The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label Congressional Budget Office. Show all posts
Showing posts with label Congressional Budget Office. Show all posts

Tuesday, September 2, 2014

CBO: US Labor Market 2014

I receive daily updates of communication from the Congressional Budget Office (CBO). Most of the updates do not hold my interest and are summarily deleted. The following article is worthy of our review.

The article addresses the US labor market and the phenomenon the CBO refers to as "slack." Labor force participation is a critical component of the US economic recovery. It is also a "drowning man's straw" for the GOP as party obstructionist reach to Labor force participation is an area of right-wing criticism of the Administration efforts to improve the US economy. Rather than work as a cohesive governing body, GOP members of congress, virtually to the member, prides in obstruction against any and all initiatives from the White House. Thus, they obstruct our ability to experience an accelerated improving economy.

Two additional points critical to this introduction. My comments above are separate and part from the CBO piece that follows. Any and all opine are that of The Pardu, with no direct connection to the CBO article. Another important consideration: the CBO report is not a glaring endorsement of any and all economic policy from the Administration.

@USCBO Congressional Budget Office. Nonpartisan analysis for
the U.S. Congress. For cost estimates, follow@USCBOCostEst

Slack in the Labor Market in 2014

Posted by Bob Arnold on September 2, 2014
Although conditions in the labor market have improved notably in recent quarters, a significant amount of slack remains, in CBO’s estimation. As discussed in a blog post last week and in our updated budget and economic outlook, CBO anticipates that economic growth will pick up in the next few years. That faster growth will reduce the amount of slack in the economy. Similarly, in CBO’s judgment, ongoing gains in employment will largely eliminate the existing slack in the labor market during the next few years.
Broadly speaking, slack in the economy refers to underutilized productive resources, including business equipment and structures that are idle, houses that are unoccupied, and people who would like to work but are not working (or who are employed but would like to work longer hours). In CBO’s view, the current slack in the labor market consists of several elements, including the following:
  • The labor force participation rate is well below what CBO estimates would be achieved if the demand for workers was currently stronger—that is, well below the potential participation rate that reflects the estimated effects both of demographics (such as the age distribution of the population) and of the number of people who have left the labor force permanently in response to the recession and slow recovery;
  • The unemployment rate is above CBO’s estimate of the natural rate (that is, CBO’s estimate of the unemployment rate arising from all sources except fluctuations in aggregate demand);
  • In combination, the shortfall in labor force participation and the elevated unemployment rate have resulted in substantially lower employment in 2014 than would otherwise be the case; and
  • The share of part-time workers who would prefer full-time work is significantly higher than it was before the recession, and the rate of long-term unemployment is still about a percentage point above its average rate during the years before the recent recession.
One important signal that significant slack remains in the labor market is continued slow growth in hourly labor compensation. But measuring slack is quite difficult—especially given the unusual developments in the labor market since the recession ended—and the current amount of slack could be a good deal larger or smaller than CBO estimates.

Labor Force Participation Rate

The labor force participation rate fell from 65.9 percent in the fourth quarter of 2007, at the beginning of the recent recession, to 62.8 percent in the second quarter of 2014.
CBO estimates that about ¾ percentage point of the decline since late 2007 represents the extent to which actual participation is below potential participation because of the contemporaneous weakness in both employment prospects and in wages. That amount is only slightly less than the effect CBO estimates for the fourth quarter of 2013, when the estimated shortfall of the actual participation rate relative to the potential participation rate was at its largest.
According to CBO’s analysis, most of the decline in the rate of labor force participation since late 2007 is attributable to two other factors: First, long-term trends, especially the aging of the population, account for about 1½ percentage points of the decline. Second, unusual aspects of the slow recovery of the labor market that led workers to become discouraged and permanently drop out of the labor force account for about ¾ percentage point of the decline.

