For years, seafood processing companies in Alaska have been hiring foreign student guest workers on J-1 visas through the Summer Work Travel program (SWT). Despite the astronomical youth unemployment rate—averaging 15.3 percent last year for 16-24 year olds in Alaska, and 17.3 percent nationally—about 4,000 SWT workers were employed by these companies last year. Thanks to new regulations issued by the State Department in May, however, there’s good reason to believe that many of those jobs will go to young unemployed Alaskans and Americans in the lower 48 states next year. In other words, the State Department may have just created 4,000 jobs for them.

SWT is the largest category within the State Department’s Exchange Visitor Program (EVP), which was created to facilitate educational and cultural exchanges between Americans and people from around the world. The SWT, one of 16 different EVP categories, allows college students from abroad to experience American culture by working full time in the United States for four months. To give you an idea about the size of the SWT program, there were 109,000 SWT students working in the United States last year out of the total 324,000 exchange visitors with J-1 visas.

The SWT program has been quite popular among employers across the country (the program peaked at over 150,000 workers in 2008), and it’s easy to understand why. Employers use the SWT program because it’s an easier, cheaper alternative to recruiting and hiring U.S. workers. Because of this, a few months ago I argued at length in support of the State Department’s then-rumored move to ban fish processing jobs from the SWT program. I noted (among other things) that there are plenty of unemployed young workers available in Alaska and the lower 48 states—and that fish processors should improve and increase their recruitment efforts to find them before filling those jobs with temporary foreign workers who are in the country on an exchange program.

A recent report in the Anchorage Press  indicates that seafood companies will do fine employing Americans instead of SWT workers. Read more

Parade Magazine  published an excellent report by Barry Yeoman about the sad state of the nation’s school facilities  this past weekend. It’s a surprisingly detailed look at a deficit—the backlog in school maintenance and repair—with much bigger consequences for our children than the federal budget deficit. By some estimates, the nation would have to spend $271 billion just to bring the public schools up to a decent state of repair, while a state of world class excellence would require investments several times larger.

All of the talk about testing our way to educational excellence has only diverted attention and funding from the desperate state of the nation’s school buildings and grounds. Crumbling, antiquated facilities are, as Yeoman makes clear, hostile to learning and depressing to the children and teachers who spend so much of their lives there.

State and local governments too often look the other way or blame teachers for the educational shortcomings of the students. Education seems to be the place where many people don’t believe “you get what you pay for.”

Today, more than 14 million children attend class in deteriorating facilities; the average U.S. public school is over 40 years old. In the worst of them, sewage backs up into halls and classrooms, rain pours through leaky roofs and ruins computers and books, and sinks are off the walls in the bathrooms. As Mary Filardo, CEO of the 21st Century School Fund, puts it, they are “unhealthy, unsafe, depressing places.”

It doesn’t have to be that way, and with Filardo’s leadership and encouragement, the Obama administration and key members of Congress are working to close this investment deficit. Sen. Sherrod Brown (D-Ohio), Rep. Rosa DeLauro (D-Conn.), and dozens of cosponsors have introduced legislation (Fix America’s Schools Today, or FAST) to provide $30 billion a year to repair and renovate school facilities, bring them up to code, and make important energy-saving improvements. These funds would not just improve the health and safety and learning environments of millions of students and teachers, they would also employ 300,000 people to do construction and maintenance work. FAST would have very positive effects on the labor market and the economy.

I hope many of Parade’s  32 million readers are inspired by Yeoman’s article to call or write their senators and congressmen to get their support for FAST. The U.S. is years behind in making these investments, but much better late than never.

Republican presidential candidate Mitt Romney has selected House Budget Committee Chairman Paul Ryan (R-Wis.) as his running mate, further elevating tax and budget policy issues. Ryan is known for providing seemingly wonky budget plans over the last decade. Below, we highlight and summarize previous analyses of these plans. What stands out is that Ryan’s budget blueprints impose huge cuts to non-defense spending yet still fail to address long-run fiscal challenges in any serious way. Further, they clearly exacerbate many pressing economic challenges, like restoring full employment, rebuilding the middle class, and curbing health costs. Lastly, they are often simply incomplete or even dishonest, claiming to hold overall revenue levels constant while offering no tax increases to counterbalance very large tax cuts aimed at the highest-income households. Simply put, the Ryan budgets fail to correctly diagnose the most pressing economic problems facing the U.S. economy, and hence fail to propose real solutions. Here are themes everyone needs to know about the Romney-Ryan agenda for the federal budget, and a 10-point overview of Ryan’s budgets.

