Exploring the effects of student absenteeism
With the great majority of states choosing some measurement of school attendance as their so-called “fifth metric” required by the Every School Succeeds Act,1 researchers, policymakers, and advocates are questioning how useful these metrics are at informing us about student achievement and education equity, as well as guiding policy. Indeed, while research has linked missing school to elevated risk of dropping out and poorer graduation rates, policymakers and researchers should further explore the importance of missing school, and about factors driving student absenteeism, and how to reduce it.
Our recently released report, Student absenteeism:Who misses school and how missing school matters for performance, examines how much school students are missing, which groups of students are missing the most school, and how bad missing school is for performance. We learned that about one in five students—19.2 percent—missed three or more days of school in the month before they took the 2015 National Assessment of Educational Progress (NAEP) assessment. Students who have been diagnosed with a disability, Hispanic-English language learners, Native Americans, and students who are eligible for free lunch, were the most likely to miss school, while Asian students were rarely absent. Our findings also confirmed that missing school negatively effects performance, even after accounting for student and school characteristics (including gender, race/ethnicity, language status, disability status, income, and school socioeconomic characteristics). Even students with only occasional absences were negatively affected. For these students, relative to those who did not miss school, absenteeism makes a moderate dent in their performance (a tenth of a standard deviation), but the decline in performance becomes more troubling as the number of missed days increases (up to about two-thirds of a standard deviation for those missing more than 10 school days).
Data continues to show little evidence that tax cuts are trickling down to typical workers, and now House Republicans want a do-over
In December, when Republicans passed the Tax Cuts and Jobs Act (TCJA) they chose to make tax cuts for corporations permanent, while making the individual provisions temporary to satisfy the requirements of budget reconciliation. Republicans sold these corporate tax cuts as being beneficial to everyday working people, despite the fact that previous experience gives us no reason to believe that corporate rate cuts will trickle down to anyone.
Some willing allies in the corporate world, eager to bolster the case for tax cuts, tried to hoodwink workers into believing that any bonus a worker received in 2017 was due to the TCJA. But the economic theory behind the idea that corporate rate cuts lead to higher pay for typical workers does not say that those wage increases would occur immediately (and certainly not before the tax cuts came into effect). Instead, wage bumps for workers, if they come at all, would come only after a long chain of economic events were triggered by the cut. One of the first of these events should be increased investment. We’ve long pointed out that there was reason to believe that nearly every link in this chain would break down, and that the theory itself is inconsistent with the reality of the larger deficits caused by the TCJA.
Now that the tax cuts have passed and enough time has gone by to allow some data to trickle in, is there any reason for us to change this judgement? Not really. There’s still no indication in the data that the TCJA has spurred investment—the necessary but by no means sufficient precursor to wage gains. Sure, owners of corporate shares have made out like bandits. The most recent release from the Bureau of Economic Analysis (BEA) shows that domestic after-tax corporate profits remain high, 7.5 percent of GDP in the second quarter of 2018 compared to 7.4 percent in the first quarter of 2018 and up substantially from already-high levels (6.7 percent) in 2017. Revenue collected from domestic corporate taxes remains low, 1.2 percent of GDP in the second quarter of 2018 compared to 1.1 percent in the first quarter of 2018 and 1.8 percent in 2017. Finally, undistributed domestic corporate profits – corporate profits kept internal to the firm and not distributed back to shareholders as dividends—remain historically high. This is due to the windfall the TCJA contained for multinational corporations on the profits they booked offshore. These undistributed profits (available to finance share buybacks) constituted 8.9 percent of domestic corporate gross value added in the second quarter of 2018 compared to 13.7 percent in the first quarter of 2018 and 2.6 percent in 2017. In short, the direct effects of the TCJA are here and totally visible in the data: swollen corporate profits.
