The Wall Street Journal continues to lead the path in the post-truth world, with columnist Andrew Puzder misrepresenting numbers to show that ObamaCare has led to a “part-time economy.” Pudzer’s whole story rests on the growth in part-time employment from January to July as measured by the Bureau of Labor Statistics household survey. He tells readers:
“The health-care law’s actual consequences unequivocally appear in the jobs data for this period. Between Jan. 1 and June 30, according to the Bureau of Labor Statistics, the economy added 833,000 part-time jobs and lost 97,000 full-time jobs, for net creation of 736,000 jobs. In reality, the economy overall added no full-time jobs. Rather, it lost them.”
Later adding:
“In August, Keith Hall, who ran the Bureau of Labor Statistics from 2008-12, looked at part-time hiring from the end of January through July and told a McClatchy reporter that the results were ‘really remarkable’ and ‘a really high number for a six-month period. I’m not sure that has ever happened over six months before.””
Wow, Keith Hall can’t remember a six-month period where part-time jobs rose by 833,000? How about the six months from June of 2008 to December of 2008 when part-time employment rose by 1,963,000, while full time employment fell by 4,453,000? Is he really not able to remember back five years ago to a period in which he was actually the commissioner of the Bureau of Labor Statistics? Perhaps he didn’t count this one because all of that rise in part-time employment was involuntary whereas most of the reported increase in January to July of this year was voluntary.
How about April of 2001 to October of 2001 when part-time employment rose by 1,115,000 (again, all involuntary), while full-time employment fell by 2,053,000? Again, this was all due to a rise in people working part-time involuntarily — they wanted full-time jobs — so maybe Hall doesn’t count this period either.
In fact these data are highly erratic. They jump around by large amounts month to month due to measurement error, not reasons having anything to do with the economy. For this reason, picking January of 2013 as a starting point is a bit of a joke.
Reported part-time employment fell sharply in the second half of 2012 (because of the ACA?), dropping from 26,623,000 in July of 2012 to 26,049,000 in January of 2013. This drop in the reported number of part-time workers almost certainly did not reflect what was going on in the economy, but was rather just random errors that show up in the data from month to month.
A serious analysis would look at an average level of employment over a series of months, for example comparing the first six months of 2013 (when the employers thought the sanctions would be in effect) with the first six months of 2012. My colleague Helene Jorgenson and I did this analysis. We found a small decline in the percentage of workers who were working less than the 30 hour cut-off that makes employers subject to the mandate. I wouldn’t attribute the increase in full-time employment to Obamacare, but at least this claim would have some basis in the data, unlike the complaints in Pudzer’s column.
Btw, there is one last point that should be raised. What’s wrong with people working part-time? We should be concerned if people want full-time jobs but can only find part-time work. This likely means that they will be struggling to support themselves and their families.
But what is wrong with someone voluntarily choosing to work part-time? Many people opt for part-time employment to be with their family, enjoy a partial retirement, or pursue other activities. Does the WSJ think it has to decide for us how many hours we should work?
The Wall Street Journal continues to lead the path in the post-truth world, with columnist Andrew Puzder misrepresenting numbers to show that ObamaCare has led to a “part-time economy.” Pudzer’s whole story rests on the growth in part-time employment from January to July as measured by the Bureau of Labor Statistics household survey. He tells readers:
“The health-care law’s actual consequences unequivocally appear in the jobs data for this period. Between Jan. 1 and June 30, according to the Bureau of Labor Statistics, the economy added 833,000 part-time jobs and lost 97,000 full-time jobs, for net creation of 736,000 jobs. In reality, the economy overall added no full-time jobs. Rather, it lost them.”
Later adding:
“In August, Keith Hall, who ran the Bureau of Labor Statistics from 2008-12, looked at part-time hiring from the end of January through July and told a McClatchy reporter that the results were ‘really remarkable’ and ‘a really high number for a six-month period. I’m not sure that has ever happened over six months before.””
Wow, Keith Hall can’t remember a six-month period where part-time jobs rose by 833,000? How about the six months from June of 2008 to December of 2008 when part-time employment rose by 1,963,000, while full time employment fell by 4,453,000? Is he really not able to remember back five years ago to a period in which he was actually the commissioner of the Bureau of Labor Statistics? Perhaps he didn’t count this one because all of that rise in part-time employment was involuntary whereas most of the reported increase in January to July of this year was voluntary.
How about April of 2001 to October of 2001 when part-time employment rose by 1,115,000 (again, all involuntary), while full-time employment fell by 2,053,000? Again, this was all due to a rise in people working part-time involuntarily — they wanted full-time jobs — so maybe Hall doesn’t count this period either.