• The Ryan budget blueprints would derail economic recovery and lower employment in the near term by prematurely cutting domestic spending.
• Ryan’s budgets make deep cuts to Medicare, Medicaid, and Social Security, as well as repeal the Affordable Care Act .
• Ryan has proposed cutting non-defense spending and public investments—areas including education, infrastructure, and scientific research—to implausibly low levels that impede near- and long-term growth.
• Ryan’s budget blueprints shift the burden of taxation from the most upper-income households to the middle class, redistributing wealth up the income distribution.
• Ryan’s budgets appear fiscally responsible on paper only by dissembling which taxes will be raised to cover his enormous cuts to tax bills of high-income households and corporations. Read more

A few weeks ago at a congressional hearing, Gene Steuerle pointed out that the design of our tax code and safety net can result in low-income households facing high effective marginal tax rates. For example, Steuerle finds that a household whose income rises from $10,000 to $40,000 would actually face a nearly 30 percent marginal tax rate.  Factoring in the loss of safety net benefits like nutrition assistance, health insurance coverage, and other program benefits translates into an 82 percent marginal rate. In other words, a household making $10,000 that gets a raise of $30,000 would end up only $5,400 better off.

This happens because much of our social safety net is means tested, meaning that benefits phase out as household income rises. A simple way to solve this problem is to delay the phase-out and extend the schedule, making the benefit in question phase-out more slowly. This would not only tear down the high marginal rate wall between low-income and middle class taxpayers, but would also help middle-income households who have too much income to benefit from social safety net programs but too little income to utilize many of the tax breaks that the tax code provides disproportionately to high-income households. Read more

I know I’m getting to this debate a little late, but it’s too good to pass up. As you may have read, the centrist think tank Third Way recently came out with a paper finding that entitlement spending has crowded out public investments, and therefore Democrats who care about children should endorse cutting health and retirement benefits for the poor and/or elderly. Bill Keller then used the paper as the basis for a New York Times  column on how the baby boomer generation is greedy. Dylan Matthews and Jamie Galbraith vehemently disagreed.

Let’s state up front that Keller and Third Way’s concern for our currently-low levels of public investment is totally spot on. We’ve written extensively on how public investments act both as a vital driver of economic growth and how they help push against inequality trends, helping us achieve a future where a higher level of prosperity is shared by more people. EPI has been writing about the deficit in public investment for more than two decades.

But there are two intrinsic problems with the Third Way/Keller narrative.  The first is that the data do not really support it at all.  Below is their central graph, supposedly proving their point:

I’ve redrawn the graph below, lopping off the data after 2011 because, as I understand it, their point is that historically public investments have been crowded out by entitlement spending, so we should only look at historical data. After all, the point is to look at what has already happened, and once you do that, it’s clear that the data do not at all support Third Way’s hypothesis.Read more

Next week, about 1.2 million young people who reside in the United States without proper authorization—but who were brought here by their parents when they were children—will be eligible to apply to the Department of Homeland Security (DHS) for a discretionary grant of relief from removal (also known as deportation). This relief will be valid for two years and renewable in two-year increments. If granted, beneficiaries would also be eligible for an Employment Authorization Document, which would allow them to work legally in the United States with full labor and employment rights. This will clearly benefit the American workforce, and it’s unlikely to cost a dime of taxpayer money.

On Tuesday, the Migration Policy Institute (MPI) hosted a forum to discuss how DHS’s new process—known officially as the Deferred Action for Childhood Arrivals (DACA) initiative—will function in practice. The keynote speaker was Alejandro Mayorkas, Director of U.S. Citizenship and Immigration Services (USCIS), which is the DHS agency that will process and adjudicate DACA applications. Mayorkas outlined the programmatic aspects of the initiative and its requirements, and four immigration experts offered their thoughts in response. It was a valuable discussion that shed some much-needed light on DACA.

We know from multiple reports that many of those who will seek this type of relief from removal are some of the best and brightest students—and future workers—our country has to offer. They arrived in the United States through no fault of their own, and it would be unjust to send them to a country they barely know or do not remember, and where many would not even know the language. They deserve to stay here and to become Americans, and to be allowed to contribute to our labor market. But despite bipartisan support and a decade’s worth of bipartisan proposals in Congress, gridlock and obstructionism have blocked a solution that would grant them a permanent status. That’s one of the reasons why President Obama announced on June 15 that his administration would use its discretionary administrative authority to refrain from removing young unauthorized immigrants who are not criminals and pose no threat to national security.

However, it is clear that USCIS has quite a task on its hands. Read more

For-profit colleges prey on the poorest students while generating a great deal of wealth to shareholders, owners, and CEOs. Figure A shows that in 2008, the median family income of students attending for-profit colleges was $22,932. This amount is only slightly higher than the U.S. Census Bureau’s poverty threshold for a family of four. The families of students at public colleges had about twice as much income, and those at private non-profit colleges nearly three times as much.

