South By North Strategies, Ltd.

Measuring Poverty

In recent months, analysts and policy leaders in Washington have been looking at ways of updating the outmoded federal poverty measurement. In a commentary in the publication Spotlight on Poverty and Opportunity, analyst Annette Case explains why the debate matters and why policymakers must take a broad view of economic hardship. Writes Case:

The purpose for measuring economic deprivation and developing and enacting policies that reduce economic deprivation is to assure opportunities to sustain and grow the middle class and to reduce poverty. The current outdated official measure of poverty, as well as one proposed replacement, provides only half of the information we are looking fo – how poorly people are faring, No official and reliably reported measure exists that tells us how many people are making ends meet or the extent to which they have become economically secure. This part of the story falls off the radad when we engage om debate about the measure of poverty. A strong middle class is essential to a vibrant economy and well-functioning democracy. Adopting a measure of economic security will better support policies that encourage economic mobility and a fair shot at the middle class.

Case’s commentary is part of an ongoing series exploring the question of poverty measurement.

Weekend Wonk Out

A round-up of policy reports from the week ending on 11/20:

• The Center for American Progress looks at how to reduce youth unemployment.
• Demos charts the rise and fall of the Glass-Steagall Act.
• The Brookings Institutions looks at the economic prospects of America’s metros.
• The Center on Budget and Policy Priorities analyzes the effects of raising Medicare taxes for high earners.
• The Institution on Taxation and Economic Policy asks just who pays taxes.

October Employment Report: NC

October’s employment report from the Employment Security Commission offers more evidence that a jobless recovery is taking shape in North Carolina.

Last month, North Carolina employers added 12,100 more positions than they eliminated. This was the second time in three months in which the state netted some jobs. Nevertheless, the job market is not generating enough positions to absorb new workers or those displaced over the past year.

In October, North Carolina employers added 12,100 more positions than they shed. The public sector added 5,800 positions while the private sector netted 6,300 positions. Among private-sector industries, education and health services posted the largest gain (+5,800) while construction shed the most positions (-6,600). Additionally, a downward revision to the September employment report resulted in the net loss of another 2,500 positions.

Click here to read South by North Strategies’ analysis of the October employment report.

Public Policy Promotes Debt

Popular discussions about debt often portray the issue in individual terms and make little mention of the economic forces that may lead individuals and firms to incur debt (e.g. flat wages coupled with rising living costs; tight credit) or the the public policies that actually encourage firms and households to borrow.

Writing in The New Yorker, James Surowiecki analyzes how the federal tax code encourages debt by subsiding its costs in various ways. Observes Surowiecki:

The government doesn’t make people go into debt, of course. It just nudges them in that direction. Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. This gives the system what economists call a “debt bias.” It encourages people to make smaller down payments and to borrow more money than they otherwise would, and to tie up more of their wealth in housing than in other investments. Likewise, the system skews the decisions that companies make about how to fund themselves. Companies can raise money by reinvesting profits, raising equity (selling shares), or borrowing. But only when they borrow do they get the benefit of a “tax shield.” Jason Furman, of the National Economic Council, has estimated that tax breaks make corporate debt as much as forty-two per cent cheaper than corporate equity. So it’s not surprising that many companies prefer to pile on the leverage.

Around the Dial – Nov. 19

Economic policy reports, blog postings, and media stories of interest:

• The New York Times traces the failure of bank regulators to curb risky practices.
• At CBS MoneyWatch, economist  Mark Thoma discusses how to prevent financial crises.
• The News & Observer looks at Sony Erricson’s decision to move from RTP to Atlanta.
• The Wall Street Journal summarizes the Senate’s health reform bill.