Further evidence that the tax cuts have not led to widespread bonuses, wage or compensation growth
One of the leading arguments for the GOP’s Tax Cuts and Jobs Act of 2017 has been that it will raise the wages of rank-and-file workers, with congressional Republicans and members of the Trump administration promising raises of many thousands of dollars within ten years. The Trump administration’s chair of the Council of Economic Advisers argued in April that we are already seeing the positive wage impact of the tax cuts:
A flurry of corporate announcements provide further evidence of tax reform’s positive impact on wages. As of April 8, nearly 500 American employers have announced bonuses or pay increases, affecting more than 5.5 million American workers.
Following the bill’s passage, a number of corporations made conveniently-timed announcements that their workers would be getting raises or bonuses (some of which were in the works well before the tax cuts passed). But as Josh Bivens and Hunter Blair have shown there are many reasons to be skeptical of the claim that the TCJA, particularly corporate tax cuts, will produce significant wage gains.
Newly released Bureau of Labor Statistics’ Employer Costs for Employee Compensation data allow us to examine nonproduction bonuses in the first two quarters of 2018 to assess the trends in bonuses in absolute dollars and as a share of compensation. The bottom line is that there has been very little increase in private sector compensation or W-2 wages since the end of 2017. The $0.03 per hour (inflation-adjusted) bump in bonuses between the fourth quarter of 2017 and the second quarter of 2018 is very small and not necessarily attributable to the tax cuts rather than employer efforts to recruit workers in a continued low unemployment environment.
Digging into the 2017 ACS: Improved income growth for Native Americans, but lots of variation in the pace of recovery for different Asian ethnic groups
Thursday’s release of 2017 American Community Survey (ACS) data allows us to fill in the blanks for racial and ethnic groups that were not covered in Wednesday’s Census Bureau report on income, poverty, and health insurance coverage in 2017. The ACS is an annual nationwide survey that provides detailed demographic, social, and economic data for smaller populations like Native Americans and the thirteen distinct ethnic groups that make up the Asian population. (For the sake of comparability, in this blog post, the national estimates of median household income and poverty that I refer to are from the ACS.)
Between 2016 and 2017, the real median household income for Native Americans increased 3.2 percent, to $41,882. Native American median household income grew faster in 2017 than 2016 (1.8 percent), essentially bringing it back to the 2007 pre-recession level (though technically still $5 lower). Even with this boost, the median household income of Native Americans was just 69.4 percent of the national median in 2017. While this data comes from a different source than Wednesday’s data on household income and covers a slightly different survey period, it suggests that Native American median household income is similar to that of black households, but Native American households experienced much faster income growth than blacks over the last year.
Poverty declined in most states in 2017
The American Community Survey (ACS) data released today shows that the decline in the national poverty rate was felt in nearly every state. The poverty rate decreased in 42 states and the District of Columbia, with 20 of those states experiencing statistically significant declines. While there were slight increases in the poverty rate in seven states, the only statistically significant increases occurred in Delaware and West Virginia. These widespread declines are certainly good news, though most states have still not recovered to their pre-great-recession poverty rates and 40 states had higher poverty rates in 2017 than in 2000, when the economy was closer to full employment.
The national poverty rate, as measured by the ACS, fell 0.6 percentage points to 13.4 percent. This is 0.4 percentage points above the ACS poverty rate for the country in 2007, and 1.2 percentage points above the rate from 2000.
