story when you don’t have expansion of Medicaid. This is what happens. Poor rural communities start to lose access to their health care.”

Lawler added that Medicaid expansion in North Carolina would help people manage chronic health issues instead of waiting for their health to reach a crisis point that requires hospitalization and expensive care. His organization supports House Bill 76, the bill to expand Medicaid that passed the state House on Thursday. If negotiations with the state Senate result in passage, Gov. Roy Cooper is expected to sign the measure, benefiting 600,000 North Carolinians.

Lawler said that there may finally be enough political will for the state to join the rest of the nation in expanding Medicaid.

“It makes so much sense if we’re going to make the state healthier and help address the behavioral health crisis and, and the substance abuse crisis in North Carolina,” he said “It creates new jobs, so it grows economies. It’s going to help rural communities stabilize their hospitals and health care safety net.”

Lloyd, the St. Claire HealthCare CEO, said that there’s no doubt that Medicaid expansion makes a difference for hospitals. Before coming to St. Claire, he was president and CEO at CHRISTUS Health Southwest Louisiana. Louisiana expanded Medicaid in 2016 and Kentucky in 2014.

“There was greater access to care and a greater sustainability to the hospitals post-expansion, both in Louisiana and here in Kentucky. We’ve just been very fortunate in the commonwealth that we’ve had a Medicaid expansion longer than some of the other states that were kind of slow to expand,” he said. “… It’s just a matter of economics and even though in some states the gap between the actual cost of care and the Medicaid reimbursement is very significant, at least it does offset some of the expense of operations.”

Will a new hospital designation help?

A new payment model that became effective in January could offer support to some rural health care facilities but health care officials caution that it is not the answer for all rural hospitals.

Under the change, hospitals that agree to a new rural emergency hospital designation would receive more Medicare reimbursements and a monthly facility payment. The hospitals would have emergency rooms, clinics and outpatient care, but patients couldn’t stay for more than 24 hours. The hospitals also can’t have more than 50 beds and must meet other eligibility requirements.

Kansas, Michigan, Nebraska and South Dakota have already enacted laws establishing licensing rules for Rural Emergency Hospitals.

“In (rural hospitals) in areas with a large number of residents who are 65 plus and qualify for Medicare, this model would help those hospitals and perhaps help offset any losses due the formerly Medicaid patients becoming uninsured,” said Richard Lindrooth, professor in the department of health systems, management, and policy at the Colorado School of Public Health at the University of Colorado.

Pink, with the NC Rural Health Research Program, said the new model isn’t a “panacea for rural health.”

“It really is directed at small rural hospitals that are at imminent risk of closure. It’s not designed to be a replacement for a rural hospital that’s breaking even or getting by in their community. … We’re not going to see 1,000 rural emergency hospitals in the country anytime soon. It’s a much smaller number of hospitals that this might be of interest to,” he said.

Floyd said ECU Health is studying whether this designation would be a good fit in some cases.

“There are trade-offs in that there is a higher payment plan per patient but you have to meet the conditions of 24 hours a day. We have to look at the market and say if it were only 24 hours, what does that do to that community? Do we have access elsewhere … for them to be?” he said.

Lloyd said it’s possible that a hospital in the area of Kentucky that St. Claire HealthCare serves could convert to the new designation, which would have implications for his health care system.

“Obviously we would handle the inpatient admissions for those institutions and so it would increase our capacity, but we’re prepared to do so if necessary,” he said.

Advocacy groups ask FTC to expand Biden administration efforts to rein in junk fees

Casey Quinlan — Mon, 13 Feb 2023 11:50:11 +0000

The Biden administration wants Congress to get rid of “junk fees,” including those paid to select an airline seat in advance. The practice means parents often pay large amounts to sit with their children (Bill Pugliano/Getty Images).

President Joe Biden devoted 19 sentences of his State of the Union speech to “junk fees,” which includes credit card late fees, service fees for concert tickets and airplane seating preferences that he said strain families’ budgets. Biden did not mention the numerous and opaque fees faced by prisoners and their families every day. But several think tanks and advocacy organizations want the federal government to tackle them.

The groups sent a letter on Feb. 8 to the Federal Trade Commission to let the agency know that prisoners and their families also need financial relief. The FTC announced in October that it was considering a rule to end many of the “unnecessary, unavoidable, or surprise charges,” which the agency said are cost-free to companies and target consumers who have no way to avoid them.

The Prison Policy Initiative, a criminal justice policy think tank, and the National Consumer Law Center, along with 27 other organizations, including the Center for Responsible Lending, and Southern Poverty Law Center, signed the letter. It explained that incarcerated people are often hit with fees for phone calls and messaging services, electronic monitoring and post-arrest diversion programs.

Prepaid debit cards given to people leaving a correctional facility with money they earned in prison or received from family also include a range of fees, including for balance inquiries and for not using the correct bank for a transaction — despite card companies rarely providing lists of banks, according to the Prison Policy Initiative

“These excessive fees bear all of the hallmarks of an unfair act or practice under the Commission’s enforcement authority,” the organizations wrote. “They cause substantial harm because they constitute high sums for people least able to afford them. They cannot reasonably be avoided because consumers are captive to private companies awarded exclusive contracts.”

These companies also benefit from monopoly contracts and provide little to no added value for consumers, the groups added.

Their language reflects that used by Biden during his State of the Union speech when he pushed for the passage of the Junk Fee Prevention Act. The administration has been targeting junk fees since last year. In September, Biden called on federal agencies to address the issue of hidden fees or junk fees, an issue he said should help relieve families’ budgets.

“Look, junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did. They add up to hundreds of dollars a month. They make it harder for you to pay your bills or afford that family trip,” he said in his speech.

The president told Congress to focus on regulating consumers’ entertainment ticket fees, airline fees, phone, internet, and television fees for switching providers, and resort fees and destination fees that hotel guests only see at the end of their reservation process.

Several agencies have already taken steps to alleviate the fees, including:

In October, the Department of Transportation proposed a rule to require airlines to clearly disclose fees, including fees for family members to sit with young children, when the consumer sees schedule and fare information.
Over the summer, the department encouraged airlines not to charge parents for seating their child next to them during a flight.
The Consumer Financial Protection Bureau proposed a rule this month to lower late fees from credit card companies.
The Federal Communications Commission has rules going into effect in 2024 to adopt labels that consumers can check out early in the process of shopping for broadband providers so that they can comparison shop for a better price.

Proposed federal rule would lower credit card late fees

Casey Quinlan — Mon, 06 Feb 2023 21:19:49 +0000

Cutline: A proposed limit on credit card late fees could eventually help consumers burdened by credit card debt and inflation (Joe Raedle/Getty Images).

As Americans continue to struggle with high credit card rates, the Consumer Financial Protection Bureau has proposed a rule to help lessen some of their financial burden — in the form of lower late fees.

The new rule would limit late fees to $8. Currently credit card companies can charge as high as $41 — penalties that the CFPB’s director, Rohit Chopra, said are charged for “no purpose beyond padding the credit card companies’ profits.”

The CFPB rule amends regulations that implemented the Credit Card Accountability Responsibility and Disclosure Act of 2009, and addresses a loophole that provided a loose standard that said late fees must be “reasonable and proportional.”

The proposed rule would require credit card companies to prove they need to charge a higher late fee to cover costs, and cap those fees at 25% of the minimum payment. Current regulations let credit card companies charge as much as 100% of the minimum payment owed. The rule would also get rid of the automatic inflation adjustment for the amount companies could charge in late fees.

According to the CFPB, an independent financial watchdog within the Federal Reserve, credit card companies bring in about $12 billion in late fees annually. The rule could shrink that by as much as $9 billion each year.

“The rule brings to the forefront the reality that credit card late fees are designed to be excessive to create incentives for consumer behavior. They are not in proportion to the cost to the lender,” said Aaron Klein, senior fellow in economic studies at Brookings.

The rule does not need Congressional approval, but Klein doesn’t expect it to go into effect and be felt by consumers until next year because of the lengthy process rules undergo, which includes a public comment period. It’s also possible that the banking industry will take legal action to fight the rule, which could delay it from going into effect.

The Consumer Banks Association’s president and CEO, Lindsey Johnson, has already responded by accusing the CFPB of “seeking to advance a political agenda” and said the rule will harm credit card holders.

The agency proposes the rule as credit card debt has ballooned in the U.S. It rose by 18.5% in the past year, shooting up to $930.6 billion, a record amount, according to a fourth quarter report from TransUnion, a consumer credit reporting agency.

Bankrate said the average credit card rate is 19.95% as of Feb. 1, which is the highest since the financial services company began tracking them in 1985. Credit card balances had the largest year-over-year increase in more than two decades at 15%, according to the New York Fed’s third quarter report on household debt and credit.

Some of that debt can be tied to the Federal Reserve’s decision to repeatedly raise interest rates to fight inflation over the past year. The latest increase of 0.25%, announced last week, follows a 0.50% hike in December and previous four rate hikes of 0.75%.

“These Fed rate hikes basically just get passed through to cardholders … if the Fed moves rates higher by half a point or three quarters of a point or whatever it is, your rate should move higher by that same amount typically within a statement cycle or two,” said Ted Rossman, senior credit cards analyst at Bankrate.

The CFPB March 2022 report on late fees found that the average late fee was $31 and that repeat late fees were $36 on average. Alabama, Louisiana, and Mississippi had the highest average late fees per account.

“In 2019 credit card accounts held by consumers living in the United States’ poorest neighborhoods paid twice as much on average in total late fees than those in the richest areas,” the report explained.

“The law differentiates between fees and interest but for consumers it’s money out of pocket. These [late fees] are a large source of cost to consumers on the margin … People facing greater economic difficulty and hardship pay more in fees,” Klein said.

He added, “For folks who are living paycheck to paycheck, and sometimes that paycheck comes a day or two after the credit card bill is due, these late fees really add up and put a much greater squeeze on those living on the razor’s edge.”

States criticized for spending federal relief funds on tax cuts, prisons

Casey Quinlan — Mon, 06 Feb 2023 14:30:04 +0000

Many states allocated their first rounds of federal COVID-19 relief funds to replace revenue lost and keep essential services running, but others used the money for programs that were not aimed at alleviating the effects of the pandemic (Spencer Platt/Getty Images).

As states plan how they’ll spend the $25 billion remaining in federal COVID-19 relief funds, some also are facing criticism and renewed scrutiny over how they allocated money already received from the American Rescue Plan Act.

Of the $198 billion authorized by Congress in 2021, $173 billion already has been appropriated by states, the District of Columbia and Puerto Rico. Much of the money went — as it was intended — to deal with the COVID-19 public health emergency, including social programs benefiting low-income communities, grants to help small businesses stay open and pay for essential workers. But civil rights groups and think tanks focused on economic and tax policy have pointed out that the money has gone to build prisons, offset tax cuts, and fund initiatives completely counter to improving public health, such as Arizona’s $163 million program to give grants to schools that didn’t have mask mandates.

The American Civil Liberties Union in a letter earlier this month requested that the Treasury Department investigate the misuse of ARPA funds. The Institute of Taxation and Economic Policy has criticized tax cuts that it says are squandering revenue built up in part by the federal relief funds. And the GOP-controlled House Committee on Oversight and Accountability on Wednesday held the first of what its chair, Rep. James Comer (R-KY), says will be many hearings examining how federal pandemic relief dollars were spent.