In fact these data are highly erratic. They jump around by large amounts month to month due to measurement error, not reasons having anything to do with the economy. For this reason, picking January of 2013 as a starting point is a bit of a joke.
Reported part-time employment fell sharply in the second half of 2012 (because of the ACA?), dropping from 26,623,000 in July of 2012 to 26,049,000 in January of 2013. This drop in the reported number of part-time workers almost certainly did not reflect what was going on in the economy, but was rather just random errors that show up in the data from month to month.
A serious analysis would look at an average level of employment over a series of months, for example comparing the first six months of 2013 (when the employers thought the sanctions would be in effect) with the first six months of 2012. My colleague Helene Jorgenson and I did this analysis. We found a small decline in the percentage of workers who were working less than the 30 hour cut-off that makes employers subject to the mandate. I wouldn’t attribute the increase in full-time employment to Obamacare, but at least this claim would have some basis in the data, unlike the complaints in Pudzer’s column.
Btw, there is one last point that should be raised. What’s wrong with people working part-time? We should be concerned if people want full-time jobs but can only find part-time work. This likely means that they will be struggling to support themselves and their families.
But what is wrong with someone voluntarily choosing to work part-time? Many people opt for part-time employment to be with their family, enjoy a partial retirement, or pursue other activities. Does the WSJ think it has to decide for us how many hours we should work?
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Glenn Kessler has a useful column assessing Senator Rand Paul’s claims about how default could be avoided if we reached the debt ceiling, however he does get one important item wrong. The piece implies that it would be possible to save money to pay debt service or other top priority items by not making Social Security payments.
This is not true. The money held by the Social Security trust fund is part of the debt subject to debt ceiling. If money is not paid out to Social Security beneficiaries then there is more money in the Social Security trust fund.
This is a dollar for dollar relationship. This means that every dollar that the government does not have to borrow on public markets to make Social Security payments is an additional dollar owed to the Social Security trust fund, leaving no net change in the amount of borrowings subject to the debt ceiling. This means that the payment of Social Security benefits does not affect whether or not the government breaches the debt ceiling.
There is one other item in this piece that deserves comment. It reports an assessment from the Government Accountability Office that higher interest rates from the August 2011 standoff will lead to $19 billion more in interest payments over a ten-year period. It is unlikely that many Post readers have the ability to assess the importance of $19 billion in the federal budget over a 10-year period. If we turn to the Center for Economic and Policy Research’s magnificent responsible budget calculator we see that this would be roughly 0.045 percent of projected spending over the period from 2012-2021.
Addendum: Kessler added a note making this point.
Glenn Kessler has a useful column assessing Senator Rand Paul’s claims about how default could be avoided if we reached the debt ceiling, however he does get one important item wrong. The piece implies that it would be possible to save money to pay debt service or other top priority items by not making Social Security payments.
This is not true. The money held by the Social Security trust fund is part of the debt subject to debt ceiling. If money is not paid out to Social Security beneficiaries then there is more money in the Social Security trust fund.
This is a dollar for dollar relationship. This means that every dollar that the government does not have to borrow on public markets to make Social Security payments is an additional dollar owed to the Social Security trust fund, leaving no net change in the amount of borrowings subject to the debt ceiling. This means that the payment of Social Security benefits does not affect whether or not the government breaches the debt ceiling.
There is one other item in this piece that deserves comment. It reports an assessment from the Government Accountability Office that higher interest rates from the August 2011 standoff will lead to $19 billion more in interest payments over a ten-year period. It is unlikely that many Post readers have the ability to assess the importance of $19 billion in the federal budget over a 10-year period. If we turn to the Center for Economic and Policy Research’s magnificent responsible budget calculator we see that this would be roughly 0.045 percent of projected spending over the period from 2012-2021.
Addendum: Kessler added a note making this point.
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When people worry about the security of an asset the price usually plummets, as was the case with mortgage backed securities when the housing bubble burst. It is pretty hard to envision the opposite scenario: that because people get concerned about the security of an asset its price rises.
However this is what Ezra Klein tells us in a column today. The story is that worries over the possibility that the U.S. government is becoming dysfunctional could actually result in the price of U.S. government bonds rising.
“The paradox is that defaulting on our debt could lead to a panic so severe that, in a desperate bid for safety, markets will buy even more of our debt. ‘We are the only country in the world where a fiscal mess, rather than increasing spreads, pushes yields lower,’ El-Erian said [Mohamed El-Erian, chief executive officer of Pacific Investment Management Co.]. ‘If there was another round of debt-ceiling fight with no agreement, we might have lower 10-year Treasury yields, rather than higher.'”
