Many posts have discussed economic and educational inequality.
Individual incomes have increased exponentially but not evenly. But while 2026 shows the highest market inequality of the five eras, overall inequality is lower than most… taxes and government transfers today redistribute far more than in earlier centuries.
Many posts have discussed immigration.
David J. Bier, Michael Howard, and Julián Salazar at Cato:
This paper updates a model of these effects first developed by the National Academies of Sciences, Engineering, and Medicine (NASEM) to shed light on how immigrants, both legal and illegal, and their children affect government budgets. This analysis is the first to estimate the cumulative fiscal effect of immigrants on federal, state, and local budgets over 30 years.
The government first began gathering detailed information on benefits use by citizenship status in 1994. \
These results, which do not account for any of immigration’s indirect, tax-revenue-boosting effects on economic growth, represent the lower bound of the positive fiscal effects. Even by this conservative analysis, immigrants may have already prevented a fiscal crisis.
- The data show:For each year from 1994 to 2023, the US immigrant population generated more in taxes than they received in benefits from all levels of government.
- Over that period, immigrants created a cumulative fiscal surplus of $14.5 trillion in real 2024 US dollars, including $3.9 trillion in savings on interest on the debt.
- Without immigrants, US government public debt at all levels would be at least 205 percent of gross domestic product (GDP)—nearly twice its 2023 level.
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Immigrants cost less as retirees: First, the savings on old-age benefits are not because immigrants are significantly less likely to retire. Instead, it is because they are far less likely to receive a government pension, since they were less likely to have government jobs and thus less likely to receive expensive government pensions. The main reason, though, is that they were simply barred from applying for Social Security and Medicare because they either arrived too late in life to earn the necessary qualifying work history, or they are here illegally or in a temporary status and ineligible for that reason.
A 2024 ITEP report by Carl Davis, Marco Guzman, Emma Sifre:
- Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. Most of that amount, $59.4 billion, was paid to the federal government while the remaining $37.3 billion was paid to state and local governments.
- Undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022. In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue.
- More than a third of the tax dollars paid by undocumented immigrants go toward payroll taxes dedicated to funding programs that these workers are barred from accessing. Undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022.
Many Americans, including Republicans, depend on federal services and assistance.
The most comprehensive data source we have is the Census Bureau’s Survey of Income and Program Participation, although its most recent data is from 2023. That year, nearly 23 million SNAP recipients (65%) were adults, and 12.4 million (35%) were children.
Non-Hispanic White people accounted for 44.2% of adult SNAP recipients and 24.8% of child recipients in 2023. Nearly 27% of adult recipients and almost a third of child recipients (32.3%) were Black. Hispanics, who can be of any race, accounted for 24.2% of adult recipients and 40.7% of child recipients.
The vast majority of both adult and child recipients were born in the United States – 81.1% and 96.9%, respectively.
Among adult recipients, 54.1% had a high school diploma or less education. And despite the program’s work requirements, 61% said they had not been employed at all that year.
The Census Bureau also looked at households where at least one person received SNAP benefits. More than six-in-ten of these households (63.1%) reported having no children in 2023; almost a third (32.7%) said they lived alone. Among all SNAP-receiving households, 39% were in the South, the highest share of any region.
A number of posts have dealt with poverty.
ABSTRACT: Developmental differences between children growing up in poverty and their higher-income peers are frequently reported. However, the extent to which such differences are caused by differences in family income is unclear. To study the causal role of income on children’s development, the Baby’s First Years randomized control trial provided families with monthly unconditional cash transfers. One thousand racially and ethnically diverse mothers with incomes below the U.S. federal poverty line were recruited from postpartum wards in 2018-19, and randomized to receive either $333/month or $20/month for the first several years of their children’s lives. After the first four years of the intervention (n=891), we find no statistically significant impacts of the cash transfers on four preregistered primary outcomes (language, executive function, social-emotional problems, and high-frequency brain activity) nor on three secondary outcomes (visual processing/spatial perception, pre-literacy, maternal reports of developmental diagnoses). Possible explanations for these results are discussed.
Many posts have discussed partisan polarization.
Republicans and Democrats continue to be far apart when it comes to whether the federal government has a responsibility to provide health insurance for all Americans. Nine-in-ten Democrats say it does, while half as many Republicans (45%) say this.
