Third and State

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Updated: 30 min 28 sec ago

Is yet another vehicle to expand payday lending in the hopper in Harrisburg?

June 2, 2014 - 2:58pm

First there was HB2191 in 2012, followed by SB975 in 2013 and now Senator Jake Corman is soliciting his colleagues for co-sponsorship of a bill that would create a “90 Day Consumer Loan Program”.  With short term lending products the devil is always in the details and we don’t yet have the language of the bill.  

Absent more information on the features of this new product the coalition to stop predatory payday loans in Pennsylvania is urging members of the Senate to decline co-sponsorship until the full terms of Senator Corman’s proposal can be analyzed. 

What low income consumers in Pennsylvania need is more income not another vehicle for predatory lenders to trap them in a cycle debt that ultimately ends in bankruptcy. 

The Pennsylvania legislature has the capacity through setting a higher minimum wage to boost the incomes of over a million low wage workers. Doing so will boost the economy by providing more working families with income to spend on the basics like food, doctor visits or necessary repairs. 

Allowing payday lending companies to lure financially unsophisticated borrowers into debt products has the opposite effect. Money that would have gone to pay for rent, medical bills and groceries is eaten up by high fees sapping the local economy. 

 

 

Minimum wage increases didn’t hurt job growth in other states; it’s time for PA to join the club

June 2, 2014 - 1:15pm

Last week, Michigan passed a bill to increase its minimum wage from $7.40 an hour to $9.25 an hour over the next four years. Michigan is the seventh state, in addition to D.C., to legislate a minimum wage increase thus far in 2014. Additionally, as of yesterday, 22 states across the country, including all six of Pennsylvania’s neighboring states, have a wage floor higher than the national level of $7.25 per hour. Support for raising the minimum wage is building among Pennsylvanias so that our workers are not left even further behind.

On Tuesday, June 3, Raise the Wage PA – a coalition of labor, religious, community, women’s and worker’s groups – will be holding a rally and lobby day at the Pennsylvania Capitol building at 1 pm urging lawmakers to increase the state’s minimum wage to at least $10.10 per hour. Bills to raise the minimum wage have been recently introduced in both chambers of the Pennsylvania legislature. An increase of this magnitude would boost the incomes of about one million workers in the state, most of whom are adults working in mid- to full-time jobs (more than 20 hours per week).

Despite common misconception, increases in the minimum wage do not have significant negative impacts on employment. In fact, the most rigorous economic research shows that state-level minimum wage increases in the last 20 years raised worker pay without causing job losses, even in regions where the economy was weak and unemployment was high.

Additionally, job growth in Pennsylvania has actually been slower than in states that have recently increased their minimum wage. The figure below shows average annual job growth in Pennsylvania since January 2010 (the beginning of the first full year of economic recovery) as well as in states that have experienced minimum wage hikes during the same time. Employment changes in these states represent job growth since the implementation of each respective state’s most recent wage hike and for which there are at least 12 months of jobs data since the raise. (For example, while Ohio’s minimum wage rose in January 2014, this graph looks at average annual employment growth since the previous increase in January 2013, or from January 2013 to April 2014.)

Since January 2010, annual job growth in Pennsylvania averaged 0.80 percent. All 14 states that implemented an increase since then have experienced a faster pace of employment gain, ranging from 0.84 percent in Vermont to 3.13 percent in Florida. It is clear a minimum wage increase would not hurt job growth. It would, however, increase incomes and living standards for hundreds of thousands of low-wage workers in Pennsylvania, boost the state’s economy by putting more money in the hands of those most likely to spend it, and strike a significant blow to the state’s runaway income inequality.

An update on the campaign to raise the minimum wage in Pennsylvania

May 30, 2014 - 4:55pm

Here is a quick audio update (mp3) on the campaign to raise the minimum wage in Pennsylvania.

Those of you that prefer not to hear my voice can read the update here.

Policy Matters: Piketty and "Two Critical Realignments" in One Graph

May 28, 2014 - 7:28pm

Our friend Colin Gordon of the Iowa Policy Project runs a website called The Telltale Chart. As the name implies, he loves charts.

Colin's outdone himself today on the blog of the Center for Economic Policy and Research (CEPR) with what he calls "Piketty in one graph."



Two other possible titles for this chart, just to hit you over the head with Colin's messages.

  1. Two critical realignments in one chart (dramatic changes in the political system). The chart shows in spades the impact of progressive shifts in what we could call a "big four" set of policy variables in the 1930s: the top marginal income tax rate, the inheritance tax, the minimum wage, and union density (which are impacted by labor laws). Then in the second "critical realignment" -- the first Reagan Presidency -- these variables moved powerfully in a regressive direction.
  2. A simpler, title: POLICY MATTERS. That is something of a "duh." Less of a "duh" is a corollary -- you want big changes in outcomes (such as income inequality), you need big changes in policies. We got big changes in policies in the big four in the 1930s and the 1980s and we got big changes in outcomes. We want to fix income inequality in this decade, we need big changes in policies. Can you say "New Deal for a New Economy"?