The basis for the idea that uncertainty about the stability of the U.S. government will lead people to buy more U.S. government debt seems to come from the experience in the summer of 2011 when the price of U.S. Treasury bonds soared and interest rates plummeted as we came within days of hitting the debt ceiling.
The problem with this story is that there is a more obvious explanation than people rushing to buy Treasury bonds because they were worried about the instability of the U.S. government. Italy suddenly made the list of euro zone crisis countries that week. While euro zone could have almost certainly withstood a default by Greece, a default by Italy would have almost certainly meant the end of the euro.
The very real risk of the collapse of the euro gives a perfectly plausible explanation for the plunge in world stock markets and U.S. interest rates, even if Boehner and Obama were spending their afternoons having beers together and telling jokes. In other words, the history to date suggests that there is little basis for serious concern about the hostile relationship between the parties imposing a major cost in the form of higher interest rates.
I hate to spoil the efforts at building fear and panic, but this is getting more than a bit overblown. Hitting the debt ceiling would undoubtedly be bad news, but an earth-shaking disaster is pretty unlikely. Everyone will get their money, with interest, even if it is a bit late.
The annoying part of the fear story is the implication that somehow things are okay now. We are throwing $1 trillion of potential GDP in the toilet every year because Congress and the President won’t approve enough stimulus to get the economy back to full employment. And millions of lives are being ruined because people can’t get jobs and earn enough money to raise their kids properly.
The media want us to get all bent out of shape because we could cross the magic line and then suddenly have to pay a risk premium of 5-20 basis points on government debt for years into the future? Sorry, for those of us who know arithmetic that doesn’t come close to the disaster we are already seeing.
When people worry about the security of an asset the price usually plummets, as was the case with mortgage backed securities when the housing bubble burst. It is pretty hard to envision the opposite scenario: that because people get concerned about the security of an asset its price rises.
However this is what Ezra Klein tells us in a column today. The story is that worries over the possibility that the U.S. government is becoming dysfunctional could actually result in the price of U.S. government bonds rising.
“The paradox is that defaulting on our debt could lead to a panic so severe that, in a desperate bid for safety, markets will buy even more of our debt. ‘We are the only country in the world where a fiscal mess, rather than increasing spreads, pushes yields lower,’ El-Erian said [Mohamed El-Erian, chief executive officer of Pacific Investment Management Co.]. ‘If there was another round of debt-ceiling fight with no agreement, we might have lower 10-year Treasury yields, rather than higher.'”
The basis for the idea that uncertainty about the stability of the U.S. government will lead people to buy more U.S. government debt seems to come from the experience in the summer of 2011 when the price of U.S. Treasury bonds soared and interest rates plummeted as we came within days of hitting the debt ceiling.
The problem with this story is that there is a more obvious explanation than people rushing to buy Treasury bonds because they were worried about the instability of the U.S. government. Italy suddenly made the list of euro zone crisis countries that week. While euro zone could have almost certainly withstood a default by Greece, a default by Italy would have almost certainly meant the end of the euro.
The very real risk of the collapse of the euro gives a perfectly plausible explanation for the plunge in world stock markets and U.S. interest rates, even if Boehner and Obama were spending their afternoons having beers together and telling jokes. In other words, the history to date suggests that there is little basis for serious concern about the hostile relationship between the parties imposing a major cost in the form of higher interest rates.
I hate to spoil the efforts at building fear and panic, but this is getting more than a bit overblown. Hitting the debt ceiling would undoubtedly be bad news, but an earth-shaking disaster is pretty unlikely. Everyone will get their money, with interest, even if it is a bit late.
The annoying part of the fear story is the implication that somehow things are okay now. We are throwing $1 trillion of potential GDP in the toilet every year because Congress and the President won’t approve enough stimulus to get the economy back to full employment. And millions of lives are being ruined because people can’t get jobs and earn enough money to raise their kids properly.
The media want us to get all bent out of shape because we could cross the magic line and then suddenly have to pay a risk premium of 5-20 basis points on government debt for years into the future? Sorry, for those of us who know arithmetic that doesn’t come close to the disaster we are already seeing.
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Glenn Hubbard and Justin Muzinich had an interesting piece in the Post today discussing whether the Fed’s mandate should be explicitly broadened to include preserving financial stability. While I am inclined to agree with Fed governor Jeremy Stein, that attacking bubbles is already implicit in the Fed’s goal of maintaining full employment, the more interesting issue is Hubbard and Muzinch’s shyness in dealing with the problem of groupthink at the Fed and among other economic policymakers.