Democrats are also 30 percentage points more likely than Republicans to say the government is responsible for providing an adequate standard of living to all Americans: 82% of Democrats and 52% of Republicans say this.
And Democrats are 31 points more likely than Republicans to say the government has a responsibility to provide all Americans with adequate income in retirement (81% vs. 50%).
Aaron Zitner, Jon Kamp and Brian McGill at WSJ:
Americans’ reliance on government support is soaring, driven by programs such as Social Security, Medicare and Medicaid.
That support is especially critical in economically stressed communities throughout the U.S., many of which lean Republican and are concentrated in swing states crucial in deciding the presidential election. Neither party has much incentive to dial back the spending.
The big reasons for this dramatic growth: A much larger share of Americans are seniors, and their healthcare costs have risen. At the same time, many communities have suffered from economic decline because of challenges including the loss of manufacturing, leaving government money as a larger share of people’s income in such places.
For its analysis of government spending, EIG used a government definition of income that includes spending on programs that Americans pay into, such as Medicare and Social Security. Another major government health program—Medicaid—is also counted.
The analysis also includes unemployment insurance, food stamps, the earned income tax credit, veterans benefits, Pell grants, Covid-era payments and other income support. States help pay for some of these programs, such as Medicaid, but the federal government covers roughly 70% of the total cost.
Americans are becoming more dependent on federal and state support. A revealing set of maps and analysis from @aaronzitner @jon_kamp @brian_mcgill --> https://t.co/68TtEJmxpg
— Tim Hanrahan (@TimJHanrahan) September 30, 2024
Tubb's group is correct that poverty rates in California are atrocious. "California has the highest rate of poverty at 13.2% of any state in the U.S.," it notes. "28.7 percent of all California residents were poor or near poor in fall 2021." EPIC doesn't address that California's poverty rate is the worst in the nation—especially when cost-of-living factors are included—despite this being the nation's most progressive state. It offers the most generous welfare programs.
One would think that politicians who are serious about ending poverty would at least address that paradox. The video features union organizers who point to the need for an even more powerful union presence in our state, yet unions were on the vanguard of some of the state's most poverty-inducing policies—such as Assembly Bill 5, which tried to ban most forms of independent contracting and destroyed moderate-income jobs throughout the freelance economy.
With their progressive policies, lawmakers are destroying the incentive for developers to build more housing. They're always adding regulations and taxes that shutter businesses and discourage people from investing in new ones. Instead of recognizing that California's poverty problem largely is the result of government meddling, EPIC will propose more-aggressive interventions. At some point, lawmakers need to stop making unattainable high-school-level promises and begin wrestling with complex realities.
Last year Abbott accounted for 42% of the U.S. formula market, about 95% of which is produced domestically. There are only four major manufacturers of formula in the U.S. today: Mead Johnson, Abbott, Nestle, and Perrigo. One reason the market is so concentrated is tariffs up to 17.5% on imports, which protect domestic producers from foreign competition. Non-trade barriers such as FDA labeling and ingredient requirements also limit imports even during shortages.
Canada’s strong dairy industry has attracted investment in formula production. But the Trump Administration sought to protect domestic producers by imposing quotas and tariffs on Canadian imports in the USMCA trade deal. The FDA can inspect foreign plants so the U.S. import restrictions aren’t essential for product safety. They merely raise prices for consumers and limit choice.
Further limiting competition is the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) for low-income mothers. By the Department of Agriculture’s estimate, WIC accounted for between 57% and 68% of all infant formula sold in the U.S. Under the welfare program, each state awards an exclusive formula contract to a manufacturer.
Companies compete for the contracts by offering states huge rebates on the formula women can buy. The rebates equal about 85% of the wholesale cost, according to a 2011 USDA study. Women can only use WIC vouchers to purchase formula from the winning manufacturer. These rebates reduce state spending, but there’s no such thing as free baby formula.
Why would manufacturers give states an enormous discount? Because the contracts effectively give them a state monopoly. Stores give WIC brands more shelf space. Physicians may also be more likely to recommend WIC brands. After 30 states switched their WIC contracts between 2005 and 2008, the new provider’s market share increased on average by 84 percentage points.