Unemployment Rate

The unemployment rate stood at 6.2 percent in the second quarter of this year, roughly 1¼ percentage points above its level before the recession (see the figure below).
Unemployment Rate
CBO estimates that about ½ percentage point of that increase reflects temporary cyclical weakness in the economy—much less than the peak effect of temporary weakness, estimated to be about 4¼ percentage points in late 2009. In CBO’s view, the remaining ¾ percentage point of the increase from the unemployment rate before the recession stems primarily from two structural factors that have boosted the natural rate of unemployment to about 5¾ percent currently:
  • The stigma and erosion of skills that can stem from long-term unemployment (wherein a person has been jobless for more than 26 consecutive weeks) account for about ½ percentage point of the increase; and
  • A decrease in the efficiency with which employers are filling vacancies (probably at least in part as a result of mismatches in skills and locations) accounts for about ¼ percentage point of the increase.

Employment Shortfall

In the second quarter of this year, if the unemployment rate had returned to its prerecession level and if the labor force participation rate equaled its potential rate, about 3¾ million more people would have been employed, according to CBO’s estimates. The elevated unemployment rate and the depressed labor force participation rate account for that shortfall in roughly equal proportions. By comparison, the shortfall in employment represented about 5¼ million people in the fourth quarter of last year by CBO’s estimates, reflecting a higher unemployment rate and a slightly more negative effect of the cyclical economic weakness on labor force participation. At its peak in 2009, that shortfall was 8½ million people, CBO estimates.
Those estimates of the shortfall in employment do not reflect the number of people who have left the labor force permanently in response to the recession and slow recovery. However, the estimates do include unemployed workers who would have difficulty finding jobs even if overall demand for workers was higher. Alternative measures of the shortfall in employment that treated those or other groups of people differently might be appropriate for some purposes.

Other Indicators of Labor Market Slack

Another manifestation of slack in the labor market is the number of people who are employed but are not working as many hours as they would prefer. The incidence of part-time employment for economic reasons (resulting from slack work or business conditions or a worker’s inability to find full-time employment) remains much higher than it was before the recession (see the figure below). Consequently, the Bureau of Labor Statistics’ U-6 measure of underutilization in the labor market stood at 12.2 percent in the second quarter, down from a peak of 17.1 percent in fourth quarter of 2009 but still well above its value of 8.5 percent in the fourth quarter of 2007. (The U-6 measure combines the number of unemployed people with numbers for two other groups of people: those who are “marginally attached” to the labor force—that is, who are not currently looking for work but are willing and able to work and who have looked for work in the past 12 months—and those who are employed part-time for economic reasons.) Consistent with the trends in the U-6 measure, average hours worked per worker fell substantially during the recession and remain below their prerecession level.
Workers Who Are Employed Part Time
Although the rate of short-term unemployment (the number of people unemployed for 26 weeks or less as a percentage of the labor force) in the second quarter of 2014 was close to its average rate between 2001 and 2007, the rate of long-term unemployment was still about a percentage point above its average rate during that earlier period (see the figure below). The fact that the elevated amount of unemployment is concentrated among the long-term unemployed has accentuated concerns that stigma and an erosion of skills may be hindering their efforts to secure stable work. Although CBO estimates that those factors have raised the natural rate of unemployment, the agency nonetheless expects that many of the long-term unemployed who are not near retirement age will be employed again. CBO’s view reflects recent research that the long-term unemployed are in many ways similar to people who have been unemployed for a shorter time. Moreover, the rate at which the long-term unemployed find jobs, while still quite low, appears to have picked up in recent months.
Measures of the Underutilization of Labor
Finally, labor compensation (the combination of wages, salaries, and benefits paid to workers) has grown slowly, another indication that a significant amount of slack remains in the labor market.