They write:
“This propensity to follow the herd is at the root of financial instability. In the most recent crisis, homeowners, investors and, notably, the Fed so succumbed to groupthink that we were almost unanimously blind to the risks of rising housing prices and bank leverage. So, how to create a Fed that guides its governors to be skeptical of crowd-induced financial excess?”
Their answer of course is a change in the Fed’s mandate. The more obvious solution would be to change incentives. Economists usually think it is important that it is possible to fire workers who perform their jobs badly. This gives workers the incentive to do their jobs well.
If Fed officials, along with other economists in policymaking positions, could lose their jobs and see their careers ruined by failing to stem the growth of destructive asset bubbles then they would have some real incentive not to engage in mindless groupthink. As it is, economists suffer almost no consequence for even the most momentous failures.
None of the Fed governors lost their jobs for failing to stem the growth of the housing bubble. In fact, according to administration sources, President Obama was considering two of these governors (Donald Kohn and Roger Ferguson) as possible replacements for Ben Bernanke as Fed chair.
Unless economists know that they can face real career consequences from engaging in groupthink their incentive is to go along with the herd. Resisting the herd will always carry risks, since it is possible that they will be shown wrong or at least will not be proven right before they lose their job. Given such asymmetric incentives basic economics would show that economists in policymaking positions will almost always choose to just follow the herd.
Note: Typos corrected.
Glenn Hubbard and Justin Muzinich had an interesting piece in the Post today discussing whether the Fed’s mandate should be explicitly broadened to include preserving financial stability. While I am inclined to agree with Fed governor Jeremy Stein, that attacking bubbles is already implicit in the Fed’s goal of maintaining full employment, the more interesting issue is Hubbard and Muzinch’s shyness in dealing with the problem of groupthink at the Fed and among other economic policymakers.
They write:
“This propensity to follow the herd is at the root of financial instability. In the most recent crisis, homeowners, investors and, notably, the Fed so succumbed to groupthink that we were almost unanimously blind to the risks of rising housing prices and bank leverage. So, how to create a Fed that guides its governors to be skeptical of crowd-induced financial excess?”
Their answer of course is a change in the Fed’s mandate. The more obvious solution would be to change incentives. Economists usually think it is important that it is possible to fire workers who perform their jobs badly. This gives workers the incentive to do their jobs well.
If Fed officials, along with other economists in policymaking positions, could lose their jobs and see their careers ruined by failing to stem the growth of destructive asset bubbles then they would have some real incentive not to engage in mindless groupthink. As it is, economists suffer almost no consequence for even the most momentous failures.
None of the Fed governors lost their jobs for failing to stem the growth of the housing bubble. In fact, according to administration sources, President Obama was considering two of these governors (Donald Kohn and Roger Ferguson) as possible replacements for Ben Bernanke as Fed chair.
Unless economists know that they can face real career consequences from engaging in groupthink their incentive is to go along with the herd. Resisting the herd will always carry risks, since it is possible that they will be shown wrong or at least will not be proven right before they lose their job. Given such asymmetric incentives basic economics would show that economists in policymaking positions will almost always choose to just follow the herd.
Note: Typos corrected.
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The New York Times has an excellent piece on the high cost of asthma medicines in the United States. However there is one major error in the piece. It attributes the high prices to the market. In fact the whole piece points to the opposite. It details how government granted monopolies allow drug companies to charge prices that are close to ten times as high as the price in other countries.
Without government intervention the market would lead to much lower prices. The United States is unique in having the government play such a large role in raising prices to consumers.
The New York Times has an excellent piece on the high cost of asthma medicines in the United States. However there is one major error in the piece. It attributes the high prices to the market. In fact the whole piece points to the opposite. It details how government granted monopolies allow drug companies to charge prices that are close to ten times as high as the price in other countries.
Without government intervention the market would lead to much lower prices. The United States is unique in having the government play such a large role in raising prices to consumers.
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The NYT is doing cover up work for Paul Ryan telling readers about his plan for:
“a debt ceiling increase tied to changes to Medicare and Medigap plans that would save more than enough money to ease some of the across-the-board cuts to domestic and defense programs …”
Ryan is not going to save money from changing Medicare, he will save public dollars by cutting Medicare. In other words, Ryan wants seniors to pay more money for their health care. It’s very polite of the NYT to assist Ryan in pushing his agenda by attempting to conceal its impact, but what happened to the old days when newspapers were about informing readers.
Under the Ryan’s proposals, seniors will pay more money out of pocket because Medicare benefits will be cut. That shouldn’t be too hard for a NYT article to print. Ryan can defend his proposed cuts by arguing that other priorities are more important, but people should understand what is at stake.