Many posts have discussed the unanticipated consequences of public policy.
The clearance of the thriving, legendary African-American neighborhood in Detroit known as Black Bottom, circa 1950, was not caused by natural disaster, gentrifying developers, or a destructive riot by its residents. The slowly gathering public policy that led to its demolition included an element of racial animus in the city's politics, but more than anything, the death of a neighborhood replete with black-owned businesses and owner-occupied property stemmed from the ideas of progressive housing reformers.
They began to build in the 1890s, when Jacob Riis, a New York police reporter deeply versed in sensationalist journalism, portrayed New York's Lower East Side in How the Other Half Lives as nothing but squalid, showing no interest in the vibrant upward mobility of its immigrants.
Riis inspired the now-obscure Johnny Appleseed of American zoning, Lawrence Veiller, who convinced communities across the country that the density that makes housing affordable (without government subsidies) must be limited. The formula that brought housing within the reach of the poor—what Boston settlement house pioneers Robert Woods and Albert Kennedy rightly celebrated as a "zone of emergence"—would be cast aside.
Its replacement—literally in the cases of Detroit's Black Bottom, Chicago's Bronzeville, St. Louis' DeSoto-Carr, and so many other healthy neighborhoods—would be public housing. The "projects" were and still are the rotten fruit that grew from seeds planted by progressive public intellectuals. The premier modernist architect Le Corbusier envisioned high-rise urban campuses without streets or stores. Less well-known but still essential figures in American housing policy history were University of Chicago sociologist Edith Elmer Wood and self-styled reformer Catherine Bauer Wurster.
In her 1934 paper "A Century of the Housing Problem," Wood led the ill-fated charge that would guide New Deal public housing policy. She inveighed against the private housing industry broadly—even arguing against the idea that homeownership was one of the means for the poor to improve their station. "The housing problem is an inevitable feature of our modern industrial civilization and does not tend to resolve itself," Wood wrote. "Supply and demand do not reach it, because the cost of new housing and the distribution of income are such that approximately two thirds of the population cannot present an effective demand for new housing."
Effects of a statewide pre-kindergarten program on children’s achievement and behavior through sixth grade.© Request Permissions
As state-funded pre-kindergarten (pre-K) programs expand, it is critical to investigate their short- and long-term effects. This article presents the results through sixth grade of a longitudinal randomized control study of the effects of a scaled-up, state-supported pre-K program. The analytic sample includes 2,990 children from low-income families who applied to oversubscribed pre-K program sites across the state and were randomly assigned to offers of admission or a wait list control. Data through sixth grade from state education records showed that the children randomly assigned to attend pre-K had lower state achievement test scores in third through sixth grades than control children, with the strongest negative effects in sixth grade. A negative effect was also found for disciplinary infractions, attendance, and receipt of special education services, with null effects on retention. The implications of these findings for pre-K policies and practices are discussed.
From the article:
While a state pre-K program is the focus of this article, a large body of research has focused on the Head Start program. However, there is only one randomized study of longer-term Head Start effects (Puma et al., 2012), one that also randomized applicants to oversubscribed programs. Head Start children had larger gains than controls on literacy and language measures (but not math) prior to kindergarten entry, but these effects disappeared by the end of kindergarten. Focusing on earlier Head Start programs, Deming (2009) conducted a study comparing siblings within the same family born between 1976 and 1986 who did or did not attend Head Start, and found long-term positive Head Start effects on adult outcomes even though test score differences faded. In a similar analysis, Pages et al. (2020) found that using the Deming sample but extending the measurement period decreased the adult effects, and data for children attending more recent Head Start programs showed mostly negative effects. Siblings who attended Head Start were less likely to be employed or enrolled in school compared to their siblings who mostly received home care. These later Head Start programs occurred within the same time window as the implementation of the Tennessee Voluntary Pre-K (TNVPK) program that is the topic of the current article
Deming, D. (2009). Early childhood intervention and life cycle skill development: Evidence from Head Start. American Economic Journal. Applied Economics, 1(3), 111–134. https://doi.org/10.1257/app.1.3.111
Pages, R., Lukes, D. J., Bailey, D. H., & Duncan, G. J. (2020). Elusive longer-run impacts of Head Start: Replication within and across cohorts. Educational Evaluation and Policy Analysis, 42(4), 471–492. https://doi .org/10.3102/0162373720948884
Puma, M., Bell, S., Cook, R., Heid, C., Broene, P., Jenkins, D., Mashburn, A., & Downer, J. (2012). Third Grade Follow-up to the Head Start Impact Study Final Report (OPRE Report # 2012-45). Office of Planning, Research and Evaluation, Administration for Children and Families, U.S. Department of Health and Human Services
American families shouldered an enormous burden caring for family members even before the pandemic, and a shortage of professional caregivers now is only likely to make that burden heavier.