The Center on Budget and Policy Priorities, a nonpartisan research institute, has analyzed the ARPA fund appropriations since 2021, and in a January report says that many have used the funds “constructively” toward economic recovery but it also suggests that states need to use the remaining funds to help the people most affected by the pandemic and prevent long-term damage to health, education, and social services in states.

According to the CBPP’s data, capital construction made up 21% of the allocations — the largest share for all states — through December, with some states like Montana allocating 79% of their funds to capital construction projects. And while many state projects were for broadband and water and sewer infrastructure, some of the spending was unrelated to “an equitable recovery,” according to CBPP policy analyst Iris Hinh, author of the report.

In 2021, Alabama allocated $400 million, almost 20% of its funds, toward the construction of two new prisons. In Arizona, $4.2 million in recovery funds was designated to fund offices for Department of Corrections staff. In its January letter to the Treasury Department, the ACLU urged the Deputy Inspector General to investigate the use of ARPA funds for jail and prison expansions saying such construction “does not mitigate the effects of the COVID-19 pandemic and does not fall under any of the eligible uses of ARPA funds.”

Twenty-three percent of Florida’s funds were allocated to highway construction, according to the CBPP. Colorado, Louisiana and North Dakota also spent a large proportion of their funds on transportation construction.

Hinh noted in the report that “while spending on highways may help produce a stronger recovery, it is often poorly targeted to the communities that need help the most.”

Revenue replacement and unemployment assistance

Another big chunk of the relief funds — 13% across the nation — has gone toward replacing revenue losses from the pandemic, as allowed under the federal guidelines. The CBPP argues that although it makes sense to ensure that services that existed before the pandemic continue, states should use more of the funds to target inequities made worse by the pandemic, such as food becoming even less affordable for many families. In Wyoming, 58.8% of appropriations of these funds went toward revenue replacement, followed by New York at 57.2% of appropriations and Pennsylvania at 56.8%.

States allocated $23 billion to unemployment insurance trust funds, but only a small portion of that, $929 million, went toward upgrading unemployment insurance and improving access through IT changes and other advancements. The rest went toward rebuilding those trust funds after jobless claims increased due to the pandemic-related closures of businesses.

Nevada, for instance, which had borrowed from the federal government to pay unemployment claims during the pandemic used ARPA funds to pay off its loan rather than raise the unemployment tax paid by employers, according to the Nevada Current.

But Nevada is also using ARPA funds to modernize and streamline its system which buckled under the influx of claims during 2020, according to the Current. Colorado, Delaware, New Jersey, South Dakota, Tennessee, Virginia and Washington are also planning to use ARPA funds to update their systems.

Hinh said that states that are only choosing to rebuild their trust funds are missing out on opportunities to expand access and should instead raise the unemployment taxes paid by businesses.

Tax cuts

One of the more contentious uses of the ARPA funds has been to offset tax cuts. Since the law was intended to be a stimulus, it included a mandate: States could not cut taxes and then use federal funds to counteract the cuts.

In 2021, 21 state attorneys general, all Republicans, brought legal challenges against that part of the law. In January, the Supreme Court declined to hear Missouri’s case on the issue after a federal district court said the state didn’t have legal standing and the Court of Appeals for the 8th Circuit agreed. In a case involving 13 states, including West Virginia, Iowa, Arkansas and Florida, the Court of Appeals for the 11th Circuit ruled in January that the provision was unconstitutional because there wasn’t clear notice for how to comply with the law.

At least 24 states are considering income tax cuts during their current legislative sessions, including Arkansas, Montana and Utah. Kentucky Republicans are trying to pass another cut in the personal income tax after the income tax rate already fell this year. In Kansas, North Dakota and Ohio, lawmakers are proposing flat tax rates, and political leaders in Arkansas, Indiana, Louisiana and West Virginia have pushed for getting rid of personal income taxes altogether, according to the Institute on Taxation and Economic Policy. The flat tax proposal in Kansas would slash the budget by $1.5 billion.

These tax policy changes will hurt the people most affected by the pandemic and weaken the impact of the recovery funds, said Hinh and Aidan Davis, state policy director with the Institute on Taxation and and Economic Policy.

“It’s during good times in the economy when states are flush with cash that they feel that they are most able to justify and to push for deep tax cuts,” Davis said. “I do think that they feel that they’ve been able to use that almost as a cover for something that they wanted to do year after year and they continue to push for year after year, but (they’re) not talking about what the long-term implications are, because you’re looking at a one time surplus.”

She added, “It really is a missed opportunity on a lot of fronts because with the legislation under ARPA, the state aid did a lot of good, but it could have done a lot more had much of it not been squandered on tax cuts in the state.”

Hinh said that in the long term, states can either build off of the benefits of the recovery funds or suffer long-term consequences from cutting taxes.

“From the Great Recession, there were tax cuts that states implemented and I think, in many cases, that they still haven’t recovered from, and that impacts your education systems, your healthcare, and things that are really critical to the well-being of families and communities,” she said.

“While things like infrastructure improvements are great and needed, and water, sewer, and broadband, it’s also important to think about the long-term consequences, and that can’t be cutting taxes. It needs to be continuously building off of these funds and the programs and services they’ve been providing to people because the pandemic will have very lasting impacts and there are so many opportunities, still, with these funds.”

States that limit business with banks that ‘boycott’ fossil fuels could pay high cost, study says

Casey Quinlan — Fri, 13 Jan 2023 12:15:12 +0000

Cutline: More state lawmakers are introducing bills to keep their state governments from doing business with financial institutions that take environmental, social or corporate governance into consideration when making investment decisions. Critics say these bills are designed to boost fossil fuel companies and will end up costing taxpayers (Joe Raedle/Getty Images).

Republican state policymakers’ efforts to boost fossil fuels by prohibiting their governments from doing business with companies that take sustainability into consideration has the potential to cost states millions, according to a study released Thursday.

Researchers looked specifically at the possible effects on Florida, Kentucky, Louisiana, Missouri, Oklahoma and West Virginia if they passed Texas-like legislation limiting investment options on municipal bonds and found it could cost them between $264 and $708 million in additional interest payments. The study noted that the states had not passed such broad legislation.

The six states are among two dozen that last year issued proposed or passed legislation prohibiting state government entities from doing business with financial firms that take environmental, social and corporate governance (ESG) into consideration when making investment decisions as anti-ESG efforts spread from state treasurers and attorneys general to governors and lawmakers. Republican policymakers refer to ESG as the “boycotting” of energy companies and argue that the investment funds are following a liberal agenda that hurts jobs.

The study by Econsult Solutions of Philadelphia was commissioned by the Sunrise Project for two groups focused on environmental policy, As You Sow, and Ceres Accelerator for Sustainable Capital Markets. It expands on a Wharton School of Business study released in July that focused on the cost to Texas after anti-ESG laws restricting business with banks that have policies against fossil fuels and firearms took effect there in 2021.

Steven Rothstein, managing director of Ceres Accelerator, calls the anti-ESG bills and changes to state pension funds “short-sighted” and “political.” He argues that these approaches will only hurt taxpayers.

“In the long run, we’re worried that those taxpayers and pension holders will actually get hurt with higher risk and low return,” he said.

With Texas leading the way as the first state to enact anti-ESG laws, the study’s authors assumed passage of similar laws and the same bond market restrictions in the six states they chose to examine. They used data on municipal bond transactions from January 2017 to April 2022 and looked at changes in Texas bonds “that occurred during the last 12 months of the period which corresponded to the implementation of the new laws.” The six were chosen because they had had more debate about anti-ESG bills and administrative action on ESG issues.

The Wharton study found that Texas paid higher interest rates because of less competition after major banks were forced from the state. Similarly, the Econsult study found that interest costs for its six states could balloon if they underwent Texas-like changes that influenced municipal bonds in addition to state actions.

In Florida, the costs would range from $97 million to $361 million.

In Kentucky, the costs would be between $26 million and $70 million.

For Louisiana, the cost would fall between $51 million and $131 million.

In West Virginia, the interest costs would be anywhere from $9 million to $29 million.

In Missouri, taxpayers would see an increase in interest payments of $32 million to $68 million.

Oklahoma would have $49 million in additional costs.

“That is a burden on every taxpayer — every teacher, every elder citizen in those states,” Rothstein said. “That obviously doesn’t help anyone. It’s just higher interest costs, and that is because of having less bankers being able to bid for that work. That is one of the risks. And in addition, they’re also not going to be considering climate risk.”

Rothstein added that after the pandemic reminded people of how interconnected the supply chain is, it would be ill-advised to rule out considering climate risk, in addition to other ESG factors, and that ESG factors are only one set of considerations investors make among many.

Kentucky and West Virginia have now enacted bills restricting various government agencies and boards from doing business with financial institutions that “boycott” fossil fuels although neither reference municipal bonds nor are they as broad as the Texas legislation.

In Missouri, state Sen. Mike Moon, R-Ash Grove, has already filed anti-ESG legislation this session, similar to a bill he filed last year that restricted “public bodies” from contracting with businesses that used “ESG scoring.” It is one of three Senate bills aimed at what state officials have labeled “woke” investments. Last year, the state’s then Treasurer, Scott Fitzpatrick, pulled $500 million in pension funds from BlackRock, the world’s largest asset manager, saying the company had shown it would “prioritize the advancing a woke political agenda” over clients.

Michael Berg, political director of the Missouri chapter of Sierra Club, told States Newsroom he sees these efforts as a way for the fossil fuel industry to “buy time” and get in the way of any progress to address climate change.

“This is a national organized campaign being pushed by the Republican Party politicians, and conservative dark money groups controlled by billionaires and fossil fuel interests,” he said. Berg pointed to the influence of the State Financial Officers Foundation, a Kansas nonprofit that has been influential in the policy push against ESG.

According to a New York Times investigation, the group coordinated with the Heartland Institute, Heritage Foundation, and American Petroleum Institute to push anti-ESG policy approaches since January 2021.

“They (lawmakers) say they don’t like BlackRock looking at anything besides immediate returns, but we have to see whether or not they’re actually costing Missouri pensioners because of political decisions under the guise of opposing political decisions,” Berg said.

Here’s what you need to know about new workplace protections for pregnant, nursing workers

Casey Quinlan — Thu, 05 Jan 2023 12:30:55 +0000

Advocates, legislators, and pregnant workers rallied in support of the Pregnant Workers Fairness Act on Dec. 1, 2022 in Washington, D.C. The amendment was included in the federal spending bill signed by President Joe Biden at the end of the year (Paul Morigi/Getty Images for A Better Balance).

The $1.7 trillion federal spending bill President Joe Biden signed last week ushers in expanded protections for workers who are pregnant or nursing.

Proponents of the Pregnant Workers Fairness Act and the PUMP for Nursing Mothers Act — both included as amendments to the spending bill — say the measures clarify rights for these workers, who weren’t properly covered under existing laws.

Sens. Bob Casey, D-PA, and Bill Cassidy, R-LA, co-sponsored the measure strengthening pregnant workers’ rights. The law, which goes into effect in June, requires a business with 15 or more employees to make reasonable accommodations for pregnant workers unless doing so puts an undue hardship on the employer.

That means a pregnant worker can’t automatically be denied additional bathroom breaks, be required to lift heavy items or be denied the opportunity to sit while working or other such accommodations. And it means an employer can’t discriminate against a pregnant job applicant who needs such accommodations.