A wag once said that economists have predicted seven of the last three recession. In my case, as an institutional economist, I've predicted two of the last zero "New Deals for a New Economy" -- 1993-94 and 2008-09. Maybe this time.

 

The sincerest, sincerest form of flattery

May 23, 2014 - 3:07pm

If imitation is the sincerest form of flattery - then plagiarism must take flattery to a whole new level of sincerity. So the Center for Budget and Policies Priorities (CBPP) in Washington, DC must really be feeling the sincere love from Maine Governor Paul LaPage. According to news reports, the governor awarded the Alexander Group a $925,000 no-bid contract to do a report on the performance of Maine’s Temporary Assistance for Needy Families program. When the report was turned in, however, it contained sections, some as long as two full pages, which were lifted directly from the work of CBPP.

The revelation has caused quite a fuss in Maine where the entire affair has been dubbed “LaPlagarism.”CBPP’s vice president, said that she had never seen the organization’s work copied so liberally.

Pennsylvania readers will recognize the Alexander Group’s founder, president and CEO, Gary Alexander as Governor Corbett’s first Secretary of the Department of Public Welfare. While he was DPW’s secretary, he maintained a home in Rhode Island and did a six-hour taxpayer funded commute from work to home. We also remember that, while he was still the DPW secretary, he started his own private consulting firm to do real estate deals.

Ever the stickler for appearances, Secretary Alexander also imposed a dress code for women working at DPW that required them to wear pantyhose.

The report in question, by the way, has quite a handsome cover.

Putting the April Jobs Report in Context

May 16, 2014 - 3:34pm

The Bureau of Labor Statistics reported today that nonfarm payrolls grew by 10,000 jobs and the unemployment rate fell to 5.7% in April.

Resident Unemployment

Over the month, the labor force was essentially unchanged as the number of residents reporting employment rose by 0.4% and the number reporting they were unemployed fell by 5.6%.

Over the year the story is more mixed as the fall in the unemployment rate of 1.9 percentage points was a mixed bag of a shrinking resident labor force (down 0.6%) but an encouraging rise in resident employment (up 1.4%).

Nonfarm Employment

To get back to an economy where we see growth in the earnings of middle income families we need the Pennsylvania labor market to generate on average about 9,000 jobs a month.  In this respect the gain of 10,000 nonfarm payroll jobs in April is right on target. 

On the other hand the recent pattern of nonfarm employment growth is not as impressive with the commonwealth adding about 2,700 jobs a month in the first four months of this year.

As Figure 1 illustrates payroll growth in the most recent twelve months has improved relative to what it was in the same period a year ago but the pace of job growth remains well short of what it was in the first year of the recovery.

Industry by Industry 

The next seven charts summarize the trend in monthly job creation by industry in Pennsylvania from May to April of each year since 2010.

Contrary to what you might hear at Marcellus shale rally employment growth in Manufacturing has been very weak with the sector shedding jobs in the last two years (Figure 2). Since I mentioned Marcellus shale I should probably add that employment in Minining and Logging was unchanged in April and is up 600 jobs since April of last year. 

Employment growth in Construction in the last 12 months is relatively strong but here again remember this sector is still just barely beginning a recovery from a historic decline in employment (Figure 3).

As usual the public sector in Pennsylvania remains a significant drag on overall employment growth although the pace of losses has slowed to just under half of what it was during the initial big wave of teacher layoffs (Figure 4).

Like most states with weak overall employment growth, Leisure and Hospitality is the one consistent strength in terms of job growth in Pennsylvania (Figure 5).

Employment growth in Education and Health Services is still positive but well below what it was earlier in the recovery (Figure 6).

Employment growth in Professional and Business Services continues to decelerate (Figure 7).

Employment growth in Trade, Transportation and Utilities has yet to match growth during the first year of the recovery (Figure 8).

$1.3 billion less for 2014-15 budget according to IFO

May 15, 2014 - 9:42am

On May 1, the Pennsylvania Independent Fiscal Office (IFO) released updated revenue estimates for the remainder of 2013-14 and its initial estimate for 2014-15. With General Fund revenues already a half a billion dollars short through April, it was expected by many budget watchers that revenue projections would be scaled back. The IFO forecasts a decrease of revenue of $568 million from official estimate for 2013-14 and for 2014-15, predicts a further decline of $768 million from the Governor’s Office estimates from February. This jeopardizes the increases proposed by the Governor for 2014-15, and could lead to budget cuts from 2013-14.

Governor Corbett’s budget proposal was already build on a fragile base, and with the IFO report, that foundation has crumbled. Back in February, Governor Corbett’s proposed 2014-15 budget projected ending 2013-14 assumed that revenue for the current year would meet estimates. The 2014-15 budget would increase spending by $825 million, but relied on optimistic revenue growth for next year (4.9%) including $225 million that was being transferred into the General Fund from other funds.