The big picture: Nursing homes and other long-term care settings have seen a staff exodus both during and after the pandemic, especially when they've imposed vaccine mandates — poking new holes in a system that was already full of them.
"We have this terrible tradeoff right in a lot of parts of the country where we can either have staff working who aren't vaccinated and put our older adults at risk, or we can be short-staffed and that also puts older adults at risk," David Grabowski, a health policy professor at Harvard, told Axios.
By the numbers: Health care employment is down by 524,000 jobs since February 2020. Nursing and residential care facilities account for about 80% of the losses. Last week's jobs report showed another 38,000-job decline in nursing and residential care.Between the lines: The kind of care delivered in nursing homes and assisted-living facilities has long been a patchwork in the U.S.
- "We are losing more people than we can recruit," Gayle Kvenvold, CEO of industry trade group LeadingAge Minnesota told the Minneapolis Star Tribune about concerns in her state. Seven in 10 nursing homes and 29% of assisted-living facilities have limited new admissions as a result.
- It's expensive, it's hard for all but the poorest patients to get insurance coverage for it, and facilities offer widely differing levels of care. It's mostly been family members that have filled in the gaps.
- Unpaid caregiving is a burden that has traditionally fallen disproportionately on women — as has child care, which is facing its own pandemic crunch.
In an earlier brief, we estimated that the American Rescue Plan Act, enacted in March 2021, would reduce the 2021 annual poverty rate to 8.7 percent (Wheaton et al. 2021). We now project a 2021 poverty rate of 7.7 percent for 2021. The revised projection accounts for improvements in the economy, incorporates updated state-level information on pandemic-related policies, and improves the method for weighting the data to reflect 2021. Both the earlier poverty projections and these updated projections use the Supplemental Poverty Measure, which allows a more comprehensive assessment of families’ economic well-being than the official poverty measure. The projections, developed using the Urban Institute’s Analysis of Transfers, Taxes, and Income Security model, take into account expected levels of employment and income in 2021, safety-net benefits, taxes and tax credits, state “back to work” bonuses, and federal and state stimulus checks. Key findings include the following:
- Using the Supplemental Poverty Measure, the annual poverty rate projection for 2021 of 7.7 percent is well below the rate of 13.9 percent that we estimate for 2018.
- The projected poverty rate for children is 5.6 percent, for adults ages 18 to 64 it is 8.1 percent, and for people age 65 and older it is 9.2 percent.
- The 2021 poverty rate is projected to be higher for Black, non-Hispanic people (9.2 percent), for Hispanic people (11.8 percent), and for non-Hispanic Asian American and Pacific Islanders (10.8 percent) than for white, non-Hispanic people (5.8 percent).
- The federal stimulus checks have a larger antipoverty impact than any of the other programs; if all other programs were in place but the stimulus checks had not been paid, we project 12.4 million more people would be in poverty in 2021. The Supplemental Nutrition Assistance Program alone keeps 7.9 million people out of poverty in 2021, and unemployment insurance benefits lower the number in poverty by 6.7 million (assuming all other programs are in place).
- The combined benefits have the largest impact on children, reducing their projected 2021 poverty rate 81 percent relative to what it would be without any benefits (from 30.1 percent to 5.6 percent).
- The benefits have the largest impact on Black non-Hispanic people (reducing their 2021 projected poverty rate 74 percent) and the smallest impact on non-Hispanic Asian American and Pacific Islanders (reducing their 2021 projected poverty rate 54 percent).
