Economy

Morning Must Reads: The Payroll Tax Cut, Cuts in Block Grants for Local Gov and the State Use Tax

The economic news in the past couple of weeks has been relatively positive so that must mean it is time for another down to the wire battle in Washington to help restore pessimism! At the end of the month, temporary extensions to the payroll tax credit and extended unemployment benefits will expire. With unemployment high, both measures should be extended through the end of the year.

Morning Must Reads: You Get What You Pay For: Human and Physical Capital

In the State of the Union address last week, President Obama called for more investment in programs that link training in higher education to employers. This morning the Harrisburg Patriot-News has an excellent article detailing one such program here in Central Pennsylvania.

Third and State This Week: State of the Union, Loopholes and Price of Service Cuts

This week, we blogged about the President's State of the Union address, new legislation to address corporate tax loopholes and a new series examining the price of cuts to state services in Pennsylvania.

IN CASE YOU MISSED IT

  • On the State of the Union, Mark Price offered a preview before the President's speech and a recap of his favorite parts the next day.
  • On state budget and tax policy, Chris Lilienthal wrote that legislation proposed by Representatives Dave Reed and Eugene DePasquale would take a first step towards closing corporate tax loopholes in Pennsylvania, but more needed to be done. Chris also highlighted the first and second installments of a new series from the Pennsylvania Budget and Policy Center featuring stories of Pennsylvanians impacted by five years of state service cuts.
  • And in other Morning Must Reads this week, Mark Price compared and contrasted executives and teachers, and highlighted a proposal to strengthen both the minimum wage and the earned income tax credit.

More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: EITC Awareness, New Economic Geography and Stigmatizing The Hungry

Today is Earned Income Tax Credit (EITC) awareness day! 

EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Since we are on the topic of the EITC, today is a good day to highlight a proposal to strengthen both the minimum wage and the earned income tax credit so that they are more effective tools for reducing poverty.

Morning Must Reads: Compare and Contrast: Executives and Teachers

The New York Times this morning has yet another story that is sure to dominate public conversation over the next week or so. Read it or else!

Morning Must Reads: State of The Union, Stimulus and Austerity Economics PA Style

Tonight President Obama will deliver his State of the Union Address to Congress. We are expecting the President to recommend an extension through the end of 2012 of extended unemployment insurance benefits and the payroll tax credit. It looks as though a major theme in the address — besides the catch phrase “built to last” — will be conventional policies aimed at reducing inequality, such as increased spending/tax credits for education and training.

Education and training are important and fruitful means of reducing inequality, but they fall well short of what's needed to reduce the degree of inequality we now face.  A more forceful step in the direction of reducing inequality would include raising the minimum wage and making it easier for workers to form and join unions. We don't expect to hear the President call for either of those changes.

The President will propose paying for his new initiatives with higher taxes on wealthy households. As with education and training, restoring some sense of fairness to the tax code is a laudable goal but longer-lasting reductions in inequality will only come from policies that allow the pre-tax wages of more Americans to rise as the size and wealth of our economy grows.

Third and State This Week: PA Jobs Report, Revenue Outlook and Kids Denied Health Care

This week, we blogged about the state's revenue picture, Pennsylvania's December jobs report, a new report on the cost of interest rate swaps, and the termination of public health insurance for 88,000 Pennsylvania kids.

IN CASE YOU MISSED IT

  • On the state budget and the economy, Michael Wood shared his analysis of the state's revenue picture midway through the 2011-12 Fiscal Year. And Mark Price highlighted some of the key takeaways from a conference hosted this week by the Independent Fiscal Office on Pennsylvania's economic and revenue outlook.
  • On jobs and unemployment, Mark Price provided his analysis of the December Pennsylvania jobs report and what the outlook is for 2012.
  • On financial matters, Sharon Ward blogged about a new report from the Pennsylvania Budget and Policy Center documenting the hundreds of millions of dollars that interest rate swap deals negotiated with Wells Fargo, Morgan Stanley, Goldman Sachs and other banks have cost the City and School District of Philadelphia. Chris Lilienthal highlighted some of the media coverage of the report.
  • On health care, Mark Price shared a report from The Philadelphia Inquirer that Pennsylvania has terminated public health coverage for 88,000 kids since August. Mark also linked to a news report on the resignation of a Pennsylvania Department of Public Welfare adviser.

More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: Job Growth in 2011 and More Layoffs, Higher Property Taxes in 2012

On Thursday, the Pennsylvania Department of Labor and Industry released data on employment and unemployment in December. Compared to the summer months, the top line numbers were good, with unemployment falling three-tenths of one percent to 7.6% (U.S. rate is 8.5%).

Nonfarm jobs were up 6,500, which is a pretty good number (we need to average 8,000 new jobs a month to get back to full employment in three years). Service-sector job growth in December was atrocious; the sector added just 300 jobs. Most of the month’s job growth was in durable goods, with manufacturing adding 2,600 jobs, construction adding 3,000 and mining adding another 600.

Those 3,000 construction jobs don't represent a sudden resurgence of the construction industry. As most of you are happily aware, December was quite warm; this meant construction activity in the month was above historical averages which shows up as job growth in the final numbers. The actual trend in construction employment is at best no or very slow growth.

The bottom line is that in the last 12 months, Pennsylvania added 59,200 jobs. That's fewer jobs than were added from December 2009 to December 2010 (63,900). The primary reason Pennsylvania added fewer jobs in 2011 than it did in 2010 is the loss of 19,800 jobs in the public sector.

Morning Must Reads: The Debut of Pennsylvania’s Independent Fiscal Office

Yesterday, Pennsylvania's new Independent Fiscal Office (IFO) held a conference to release its economic and budget outlook for the next five years (PDF).

The event included presentations from staff at the Philadelphia Federal Reserve, IHS Global Insight, the Bureau of Economic Analysis and the National Conference of State Legislatures.

Several of the presentations noted that Pennsylvania’s job growth weakened over the summer primarily due to substantial layoffs of teachers and other state and local workers. The director of the IFO, Matthew Knittel, very cautiously predicted that state and local layoffs are at an end.

Third and State This Week: Food Stamps Assets Test, Lagging Job Growth and State Cuts

This week, Mark Price dominated the blog, writing about income inequality, challenges facing school districts and a new policy intended to limit access to food stamps for low-income families with modest savings.

IN CASE YOU MISSED IT

  • On poverty and public welfare, Mark Price blogged about a Philadelphia Inquirer editorial questioning the wisdom of the state's reinstatement of an "assets test" for Pennsylvanians receiving food stamps, As the editorial states: "Instead of encouraging the working poor to save, Pennsylvania welfare officials want to punish families for having a few dollars in a bank account."
  • On jobs and the economy, Mark wrote that Pennsylvania is headed in the wrong direction, with November 2010-November 2011 job growth less than November 2009-November 2010.
  • On the state budget, Mark highlighted news reports on the local impacts of state cuts, and he passed on news reports on income inequality and challenges facing schools and higher education.

More blog posts next week. Keep us bookmarked and join the conversation!

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