Supporters of the amendment said neither the existing Pregnancy Discrimination Act (an amendment to the Civil Rights Act) nor the Americans with Disabilities Act provided the accommodations that pregnant workers needed for a healthy pregnancy. Because those measures didn’t offer enough protections, 30 states enacted their own laws for pregnant workers, according to Bloomberg Law.

The Supreme Court’s standard for assessing pregnant workers’ rights and their needs for accommodations made the bill necessary, said Dina Bakst, co-founder of A Better Balance, a nonprofit focused on litigation, legislative advocacy and education on labor issues.

Bakst, in testimony to Congress in favor of the bill, said the court’s 2015 decision in Young v. UPS “laid out an overly complicated, burdensome standard requiring pregnant workers to jump through legal hoops and prove discrimination” to get accommodations. The court held that pregnant workers could only have the same accommodations as workers who were limited by injury or disability.

Bakst also testified that a 2019 report by her organization found that as a result of the court’s decision, pregnant workers lost 29 out of 43 pregnancy accommodation cases in lower courts. Elizabeth Gedmark, vice president of A Better Balance, told States Newsroom, said that doesn’t capture the number of workers who never made it to court because of the stress and financial issues related to taking legal action.

“You shouldn’t have to look around and find another coworker or jump through all these hoops or prove that you are disabled under the ADA,” she said. “You should just simply be able to have that reasonable accommodation when you need it, especially to prevent problems and health issues before they even start.”

As recently as August, the United States Court of Appeals for the Seventh Circuit decided that Wal-Mart did not violate the law when it said pregnant workers were not included in a policy at a distribution center in Wisconsin that allowed workers injured on the job to be assigned work that would not aggravate their injuries, Bloomberg reported. The court said Wal-Mart did not need to provide any justification for why the policy was limited to only those workers, the argument made by the Equal Employment Opportunity Commission which brought the suit on behalf of female workers.

Jocelyn Frye, president of the National Partnership for Women & Families said the passage of the Pregnant Workers Fairness Act was a win for gender and racial equity. She added, “For far too long, pregnant workers have gone without the critical protections many people need to maintain a healthy pregnancy: protections like the ability to take bathroom breaks during a shift, sit down while working a cash register, or pause to take a drink of water to stay hydrated.”

The legislation, which passed with bipartisan support, was also endorsed by the U.S. Chamber of Commerce, Retail Industry Leaders Association, Society for Human Resource Management and National Retail Federation.

Vania Leveille, senior legislative counsel at the ACLU also celebrated the passage of the PUMP Act for Nursing Mothers, sponsored by U.S. Sens. Jeff Merkley, D-OR, and Lisa Murkowski, R-AK, which was also included in the spending bill.

The measure was needed, advocates said, because the Affordable Care Act, which required workers be given break time to pump breast milk and the privacy to do so, did not cover employees considered exempt from overtime. That left out 9 million women workers of childbearing age, according to a report released in 2019 from the Center for WorkLife Law, out of the University of California.

The PUMP for Nursing Mothers Act is supposed to fill those coverage gaps, according to the ACLU and Center for WorkLife Law. It also extends the time breastfeeding parents can benefit from these accommodations from one year to two years.

“The PUMP for Nursing Mothers Act is so transformational because it expands the coverage of federal laws that provide break time, and space that is not in the bathroom and has to be hygienic for breastfeeding workers,” Gedmark said.

Businesses with 50 or more employees must provide the time and space for pumping immediately, but the ability to bring a complaint against an employer and take legal action doesn’t begin until April.

Transportation workers are treated differently under the PUMP Act, with bus drivers for long-distance bus companies and some railroad workers having a three-year delay in the bill applying to them.

There is also an exemption for air carriers and a difference in how the law affects some railroad workers. Employers do not have to provide breaks for railroad workers in train crews if it would be too expensive for the employer and if it created unsafe conditions for another rail worker who has the right of way, the amendment’s language explains.

More children live in poverty in states that haven’t raised minimum wage

Casey Quinlan — Fri, 23 Dec 2022 14:55:11 +0000

People gather together to ask the McDonald’s corporation to raise workers wages to a $15 minimum wage as well as demanding the right to a union on May 23, 2019 in Fort Lauderdale, Florida. The nation wide protest at McDonald’s was held on the day of the company’s shareholder meeting (Joe Raedle/Getty Images).

Of the 20 states that have failed to raise the minimum wage above the federal $7.25 an hour standard, 16 have more than 12% of their children living in poverty, according to a States Newsroom analysis of wage and poverty data. Anti-poverty advocates say that’s a sign that there’s an urgent need for lawmakers to increase the federal minimum wage and do more to help struggling families.

Congress had the opportunity to achieve the latter by expanding the child tax credit before the end of the year, but lawmakers did not arrive at a deal with Republicans to include it in the omnibus spending package. The expansion, which was part of the American Rescue Plan, provided as much as $3,600 in monthly installments to qualifying families and is credited with lifting 3.7 million children out of poverty at least temporarily.

Raising the minimum wage would not lead to as fast or drastic an improvement, but a 2019 Congressional Budget Office analysis found that increasing the amount to $15 an hour would lift more than 500,000 children from poverty. And the Economic Policy Institute estimated in 2021, that if Congress passed a $15 minimum wage increase by 2025, up to 3.7 million people wouldn’t have to live in poverty — 1.3 million of those being children.

Ben Zipperer, an economist at the Economic Policy Institute, said there is a strong connection between the minimum wage and poverty.

“It’s not a 1-1 connection, but there is a pretty strong connection,” said Zipperer, whose expertise is on the minimum wage, inequality, and low-wage labor markets. “The main determinants of poverty in this country are whether you work and how much you work, so whether you have a job during the year and how many hours a week or weeks per year you work at that job. … And then the third [determinant] is how much you were paid for an hour of work at your job. If you’re getting paid relatively low wages, the minimum wage affects that.”

Congress last raised the minimum wage in 2009, but 30 states now require employers pay more than the federal standard, according to the National Conference of State Legislatures. Numerous municipalities have also passed living wage laws for city or county workers.

Twenty-seven states, including New Jersey, Florida, California and Missouri, will raise their state’s minimum wage in 2023, after passing legislation or voter-approved ballot measures that gradually increase the state minimum wage over several years or tie it to inflation. Washington ($15.74), California ($15.50) and Massachusetts ($15) will have some of the highest state minimum wages in 2023, although the high cost of living in those states mitigates the effect on poverty rates.

In Missouri, where the minimum wage will be $12 next year, a 2018 analysis from the Economic Policy Institute found that Proposition B, the ballot measure that is responsible for raising the wage, would increase wages for 677,000 people in Missouri.

States where legislatures have not raised the minimum above the federal $7.25 an hour include Mississippi, Louisiana, Georgia, Oklahoma, Tennessee, Kentucky, North Carolina and South Carolina. All have child poverty rates of 20% or higher, according to U.S. Census data analyzed by 24/7 Wall Street, a financial news site. Mississippi has the highest child poverty rate in the United States, at 27.6%, with Louisiana following at 26.3%.

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Zipperer said that many of these low minimum wage states are concentrated in the Southern United States for a reason. He pointed to the political deals lawmakers made to leave Black workers out of 1930s labor rights gains, which were done for the benefit of Southern Democrats.

“That legacy of racism plagued the initial years of the national minimum wage and labor law generally in the United States, and while it was somewhat improved and overcome through the civil rights movement, you see the parallel to that now where you have a lot of places in the South that don’t have minimum wages and or have very low minimum wages, and so they follow the federal standard which Congress has refused to raise over the past 13 years,” he said.

He added, “That kind of decline in the cost-of-living adjusted value of the minimum wage disproportionately harms the people who are paid the lowest wages in the U.S. economy and because of our sexist and racist labor market, that is women and people of color.”

In Louisiana, for instance, 64% of women of color earn less than $15 an hour, while 58% of Black workers and 50% of Hispanic workers also earn less than $15 an hour, according to Oxfam America’s analysis of U.S. Census data.

The results of that disparity can be seen in an analysis of data on Lousianans’ standard of living done by Talk Poverty, a project of the Center for American Progress. It found:

19% of people in Louisiana had incomes below the poverty line in 2019.
20% of working age women and 29% of Black Lousianans in 2019 lived below the poverty line.
Louisiana ranked 42nd in the nation in high school graduation rates and 45th in higher education attainment during the 2017-2018 school year.
In 2018, 20% of young people aged 18 to 24 without high school degrees were not in school or working.
From 2017 to 2019, 15.3% of Louisiana households were food insecure.

Peter Robins-Brown, executive director of Louisiana Progress, said several factors contribute to the number of Louisianans living in poverty. Louisiana hasn’t prioritized putting funding into programs that would provide economic relief, has focused its tax reform on benefits for the wealthy and for businesses, and has a particularly unjust criminal justice system that punishes the poor, he said.

“Social services in Louisiana are largely underfunded, making it easier for generational poverty to continue,” Robins-Brown said.

The state also favors landlords’ rights over tenants rights and people living in the southern parts of the state that experience the most severe weather disasters have to live with high premiums for homeowners insurance, which further contribute to economic inequality, Robins-Brown explained.

Although Louisiana Gov. John Bel Edwards is a Democrat, and has expressed support for raising the minimum wage, both chambers of the Louisiana Legislature are controlled by Republicans. Louisiana is one of 24 states without a process for citizens to offer ballot initiatives and voter referendums.

“Both the House and Senate committees that deal with labor issues are low-priority for Republicans and Democrats because industry interests usually predetermine the outcomes in those committees,” Robins-Brown said.

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For these reasons, Robins-Brown says Louisianans are depending on the federal government to take action to raise the minimum wage. He said his organization supported expanding the child tax credit because it was been a powerful tool in reducing child poverty.

Congress last failed to increase the minimum wage in 2021, when it was proposed as part of a larger pandemic relief package. Fifty Senate Republicans and seven Senate Democrats voted against raising the minimum wage to $15 by 2025. The exclusion of the expansion of the child tax credit in Congress’ omnibus bill is one more lost chance to reduce child poverty.

“The child tax credit enormously reduced poverty during the recent expansion of that program and unfortunately that was temporary,” Zipperer said. “But I think that’s a very clear demonstration that we actually have, to some degree, the capacity to eliminate a lot of poverty in this country. All it takes is overcoming the political opposition to do that.”

Voters embraced affordable housing initiatives. Advocates say Congress should do the same

Casey Quinlan — Sat, 17 Dec 2022 11:55:41 +0000

In November, Colorado voters passed Prop 123, which will allow 0.1% of the state income tax rate to be used to increase the affordable housing stock among other provisions to help the unhoused. This man, who was living in an encampment in Boulder last year, said he had been on a housing wait list for a long time (Derek Miles for Colorado Newsline).

Voters in Colorado approved a statewide affordable housing initiative in November; while voters in nine cities across the country OK’d measures to finance the construction of affordable housing, preserve existing rental properties and support renters. But as housing costs soar, analysts and advocates say more needs to be done and argue that federal action is needed.

Robert Silverman, a professor at the department of urban and regional planning at the University at Buffalo, said the affordable housing crisis we’re seeing today has been many years in the making.