The new IFO figures scale back overall revenue growth to 3.5%, and overall tax growth in 2014-15 to 3.3%. These figures do not include the Governor’s proposed transfer of $225 million into the General Fund, as they have not been enacted into law.

The IFO’s reduced revenue forecast for 2013-14 and 2014-15 underscore the ongoing need for additional revenue sources. Without new revenue, $1 billion or more will be cut from Pennsylvania schools, hospitals, and human service providers. This will result in the loss of jobs and a further drag on our state economy.

There are sensible revenue and cost saving options available for state policy makers- including a severance tax on natural gas, smokeless tobacco taxes, and the immediate expansion of Medicaid.

Click for more on the IFO revenue estimates.

 

Senate Bill 76: a School Defunding Formula Bill?

May 9, 2014 - 4:56pm

The Senate Finance Committee did not take up Senate Bill 76 this week, a positive sign. The committee held a hearing on April 30 to consider an amendment that was supposed to fix the problems with the legislation, but the amendment had the opposite effect, raising even more questions about the impact of the bill on schools, communities, and businesses.

SB 76 is known by its supporters as the property tax elimination bill. But it needs a new name, one that more accurately describes both its intent and is impact: the public school decimation bill is one, or maybe the school defunding formula bill. 

The case for the devastating impact of this bill on public school funding was made eloquently this week by the people who are in the trenches, representatives for the school boards and superintendents trying to hold together school budgets under the most trying of circumstances.

Their op-ed in the Harrisburg Patriot News highlighted the biggest problem with SB 76:

Would the tax mix proposed in SB 76 properly fund public education? The simple answer is “no” according to the Pennsylvania Independent Fiscal Office (IFO).

They make the obvious point that no one likes to pay property taxes and that school boards and superintendents don’t enjoying asking for them. But without a well-funded system of education there is no economic progress, for kids or for the state.

They make a number of other great points:

  • Federal income taxes would rise for the nearly 2 million Pennsylvanians who have claimed a state/local tax deduction on their federal taxes;
  • Individuals will pay more in sales taxes on a host of goods and services;
  • Inequities in school funding would be locked in, forever.

They point out that the real culprit is the small state share of overall school funding. When the state kicks in only 34% of education costs rather than the 50% that was promised (and that so many other states manage to provide) local property owners are forced to pay more.

What we need is a school funding formula with appropriate funding, not a school defunding formula.

So far state lawmakers seem to be doing the responsible thing, asking hard questions about SB 76 and not advancing the bill. But unless public school advocates speak out, as Nathan Mains, Jim Buckheit, Jay Himes, and Joe Bard did, that could change.

 

Pocket money for a business lobbyist is real money for working families

May 8, 2014 - 3:42pm

On Wednesday ABC27 did a story on proposals to raise the minimum wage in Pennsylvania which attributed the following to an anonymous Pennsylvania business lobbyist:

Pennsylvania business leaders and lobbyists argue the minimum wage increase would benefit only workers in entry-level positions or those earning pocket money.

This comment by an anonymous member of the business lobby is quite dismissive when the fact is that the minimum wage increase is really meaningful to working people. Working full-time at the minimum wage, workers would bring home $15,080 a year, at $10.10 an hour $21,008 a year. On average, the workers affected by a minimum wage increase to $10.10 an hour take home about 41.7% of their familys’ total incomes.

It’s important to keep these kinds of comments in mind because on the record members of the business lobby regularly express real concern for working people suggesting business opposition to a minimum wage increase isn’t about profits but what’s in the best interest of working people.

On Thursday join an event near you to advocate for a higher minimum wage in Pennsylvania.

May 7, 2014 - 11:52am

Today we released a new report "Living on the Edge: Where Very Low Wage Workers Live in Pennsylvania". This comes in advance of Thursday's statewide day of action organized by a diverse coalition of faith, labor and community groups urging lawmakers to take action to raise the minimum wage in Pennsylvania (see http://raisethewagepa.org/ for more information on local events).

In the regions where events will be held on Thursday, the report finds that that a minimum wage increase would raise the wages of:

  • 51,700 workers in Allentown-Bethlehem-Easton metropolitan area
  • 49,900 workers in Bucks county
  • 25,800 workers in Erie county
  • 49,200 workers in Harrisburg-Carlisle metropolitan area
  • 49,000 workers in Lancaster county
  • 113,400 workers in the City of Philadelphia
  • 34,400 workers in the City of Pittsburgh and 179,300 in the rest of the Pittsburgh metropolitan area
  • 50,600 workers in the Scranton--Wilkes-Barre--Hazelton metropolitan area.

Read the full report here (PDF) be sure to let your local lawmakers know you support a minimum wage increase!