Difficulties in Measuring Labor Market Slack

Considerable difficulties arise in measuring slack in the labor market, especially under current circumstances. For example, in estimating potential labor force participation, CBO has estimated how many people permanently dropped out of the labor force because of such factors as long-term unemployment. However, CBO may have underestimated or overestimated that number, and therefore potential labor force participation could be higher or lower than the agency thinks. Similarly, CBO’s estimate of the increase in the natural rate of unemployment relative to what it was before the recession incorporates the agency’s estimate of the decrease in the efficiency with which employers are filling vacancies. That effect has diminished gradually, in CBO’s judgment, as the causes of that dampened efficiency have receded and as workers have acquired new skills, shifted to faster growing industries and occupations, or relocated to take advantage of new opportunities. If such adjustments in the labor market have occurred faster or slower than CBO has estimated, the natural rate of unemployment would currently be lower or higher, respectively, than CBO has estimated. A lower natural rate would suggest less upward pressure on wages for any given unemployment rate, and a higher natural rate would suggest more upward pressure.
Bob Arnold is Chief of the Projections Unit in CBO’s Macroeconomic Analysis Division.

Friday, May 23, 2014

Fox News Garners Another "Pants Of Fire!" Ironic Since Fox Has Been Known For Policy Agains Pants on the Set

It is sad Fox News viewers don't supplant their news viewing with anything other than sitting with popcorn in bowl and tin foil hats to soak-up the Keystone Cop programming from Roger Ailes employees.

I recall an exchange with a conservative who took exception to ObamaCare regarding his thoughts of Congressional wavier. In other words, he believed member of Congress were omitted from compliance under the Affordable Care Act. After I sent the guy a copy of an article, clearly delineating members of Congress were required to enroll, the guy fired back a snippy response of , " you believe what these guys say." He further stated he asked his congressman and his congressman told him members of Congress did not have to secure coverage via the ACA. When I asked if his congressman was a Republican and implied he might have fallen for GOP lockstep lies, I never heard back from the guy. I suspect he secured an answer via a Goggle search. How naive and "tin hattish?" 

I am unabashed as I restate my position of securing news and current events from people who work for a network that prohibits women from wearing pants on the set. Now, why do you suspect such an edict is a reality over at Fox News?  Allow me to provide an answer.

USA Today September 20, 2013
"Pants were not allowed on Fox & Friends, remember?" she told former co-host Brian Kilmeade on his Fox News Radio show yesterday. (We're guessing the rule only applied to female hosts, considering we've never caught Kilmeade or Steve Doocy in a skirt.)
Some prefer images.....The Five co-host Kimberly Guilfoyle.


Fox spares no camera angles and it isn't at all surprising the network demographics indicate a heavy leaning towards thirty-somethings to high baby boomer white males.  

No problem with liberal (use intended) of thigh and legs shots on camera, but I relish in the fact those who expose are not bringers of information that I absorb. Since we are on the topic, the pictured host, recently delivered a message craftily written by writers and delivered via Fox New production.

The Truth-O-Meter Says:
Kimberly Guilfoyle on Wednesday, May 21st, 2014 in a broadcast of "The Five" on Fox News

Guilfoyle: Obamacare is 'one big fat VA'