“It’s a structural problem with the housing market, where housing prices keep going up, costs of construction have increased, and incomes haven’t necessarily kept up with that part of the market,” he said. “It’s been something that’s been brewing for a couple of decades now. And the policy response, although there has been some, hasn’t been large enough to really wrap its arms around the entire problem.”

Higher building costs, a shrinking supply of low-cost rental units and more people with higher incomes choosing to rent rather than buy are driving the increase in higher-priced rentals and corresponding decline in low-cost units, according to a 2020 report from the Joint Center for Housing Studies of Harvard University.

Over the past five years, rent increased on average 5.8% year-over-year but saw the steepest increase — 14% — from 2021 to 2022, according to Credit Karma’s analysis of rental data. Meanwhile, the Census Bureau’s five-year survey shows that 40% of renters put 30% of their income toward housing. Higher home prices — the median sales price for a home in the third quarter was 10.6% higher than a year ago — and high interest rates are also combining to keep people from buying a home.

In response, voters across the country showed their concern about the lack of affordable housing by saying yes to millions of dollars in housing bonds and grants to address the issue. Among the measures passed:

Colorado voters passed Prop 123, which will allow 0.1% of the state income tax rate to go toward a number of grants and programs to increase affordable housing, assist unhoused people or prevent eviction, and provide rental assistance, among other provisions.
In Buncombe County, North Carolina, voters agreed to a $40 million bond for affordable housing. While voters in Charlotte approved a $50 million bond package for the city’s housing trust fund to provide financing for affordable housing projects. Charlotte needs 32,000 affordable housing units, according to the city government’s website.
Palm Beach, Florida, voters approved a $200 million bond to build 20,000 new units of both discounted and market-rate units by 2032.
A $50 million affordable housing bond intended to create 2,000 units was approved in Kansas City Missouri. It will focus on housing that would cost between $550 and $750 in rent each month.
Columbus, Ohio, voters OK’d $200 million to go toward the building of more affordable rentals, efforts to house and assist the homeless and the preservation of existing affordable housing, as well as funds to make homeownership more affordable in the area.

“These bond issues are one way to address [affordable housing], but they’re also a political indication of the degree to which voters recognize there’s a problem that has to be solved,” said David Dworkin, president and CEO of the National Housing Conference. “When we look at the broad range of proposals that have been approved, I think we also can see a signal that people get it. There’s a problem. And we’re going to have to pay to help fix it and it’s not going to fix itself now.”

Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio, said that inflation has created an “immediate need” for the affordable housing bonds. People are overcrowding their apartments to cover rent and the length of stay in homeless shelters is getting longer as families have nowhere to go, Boos said.

“The way that inflation is pinching everybody’s budget is making construction and building for housing demand harder and harder to do. So there’s an immediate need,” she said.

IMPACT Community Action, an anti-poverty organization based in Columbus, told an ABC affiliate that there were 2,000 evictions filed in September for Franklin County. The annual point-in-time count for Columbus and Franklin County’s unhoused population in January, 2022, was 1,912 people, with 342 people completely without shelter. Community Shelter Board, the nonprofit that organized the count, cautioned that the numbers did not paint a full picture because the Omicron surge made counting more difficult.

The preservation of affordability in housing is also key to tackling the crisis, Boos said.

“We know that there’s maintenance issues and rehabilitation issues and there’s properties that are affordable naturally, but it’s because they’re substandard naturally,” she said. “We don’t want people to have substandard housing because it’s the only thing they can afford.”

But Columbus residents won’t feel the effects of the bond measure overnight, she said, which is why she said state leaders should use pandemic relief funds from the American Recovery Plan Act to support the housing infrastructure in Ohio.

The Coalition on Homelessness and Housing in Ohio has called on Ohio Gov. Mike DeWine and the Ohio General Assembly to support spending $308 million in American Recovery Plan Act funds to build more affordable housing and improve current housing, among other housing efforts.

Moving into homelessness

Andy Paul, one of the founders for Asheville for All, a group that advocates for “housing abundance” in Asheville, the county seat of Buncombe County, said the affordable housing problems facing the city are similar to many areas of the country. Paul said that tourism and retirees have created more housing demand, and that Asheville’s expected population growth necessitates building more homes. He said he hopes that affordable housing bonds can help meet some of that need in the coming years. Buncombe County’s residents are expected to increase by 80,000 people by 2045, according to two firms, the French Broad River Metropolitan Planning Organization and Woode & Poole Economics.

The annual count of unhoused people in Buncombe County in 2022 was 637 people, a rise of 21% over last year’s count. The majority of unhoused people — 57.8% — became homeless while living in Asheville.

“We don’t blame people for wanting to move here. The solution is to just solve the problem. But that does create pressure,” Paul said. “And it means people can bid up land value. They can bid up home prices. And so it absolutely causes displacement of people that maybe grew up in Asheville.”

Peter LiFari, executive director at Maiker Housing Partners, a public housing authority in Adams County, Colorado, said that Congress often treats housing an “afterthought,” by keeping funding for housing affordability low. According to a 2021 report co-authored by LiFari and Evelyn Lim, from Common Sense Institute, an organization that provides research on Colorado’s economy, the state has to provide 54,190 new housing units each year over a five-year period to make up for lack of building during the Great Recession and to address future housing needs.

LiFari said he is “bullish on” Prop 123, which moves money from a general fund to a fund dedicated to affordable housing and allows local governments the right to opt in. But he added there will be challenges. If not enough governments enroll, there is some possibility that state lawmakers could direct the funds elsewhere. Local governments have until Nov. 1, 2023, to opt in so that their projects can benefit from the fund. By December 2026, the state’s housing division will begin to analyze whether local governments have met their growth targets.

How the federal government could help

Dworkin, with the National Housing Conference, says that there is much more governments can do to address the affordable housing crisis. Localities could reduce regulatory barriers, like zoning restrictions, that make it harder to build high-density housing. But he added that Congress also needs to act.

He pointed to a Nov. 28 letter from a bipartisan group of more than 50 members of Congress to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy that stressed the need to once again boost the Low Income Housing Tax Credit. The credits, which the federal government issues to states, are then awarded to developers of affordable rental housing to be used for financing. In 2018, Congress boosted the tax credits by 12.5% but that increase expired in 2021.

The letter also advocated for lowering the test of funding a development with 50% private activity bonds to 25%, which would allow states to fund more projects. Both strategies would make it easier to increase the affordable housing stock.

Members of Congress have been focused on coming to an agreement on various tax issues before the end of the year, including bringing back certain business tax breaks and expanding the child tax credit, but it’s unclear if the issue will be settled by the time the new Congress begins.

Silverman, with the University at Buffalo, said the Housing Choice Voucher Program, also known as the Section 8 program, also could be much larger to meet more people’s affordable housing needs.

“Half of the households that are eligible for vouchers aren’t even on the waiting list. And so there’s a lot of demand for housing subsidies for renters nationally out there and just expanding those programs would do a lot to meet some of the affordable housing needs that are already out there,” he said.

HUD programs addressing affordable housing issues have only had incremental increases over the years that just don’t keep up housing demand, he said.

The Biden administration announced a Housing Supply Action Plan in May, including a call for Congress to provide billions in HUD grants to increase affordable housing units, pressing states and localities to use American Rescue Plan Funds to build more housing, and leaving federal properties to affordable housing developers for reuse. In November, several White House officials, including Domestic Policy Advisor Susan Rice, National Economic Council Director Brian Deese, and American Rescue Plan Coordinator Gene Sperling had a meeting with advocates and experts in housing policy to talk about rental affordability and tenants rights.

Dworkin, who attended the meeting, said, “I think the White House is very focused on identifying bipartisan opportunities to make progress on this issue.”

LiFari said policymakers at all levels of government need to prioritize this issue immediately.

“The housing shortage now, the homelessness crisis, is acute. It’s horrible. It’s a humanitarian crisis,” he said.

Here’s why food prices remain stubbornly high even as inflation cools

Casey Quinlan — Tue, 13 Dec 2022 19:48:37 +0000

The cost of holiday baking will be higher this year as prices for eggs are up 49.1% over last year, according to the Consumer Price Index (Brandon Bell/Getty Images).

Shoppers hoping for a little relief at the grocery store for their holiday meals will be disappointed by the Consumer Price Index released Tuesday. The CPI shows inflation cooling but food prices — particularly for some holiday staples — remain high.

The CPI increased 0.1% in November, which was lower than some economists expected. Over the last 12 months, it rose 7.1%. Food went up 0.5% last month after an increase of 0.6% in October. The food index climbed 10.6% over last year.

“The headline inflation numbers are encouraging for the general economy but consumers are not being relieved at the grocery store,” said David Ortega, associate professor at the department of agricultural food and resource economics at Michigan State University. “We’re looking at November being the ninth consecutive month of double-digit grocery price inflation. Grocery prices are still 12% higher than they were a year ago.”

In August, the cost of food shot up 11.4% over last year, which is a level not seen since May 1979, according to Marketwatch’s analysis of government data.

“The good news is that food price increases and grocery price increases peaked in August,” Ortega added, “They’re just slowly starting to come down. We’re headed in the right direction but consumers are still not feeling relief at the store and that’s because inflation captures the rate of price increases over time, so just because the inflation rate starts to calm down a bit doesn’t mean that things are getting cheaper. They’re just not rising in price as quickly.”

Supply chain disruptions, the conflict in Ukraine, climate change, the deadliest bird flu in U.S. history, transportation costs, and increased consumer spending on food, are all drivers of higher food prices, Ortega explained.

“We have supply chain disruptions and they’re starting to ease from the pandemic. But then we have the conflict in Ukraine that led to a surge in commodity prices earlier this year. Those have come down significantly, but it takes time for that to be fully realized at the grocery store.”

Climate change has also affected agricultural output, he said, which has meant less food out in the market and increased prices. Ortega said that although it’s hard to say when food prices will begin to come down, he expects that it could happen in the next six months or so. The International Monetary Fund released a report in October that said Federal Reserve interest rate increases will put “downward pressure on prices through the end of next year.”

Donna McCallister, assistant professor at the department of agricultural and applied economics at Texas Tech University, said prices always increase this time of year, compounding the problem for many Americans this month. According to Bankrate’s Nov. 23 analysis of the cost of holiday essentials, six of 10 of the most inflated prices were for food, including turkey, bakery items, eggs, flour and prepared mixes.

Consumers preparing a Christmas ham, buying a frozen pie, or making sugar cookies for a party this month will find significantly higher prices than last year. Ham is up 7.8% year over year, frozen and refrigerated bakery products are up 19.4%, and eggs are up 49.1%, the CPI. shows.

“A lot of that has to do with increased cost of production and transportation, but also increased demand for these things like butter, where people go out and buy things like eggs, butter, and flour for their cooking, so there’s also a demand story here as well,” Ortega said.

McCallister suggests cutting down on food waste by going to stores more frequently for specific meals, buying some items in bulk, or switching from name brand to store brand to save money this holiday season.

Here’s when drug prices will start to decrease for Medicare recipients

Casey Quinlan — Mon, 05 Dec 2022 17:00:51 +0000

Medicare recipients who take insulin will be the first to benefit from the drug pricing provisions in the Inflation Reduction Act. Additional drug costs will start to decrease in 2026 (Joe Raedle/Getty Images).

Starting next month, a $35 cap on insulin prices will go into effect for millions of Medicare recipients. The lower pricing is one of the first of several policy measures Americans will see in the coming months and years under the Inflation Reduction Act signed into law in August.