 

TAX THE FRACKERS BEHIND ME

May 6, 2014 - 3:16pm

 

In the largest display of Astroturf organizing in recent memory, the Marcellus Shale industry today brought busloads of its employees and some lease-holding landowners to Harrisburg for a parade and a rally.

The industry’s “message” was drilling means jobs. But then an activist jumped to the head of the parade and moved a better idea to the front of the parade - TAX THE FRACKERS BEHIND ME.

The show the industry put on, complete with a Jumbotron on the Capitol steps and a squad of black-shirted private security, was meant to head off any silly thoughts the Pennsylvania legislature may be having about enacting a severance tax on natural gas extraction.

The industry’s message for the day repeated one of the central myths the industry has embedded in the culture of the General Assembly – gas drilling is driving employment in Pennsylvania. But that’s just not true. Between 2007 and 2012, the gas drilling industry added 22,000 jobs to the Pennsylvania workforce, a mere 0.2 percent of the total.

And there is a big number the members of the General Assembly must keep in mind – the $1 billion deficit they must fill to produce the coming fiscal year’s state budget.

Over the next seven weeks, Pennsylvania legislators will face a choice – make further cuts and continue to devastate education, human services and the economy – or TAX THE FRACKERS BEHIND ME.

April Revenues and Corporate Taxes Plummet Below 2012-13 Levels

May 2, 2014 - 5:32pm

Something emerged from April’s revenue results[1] that is troubling – and has a longer lasting impact on the Commonwealth’s ability to make critical investments in education, health care, and infrastructure than merely missing revenue targets. Revenue collections are now $87 million, or 0.4%, less than they were at this point in 2012-13 – and this shortfall is largely our own doing. While personal income and sales taxes have grown by $242 million, or 1.4% collectively, from last year (as could be expected in a slowly growing economy), corporate tax collections have dropped by $292 million compared to last year.

The reduction in corporate tax collections from last year is not due to flagging profits or economic conditions, but can be traced back to tax cuts enacted in recent years. The capital stock and franchise tax rate was cut in 2012, 2013, and 2014, and collections have fallen by $211 million – representing a tax loss of 44% from this point last year. Bank taxes were reformed in the 2013-14 budget agreement, broadening the base and lowering the tax rate in what was thought to be a “revenue neutral” change. The result, so far, has been a decrease in bank taxes of $65 million, or 19% from a year ago. A change in the bank tax law may be necessary to correct this in future years.

These are permanent revenue losses that will continue to drag overall state tax revenue growth – making it more difficult to pay for state services going forward.

April showers on already soft 2013-14 revenues

The downward spiral of Pennsylvania General Fund revenues continued in April, falling $328 million short of estimate for the month, a shortfall of 9%. For the fiscal year, revenues are now $506 million, or 2.1% below estimate. This is the fifth straight month where revenues fell short of estimate.

With only three months left in the fiscal year, and only one of them being a “major” revenue collections month, it is now highly likely the state will fall far short of revenue targets for the fiscal year. The results from both March and April make crafting a spending plan for 2014-15 over the next few months more difficult as revenue collection expectations for next year will be lower. Without additional revenue, planned increases for schools, early education, and critical human services are at risk.

Shortfall in income tax payments in April 2014 thought to be a one-time correction

April collections fell short of revenue targets primarily in two area – settlement of 2013 personal income tax bills and corporate taxes. “Non-withheld” PIT payments were $190 million lower than estimate in what is the largest month for such payments. These payments were higher in 2012 for high income individuals, as many chose to pay taxes on investment income in 2012 to avoid a 2013 federal tax increase. The results in April seem to indicate that more income than expected was moved into 2012 from 2013, causing 2012-related payments to swell (in April 2013) and 2013 income to fall. Returns for 2014, to be filed in April 2015 should be more “normal.”

This was not unexpected. In April 2013and again in September, the influential Rockefeller Institute of Government warned that state income tax receipts across the country for 2012 (largely paid in 2012-13) were temporarily inflated. They noted:

The "bubble" in income tax receipts most definitely would be short-lived, and in fact should lead to slower growth later in year. Therefore, state officials should be cautious about using any unanticipated revenue for ongoing spending increases or revenue reductions.”[2] 

Pennsylvania, like some (but not all) other states, underestimated this impact, forecasting a 2% decline in the non-withheld April 2014 PIT payments from the year before. The actual figure turned out to be a 17% decline, year over year.

April Non-Withheld Personal Income Tax Payments

April 2012
(2011-12)
ACTUAL

April 2013
(2012-13)
ACTUAL

April 2014
(2013-14) ESTIMATE

April 2014
(2013-14)

ACTUAL

 

$1.025 B

$1.243 B

$1.220 B

$1.030 B

Change from Prior

+9%

+21%

-2%

-17%

The other area of shortfall from estimate in April was corporate taxes. Both corporate net income and capital stock and franchise tax receipts were lower than expected, by a combined $95 million. For the fiscal year, corporate net income tax collections are now $25 million, or 0.4%, higher than estimate and the capital stock and franchise tax falls to $3 million, or 0.1% below estimates for the fiscal year.

