Recently, I have undertaken some research on racial under-representation in the construction industry, and some interesting early findings are worth sharing. Construction is a sector that has historically excluded black workers—including the unionized portion of the industry. Giving minority workers access to good jobs is an important part of closing our large and persistent racial wage inequities, so this is a critical issue. It was on this basis that many progressives have been hostile to infrastructure spending in the past: it provided jobs in a sector where it was well known and documented that black workers had been excluded from opportunities. Some people, such as National Black Chamber of Commerce CEO Harry C. Alford, contend that “construction sites are still close to Jim Crow.”

It is worth asking whether and to what extent construction work is racially exclusionary, especially the unionized sector as Alford also contends. After all, there have been changes over the years, with unions increasing the number of minorities admitted into apprenticeship programs, and undertaking project labor agreements that incorporate community agreements that bring excluded populations into the industry. What does the current situation look like, and how does the union sector compare to the nonunion sector? It turns out that, at least in one of our largest and heavily unionized cities, New York City, Alford’s characterization is quite outdated.

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The Supreme Court has accepted a case in which the relevance of “disparate impact” evidence in discrimination cases brought under the Fair Housing Act is being challenged. The Economic Policy Institute, in collaboration with the Chief Justice Earl Warren Institute on Law and Social Policy at the University of California School of Law, and with the U.C. Berkeley Haas Institute for a Fair and Inclusive Society,  has submitted an Amicus Curiae brief to the Court in this case.

Our brief argues that entrenched patterns of residential segregation, established substantially by government policy, structure the housing opportunities of African Americans into the present time. In a case like that considered by the Court, a redevelopment project that displaces African Americans could violate the Fair Housing Act if provision is not made for the relocation of displaced residents into integrated middle-class communities nearby.

Many distinguished scholars have joined us as amici in this brief, including Elizabeth Anderson, John Brittain, Nancy Denton, Christopher Edley, Jr., James Kushner, Ira Katznelson, James Loewen, Myron Orfield, Jr., John Powell, Gregory Squires, and many others.

If you are a scholar in this field, and we neglected to invite you to join these amici, please understand that it was an oversight under serious time-pressure to submit this brief by the Court’s deadline.

No, nothing to do with the website—that still seems problematic at best. But the CBO just released new estimates of the budget savings that would result from raising the Medicare eligibility age from 65 to 67. The punchline that most have focused on is that this (terrible) policy change is now estimated to save just a small fraction of what it was estimated to have saved in previous years ($19 billion over 10 years in the latest estimate, compared to $113 billion over 10 years in previous estimates).

Why the change? Mostly because CBO has changed its estimates to better reflect that fact that those who enroll in Medicare at 65 and 66 are less expensive than previously thought. The genuinely expensive 65- and 66-year-olds that are covered by Medicare tend to have been allowed to enroll at earlier ages because of chronic illness or disability. Further, many 65- and 66-year-olds still receive employer-sponsored insurance and use Medicare as secondary insurance. CBO seems to have made re-estimates that boost the importance of both these issues in reducing the estimate of what newly enrolled 65- and 66-year-olds spend on Medicare.

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Happy Friday. Here’s what we read today. Read anything interesting lately? Share it in the comments!

• The Times Is Working on Ways to Make Numbers-Based Stories Clearer for Readers (New York Times)
• Are Private Schools Worth It? (The Atlantic)
• The Trillion Dollar Money Pump for the 1 Percent (Huffington Post)
• The Triumph of the Right (Nation of Change)
• Addicted to the Apocalypse (The New York Times)

In the past, I have shown that most of the improvement in the unemployment rate since its peak of 10 percent in the fall of 2009—and all of the improvement in the unemployment rate over the last year—has not been for good reasons. It has been due to people either dropping out of, or not entering, the labor force due to weak job opportunities.

But what about other measures of labor market slack that the Bureau of Labor Statistics publishes? The most comprehensive direct measure of labor market slack published by the BLS is the U-6 measure of labor underutilization, the so-called “underemployment” rate. Like the unemployment rate, the underemployment rate has declined substantially in this recovery, from a peak of 17.1 percent in the fall of 2009 to its current rate of 13.6 percent. While still very elevated—the U-6 averaged 8.3 percent in 2007—that is significant improvement. Is it a sign of major healing?

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The sequester (pdf) cut approximately $85 billon from Fiscal Year 2013 spending—half from reductions in defense spending and half from elsewhere in the budget. OMB calculated (pdf) that it would result in a 5 percent reduction in nondefense discretionary spending—funding for programs like education and housing assistance, veterans’ benefits and services, medical and scientific research, and health and safety regulations.

I have long argued that cuts to government spending are uncalled for, given the lack of a robust economic recovery. However, if you are searching for sensible ways to shrink the deficit, there are better alternatives to sequestration. For example, we could eliminate the nondefense discretionary spending cuts in the sequester and shave $26 billion annually from the deficit by eliminating or closing a handful of tax loopholes.

Tax loopholes, formally known as tax expenditures, reduce tax revenues by over $1 trillion every year. There are many reasons to keep tax loopholes in the tax code: some are very popular (e.g., the mortgage interest deduction), some provide incentives to socially beneficial behaviors (e.g., the earned income tax credit), and some are technically difficult to change (e.g., the exclusion for employer retirement plans).