The uproar over allegations of secret waiting lists at a Veterans Administration hospital in Phoenix, and delays that potentially cost veterans their lives has opened the Obama administration to criticism that it was slow to respond to the VA’s own internal reports.
Some also see a connection between troubles at the VA and the president’s signature health care law, the Affordable Care Act.
On Fox News’ The Five, four of the show’s pundits built the case that if Obama digs deeply into the VA, it will raise more questions than he would like about how the Affordable Care Act is structured.
When a Fox News panelist described the VA as a "single-payer" system (where the financing of health care is run through the government), co-host Kimberly Guilfoyle chimed in.
"If he (Obama) shines a light on that, if we actually have some illumination there, then you're going to see this is really what the rest of you all are going to get: One big fat VA system in the form of Obamacare," Guilfoyle said.
Using the same logic, co-host Eric Bolling later claimed that 500 people per year "are going to die waiting" for treatment because of Obamacare.
Bolling’s claim has some fundamental problems -- we’ll address them in a bit -- but here we’re fact-checking Guilfoyle’s claim that Obamacare amounts to "one big fat VA system."
Obamacare: One big fat VA system
The VA owns hospitals. Its doctors, nurses and technicians are government employees. The people who get care at VA facilities have served in the armed forces. These facilities are not open to the general public, and Congress appropriates the funds that keep the VA running.
Under the Affordable Care Act, the government works with private insurance companies and health care providers to provide health care coverage. The government subsidizes insurance premiums for some people and sets minimum standards for insurance policies.
But the health care system remains in the private sector. Private sector providers get paid by insurance companies and patients. There are thousands of private providers and hundreds of insurance plans operating in hundreds of markets across the country.
In the case of Medicaid, the government plays the role of the insurance company and pays private providers based on a set reimbursement schedule.
Some notes about the Affordable Care Act:
  • Employers will continue to provide health insurance to the majority of Americans through private insurance companies.
  • The government has not seized control of hospitals or nationalized doctors.
  • The law does not include the public option, a government-run insurance plan that would have competed with private insurers.
We asked health care experts to assess the similarities and differences between the VA and the Affordable Care Act. The bottom line: it’s apples and oranges.
Tom Buchmueller, who spent a year on Obama's Council of Economic Advisors and teaches at the University of Michigan, said he struggles to see any similarity at all. "Coverage through the exchanges is private insurance," Buchmueller said. 
Tom Getzen at Temple University said the VA is much like the institution that the veterans were once part of. "It’s an army," Getzen said. "In contrast, Obamacare is a complex legislative creation (with) the exchanges, expanded Medicaid and regulation."
Getzen said, to call Obamacare the same as the VA "is kind of like saying your farm program is a post office." They both have government ties, but they’re fundamentally different and are operated differently. 
Scott Harrington, an adjunct scholar with the conseravtive American Enterprise Institute and a professor at the University of Pennsylvania Wharton School, described the changes under Obamacare as a step in the direction of a government-run health care system. "But it’s a long way from getting there," Harrington said.
The idea that the Affordable Care Act was a "government takeover of health care" was named as PolitiFact’s 2010 Lie of the Year.
500 people dying a year from Obamacare
Bolling took the comparison a step further, saying the sort of delays that took place at the VA in Phoenix would repeat themselves under Obamacare, with 500 people dying a year as a result.
"President Obama wanted to insure 40 million new people under Obamacare," Bolling said.
At the VA, he continued, the typical veteran has 13 appointments each year. Bolling applied that to 40 million new patients.
"You're talking 585 million visits, half a billion visits," Bolling said. "If people are dying, how many people are going to die in Obamacare? Do the math. It will be about 500 people per year that are going to die waiting -- apples to apples."
While we won’t fact-check Bolling’s prediction, we do think it’s important to point out two problems with Bolling’s math for people who saw the segment. First, the Congressional Budget Office projects that through 2024, 26 million people will gain coverage under the Affordable Care Act. So Bolling exaggerated the base number by about 50 percent.
Second, the experts we reached said veterans have very different needs than the general population. Part of the massive growth in the VA workload stemmed from disorders related to traumatic brain injury and from the lingering effects of the Vietnam War defoliant Agent Orange. Bolling doubled or even tripled the number of doctor appointments of typical Americans, experts told us.
"The average in the U.S. is between four and six," Getzen said. The U.S. Census Bureau reports that the average number of visits fell from 4.8 a year in 2001 to 3.9 in 2010.
Point being: The math Bolling used to reach his prediction is quite flawed.
Our ruling
Guilfoyle said Obamacare is "one big fat VA system." We found no health policy expert who agreed with that comparison. The VA is owned and operated by the federal government. Its staff are government employees. In contrast, Obamacare builds upon the existing private sector health industry. The law sets standards for insurance and health care providers and it subsidizes premiums. Washington does run the Medicaid insurance program but even under that program, it is paying private providers.
We rate the claim Pants on Fire.