Despite having the poorest student bodies, the CEOs running for-profit education companies earn far more than the richest leaders of traditional public and private colleges and universities. CEOs of publicly-traded for-profit education companies had an average compensation of $7.3 million in 2009, while the richest five leaders of private non-profit colleges and universities had an average compensation of $3 million (Figure B). The richest five leaders of public universities had an average compensation of $1 million.

For-profit colleges are so profitable because they charge very high tuition and invest rather little in education. Among for-profit college students, 96 percent take out student loans to pay for their education, a much higher rate than at other colleges. Since most of these loans are from the Department of Education financial aid program or U.S. military educational programs, it is ultimately taxpayers who are paying these CEOs’ salaries. These students who were already low-income often end up saddled with a very large amount of debt. Since student loan debt cannot be expunged even through bankruptcy, these debts can be “a lifelong drag on people who already are struggling.”

For-profit colleges tend to enroll students who are not familiar with traditional higher education. They are more likely to be low-income, African American or Latino. Significant numbers of veterans also enroll in these schools. The Senate Committee on Health, Education, Labor, and Pensions found that recruiters “were trained to locate and push on the pain in students’ lives.” Additionally, undercover recordings by the Government Accountability Office and other sources show that many for-profit college recruiters “misled prospective students with regard to the cost of the program, the availability and obligations of Federal aid, the time to complete the program, the completion rates of other students, the job placement rate of other students, the transferability of the credit, or the reputation and accreditation of the school.”

This combination of naïve students and misleading information allows for-profit colleges to set tuition in line with their profit goals (many of these colleges are publicly-traded companies) rather than in line with the cost of education. Figure A shows that the average cost of a certificate program at a for-profit college is 4.7 times the cost of an equivalent program at a public community college. The average cost of an associate degree is 4.2 times what it would cost at a typical community college. Bachelor’s degree programs average 19 percent higher at a for-profit college than at a flagship state public university.

Read more

The claim that an excess of regulatory activity is stifling the economy and jobs growth continues to ignore the roots of the economy’s problems (the collapse of the housing and financial sectors) and the reality of current economic trends. We will save discussion of the causes of the downturn for a different day, except for noting the irony that regulatory opponents are fighting implementation of the stronger financial rules that could help prevent future collapses. Instead, we will update key information from a previous EPI analysis of whether business decisions, specifically investments, are consistent with the excessive regulation story. The earlier report documented that “what employers are doing  in terms of hiring and investment” was inconsistent with business claims that regulatory uncertainty under the Obama administration was impeding job growth. The new data include four additional quarters of results and also take into account revisions to the earlier data that were made available in late July (the Bureau of Economic Analysis annual benchmarking of the National Income and Product Accounts data leads to some revisions). Altogether, we are now able to compare investment trends during the first 12 quarters (or three years) of this recovery to the first 12 quarters of the three prior recoveries.

Of particular interest is whether businesses are holding back from investing in equipment and software because of fears of new or potential regulations. This investment category leaves out residential investment and investments in business “structures”—because those types of investments are clearly faltering as a result of the bursting of the residential and commercial real estate bubble (and not because of regulatory activity).

As a share of the economy, the data show that equipment and software investment has increased more in this recovery than in the three prior recoveries. Indeed, three years into this recovery the growth of 1.6 percentage points in the share of GDP going to investment in equipment and software is more than twice as large as the growth during the first three years of either the George W. Bush or the Reagan recoveries. That means that this recovery, with the Obama regulatory approach, is far more investment-led than the recoveries under the generally deregulatory Bush and Reagan administrations.

Read more

Celebrating Medicare and Medicaid’s 47th birthday this week, here are some quick thoughts on government’s role in ensuring access to affordable health care:

1. The United States spends nearly double what other countries spend. Americans spent a total of around $7,600 per person on health care in 2010, compared with around $3,900 on average for countries with similar standards of living, according to the Kaiser Family Foundation. Despite this higher spending, health outcomes are no better than in other developed countries.
2. Government picks up nearly half the tab. As fewer Americans are covered by employer-sponsored insurance, government has taken up the slack. State and federal programs now directly or indirectly cover 45 percent of health care costs in the United States.
3. High and rising health care costs are the biggest fiscal challenge our country faces. The Congressional Budget Office (CBO) projects that federal spending on major health programs will increase from 7.4 percent of GDP in 2022 to 10.4 percent in 2037 if current policies remain in place. Nearly two-thirds of this increase is due to the assumption that per capita health care expenditures will grow faster than per capita GDP. In the absence of this excess cost inflation, spending on these programs would increase to a more manageable 8.6 percent of GDP in 2037, largely reflecting the long-anticipated baby boomer retirement. Read more