Two moderately bright notes in an otherwise gloomy April revenue report were that sales tax collections pulled out of their five month slide and exceeded its April target by $4 million (still down $106 million for the fiscal year) and personal income tax collections from paychecks also exceeded its monthly estimate by $4 million.

Even if revenue collections moderate in the final quarter of 2013-14, expect a revenue deficit of a half a billion dollars or more and a decline in revenues expected in 2014-15. This means without additional revenue in the 2014-15 budget, dramatic cuts from the Governor’s February budget proposal are likely.



[1] The 2013-14 revenue figures used in this analysis do not include the early transfer of $80 million of liquor store profits in March 2014. the early transfer was done to aid the commonwealth's cash flow and would normally have been made in June.

[2] Lucy Dadayan and Donald Boyd, “Temporary “Bubble” in Income Tax Receipts,” Rockefeller Institute of Government, SUNY, September 18, 2013, http://www.rockinst.org/newsroom/data_alerts/2013/2013-09-18_Data_Alert.pdf.

 

Apr_14_Rev_tracker_table.pdf Apr_14_to_prior_FY_table.pdf Apr_14_est_to_act_rev_table.pdf

Pennsylvania Families Come First in Alternative Budget

May 2, 2014 - 3:50pm

This week Rep. DiGirolamo (R-Bucks) unveiled the Roadmap for a Stronger Pennsylvania, a sound alternative to the budget that was proposed by the governor. The Roadmap gets us on the way toward a responsible, sustainable state spending plan that makes critical investments in education, health care and communities and delays unaffordable tax cuts.

Pennsylvania families come first in this commonsense approach to the budget. It raises desperately-needed revenue from a severance tax and a tax on smokeless tobacco and E-cigarettes; closes corporate tax loopholes and freezes the Capital Stock and Franchise Tax; and fully enforces sales taxes from internet sales. The combination of new taxes, new program revenue and corporate tax cut rollbacks will make more than $1.1 billion available for crucial state investments.

These include: $360 million from a 4.9 percent severance tax on natural gas extraction; $35 million from a tax on the sale of E-cigarettes; $35 million from a tax on the sale of smokeless tobacco; $120 million from closing corporate tax loopholes; $75 million from delaying the reduction in the Capital Stock and Franchise tax; and, $100 million from fully-collected internet sales tax.

By refusing to leave money on the table, Rep. DiGirolamo’s budget proposal will allow the state to invest in education and health and human services that Pennsylvania families need and want. It would boost funding for basic education and community colleges, health care, veterans housing, crime fighting and drug treatment.

The Roadmap investments include: $20 million for special education; $20 million for community colleges; $3 million for pre-kindergarten; $1.4 million for health programs; $3 million for veterans housing; and, $20 million for emergency drug and alcohol treatment.

The Roadmap for a Stronger Pennsylvania also foregoes one-time revenue-raising gimmicks like expanding gas drilling in state forests. Instead, the Roadmap puts into place stable, recurring revenue sources to responsibly addresses major structural weaknesses in our state budget and prepare us for a future where prosperity can be widely shared by our families and communities.

Breaking news: Seattle will establish $15 per hour minimum wage, highest in the nation

May 1, 2014 - 3:52pm

Seattle will raise its minimum wage to $15 per hour, the highest in the nation, under a deal just announced by labor and business groups and reported on by Think Progress.

All employers will have to meet the $15 minimum wage by the end of the decade, while businesses with more than 500 employees will have a three-year phase-in period.

After reaching $15 per hour, the city’s minimum wage will rise 2.4% each year regardless of the rate of inflation.

Congratulations to all the members of the Seattle minimum wage coalition for their leadership, including Keystone Washington state's progressive think tank, the Economic Opportunity Institute (EOI). (In the late 1990s, EOI co-founded with KRC and several other national and state groups Economic Analysis Research Network.) Back in 1998, EOI was was a key player in raising and indexing to inflation the Washington state minimum wage, currently the highest state minimum wage at $9.32 per hour. In the current Seattle push, EOI provided data and communications to support the coalition.

Think Progress rightly highlighted the approval from restaurant owners of the Seattle deal, whill will eliminate the separate lower minimum hourly pay rates for tipped workers over a period of five years. The votes for the deal also included local hotel owners and venture capitalist Nick Hanauer.

There are 102,000 workers in Seattle currently earning less than $15 an hour. Raising those people’s wages will put about half a billion extra dollars of spending money into Seattle workers’ pockets.