Saturday, April 5, 2014

Rubio, and Hannity Combine For A Serious "Mostly False."

Rubio says health care law fell short of goal for 30 million signups

The White House celebrated earlier this week when 7.1 million Americans signed up for health insurance under the Affordable Care Act marketplaces since they opened in October 2013.
Predictably, the law’s critics were not as thrilled. Sen. Marco Rubio, R-Fla., spoke on Hannity Tuesday night about what he sees as the reform’s shortcomings.
"I mean, the purpose of Obamacare was not to get 7 million people or 6 million people, or whatever the number now is, to sign up on a website," Rubio said. "The purpose of Obamacare, according to them, was to get more people insurance. And by all accounts, it's going to fall woefully short. You're still going to have 30-some-odd million people in this country uninsured."
We wanted to know if Rubio’s claim was correct that the health care law was falling short of its goals. Rubio’s office didn’t return our request for comment.
One thing that struck us is that Rubio is mixing up numbers for the law’s first year and what policy makers hope the law achieves over the long run. No one expected to see the law’s full effects in the first year after the health care marketplaces opened.
The best authority on health care numbers is the nonpartisan Congressional Budget Office, which regularly publishes independent estimates of the law’s effects.
In February 2013, months before launched, the Congressional Budget Office estimated that 7 million people would sign up on the marketplaces by March 31, 2014, after the marketplace had been open for six months.
The CBO estimated that by 2019, 27 million people will have signed up on the marketplaces. There will still be roughly 29 million people uninsured by that time, which is close to the number Rubio mentioned. But that’s down from 55 million uninsured in 2013.
Not everyone will end up with health insurance for a variety of reasons. Undocumented workers aren’t eligible to shop on the marketplaces. People living in states that have decided not to expand Medicaid will also be among the uninsured.
The law also has a hardship exemption. That means homeless people, domestic violence victims, people caring for disabled family members and others can apply to have the penalty fee waived for not purchasing insurance under the reform’s individual mandate.
Our ruling
Rubio claimed the Obama administration’s goal for the Affordable Care Act was to get 30 million Americans insured, not the 7 million who enrolled by the March 31 deadline. Down the road, there are targets to insure millions more via the online marketplaces. But the clearly stated goal for 2014, that the White House hit just in time, was 7 million signups. By 2019, that number is expected to jump to 27 million.
Rubio does have a point that many Americans will remain uninsured under the reform, but his claim twists the administration’s timeline for enrolling uninsured Americans. We rate his claim Mostly False.

Thursday, February 20, 2014

CBO Report Provides Fodder For GOP Mininum Wage Talking-Points
The Congressional Budget Office (CBO) is all the talk these days. Republicans are using each policy driven report as opportunity to obstruct "anything Obama.'' The Administration is forced to carefully scrutinize each report for positive news (findings) as President Obama's policy deliverables move towards deliberation or enactment. In one well discussed case (within the past two weeks) the GOP grabbed a portion of the CBO report on the long-term impact of the ACA, and literally tripped itself-up like a mouse snared in a mouse-trap as it attempted to steal the cheese. The early February CBO report does not mean the ACA will result in 2 million jobs losses! 

Over time the Republican Party has maligned and disparaged the CBO as an agency ridiculed as partisan. The GOP also has identified the CBO as a target for elimination.  

Chris Hayes on the GOP and past hatchet-jobs on the CBO.

As opportunism goes, the GOP now grabs any detailed CBO (administration) policy assessment for dogged scrutiny with subsequent development of taking-points. It is as if the CBO report offer morsels of cheese that will hopefully provide fodder for taking-points without engaging the ever-present mousetrap bar and associated (killing) hammer. 

This week's release of CBO report on the impact of increasing the minimum wage, has provided yet another opportunity for extracting talking-points for political leverage. 