The bill also requires pharmaceutical companies to pay Medicare rebates for drugs where prices surpass inflation for Medicare Part D and mandates that the government negotiate drug prices on some prescription drugs for people who have Medicare — the first time Medicare has been given that power. While it’s unclear how many people will ultimately benefit from the various changes, 49 million people are enrolled in Medicare Part D plans, according to the Kaiser Family Foundation.

The Medicare Part D rebates began in October. That same month, Medicare also began paying more for some biosimilar drugs to create more competition, lower the cost and improve access to those drugs for consumers. Biosimilars are drugs that are very similar to an existing drug, and have an average sales price that isn’t higher than the other drug.

The insulin cap that goes into effect next month benefits Medicare Part D recipients, who also no longer have to meet a deductible on their insulin. A $35 monthly cap on insulin for recipients who use insulin pumps and are covered under Medicare Part B’s durable medical equipment benefit goes into effect July 1, according to the Centers for Medicare and Medicaid Services.

Richard Frank, senior fellow in economic studies and director of the University of Southern California-Brookings Schaeffer Initiative on Health Policy, said there are a couple reasons that the law reduces the cost for insulin before other measures.

“The whole history of health reform in this country is that you really want to try to frontload real benefits to real people. And insulin, because of the relative technical simplicity, is a great place for that right away. You give sick people who really need the help, and where there’s been a lot of crazy cost-sharing for patients, earlier, so the benefits of the legislation start to become apparent pretty quickly,” he said.

Medicare patients spent $1 billion on insulin in 2020, according to Kaiser Family Foundation, and an estimated 16.5% of people with diabetes rationed their insulin in the past year, which can be extremely harmful to their health, according to an Annals of Internal Medicine article published in October.

But the Health and Human Services Department’s process for negotiating drug prices will take much longer. This process will apply to certain types of drugs, including biologics, or drugs that come from biological sources like sugars or proteins that don’t have generic or biosimilar competitors, or brand-name drugs where the company holds the patent, known as single-source drugs. Here’s the timeline:

In September, Centers for Medicare and Medicaid Services will list the 10 Part D drugs whose negotiated prices will take effect in 2026. Negotiations begin in October and end in August 2024, according to Kaiser Family Foundation’s timeline.
Another round of negotiations for 15 Part D drugs starts in February 2025 and ends November 2025, with prices to take effect in 2027.
The negotiation process for 15 Part D or Part B drugs starts in 2026 and prices will go into effect in 2028.
In 2027, 20 Part D or Part B drugs will be announced and in 2029, those prices will hit consumers.
In 2028, 20 more Part D and Part B drugs would be chosen to be fully implemented in 2030.
The last round of 20 Part B and D drugs prices would be seen in 2031.

“The bill is designed to have Medicare negotiate for the drugs that have the highest aggregate spending, so it really does give you the most bang for the buck,” said Emily Gee, vice president and coordinator for health policy at the Center for American Progress.

The price changes should start to have a real impact on Americans in 2026. “They’ll get roughly a 30% haircut on that deductible portion of their drug in a lot of cases. Most people would notice that,” Frank said.

According to an analysis of the impact of the Inflation Reduction Act from the Center for American Progress, an elderly middle class couple living in Pittsburgh, where one person is diabetic and takes insulin, could save $575 on insulin each year starting next year, and as much as $2,430 each year for their household — because of the $2,000 limit on annual out-of-pocket costs — beginning in 2025.

How will pharma respond?

A U.S. Department of Health and Human Services report released in September showed drug companies increased prices for several drugs by more than 500% between 2016 and 2022, and some experts worry that pharmaceutical companies could find loopholes in the new law.

Juliette Cubanski, deputy director for the program on Medicare policy at the Kaiser Family Foundation, said there may not be very much drug companies can do to stop from being selected for the first negotiation process at this point. But in general, they could try to put up barriers to implementation, such as raising legal challenges against the law. Cubanski said one other response could be higher launch prices for new drugs.

“That’s just one of those side effects from this legislation that we can’t really control in this country because we don’t have any sort of organized approach to setting the price of drugs the way that other countries do,” Cubanski said. “The Inflation Reduction Act provisions are expected to be helpful at constraining the growth in drug prices for existing drugs, but doesn’t have any provisions in it to limit the level at which drug prices are set for new drugs coming to market.”

The government can only negotiate for drugs that have been on the market for a certain number of years – nine years for small molecule drugs, typically pills, including some cancer treatments, and 13 for biologics, which use living cells and are difficult and more expensive to manufacture.

“I think there is an effort by pharmaceutical companies to bring innovative products to the market because there is, I think, a recognition among the pharmaceutical industry that that is where they have kind of the upper hand in prices and price negotiations — when we’re talking about drugs that are truly unique and innovative and don’t have competitor products,” Cubanski said.

She added that the possibilities of how drug companies could respond are largely unknowable at this point, however, because there is still so much to be done on the policy level.

They could also try to take their financial burden to the private insurance market or use citizen petitions to try to halt generic drugs from being approved by the FDA, at least for a while, NBC News reported.

Gee said she sees those messages about cost-shifting or raising launch prices as a scare tactic from pharmaceutical companies and said there isn’t really anything holding them back from raising prices now.

“But there’s very little discipline for them now because the market is so concentrated,” she said. “If they could raise their price another $10, why wouldn’t they do that now? It’s hard to see why they would be leaving money on the table today.”

Correction: This story was updated to correctly reflect that the monthly cap for insulin does not go toward pumps.

Two communities find a cure for medical debt: Pandemic stimulus funds

Casey Quinlan — Fri, 18 Nov 2022 20:38:50 +0000

Four in 10 adults in the United States have medical debt, according to a report from the Kaiser Family Foundation (Getty Images).

Local governments in Ohio and Illinois are using American Rescue Plan Act money to relieve residents struggling with medical debt by partnering with an organization that buys debt and wipes the slate clean for debtors.

It’s a strategy advocates say could be duplicated across the country to help erase a multibillion-dollar problem.

On Nov. 9, the city council in Toledo, Ohio, passed a measure to wipe out the medical debt of eligible residents using $800,000 allocated to the city through the American Rescue Plan Act (ARPA), a federal law signed by President Joe Biden in March 2021 that aimed to help the country recover from the economic pain caused by the COVID-19 pandemic.

Commissioners in Lucas County, of which Toledo is a part, also announced they would also contribute $800,000 in ARPA funds. The combined $1.6 million will go to RIP Medical Debt, a nonprofit based in New York, which buys medical debt from hospitals in bundles at a much lower price than the actual debt, allowing the money to go further. This means that $190 million to $240 million of community members’ debt will be eliminated, according to Michele Grim, the Toledo City Council member who championed the proposal. RIP Medical Debt only has an estimate at this time because the organization won’t know the exact amount until it has reached deals with local hospitals.

Residents have to earn a household income of less than four times the federal poverty level, which ranges from $13,590 for a one-person household to $46,630 for an eight-person household for the majority of states, and have medical debt that is more than 5% of their income to qualify.

Grim, a Democrat and newly elected member of the Ohio Statehouse, said that she would consider introducing a similar proposal in the Legislature. “I would like to explore this in the House. Medical debt is a crisis for everyone and would aid in the economic recovery of many Ohioans, she said in an email to States Newsroom.

“I have had several local governments reach out looking to do the same thing. I hope they can take the Toledo model and make it nationwide. Washington DC doesn’t have a plan to eliminate medical debt but Toledo, [Ohio] does.”

Many Americans carry medical debt, and it can take a serious toll on their finances. According to a Kaiser Family Foundation report published in June, 4 in 10 adults in the United States have some kind of medical debt, and 1 in 5 of those with health care debt don’t think they will ever be able to pay off their debt.

The Consumer Financial Protection Bureau (CFPB) estimates the total amount of medical debt in the U.S. at $81 billion based on data from credit reporting agencies but acknowledges its total is likely understated as “not all medical debts in collections are furnished to consumer reporting companies.”

A Kaiser Family Foundation analysis of data from the Census Bureau’s Survey of Income and Program Participation put the total much higher — at $195 billion, when including people who had more than $250 of medical debt.

Medical debt is also more common in certain areas of the country, according to the CFPB, particularly in the Southeast and Southwest. For instance, about 22% of Louisiana’s population has medical debt compared to 2.25% in Minnesota, the CFPB report shows. A 2021 study that analyzed consumer credit reports from 2009 to 2020 found that medical debt was most prevalent in low-income communities in the South.

In some cases, medical costs have driven people to bankruptcy. A study published by the American Journal of Public Health in 2019 showed that 66.5% of bankruptcies were either because a person’s illness affected their ability to work or their medical care was exorbitantly expensive..

Grim said she was inspired to do something about medical debt after seeing what Cook County, Illinois, did to relieve its residents of their medical debt. In July, the Cook County Board unanimously approved spending $12 million of ARPA funds to effectively get rid of $1 billion in people’s medical debt. Grim said she modeled Toledo’s plan closely after Cook County’s.

Allison Sesso, president of RIP Medical Debt, said that more local governments have reached out to the group to use ARPA funds to wipe out medical debt after learning about Toledo and Cook County’s efforts.

“I think it was sort of a no-brainer for anyone that’s focused on health equity and the recovery, post-COVID, on their communities, to get rid of this medical debt burden from people as quickly as possible,” she said.

RIP Medical Debt was founded in 2014 by Craig Antico and Jerry Ashton, who are former debt collections executives. Sesso said the pandemic brought renewed attention on medical debt and problems with the U.S. healthcare system in general.

“Part of the equation when you’re thinking as a policymaker in terms of solving these problems for individuals is that we are seeing rising costs of living, all this inflation, and all these other things that are making it harder and harder for families to make ends meet,” she said. “ … It’s an American experience for you to go to a health care provider and be thinking about how you’re going to finance that healthcare. And even if you can get yourself on a payment plan and it doesn’t turn into debt, it still means that you’re doing it at great sacrifice.”

Brady Chalmers, an administrative analyst in the office of Cook County Board President Toni Preckwinkle, said Preckwinkle took this approach because she wanted to focus on measures to alleviate poverty and promote public health. RIP Medical Debt was the organization that seemed best positioned to achieve this policy at the scale Cook County needed. Chalmers added that one of the advantages of the action was how much further the money could go when it costs pennies on the dollar to buy the debt.

“$12 million buying a billion dollars worth of debt is a really good bang for the taxpayer dollar,” he said.

Chalmers said that this could make it a little bit easier for people to make economic progress.

“Hopefully they get an improvement in their credit scores and that allows them access to financial tools that they wouldn’t otherwise have,” he said. “We also want them to feel comfortable using the hospital system. We don’t want to live in a world where people are choosing between rent and going to the doctor when they need both because they have some old debt. This allows us to free these folks from that burden.”

The Fed raises interest rates again, signals more coming despite pressure to slow the pace

Casey Quinlan — Thu, 03 Nov 2022 11:15:39 +0000

U.S. Federal Reserve Bank Board Chairman Jerome Powell during a news conference following a meeting of the Federal Open Market Committee on Wednesday, Nov. 2, in Washington, D.C. In a move to fight inflation, Powell said the Federal Reserve is raising interest rates by three-quarters of a percentage point, the sixth interest rate increase this year and the fourth time in a row at rates this high (Chip Somodevilla/Getty Images).