Pittsburgh: One of America's New Laboratories of Democracy

April 30, 2014 - 4:02pm

My colleague Diana Polson brought my attention to Harold Meyerson's new story in The American Prospect highlighting Pittsburgh as a city with exciting young progressive political leadership and labor-community alliances (e.g., Pittsburgh United). Pittsburgh deserves the credit as do councilwoman Natalia Rudiak, Mayor Peduto, and SEIU 32BJ, which received shout outs in the story.

Meyerson does not have the space to go into everything that's going on in "The Steel..." I mean "The Eds and Meds City", such as

Put together these initiatives and Meyerson's examples and you sense that inequality isn't inevitable -- we can get back to shared prosperity. As Meyerson concludes, Pittsburgh and other "...new urban regimes are seeking to diminish the inequality so apparent in cities and so pervasive nationwide. They are mapping the future of liberalism until the day when the national government can bring it to scale." Or to paraphrase Justice Brandeis Pittsburgh today is one of America's laboratories of democracy.

You Can't Pay the Hospital with Your Varsity Letter: The Union Vote at Northwestern University

April 25, 2014 - 10:16am

The controversy surrounding the effort of Northwestern University football players to form a union makes me think back to when workers at Harvard first tried to form a union in the 1970s.

At the time, Derek Bok, a well-known liberal, was Harvard President and co-author with John Dunlop (pro-labor Republican and former Ford Administration Labor Secretary) of the standard labor law textbook. Bok believed firmly in workers' rights to form a union — "just not at Harvard."

For more than a decade, the Harvard administration used legal delaying tactics to foil its workers' efforts to exercise their democratic rights. For example, the university closed a Medical School personnel office, and centralized HR university-wide, so that it could win a legal argument that the union election also had to be university-wide rather than including only the group that first wanted to unionize. (Contesting the group of workers that a union election includes — the "bargaining unit" — is a standard way U.S. private employers frustrate workers who want a union.) Ultimately, the Harvard Union of Clerical and Technical Workers formed in 1988 behind the slogan "We Can't Eat Prestige."

Fast forward now to this morning's The New York Times story on Northwestern's all-out campaign to stop football players from unionizing, after a legal determination that players are "employees" based on the compensation they receive (scholarships) and their obligation, in exchange, to practice for periods of time equivalent to a job.

For Americans who do not know the hurdles that workers confront if they want a union, Northwestern's anti-union campaign offers a nice primer. Veiled threats (no more Division 1 football, maybe no new athletic center), intimidation by authority figures (the university president, the revered coach saying a union yes vote would be a "betrayal"), divisive use of those willing to speak out against a union. These are standard tactics from the American anti-union consulting firm handbook. Nothing special dreamed up just for college football players. Exactly what manufacturing workers, janitors, nursing home aides, restaurant servers, and other workers face when they try to lift their voice — as documented here.

Another former Harvard Law School Professor Paul Weiler, a Canadian, was puzzled by the role of U.S. managers in workers' decision about unionizing. He understood that management might be impacted by the union vote, just as Canadians might by the outcome of a U.S. presidential election. But, he added, that doesn't mean Canadians can interfere or vote in the decision of U.S. citizens about who their president will be. So why does management get to interfere in workers' choice of whether they want a union? Excellent question.

Read the Times story, and see if a sense of outrage doesn't build at Northwestern's interference with football players newly recognized right to unionize. The story provides a visceral reminder that, wait a minute, university administration (and employers more generally), it's not YOUR decision. If football players concerned about the long-term damage to their brain and health want to come together to bargain for lifelong health care, that's up to them. If players aware that universities make millions from football — and aware that most football players don't become professionals but do enter a job market without enough good jobs for people who didn't graduate or obtain a marketable skill — want to bargain for some of those resources, that's up to them.

You'd like to think that universities — centers of moral leadership — would "get" an ethical issue like this. You'd also like to think they would get that this is also an issue of very practical decency. You see, you can't pay for lifelong health care with your varsity letter any more than you can "eat prestige."

So here's to the courage and moral leadership of the Northwestern football players.

And here's to Americans being reminded that unionism comes in lots of shapes and sizes.

Unionism is about "collective action" in whatever form is needed to ensure that our economy respects our basic values. And we need a lot more of it to revive economic opportunity and prosperity for working families.

Education Is the New Black

April 24, 2014 - 9:27am

A new poll out confirms the public’s support for more education funding and a new education funding formula.

The poll, conducted by Terry Madonna, was released at a press conference Tuesday in the state Capitol, sponsored by associations representing Pennsylvania school boards (PSBA), school administrators (PASA), business officials (PASBO), and rural schools (PARSS).

The key takeaway is that Pennsylvanians want more state funding for public education. More than seven in 10 (71%) respondents believe the state’s investment in public education should be larger. The poll finds that:

  • More than eight in 10 Pennsylvanians (84%) surveyed said they believe public schools have a "Very Strong" or "Some" effect on economic development;
  • More than two-thirds of Pennsylvanians (67%) said schools with a greater number of students in poverty should "Definitely" or "Probably" receive more state funding; and
  • Nearly three-quarters of Pennsylvanians (72%) said they "Strongly Favor" or "Somewhat Favor" using a school funding formula to ensure fair distribution of funding.