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Recent reports from The Heritage Foundation and the American Action Forum claim that Americans (particularly young Americans) will pay more for health insurance in the new exchanges set up as part of the Affordable Care Act (ACA, or, Obamacare if you like) than they do currently. The question of how much prices differ between the current non-group market and the new health insurance exchanges is awfully interesting, but very difficult, if not impossible, to answer. And to be very clear—neither the Heritage nor the AAF studies do much to shed light on it.

Transparent prices are now widely available in the new health insurance exchanges.1 There are advertised prices for a variety of policies, for consumers in different age groups, and, similarly, subsidies can be calculated for a continuum of income levels. And these are the prices that people will actually end up paying.

Now, let’s contrast that with the non-group market before the ACA. First, the insurance policies often compared to the exchanges do not line up in terms of benefits. Policies in the individual market often have higher deductibles and exclude various conditions from what’s covered by the policy. The policies offered in the exchanges generally offer more comprehensive coverage, and hence should be more expensive on average for this reason. Second, in the pre-reform non-group market, list prices don’t reflect the true prices people will actually end up paying. The individual market, in most states, does individual risk rating. This means the insurance company (often on a website) will give a price, but then they will do an individual risk assessment, for instance, by sending someone to measure an applicant’s blood pressure, weight, etc. At that point, the true price is given. Not surprisingly, it can turn out to be higher than the price listed. This price can be effectively infinity, by the way (more on this below).

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The Luddites the headline is speaking of, of course, are those of the deficit hawk industrial complex, ably personified yesterday by Erskine Bowles on MSNBC’s Morning Joe and today by Thomas Friedman’s NYT column. This is a group of people who are routinely given prominent platforms (and often paid very well) to warn that budget deficits are a clear and present danger to American living standards. They are re-emerging in force now that the current fiscal showdown seems to be moving away from repealing/defunding/undermining the Affordable Care Act (ACA) and into the traditional stage of hand-wringing about budget deficits.

Officially sanctioned hand-wringing about budget deficits as a part of deals solving fiscal showdowns has become a routine part of fiscal policy debates in recent years.  And this hand-wringing has been increasingly damaging to the U.S. economy. The first instance of this phenomenon was the creation of the National Commission on Fiscal Responsibility and Reform (or, the “Simpson-Bowles Commission”) in 2010. The SB plan (not an official plan, just one forwarded by the Commission co-chairs) called for a roughly balanced mix of tax increases and spending cuts to get deficit savings over the next decade.

Even in 2010, the urgency to cut longer-run deficits was misplaced—the laser focus should have been on ensuring full recovery from the Great Recession. This failure to focus on recovery has been the primary contributor to the recovery’s dismal rate of progress between the first quarter of 2010 and the second quarter of 2013. For example, the employment rate of prime-age adults has risen by less than a percentage point, leaving intact well over 80 percent of the Great Recession-induced decline in this key measure of labor market slack.

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The current fiscal showdown was actually a little different in that the House GOP and Senator Ted Cruz largely did not claim to be engaging in obstructionism in the name of reducing budget deficits. Indeed, their central demand—the wholesale rollback of the Affordable Care Act (ACA) would actually increase long-run deficits substantially.

But those days seem over and discussion after any short-term cease-fire on the continuing resolution (CR) and debt ceiling seems set to snap back to the Washington perennial of obsessing over long-run budget deficits. A clear sign that the nation’s political debate has shifted back to budget deficits is always that Erskine Bowles and Alan Simpson have launched a campaign calling on policy-makers to reduce deficits and are invited on talk shows and fawned over. Looks like we’re here again.

As comfortable as this makes Beltway pundits, it’s a disaster, since previous episodes where fiscal showdowns focused on budget deficits led to the radical austerity that has been so damaging to recovery from the Great Recession. Let’s recap.

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The budget deals being talked about in the Senate and the House suggest that the government shutdown will end soon and that the debt ceiling will be raised, at least for a while. This cease-fire looks like the Tea Party has snatched a possible victory from the jaws of defeat.

Helaine Olen, author of Pound Foolish, appropriately calls this a ‘cease-fire’ because nothing got settled and hostilities are bound to resume in a few months. It seems that no hostages (like the health care law) will be taken this time but the situation is set so hostages may be taken again in February. The extortion threat remains the same but now the ransom demand is the Democrats’ assurance that the so-called grand budget deal goes according to the House Tea Party caucus’ wishes:  cuts in Social Security and Medicare. This is unfortunate since the President and Senator Reid have clearly articulated that they wanted to end the hostage-taking, where either the government or the economy is a hostage. After all, the setup is to trade entitlement cuts, meaning unpopular reductions in Medicare (like raising the eligibility age) or in Social Security (cutting cost-of-living increases and/or raising the full retirement age), for revenue. That’s a tried and failed deal. So, if the President does not agree to Social Security and Medicare cuts there won’t be an increase in the debt ceiling? A government shutdown again? I wonder, is this setup meant to pressure the Tea Party into granting more revenue or is it meant to pressure Democrats into accepting Social Security and Medicare cuts they do not want or think are necessary?