The Federal Reserve announced on Wednesday that in its continuing efforts to tamp down inflation, it would raise interest rates yet again by another three-quarters of a point to a target range of 3.75 to 4%.

Federal Reserve Chair Jerome Powell said during a press conference following the announcement that the “historically fast pace” of rate increases is “appropriate given the persistence and strength in inflation and low level at which we started.”

Powell, who has been pressured in recent months by members of Congress to avert a recession, said that at some point it will make sense to slow down the pace of increases but added, “We have some ways to go,” and said he anticipates ongoing increases.

Powell said he does not want to prematurely change the Fed’s approach because “ … the longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched.

“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” he said. “Without price stability, our economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”

YOU MAKE OUR WORK POSSIBLE.

In its policy statement, the Federal Reserve said: “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

In September, when the Fed raised rates three times, a Bankrate analysis found it was the most increases by the Fed in one year since the 1980s. In the 1980s, Federal Reserve Chair Paul Volcker raised rates several times — ultimately to the highest they had ever been, which was close to 20%. There were two recessions as a result and inflation fell to 3.4% in 1987 from 9.8% in 1981.

In August, Powell said the Fed’s goal to eventually get to 2% core inflation is “unconditional.” On Wednesday, the Fed repeated its mission and said it is “strongly committed” to meeting its 2% inflation goal.

And while Powell has said the Fed’s aim is to bring down inflation without causing a recession, he has also said “No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” PBS NewsHour reported. The acknowledgement that efforts to curb inflation could lead to job losses, has resulted in pushback from some economists and lawmakers who argue that a recession would be worse than today’s inflation.

Josh Bivens, director of research at the Economic Policy Institute, wrote in July that inflation does not directly decrease people’s incomes in the aggregate in the way that unemployment does and that in the long term, a recession would hurt economic growth more than inflation would.

GET THE MORNING HEADLINES.

Several Democratic senators have spoken out against raising rates, saying that it will put more Americans out of work, and would ultimately result in a painful recession. U.S. Sen. Elizabeth Warren tweeted on Wednesday morning, “Throwing millions out of work without addressing key drivers of higher prices isn’t the solution to fight inflation.”

On Monday, Sens. Warren, Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI) Sheldon Whitehouse (D-RI), and Jeff Merkley (D-OR), and U.S. Reps. Sylvia Garcia (D-TX), Jesus “Chuy” G. Garcia, Katie Porter (D-CA), Madeleine Dean (D-PA), Jamaal Bowman (D-NY), and Rashida Tlaib (D-MI) wrote to Powell: “Your ‘overarching focus’ on ‘using [the Fed’s] tools to bring inflation back down to our 2 percent goal’ no matter the cost is particularly troubling given the limits of interest rate hikes in addressing key drivers of today’s inflation, including lingering supply chain snarls, corporate price gouging, and the war in Ukraine.”

Powell had previously heard from U.S. Sens. Sherrod Brown (D-Ohio) and John Hickenlooper (D-CO). Brown, chair of the Senate Committee on Banking, Housing, and Urban Affairs, wrote to Powell on Oct. 25, “ … potential job losses brought about by monetary over-tightening will only worsen these matters for the working class.” While Hickenlooper wrote: “… I worry any additional action will undermine economic growth and harm American families.”

Democratic members of Congress introduced a bill in May that would focus on stopping price gouging during an “exceptional market shock.”

Republicans say they would cut government spending and “regain American energy independence” to bring down inflation, under the Commitment to America plan shared by House Minority Leader Kevin McCarthy.

Republican candidates for Congress have seized on the issue for the midterm elections. On Oct. 6, Madison Gesiotto Gilbert, who is running to represent Ohio’s 13th Congressional District, tweeted, “41-year high inflation” among her list of criticisms of Biden’s presidency. While Mark Robinson, the Republican running to take Democratic Rep. Dina Titus’ seat in Nevada’s 1st Congressional District, has blamed pandemic relief for inflation, according to the Financial Times. He said, “It’s reckless government policy that spent trillions of dollars we did not have and then paid people not to work: that’s what fueled the inflation. If they hadn’t done that, the Fed would not have to react.”

The CARES Act, the first pandemic relief measure with a $2.1 trillion price tag, was passed with bipartisan support in Congress during Donald Trump’s presidency. And economists have said that inflation in large part is being driven by consumer spending.

In the past month, the Biden administration has taken action to try to alleviate the burden of inflation by providing cost-of-living adjustments to people receiving Social Security benefits as well as implementing IRS inflation adjustments.

Millions of workers are dealing with long COVID. Advocates call for expanding social safety net

Casey Quinlan — Mon, 24 Oct 2022 10:45:36 +0000

Emily Withnall was living in Montana when she contracted COVID-19. In the two years since then, she’s moved to New Mexico and found a job but says she’s also experienced a laundry list of symptoms that have hampered her ability to live, work and provide for her family (Photo by Gino Gutierrez).

Emily Withnall caught COVID-19 from her teenager in July 2020. In the more than two years since, the 40-year-old has suffered from debilitating fatigue, spinal pain and heart palpitations. In addition to her primary care doctor, she regularly sees a cardiologist and says her acupuncturist and craniosacral therapy help relieve her pain and the trouble she has focusing.

Although her condition is improving, Withnall said she still isn’t back to her pre-COVID-19 health and she’s had to ask her employer, New Mexico Highlands University, for accommodations, which include time off to go to her various medical appointments and the ability to work remotely. When she does commute, it takes her an hour to get to the office

“There were a couple of times I had to commute and that was really, really hard and exhausting just physically,” she said. It doesn’t take much to cause a health setback. A simple cold can last weeks so she worries about getting the flu or, even worse, COVID again.

“I have no idea how bad it could be for me,” she said.

Long COVID, which the Mayo Clinic classifies as suffering from new, returning or ongoing symptoms, can include fatigue, chest pain, joint pain, dizziness, headaches, digestive issues, blood clots and brain fog, which makes it difficult to concentrate.

Sixteen million people of working age in the U.S. suffer with long COVID and of those, from 2 to 4 million people were unemployed in June and July, according to an August 2022 Brookings Institution report, which analyzes Census Bureau survey information. It’s one of numerous papers, surveys, and studies attempting to assess the effect of long COVID on workers, businesses and the overall economy.

The unemployment of so many Americans with long COVID, a lack of a social safety net for many of them, and a labor market that is beginning to turn in favor of employers could collide to create wider economic problems, some economic experts say.

The cost in lost wages has already been great. The Brookings Institution report puts the amount between $170 billion to $230 billion a year. And a National Bureau of Economic Research paper published in September found that workers with COVID-19 absences could see their earnings fall by about $9,000 in the 14 months afterward.

Andrew Goodman-Bacon, a senior research economist with the Federal Reserve Bank of Minneapolis, said it’s unclear how the spending habits of people with long COVID will be affected by their illness.

“Some households will certainly have to cut back,” he said. “But some subset of those households will also have ways to sort of insure themselves or be insured by these public programs. … What is aggregate spending going to look like if we enter a recession with a large group of workers with a health condition, a newly acquired health condition hard to predict? It will pull a lot of these levers in the economy, some of which will make consumption patterns change more and some of which might kind of push the other direction.”

Goodman-Bacon added, “The health of the workforce really does matter and it’s mattered for a long time … We’re all really trying to understand the same questions of just how much and right now we don’t know.”

Taking care of workers

Emily Withnall says she has come a long way from the early days of her illness, but lingering symptoms of long COVID are still present. Chronic fatigue is what plagues her the most, she says (Photo by Gino Gutierrez).

Withnall said that at the beginning of the pandemic she was living in Missoula, Montana and teaching creative writing at schools. That work ended when schools shut down. It also became harder to place her freelance writing.

Then her landlord raised the rent.

“The real estate prices were skyrocketing, and still are actually, and so as a single parent with a meager freelance income and very little teaching left, I was just really, really struggling even with the unemployment benefits,” she said in a phone interview. “I was also really not able to work a lot because of how bad my COVID symptoms were.”

She said for the first six weeks after she tested positive for COVID, her neck and back “felt like it had been turned into concrete.” At one point, a walk to the bathroom could leave her gasping for air. She ended up in the emergency room three times.

She still struggles financially because of health care costs despite her job as associate director for communications at the university and writing a few articles each month as the economic justice fellow for the nonprofit Community Change.

“I also don’t have savings or the ability to even think about bigger things like buying a house,” she said. “My oldest teen just started college and I can’t afford to help pay for it at all. I’d love to be able to put the money I’m paying in medical expenses towards my teen’s college, but that’s not yet possible. I’m still hoping that full recovery from long COVID will happen, but we will see.”

While the accommodations she has received from her employer has allowed Withnall to keep working, Katie Bach, a nonresident senior fellow at the Brookings Institution and author of the 2022 report, said that with a changing labor market, there’s a question of whether employers will be less likely to support workers with long COVID who need accommodations at work.

“Labor market participation among the disabled has gone up about 2 percentage points during the pandemic,” Bach said “Now there are a bunch of reasons that could be the case. One potential explanation is employers are more incentivized to find ways to accommodate people because they are short on people. If the macroeconomic conditions are such that over the next year we really see a move away from this kind of labor market tightness, employers are a little less motivated.”

And there are some signs that the labor market may indeed be cooling down. The U.S. unemployment rate was 3.5% in September, the same as in September 2019 before the pandemic. Companies throughout the U.S. are having less trouble hiring staff, according to The New York Times’ reporting, and the rate of people leaving their jobs sunk to 4.1% in July 2022 from 5.9% in July 2021, according to a Federal Reserve Bank of New York SCE labor market survey.

If employers become unwilling to keep on people with long COVID or if those workers are forced to quit for health reasons, many parts of the social safety net, including the unemployment system, are not set up well to help them, researchers say.

Andrew Stettner, director of workforce policy and senior fellow at the Century Foundation, said, there are a few states with laws that allow people to collect state unemployment benefits if they cannot work because of their own illness, but “that’s definitely not the majority.”

The Biden administration has taken some action to ensure that people with long COVID have safeguards against discrimination, including guidance on treating long COVID as a disability under the Americans with Disabilities Act. The Department of Labor’s Office of Disability Employment Policy also has a website that links to resources for employers on workplace accommodations for people with long COVID.

But Goodman-Bacon pointed out that as more people return to work, employers may be more likely to keep only the accommodations they find useful and cost-saving, such as allowing remote work which has been shown to increase productivity.

It may also be difficult for people to receive workers compensation when they get long COVID. Tom Wiese, vice president of claims at the MEMIC Group, said that claims of work-related long COVID are challenging to investigate.

“Even if the medical causation and/or origin of the symptoms/disease diagnosis can somehow be linked to COVID, there still remains the workers compensation causality from a legal principle perspective. Did that causation arise out of and occur within the scope of their employment?” he said.

For instance, a woman who had COVID-19 lost a workers comp case in Virginia in 2021 even though she worked in a nursing home when she became sick. Her weekly trips to the grocery store hurt her claim, according to the Virginia Mercury.

Advocates and researchers have proposed a number of policies to provide economic stability to long COVID sufferers, a number which the Brookings report says could increase by 10% each year — and lead to half trillion dollars in lost wages in 10 years — if people don’t begin to recover at greater rates.