These findings are similar to a poll we commissioned with Public Citizens for Children and Youth (PCCY) in June 2013, which showed broad public support for public education and concern about the impact of budget cuts. Our poll also tested the public appetite for new revenue for education, finding that the majority would pay a higher personal income tax or use higher sales and corporate taxes to restore funding cuts.

Education is the new black. A Franklin and Marshall poll in March showed that education has replaced the economy as the issue of most concern to Pennsylvania voters, jumping as the top concern from 25% to 32% between February and March 2014. Meanwhile, 23% ranked unemployment and personal finances as their top concern.

These findings come as the state Legislature considers creating a new education funding commission, similar to the one established for special education last year. Legislation sponsored by Representative Bernie O’Neill has passed the House, and a comparable bill sponsored by Senator Pat Browne is moving in the Senate.

The key question is whether and how a new “funding” commission approaches the “funding” side of the equation. Support for a new formula is widespread, even in the General Assembly. The critical question is whether Pennsylvania gets back to a cost-based assessment of student educational needs and makes plans to meet those needs.

If the new commission wants to take a look at funding adequacy, members can do so knowing the public has their backs.

Morning Must Reads: A Natural Gas Severance Tax This Year?

April 17, 2014 - 10:01am

Momentum is building to enact a natural gas severance tax in Pennsylvania. But don't take it from us.

The Triadvocate has an analysis of the debate that concludes an extraction tax is "almost a fait accompli."

As April moves forward and we continue to get depressing news from the Department of Revenue about tax collections (the state is now $175 million behind projections for the year), there is some renewed discussion at the very highest levels of the General Assembly about an extraction tax being levied on natural gas drillers in Pennsylvania.

But unlike past discussions that have been taking place since the waning days of the Rendell Administration, this time the possibility of the tax actually being levied is more than just idle talk. It is almost a fait accompli.

The Triadvocate bases its analysis on three factors: lagging General Fund revenue collections, growing support for a severance tax among some members of the House and Senate GOP, and a sense among some (not all) drilling companies that it is best to negotiate a reasonable tax in line with other states now rather than next year when the state may have a new governor.

Meanwhile, The Associated Press reported this week that another GOP lawmaker is joining the chorus calling for a severance tax.

Monroe County Representative Mario Scavello, who is running for a newly created Senate seat, is seeking co-sponsors on a bill to impose a 5% tax on the highest-producing shale gas wells. Tom McGarrigle, a Republican candidate for an open Senate seat in southeastern Pennsylvania, supports a 4% tax, while Representatives Tom Murt and Eugene DiGirolamo, Republicans from the Southeast, favor enacting a 4.9% tax.

Governor Corbett's administration maintains its opposition to a severance tax, as reflected in a National Journal story this week asking "Is Pennsylvania Wasting Its Fracking Wealth?"

That story also notes the state's current drilling impact fee has failed to keep pace with rising gas production.

Between 2012 and 2013, revenue from the fee increased by 11 percent, jumping to a record high of close to $225 million last year. But the leap was significantly smaller than the overall rise in production. Natural-gas output increased by more than 37 percent in the same period, when it rose to 3.1 trillion cubic feet, according to Pennsylvania state estimates.

Skeptics say the math doesn't add up. "We haven't captured the gains we're seeing in production and that means we're essentially giving away money right now that other states are collecting," said Sharon Ward, the executive director of the left-leaning Pennsylvania Budget and Policy Center.

A report released last month by a state data agency has added fuel to the fire. It concluded that Pennsylvania has the lowest effective tax rate on natural-gas production in a survey of 11 of the largest shale-gas-producing states.

A Guide to the Creative Use of Numbers by the Business Lobby

April 16, 2014 - 10:59am

The debate over raising the minimum wage can quickly become a fog of studies and numbers. So in the spirit of keeping people honest, we review some of the arguments against raising the wage made in a Philadelphia Inquirer article by Pennsylvania Chamber of Business and Industry chief Gene Barr.

Young Workers

Barr claims that a majority of minimum-wage workers are young people, under the age of 25, who are not supporting families. By this, he means those earning exactly the current minimum wage of $7.25 per hour or less. This small group is not representative of the much larger group that a minimum-wage increase would actually impact.

If you look at the ages of the larger group of workers impacted by a minimum-wage increase to $10.10 an hour — say, people who earn $8 or $9 an hour — 83.5% of them are age 20 and older. The following figure breaks that age distribution down. And, yes, 38% of the people impacted are over the age of 40!


Workers in Middle-income Household

Barr also claims that many minimum-wage workers are part of middle-income households that do not need special help.