Between 2016 and 2017, the District of Columbia saw the largest decline in its poverty rate (-2.0 percentage points), followed by Idaho (-1.6 percentage points), Arizona (-1.5 percentage points), Maine (-1.4 percentage points), Kentucky (-1.3 percentage points), and Rhode Island (-1.2 percentage points). There were increases in poverty in Delaware (1.9 percentage points), West Virginia (1.2 percentage points), Alaska (1.2 percentage points), New Hampshire (0.4 percentage point), Hawaii (0.2 percentage point), South Carolina (0.1 percentage point), and Massachusetts (0.1 percentage point). In Wyoming, the rate remained essentially unchanged between 2016 and 2017.Read more
Household incomes in 2017 stayed on existing trends in most states; incomes in 21 states are still below their pre-recession levels
The state income data for the American Community Survey (ACS), released this morning by the Census Bureau, showed that in 2017, household incomes across the states stayed largely on the same trajectories that they were heading in 2016, with a handful of exceptions. From 2016 to 2017, inflation-adjusted median households incomes grew in 40 states and the District of Columbia (24 of these changes were statistically significant.) The ACS data showed an increase of 2.5 percent increase in the inflation-adjusted median household income for the country as a whole—an increase of $1,492 for a typical U.S. household. Despite these increases, households in 21 states still had inflation-adjusted median incomes in 2017 below their 2007 pre-recession values.
From 2016 to 2017, the largest percentage gains in household income occurred in the District of Columbia, where the typical household experienced an increase of $5,258 in their annual income—an increase of 6.8 percent. With this increase, the District of Columbia now has the highest median household income in the country at $82,372—though comparing D.C. to states is problematic, since D.C. is a city, not a state. Maryland remains the state with the highest median household income at $80,776—a value essentially unchanged (0.2 percent growth) from 2016 to 2017. Households in 13 states experienced growth faster than the U.S. average of 2.5 percent: Montana (4.5 percent), Maine (3.8 percent), California (3.8 percent), Washington (3.6 percent), Tennessee (3.5 percent), Arizona (3.4 percent), Rhode Island (3.2 percent), Nebraska (3.1 percent), Colorado (3.0 percent) New Jersey (3.0 percent), Nevada (2.9 percent), Virginia (2.8 percent), and Georgia (2.7 percent).Read more
Government programs kept tens of millions out of poverty in 2017
From 2016 to 2017, the official poverty rate fell by 0.4 percentage points, as household income rose modestly, albeit unevenly, throughout the income distribution. This was the third year in a row that poverty declined, but the poverty rate remains a full percentage point higher than the low of 11.3 percent it reached in 2000.
Since 2010, the U.S. Census Bureau has also released an alternative to the official poverty measure known as the Supplemental Poverty Measure (SPM).1
The SPM corrects many potential deficiencies in the official rate. For one, it constructs a more realistic threshold for incomes families need to live free of poverty, and adjusts that threshold for regional price differences. For another, it accounts for the resources available to poor families that are not included in the official rate, such as food stamps and other in-kind government benefits.
As shown in Figure A, a larger proportion of Americans are in poverty as measured by the SPM than the official measure reports. (Importantly, however, researchers who constructed a longer historical version of the SPM found that it shows greater long-term progress in reducing poverty than the official measure.) In 2017, the SPM declined by 0.1 percentage points to 13.9 percent. Under the SPM, 45.0 million Americans were in poverty last year, compared with 39.7 million Americans under the “official” poverty measure.
10 years after the start of the Great Recession, black and Asian households have yet to recover lost income
Today’s Census Bureau report on income, poverty, and health insurance coverage in 2017 shows that while all race and ethnic groups shared in the growth in median household incomes during the previous two years, that trend abruptly ended for African American households in 2017. Real median incomes were basically flat among African Americans (from $40,339 to $40,258) and down among Asians (from $83,182 to $81,331), but up 3.7 percent (from $48,700 to $50,486) among Hispanics, and 2.6 percent (from $66,440 to $68,145) among non-Hispanic whites. The decline in Asian household incomes was not statistically significant. As a result of stalled income growth among African Americans, recent progress in closing the black-white income gap over the last couple years has been reversed. The median black household earned just 59 cents for every dollar of income the white median household earned (down from 61 cents), while the median Hispanic household earned just 74 cents (up from 73 cents). Meanwhile, households headed by persons who are foreign-born saw little change in median incomes between 2016 and 2017 (from $56,754 to $57,273), compared to an increase of 1.5 percent (from $61,066 to $61,987) among households with a native-born household head.Read more
Black workers have made no progress in closing earnings gaps with white men since 2000
This week, the Census Bureau released its report on incomes, earnings, and poverty rates for 2017. Most analysis has paid particular attention to the changes between 2016 and 2017, but this post takes a deeper look at earnings by race and gender over a longer period of time—since 2000—to paint a more complete picture of what has happened over the last full business cycle (2000-2007) plus the most recent recession and recovery (2007-2017). Since 2000, wages have been generally stagnant, and large gaps persist by race and gender, despite an expanding and increasingly productive economy.