In addition to better treatment options, the Brookings report recommends:

Expanding paid sick leave, which could reduce the spread of COVID;
Improve accommodations offered to workers such as flexibility on deadlines, longer and more frequent breaks, flexible hours and remote work;
Provide greater and and more timely access to Social Security Disability Insurance.

Bach and Stettner say Census Bureau and Bureau of Labor Statistics need more questions on long COVID and employment on their surveys to better guide policymakers.

The Patient-Led Research Collaborative, which is a group of long COVID patients and researchers, say that there should be a federal advisory committee on long COVID at HHS, that Congress should appropriate funds for states to fund or open clinics treating people with long COVID, pass universal healthcare, and expand access to disability benefits, among other policies.

Lisa McCorkell, a long COVID patient and the cofounder of and researcher for the Patient-Led Research Collaborative, said that although the Biden administration guidance is helpful, there’s a lot of people with long COVID who will still encounter discrimination at work.

“We’re still seeing a lot of people not get the accommodations that they need,” she said.

It can be difficult for some long COVID patients to access the health care they need to establish that they are covered and some employers still don’t believe they need to offer accommodations such as breaks or starting work later in the day, McCorkell said.

She said that although she’s seen people forced out of the workforce due to a lack of accommodations from employers, not many people have the resources to fight that termination, and it’s also hard to take on legal issues when you’re sick.

Stettner said that it’s important employers adjust and provide accommodations for workers with long COVID, because the workforce is changing in the long term.

“We had a very large generation of workers born in the ’40s and ’50s and those workers are reaching retirement age,” he said. “We really don’t have enough workers to grow the economy and we need to be able to accommodate those who are able to work, even if they’re not able to work full time, 12 months a year. We have to do better at that. It’s an economic necessity for us to do that as a society.”

Costs of incarceration rise as inflation squeezes inmates, families

Casey Quinlan — Tue, 11 Oct 2022 18:51:33 +0000

Wages for inmates are well below the federal minimum wage. According to a 2022 ACLU report, inmates in state prisons are paid on average between 13 cents and 52 cents per hour for a “non-industry job,” such as janitorial work or maintenance and repairs, which make up the majority of prison jobs (Darrin Klimek/Getty Images).

Across the nation, prison commissaries are raising prices on items that many consider basic necessities — from deodorant to fresh fruit — not provided by the state department of corrections. The markups come as decades-high inflation is also squeezing inmates’ families, making it harder for them to help.

It’s a burden that families shouldn’t have to shoulder, advocates say, and a situation that some worry will lead to unrest or violence.

Wanda Bertram, communications strategist for the Prison Policy Initiative, a think tank focused on policies in the criminal justice and legal system, said that by forcing prisoners and their families to buy many essential items in the prison commissary instead of providing them for free, prisons are shifting the costs of incarceration onto them and their loved ones.

“The prison and jail system always has the power to play hardball with the provider to get prices down in order to make items more affordable for the consumers but a prison system that’s already content with foisting the costs of things like over-the-counter medication onto incarcerated people probably is not going to work very hard to do that,” she said.

Jodi Hocking, the founder and executive director of the Nevada prisoner advocacy group Return Strong, said the strain is hard on the families.

“We have families that cross all different socioeconomic lines,” said Hocking, whose husband is incarcerated, “but a lot of families, once your loved one goes to prison, you’ve now lost your second income and you’re now dealing with kids on your own.”

Low wages, high prices

Inflation is, of course, only part of the problem.

Shannon Ross, a former inmate and now executive director of The Community, a Wisconsin-based nonprofit focused on decarceration and re-entry, said the biggest issue with the price of commissary items in Wisconsin prisons is that prisoners have such low incomes.

Jose Colón, who is at Sing Sing Correctional Facility in New York for a murder committed when he was a teenager, makes about $7 every two weeks as a clerk in the education department at Sing Sing, which he told States Newsroom is one of the better paying programs for prisoners.

Sing Sing raised the limit on the amount prisoners could spend in the commissary to account for the higher prices but that doesn’t help if money is still hard to come by.

“You go into the commissary one week and it will be a certain price and then the following week the price goes up a little bit, whereas it might only go up 25 or 50 cents but that’s significant when we’re only dealing with a set amount that we can spend per commissary,” Colón said.

Prison commissaries are often run by companies that contract with the state, and the state may also get a cut of the profits. That’s the case in Kentucky and Nevada, two states where price increases have come under scrutiny this year.

Kentucky prisoners saw a 7.2% rise in commissary prices in July, according to the Kentucky Center for Investigative Reporting. Items like a 4.6-ounce tube of Crest toothpaste, which costs $1.38 at the local Walmart, cost $3.77 at the prison commissary, and a 3-ounce Speed Stick deodorant was $4.52, compared to $1.98 at Walmart, according to the Center’s report. Katherine Williams, spokeswoman for the department of corrections, told the news outlet inflation was responsible.

Kentucky’s prison commissaries are run by Keefe Group, which runs commissaries in 14 states according to its website. Keefe is also the vendor for Nevada’s prisons and, along with the state Department of Corrections, earlier this year faced criticism from elected officials for overcharging prisoners after a state audit found most items marked up as much as 40%.

Nicholas Shepack, Nevada state deputy director at the Fines and Fees Justice Center, a criminal justice advocacy group, said in an email to States Newsroom that such mark-ups are supposed to go through a public approval process.

After the audit, Keefe Group wrote to “Nevada Department of Corrections: “Keefe Supply and the DOC Commissary have been hit with massive increases over the last year in almost all commodities. Keefe/DOC Commissary are not immune to world events such as supply chain shortages, shipping cost increases and increased labor costs.”

The Nevada Department of Corrections did not respond to questions from States Newsroom about commissary pricing. But the NDOC’s Deputy Director William Quenga previously told the Nevada Current that the department was in the process of putting together a report on cost analysis and profit margins.

Unhealthy options

Inmates often rely on the commissary to provide more satisfying meals than what they are served. A 2020 report from Impact Justice, a nonprofit focused on criminal justice system policy, found that a majority of prisoners said they rarely or never had access to fresh vegetables and had been served rotten or spoiled food.

Corrections officials in multiple states defended the food served to prisons.

The Wisconsin Department of Corrections responded to a question from States Newsroom by saying that “Canteen items are not intended to supplement meals in Wisconsin DOC institutions. Meals have a required calorie count.”

Betty Guess said her son, who is incarcerated in Nevada, told her the food served is inedible. But she can’t help him get anything better from the commissary, where prices have risen in the past couple of months.

Guess said she and her husband are retired and living on a fixed income. They pay for phones and email to check in on their son, but can’t afford to send any more money for commissary items. She worries about his health.

“He’s still a human being. They all are. And they deserve to be treated humanely no matter what their crime is,” Guess said.

José Colón’s wife, Janette Colón, also worries about her husband’s health. He underwent a thyroidectomy several years ago and she said she’s noticed he’s losing weight. Colón, who is the Bronx community leader for Release Aging People in Prison, used to supplement her husband’s commissary account with healthy items purchased at stores on the outside, but the state instituted a package ban this summer cutting out that option.

A car accident several years ago left her unable to work a full-time job, so she relies on Social Security Disability Insurance to support herself. She also provides financial support to her 19-year-old daughter, who is in college, and her mother.

“My biggest fear is that God forbid something happens to me that I won’t be able to provide anymore. So I always made sure to send money so that he can have a nice amount of money in his commissary. But that’s dwindled,” she said.

That puts her in a difficult situation, Colón said.

“What do I select? What do I choose? Do I choose my health over my husband not eating?”

In order to receive hygiene kits with toothpaste and shampoo, materials to send letters or other such necessities without paying for them, inmates have to be considered indigent in almost every state prison and federal prison, according to a 2021 Prison Policy Initiative Survey.

The amount of money prisoners can have in their prison account to be considered indigent varies from state to state, but in 13 states, including Colorado, Minnesota, New Mexico and Virginia, the account must stay under $5 to qualify. In 18 states, if an inmates’ account goes over the limit, they must pay back the state department of corrections for some of the benefits they received.

A push for change

Prisoner advocacy groups, prisoners and families are advocating for policy changes to address the high prices, and some lawmakers are starting to address the issue.

In Nevada, a bill that would be proposed for Nevada’s 2023 legislative session would aim to keep commissary prices in check, according to the Nevada Current.

In Virginia, members of a working group authorized by the General Assembly who weren’t affiliated with the state Department of Correctionsrecommended cutting the 9% markup on commissary goods and replacing that revenue with $4 million from the general fund. In a report produced by the group, reformers also suggested that to help defray the costs of purchases, families of prisoners be given a $500 tax refund or rebate. The working group came out of a bill introduced by Virginia Sen. Jennifer Boysko (D-Loudoun), who is considering filing a similar bill next year, according to the Virginia Mercury.

And in Massachusetts, Michael Cox, executive director of Black and Pink, a prison abolitionist group focused on LGBTQ and HIV-positive prisoners, said he is optimistic that a bill for fair pricing in the state’s commissaries would pass in the coming session even though efforts to include it in the 2023 budget bill did succeed. The bill would require that state prisons, correctional facilities, county correctional facilities, and entities contracting with them would not charge more than 3% over the purchase price for anything sold at the commissary, among other measures.

Changes to ensure that prisoners have affordable access to decent food and other necessities are necessary not just to provide relief to prisoners and families but for safety, say advocates and prisoners.

“It creates an atmosphere of violence,” said Colón, the prisoner in New York. “It creates an unsafe environment because now people look to rob people and look to prey on each other because ‘You have something that I want.’”

Betty Guess agreed.

“It does make them angry and it does tend to increase violence and they get into more fights with each other,” she said. “It makes it a more dangerous environment for the people who work there, the corrections officers and the other staff. All of that is a heightened level of volatility.”

GOP leaders target ‘woke’ investments through state pension funds

Casey Quinlan — Tue, 20 Sep 2022 12:00:44 +0000

Missouri Treasurer Scott Fitzpatrick threatened to remove the state’s assets from banks that “refuse to lend or invest in coal, oil and natural gas companies" (photo by Tim Bommel/Missouri House Communications).

Republicans in state capitals across the country are targeting an investing concept known as environmental, social and corporate governance criteria, or ESG for short.

Describing these investment criteria as “woke” and “misguided activism,” GOP officials argue that by taking these factors into account when making investment choices, financial institutions are putting ideology ahead of making money.

Experts on this investment criteria say that it’s the other way around, and that Republicans are losing money for their constituents by unnecessarily narrowing the options of the financial institutions the state does business with.

Nineteen Republican state attorneys general wrote a letter to BlackRock, the world’s largest asset manager, which manages $10 trillion, according to Insider, in August. The letter accuses BlackRock of making decisions based on its alleged political agenda rather than the welfare of state pensions.

“A governance engagement strategy primarily focused on BlackRock’s climate agenda necessarily overlays ESG factors on the core index portfolios that comprise a substantial part of many state pension funds,” the state attorneys general said in their letter. They added, “BlackRock’s commitment to the financial return of state pensions should be undivided.”

State attorneys general in Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Nebraska and Ohio were among those who signed the Aug. 4 letter.

In its response, BlackRock called the attorneys general statements inaccurate and wrote “we are disturbed by the emerging trend of political initiatives that sacrifice pension plans’ access to high-quality investments – and thereby jeopardize pensioners’ financial returns.”