The 1917 veterans benefits system is the system that the Department of Veterans Affairs uses today, groaning under the weight of an enormously expanded set of veterans benefits haphazardly added on after a century’s worth of wars, all reflecting changing (and often conflicting) views of individual rights, government benefits, economics, and military service. Richard Levy has written out a helpful explainer of the contemporary conflagration resulting from the dynamics at work in these benefits—something he calls the “uneasy mixture of two basic models of government benefits,” the charitable and the social insurance models.
In the charity model, “whatever moral obligation the nation may owe its veterans, the fulfillment of that responsibility is, from a legal perspective, a voluntary undertaking.” The charity model prevailed for a significant portion of American history, including during the time the veterans benefit system emerged. The creation of Social Security, Welfare, and Medicare decades later signaled a different understanding of government benefits, what we commonly call entitlements, and which Levy calls the “social insurance model” of benefits. Levy writes that in this latter model, “benefits are a form of social contract through which the government uses its taxing and spending powers to spread the costs of old age, disability, unemployment, and poverty.”
In the expansion of modern veterans benefits to include now housing insurance and fertility treatments, we can see the social insurance model in play, along with the charity model. The dual motivations of gratitude and a just repayment of a debt behind those two models are not difficult to discern. But the range of benefits the contemporary veteran can qualify for is so expansive that the veteran’s relationship with the VA may be the most important relationship in her post-service life. The VA can define who, as a veteran, she is in her own mind—whether disabled, because she receives a check for such, or not. And in its capacity as the second largest federal agency and the most visible public expression of the nation’s gratitude towards its veterans, the VA certainly shapes the American public’s expectations and understanding of who the veteran is.
Society’s medicalized perception of the veteran is further reemphasized, as James D. Ridgeway has noted, by veterans service organizations frequently lobbying for all benefits as compensation that is owed the veteran, as their right. But in fact, the “wounded warrior” is the centerpiece of veterans’ legislation in the 21st century not only because medical care is its historical root, but also because stakeholders and legislators have learned that highlighting the “brokenness” of veterans is the most effective mechanism to move legislation through Congress.
In 1980, Harris and Associates explicitly recommended this tactic to legislators even while noting its risky downsides for the public image of the actual veterans. That Congress liked the recommendation and paid no attention to the warning seems obvious in the post-9/11 context by the frequency with which members in the House and Senate introduce suicide prevention legislation despite repeated empirical evidence that veterans’ most consistent source of stress is understanding how to navigate the veterans benefits system, and being able to secure meaningful employment.
This by no means is to make light of the statistics about veteran and military suicides. But at what point does holding one single perspective distort the truth of a photograph or a profession, a person or a phenomenon?
Many posts have discussed state government and public finance.
#DYK that in 2019, public welfare exceeded education as the largest state expenditure for the first time since 1942?
— U.S. Census Bureau (@uscensusbureau) December 16, 2020
Download our summary of the 2019 Annual Survey of #StateGovernment Finances to learn more: https://t.co/f3lkXqr7qg pic.twitter.com/RKcOn7hHHl
Which industry had the highest employment and annual payroll in 2018?
According to the U.S. Census Bureau’s County Business Patterns (CBP), the 907,426 businesses in the Health Care and Social Assistance sector topped all others with 20 million employees and over $1.0 trillion in annual payroll in 2018.
And the U.S. Bureau of Labor Statistics (BLS) projects this sector will grow 14% from 2018 to 2028, due largely to an aging population with increased health care needs.
There's now an acceleration of what happened during the Great Recession a decade ago, when there was a 5 percent bump in eligible adults claiming Social Security an average of six months early. At the same time, soaring unemployment meant the government was collecting less in payroll taxes. The Obama administration estimated at the time that the fund would run out of money in 2037 — four years faster than expected before the financial crisis.
Today, the unemployment rate has already blown past the 10 percent peak logged during that recession, to 14.7 percent as of mid-April, according to data released this month. And some economists think it could climb as high as 20 percent. It’s estimated that 1 in 10 Americans still won’t have a job well into next year.
At least 36.5 million people aren’t paying payroll taxes into the program right now, and a second surge in early retirements is expected. Social Security benefits can be collected at the age of 62, though there is a penalty for not waiting until full retirement age.