To a great extent, trends in annual earnings since 2000 resemble the overall wage stagnation we’ve seen since the mid-1970s. (Here, we discuss annual full time earnings, but the long-run trends are consistent with the hourly wage data. For an extensive discussion of hourly wage trends, see The State of American Wages 2017.) Between 2016 and 2017, full-time year-round men’s and women’s earnings fell 1.1 percent. Men’s median earnings are still 1.9 percent below their 2000 level, while women’s earnings are now 7.1 percent higher than in 2000. Because of these divergent trends, the overall gender wage gap narrowed between 2000 and 2017, though at a slower rate than in the previous two decades.
These patterns in men’s and women’s full-time median annual earnings can be further broken down by race. As you can see in the figure below, real median earnings of full-time workers—male and female, black and white—have been relatively flat since 2000. Unlike the previous year’s data where only white women saw a significant increase in median earnings, only white men saw their median wages rise between 2016 and 2017. For the most part, median wages were flat or falling in the full business cycle of 2000–2007, and black men have still not grown past their 2000 levels.
Household income growth slowed markedly in 2017 and was stronger for those at the top, while earnings declined slightly
Today’s report from the Census Bureau shows a marked slowdown in median household income growth relative to previous years. Median household incomes rose 1.8 percent, after an impressive 5.1 percent gain in 2015 and a 3.1 percent gain in 2016; median non-elderly household income saw a similar rise of 2.5 percent this year after gaining 4.6 percent and 3.6 percent in the prior two years, respectively. However, inflation-adjusted full-time annual earnings for both men and women fell by 1.1 percent in 2017. Men’s earnings are still below their 2007 level (by 2.5 percent points), while women’s earnings are now 0.9 percent above. This year’s report is hence a bit discouraging; earnings for low and middle-income workers need to make strong and sustained gains if we are to have an economy that works for typical American households and not just for the well-off.
While the gains in household income are markedly slower than in previous years, they nonetheless represent another small step toward reclaiming the lost decade of income growth caused by the Great Recession. Part of this year’s slowdown in income growth relative to 2016 is likely driven by a small increase in the pace of inflation. In 2017, year-over-year inflation was 2.2 percent compared to 1.3 percent in 2016. However, as discussed below, this year’s report reminds us that the vast majority of household incomes (when corrected for a break in the data series in 2013) have still not fully recovered from the deep losses suffered in the Great Recession.
Non-elderly household incomes improve
The Census data show that from 2016–2017, inflation-adjusted median household incomes for non-elderly households (those with a head of household younger than 65 years old) increased 2.5 percent, from $67,917 to $69,628. Median non-elderly household income is an important measure of an improving economy, as those households depend on labor market income for the vast majority of their income. This continued, albeit slower, increase after large gains in the prior two years is a welcome trend. Median household income for non-elderly households, which finally recovered to its pre-recession level in 2017, was 0.8 percent, or $530, above its level in 2007. It’s important to note that the Great Recession and its aftermath came on the heels of a weak labor market from 2000–2007, during which the median income of non-elderly households fell significantly, from $71,577 to $69,098—the first time in the post-war period that incomes failed to grow over a business cycle. Altogether, from 2000–2017, the median income for non-elderly households fell from $71,577 to $69,628, a decline of $1,949, or 2.7 percent. In short, the last three years should not make us forget that incomes for the majority of Americans have experienced a lost 17 years of growth.Read more