The same group of attorneys general along with Virginia’s AG have joined an investigation by Missouri Attorney General Eric Schmitt into whether Morningstar, a financial services company, violated consumer protection law as it evaluated companies performance on ESG issues.

Missouri Treasurer Scott Fitzpatrick, along with 14 other GOP state treasurers, threatened to remove their state’s assets from banks that “refuse to lend or invest in coal, oil and natural gas companies.”

“Attempts to pressure financial institutions to cut off the fossil fuel industry,” Fitzpatrick said at the time, “amounts to nothing less than an abuse of power by the federal government and should not be tolerated by states.”

Later, Fitzpatrick defended his leadership role in a nonprofit organization that an investigation by The New York Times found was working to punish companies that try to reduce greenhouse gas emissions.

Florida Republican Gov. Ron DeSantis has also taken on the issue. On Aug. 23, he successfully pushed through a ban on considering ESG criteria in state pension fund investments.

DeSantis said of his win against ESG investing, “We are reasserting the authority of republican governance over corporate dominance and we are prioritizing the financial security of the people of Florida over whimsical notions of a utopian tomorrow.”

But Witold Henisz, vice dean and faculty director of the ESG Initiative at the Wharton School of the University of Pennsylvania, said such policy developments are bad news for taxpayers in these states.

“When states say they can’t do business with financial institutions that take climate risk and other ESG factors into account, that means they’re not doing business with the largest and most sophisticated financial institutions in the U.S. and in the world, which means they have to issue bonds and interact with smaller financial institutions which have less economies of scale and economies of scope and as a result, charge higher fees,” he said.

According to Deloitte, by 2024 half of all professionally managed assets globally will have investments in companies that take ESG issues into account. BlackRock has seven of the 10 largest ESG funds, according to Barrons, and its ESG-integrated portfolios covered $2.9 trillion in assets, according to its 2020 sustainability disclosure report.

A 2021 survey on responsible investing by Nuveen, an asset manager, found that 75% of employees strongly agreed or somewhat agreed that employers that have ESG and responsible investing options care about their retirement outcomes.

The Securities and Exchange Commission’s resource for investors notes that the environmental component of such investment strategies “might focus on a company’s impact on the environment or the risks and opportunities associated with the impacts of climate change on the company, its business and its industry.” The social criteria may relate to human rights issues or labor rights, and governance has to do with how the company conducts itself.

Alison Taylor, executive director of Ethical Systems at New York University, said that climate issues, which Republicans have been most critical of when discussing ESG investing, are actually one of the better factors to consider when making these investment decisions.

“Depending on the issue, there is more or less a ‘business case,’ more or less evidence showing that this issue will affect the bottom line of the organization,” she said. “Now where everybody has landed is climate change. I think that that’s problematic for the Republican position because there are some of these issues where there’s mixed evidence or there’s not that much evidence that the issue will have a dramatic impact on the bottom line over the long term. But climate is certainly an issue where there’s plenty of evidence that if you don’t manage climate risk now, that will have a detrimental financial impact over the long term.”

North Carolina and Texas politicians have also spoken out on ESG investing. Texas Comptroller Glenn Hegar (R) prohibited several financial firms from having contracts with his state, which means that Texas pension funds can no longer work with huge companies like BlackRock, UBS Group AG and Credit Suisse Group AG. Hegar said he decided to focus on banning firms that “boycott energy companies” in his announcement of the decision on Aug. 24.

Hegar said that state government entities would have to notify his office no later than 30 days after seeing the list of banned firms of the financial companies in which they have holdings. They also have to turn in an annual report “to the presiding officer of each house of the Legislature and the attorney general that identifies all securities sold, redeemed, divested or withdrawn in compliance with the Texas Government Code.”

Texas has been targeting ESG investing for some time.

Wayne Christian, a Republican on the Texas Railroad Commission, which regulates oil and gas, criticized ESG as potentially hurtful to employment in the energy industry in January 2021, according to Bloomberg. In May of 2021, he said the SEC should protect oil and gas companies from ESG investing, the outlet reported. The following month, Texas Gov. Greg Abbott signed a bill into law that says the state’s pension funds must divest, sell, withdraw, and redeem from companies that it characterizes as boycotting energy companies.

North Carolina State Treasurer Dale Folwell, who manages the state’s pension fund, has also criticized ESG investing and told top1000funds.com that the pension fund is going to take a different approach to environmental factors through shareholders voting instead of through a proxy vote by asset managers.

“We don’t want our proxy to be used to promote policies that don’t have anything to do with our fiduciary responsibility; to use these assets and vote these assets in a way that is contrary to our fiduciary responsibilities is not something we are going to do anymore,” said Folwell, who has been criticized for his financial decisions in the past.

Taylor said she sees Republican efforts to attack ESG investing as similar to the Republican focus on critical race theory in the sense that policymakers took a concept that many Americans weren’t familiar with and used that to their advantage to meet certain political goals.

“You can think about ESG as an attempt to sort of bring critical race theory to the private sector,” she said.

Taylor added, “This stuff is wonky and it’s technical and it’s really disputed and a lot of people use the term in different ways. It’s the exploitation of a level of misunderstanding and I think they hope that people will be like, ‘Well, Disney really overstepped the mark.’”

As rural homelessness increases, HUD aims money at helping people without access to shelters

Casey Quinlan — Mon, 12 Sep 2022 10:50:53 +0000

People wait for the chance at securing housing in small trailers for $10 a night on August 5, 2021 in Springfield, Missouri (Spencer Platt/Getty Images).

The Department of Housing and Urban Development has opened up millions of dollars in funding for groups serving unhoused people in rural areas — an unprecedented move by the agency, say housing advocates.

People living in cars, parks, and on the street at night, which the agency labels unsheltered homelessness, has increased across the nation, particularly in urban areas on the West Coast, but rural areas across the country are also being affected, a department spokesperson said.

Continuums of Care, the planning bodies that address homelessness within specific regions, have until Oct. 20 to apply for a portion of $54.5 million targeted at rural homelessness. HUD could not provide an estimate for how many organizations would benefit from this funding but said that 127 of them are eligible to apply.

According to the department’s January 2021 report to Congress, 2020 was the first year since it began collecting this data in 2005 that there were more unsheltered unhoused people than people living in shelters. The report also noted that “largely rural [Continuums of Care] had the largest percentage of people experiencing homelessness in unsheltered locations” at 44%, compared to 39% in Continuums of Care that include major cities. From 2019 to 2020, there was an 8.3% increase in unsheltered homelessness in largely rural Continuums of Care.

Steve Berg, vice president for programs and policy at the National Alliance to End Homelessness, said the housing challenges are different in rural areas. Berg said the issue in rural areas is not always a lack of housing as it is in urban areas but a lack of safe housing.

“In rural areas, there’s housing and a lot of it is vacant or it’s run down. It’s not kept up well, so it’s substandard housing. If that goes on for too long, then people just can’t live there safely.”

Berg added that the systems in place for addressing homelessness in rural areas also operate differently from urban areas.

“There aren’t homeless programs in a lot of rural areas. A county that’s mostly rural might get a little bit of federal homelessness money, but it’s not enough to really run a program or people’s salaries,” he said. “So in a big city, you’ve got a whole sort of system of homeless programs that are dealing with different aspects of the problem and are overseen usually by a centralized agency that makes decisions about how the funding will be doled out and who will go to work. None of that really exists in a lot of rural areas.”

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Service deserts

Adrienne Bush, executive director for the Homeless and Housing Coalition of Kentucky, said that understanding how many unhoused people are in rural areas is challenging because of “service deserts” where there aren’t shelters or housing programs available to count the number of unhoused people.

Bush said that there is a need for more resources for outreach as well, which looks different in rural areas. For example, it could require going to a state park and walking up and down river beds rather than going to an encampment under an overpass.

In 2020, the states with the highest percentages of unsheltered unhoused people overall were Nevada, Oregon, California, Hawaii and Arkansas. Maine, New York, Nebraska, Massachusetts, and North Dakota had the lowest rates, according to the 2021 HUD report. HUD also has $267.5 million in funds available to address the unsheltered homeless population in non-rural areas. The report also found that largely rural Continuums of Care that had the highest percentages of unsheltered unhoused people were in West Tennessee, including the city of Jackson; Lake County, California; and seven counties in Florida: Hamilton, Columbia, Suwanee, Lafayette, Hardee, Highlands and Hendry.

The HUD funding will begin to address the challenges advocates describe.

Brenda Gray, executive director of Heartland Coalition for the Homeless in Florida, whose coverage area includes Hendry, Hardee and Highlands counties, said that some of the challenges to preventing homelessness in the area include a lack of affordable housing.

Gray said she hopes that at least a few of the six counties the Heartland Coalition serves will be selected for projects. One possible project she’s looked at would be a pilot project in Hendry County for 12 or 13 tiny houses on a third of an acre of land.

“We’re a small Continuum of Care and what we really need funds for is a housing specialist. My clients that we serve right now — we try to assist them as much as we can in locating housing,” Gray said. “But without a housing locator or a housing specialist, there’s not too much we can do. So what we ask them to do is to find housing and then we will help you get into that place financially, providing you will qualify. So housing specialists and outreach is the most important in my point of view. Because we’ve got a case manager trying to do everything.”

YOU MAKE OUR WORK POSSIBLE.

Housing first policy

Bush said that she sees the HUD funding as an opportunity for areas that can’t supplement federal dollars with money from their local general fund and tax base like Louisville and Lexington can.

“Some of these smaller communities, say Hopkinsville, Kentucky, don’t have that luxury and so whatever money for homeless services they have, it’s going to be coming from the federal government and dependent on whether there is a local organization that has the capacity to apply for and deliver high quality services with federal funds,” she said. “The state is not supplementing anything from its general fund towards homeless assistance and that is unfortunately true for a lot of southern states.”

She added that one of the things she likes about the funding opportunity is that it incentivizes projects that have partnerships with housing providers.

“The idea here is to increase the [housing] stock and streamline the process from people experiencing homelessness to actually get into the housing,” Bush said.

HUD says that one of its policy priorities for the funding is a “housing first” approach. The department says that Continuums of Care should “engage landlords and property owners to identify an inventory of housing available for rapid rehousing and permanent supportive housing participants, remove barriers to entry, and adopt service delivery methods that respond to the preferences and needs of the individual or family presenting for assistance.” It also requires that Continuums of Care describe their current strategy for recruiting landlords and how they would use data to change their recruitment strategy.

Leeanne Sacino, executive director of the Florida Coalition to End Homelessness, said in an email that many rural communities struggle to provide services because of staffing issues caused by low pay. . Sacino added that many rural communities in the state don’t even have shelters.

She said that the HUD funding provides for services like short-term emergency stays in hotels, emergency food and clothing, prevention of homelessness for those who are behind on paying rent, and things that will help build agencies and organizations’ capacity, such as employee education, that aren’t usually available to Continuums of Care.

The HUD funding is of course just one step toward addressing rural homelessness in the U.S. Berg said that the department needs a lot more funding from Congress to truly address homelessness in this country.

“They have programs that are well designed to get good results, but they’re just never funded enough to really go to scale.”

For upcoming federal appropriations, the National Alliance to End Homelessness is advocating for $3.6 billion in funding for HUD’s Homeless Assistance Grants and $32.1 billion for the Tenant Based Rental Assistance account.