Without accounting for the pandemic and the ensuing financial downturn, the federal government estimated last month that the program can fully issue benefits until 2035. At that point, only 76 percent of benefits can be paid out.
“It’s clearly going to be a lot worse than that,” said Alan Auerbach, an economist at the University of California, Berkeley.
A recent working paper from the University of Chicago’s Becker Friedman Institute finds that the unemployment rate has not risen to levels that would correspond with the numbers of jobs lost. Through surveys conducted earlier in 2020 and again at the height of the pandemic, they found that some of those who lost jobs have not been counted in the BLS unemployment rate because these workers have dropped out of the labor force. Furthermore, a striking percentage of these former workers cited retirement as their reason for not seeking additional work, rising from 53 percent in the first survey to 60 percent in the follow-on survey. The authors believe that these retirements are likely earlier than originally planned, given the age range of the participants.
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A unique feature of the current recession is that health officials have been warning the public for months that older people, and especially those living with underlying health conditions, are more at risk of developing more serious forms of the disease than their younger, healthier counterparts. Anxiety about the disease and lower rates of telecommuting might be combining to encourage more early retirement.
About 47 million people living in the United States in 2018 were born in other countries. Roughly three-quarters of those people were here legally. They included naturalized citizens, lawful permanent residents (who are also known as green-card holders), refugees, people who were granted asylum, and people who were temporarily admitted for a specific purpose, such as extended work or study. (The people accounted for in this document do not include visitors for business or pleasure.) The remaining one-quarter, or about 11 million people, were here illegally, having either remained here when their temporary legal status expired or crossed the border illegally. For more than a decade, the number of people remaining when their temporary status expired has exceeded the number crossing the border illegally, mostly because the number of illegal border crossings has declined.
Effects of the Foreign-Born Population on the Economy
Immigration, whether legal or illegal, expands the labor force and changes its composition, leading to increases in total economic output—though not necessarily to increases in output per capita.
The effects of immigration on wages depend on the characteristics of the immigrants. To the extent that newly arrived workers have abilities similar to those of workers already in the country, immigration would have a negative effect on wages. To the extent that newly arrived workers have abilities that complement those of workers already in the country, immigration would foster productivity increases, having a positive effect on wages. But it is difficult to disentangle the influence of immigration on wages from the influence of other forces, such as changes in technology and the global economy.
A change in the legal immigration status of people who are already in the United States would affect their wages and productivity. People with legal immigration status are usually authorized to work; so are recipients of Deferred Action for Childhood Arrivals (DACA). People without legal immigration status are usually not authorized to work (although many work regardless). And if people were to acquire legal status, they would be better positioned to ask for more compensation and become likelier to be employed in jobs that best matched their skills, increasing their wages and productivity.
Effects of the Foreign-Born Population on the Federal Budget
People’s direct effects on the federal budget depend largely on the taxes that they pay and the government programs in which they participate. Foreign-born and native-born citizens are liable for the same taxes and eligible for the same programs. Foreign-born people who are not citizens are generally liable for federal taxes, but their eligibility for various federal programs depends on their immigration status. (Similarly, people’s effects on state and local budgets depend on their liability for state and local taxes and their use of state and local public services. For example, increases in population exert budgetary pressure on community resources, such as schools.
On average across OECD countries, mothers are entitled to just over 18 weeks of paid maternity leave around childbirth (Table PF2.1.A and Chart PF2.1.A). In line with both the ILO convention on maternity leave and the current EU directive on maternity leave, almost all OECD countries provide mothers with at least 14 weeks leave around childbirth; the main exception is the United States, which is the only OECD country to offer no statutory entitlement to paid leave on a national basis. In some countries, entitlements to paid maternity leave extend to over six months. In the United Kingdom, for example, mothers can take up to nine months paid maternity leave. Maternity leaves are generally well paid (Table PF2.1.A and Chart PF2.1.A). The majority OECD countries provide payments that replace over 50% of previous earnings, with 13 OECD countries offering a mother on average earnings full compensation across maternity leave. Payment rates are lowest in Ireland and the United Kingdom, where less than one-third of gross average earnings are replaced by the maternity benefit. As a result, despite lengthy maternity leave entitlements, full-rate equivalent paid maternity leave in these countries lasts only seven and twelve weeks, respectively.