Middle-class wages and incomes are lower today than they were a decade ago, so I’m pretty sure many middle-income households would appreciate the boost that comes with a minimum-wage increase for a household member. That said, out of the more than 1 million people who would get a raise from a minimum wage increase, 62% — just over 660,000 — have family incomes that would place them below the median family income of $65,109 in Pennsylvania in 2012.

On average, the workers who would get a boost from a minimum wage increase to $10.10 per hour earn over four-tenths (42%) of their family's total income.

And with respect to the “special help” remark, remember we are talking about income earned from work. The minimum wage today is 23% lower than it was in 1968. This isn’t about workers needing special help; this is about undoing the damage done to family finances by fierce political opposition to adjusting the purchasing power of the minimum wage to reflect the rising cost of living.



Small Businesses

In the Inquirer article, Barr is quoted as saying: “Half [of minimum-wage earners] work for small businesses [with] less than 100 employees; two-thirds work for businesses that employ less than a thousand people."

Barr is quoting national data on workers earning between $7.25 and $7.30 an hour, drawn from the U.S. Census Bureau's Current Population Survey. But as I noted previously, he is using a small, atypical group of workers (even if a slightly different one than before) to support a claim that is not correct for the group of workers who would benefit from a minimum wage increase to $10.10 per hour.

In the Current Population Survey, when you ask for the size of employers with workers earning $10 (not quite $10.10 but close) or less per hour, the answer you get back is two-thirds of those workers are employed by firms with 100 or more employees.

In sum, an honest and accurate accounting of the impact of a minimum-wage increase concludes that the bulk of the workers who would benefit are adults who contribute substantially to their family finances and are often employed by some of this country’s largest, most successful companies. It’s a shame the business lobby still insists on trying to confuse people by selectively quoting statistics aimed at advancing their cause.

Cut Hours

Finally, Barr claims some employers will cut staff or hours if the minimum wage is increased.

This is where we come to the meat of the disagreement — what happens to employment when the minimum wage is raised. A lot of labor economists, including me, read the research literature as suggesting that modest increases in the minimum wage that have occurred over time have had little or no impact on employment.

You, meanwhile, are left having to choose who to believe. A key part of your decision should include an evaluation of the record of the business lobby in talking about this issue. Can you trust that you are getting an honest assessment of the research literature from advocates who continue to claim that most beneficiaries of a minimum wage increase are affluent teenagers?

I appeared on NBC 10 @ Issue last Sunday with Alex Halper of the Pennsylvania Chamber of Business and Industry to discuss raising the minimum wage. As you watch the program, note how you hear every one of Gene Barr’s points above.

A Look at Shale Drilling’s Mixed Legacy

April 10, 2014 - 4:48pm

Natural gas drilling has transformed two Pennsylvania counties with the greatest development activities, for better and for worse.

That statement in itself is not surprising, but two new studies from the Multi-State Shale Research Collaborative have a wealth of data on just how much these communities have been transformed. And some of the findings may surprise you.

For instance, in one of the two communities studied, Tioga County, the story is one of a boom and bust. The county was largely unprepared for the sudden overwhelming presence of the industry, with few tools to manage or plan for growth and change. And then just as suddenly, the industry packed up and left town, taking many of the jobs with them.

Greene County, by contrast, had a history of coal mining and conventional gas drilling. While employment has increased, the county is now even more dependent on extractive industries, which could put the local economy at risk in the event of a slowdown.

Greene County, in the Southwestern corner of Pennsylvania, and Tioga County, along the Northern Tier bordering New York State, are both small rural communities that witnessed a dramatic growth in shale development in recent years.

For both communities, the impact of shale drilling has been mixed. Communities benefited through higher incomes and new jobs but paid a price in the form of more crime, higher costs for police and emergency services, higher rents and a shortage of affordable housing, and heavy truck traffic and greater road maintenance needs.

Both counties had many similar experiences after drilling expanded, including an influx of out-of-state workers and a climate in which companies operated without much local oversight. There were notable differences too, particularly as the industry shifted its focus from drilling for methane, or dry, gas in Tioga to more lucrative wet gas and shale oil in Greene and parts of Ohio and North Dakota.

The two case studies are part of a package that also includes a close look at shale oil and gas drilling in Carroll County, Ohio, and Wetzel County, West Virginia. You can read more of the key Pennsylvania findings here.

Both the Greene and Tioga case studies recommend that communities with increased drilling create local oil and gas taskforces to coordinate discussions between government agencies, local stakeholders, and companies, and that local landowners establish a landowners group to help each other navigate the growth of the industry.

The studies also recommend the state replace its local impact fee with a severance tax and that more investments be made in fixing and policing the roads and making affordable housing more available in hard-hit communities.

Bottom line: while there are localized benefits from gas development, there are also substantial costs — for low-income residents, in the form of increased crime, and in costs to local governments. Communities potentially facing new gas development would do well to greet the development with as much caution as enthusiasm, and to be prepared as much for the bust as the boom.