Chris Hayes also  explored the CBO report in the context of "good for the nation, troublesome for the nation and GOP reaction coupled with expert opinion from a noted economist."

Politico reported Senator John Cornyn's (R) TX.  and Nancy Pelosi's (D) CA. reactions to the report.
“The non-partisan Congressional Budget Office confirmed yet again what we know to be true of government overreach in the marketplace: raising the minimum wage would slash jobs and harm an already fragile workforce,” said Sen. John Cornyn, the chamber’s second-ranking Republican.
House Democratic Leader Nancy Pelosi said: “No matter how the critics spin this report, the CBO made it absolutely clear: raising the minimum wage would lift almost one million Americans out of poverty, increase the pay of low-income workers by $31 billion and help build an economy that works for everyone.”
Read more 

As stated by Chris Hayes any prospect of fewer jobs is less than ideal; actually undesirable. CBO estimates are just that estimates and we should hope the potential for employers not filling jobs at the lower end, does not come to fruition. Conversely, we hope CBO estimates regarding lifting families out of poverty and increased earnings potential for millions provide inertia in returning the nation to higher levels of productivity (increased production based on increased sale of goods an services). Another area of hope is the prospect of a modicum of fairness as we consider the phenomenal level of income disparity since the late 1970s and early 1980s. 

The "raise the Minimum Wage or not raise it" kerfuffle lends itself to a question. Does raising the Minimum Wage have a history of associated or resultant job loses?  A question we can only hope to answer via looking back at the past.   

The GOP longs for the past. The party is actually working to repressively move the nation back to times more to their liking and paradigm (socially regarding minorities and women), so a look to the past should warrant a quick review. 

Our quick review yielded many sources with the position raising the minumum wage does not have a deleterious impact on jobs or job creation, we find a Think Progress article from June 2012, most concise yet relevant to the question of job losses synonymous with raising the minimum wage.

Think Progress, Travis Waldron, June 20, 2012.
Opponents of minimum wage increases contest that raising the minimum wage will be costly for businesses and have a negative effect on job growth and employment. An analysis by the Center for American Progress’ Nick Bunker, David Madland, and the University of North Carolina’s T. William Lester, however, found five recent studies showing that increasing the minimum wage — even during periods of high unemployment — does not have a negative effect on job growth: 
A significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times. There are at least five different academic studies focusing on increases to the minimum wage—including increases ranging from 7 percent to 12.3 percent made during periods of high unemployment—that find an increase in the minimum wage has no significant effect on employment levels. The results are likely because the boost in demand and reduction in turnover provided by a minimum wage counteracts the higher wage costs. 
Similarly, a simple analysis of increases to the minimum wage on the state level, even during periods of state unemployment rates above 8 percent, shows that the minimum wage does not kill jobs. Indeed the states in our simple analysis had job growth slightly above the national average. [...] 
All the studies came to the same conclusion—that raising the minimum wage had no effect on employment. 
While increasing the minimum wage likely has no effect on job creation, it does have a tangible benefit for workers. Eight states increased their minimum wage at the beginning of 2012, providing extra benefits to 1.4 million workers. More than half of the workers directly affected by a minimum wage increase, as well as more than half who would be indirectly affected, are women, meaning increasing the wage provides help to a segment of the population that already faces significant disadvantages in the workplace.
While, I am admittedly biased in my view of raising the Minimum Wage, data indicates GOP rhetoric about job losses and slow job creation is not a reality based in empirical study.

In 2013, the National Employment Law Project Action Fund commissioned a poll with results showing 80% of the polled respondent group favored raising the Minimum Wage. Linked

Just as is the case with 91% of Americans favor background investigation for gun purchases, the majority of Americans favor raising the Minimum Wage. Sixty per cent of Americans do no wish to have the ACA taken off the federal registers and eliminated. 

What is the problem, GOP?