The NYT is doing cover up work for Paul Ryan telling readers about his plan for:
“a debt ceiling increase tied to changes to Medicare and Medigap plans that would save more than enough money to ease some of the across-the-board cuts to domestic and defense programs …”
Ryan is not going to save money from changing Medicare, he will save public dollars by cutting Medicare. In other words, Ryan wants seniors to pay more money for their health care. It’s very polite of the NYT to assist Ryan in pushing his agenda by attempting to conceal its impact, but what happened to the old days when newspapers were about informing readers.
Under the Ryan’s proposals, seniors will pay more money out of pocket because Medicare benefits will be cut. That shouldn’t be too hard for a NYT article to print. Ryan can defend his proposed cuts by arguing that other priorities are more important, but people should understand what is at stake.
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According to polling data the Republicans are taking a beating over their decision to shutdown the government and risk default on the debt to stop Obamacare. The Washington Post decided to help them out. Using their new journalism model, where there is no distinction between news and editorial views, they used the news section for this purpose.
In a front page article in the implications of missing the debt ceiling, the Post discussed a report from Moody’s which argued that the government could structure its payments so that the debt is serviced and there is no default. It therefore reasoned that the impact on financial markets would be limited. The piece discussed this assessment and then told readers:
“The memo offered a starkly different view of the consequences of breaching the debt limit than is held by the White House, many policymakers and other financial analysts. Over the weekend, economists at Goldman Sachs said the economy would take a devastating hit even if Treasury kept making payments on the debt, because the pullback in federal spending would amount to roughly $175 billion, or 4.2 percentage points of gross domestic product.”
Actually Moody’s view (as described in the Post piece) is not a “starkly different view.” Moody’s report focused on the financial market implications. It did not discuss (at least by the Post’s account — I couldn’t find the memo), the macroeconomic effects of the cuts discussed by Goldman Sachs and other economists.
It would be striking if analysts at Moody’s really did have a “starkly different view” of the economy than almost all the other analysts who follow it. However the Post did not actually produce any evidence that this is the case. It just misled readers by implying that the huge macroeconomic hit from sharp cutbacks in spending is a debatable point, as opposed to something like the shape of the earth, which serious people do not waste time disputing.
According to polling data the Republicans are taking a beating over their decision to shutdown the government and risk default on the debt to stop Obamacare. The Washington Post decided to help them out. Using their new journalism model, where there is no distinction between news and editorial views, they used the news section for this purpose.
In a front page article in the implications of missing the debt ceiling, the Post discussed a report from Moody’s which argued that the government could structure its payments so that the debt is serviced and there is no default. It therefore reasoned that the impact on financial markets would be limited. The piece discussed this assessment and then told readers:
“The memo offered a starkly different view of the consequences of breaching the debt limit than is held by the White House, many policymakers and other financial analysts. Over the weekend, economists at Goldman Sachs said the economy would take a devastating hit even if Treasury kept making payments on the debt, because the pullback in federal spending would amount to roughly $175 billion, or 4.2 percentage points of gross domestic product.”
Actually Moody’s view (as described in the Post piece) is not a “starkly different view.” Moody’s report focused on the financial market implications. It did not discuss (at least by the Post’s account — I couldn’t find the memo), the macroeconomic effects of the cuts discussed by Goldman Sachs and other economists.
It would be striking if analysts at Moody’s really did have a “starkly different view” of the economy than almost all the other analysts who follow it. However the Post did not actually produce any evidence that this is the case. It just misled readers by implying that the huge macroeconomic hit from sharp cutbacks in spending is a debatable point, as opposed to something like the shape of the earth, which serious people do not waste time disputing.
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That’s not exactly what the piece said. Rather it said that China raised concerns about the debt ceiling in discussions with Secretary of State John Kerry. It implied that such concerns may affect China’s willingness to buy and hold U.S. debt.
The purchase of U.S. government bonds is the mechanism through which China “manipulates” the value of its currency. By buying U.S. bonds it raises the price of the dollar relative to the Chinese yuan, thereby making its exports cheaper to people living in the United States.
As a matter of policy, both the Bush and Obama administration claimed to be committed to ending this “manipulation.” While the dollar has fallen against the yuan in the last decade it is still priced at a level that results in a huge U.S. trade deficit with China. The position of both administrations has been that their pressure is leading to a gradual reduction in the value of the dollar relative to yuna, however this article suggests that concerns over default may lead to much more rapid progress.
That’s not exactly what the piece said. Rather it said that China raised concerns about the debt ceiling in discussions with Secretary of State John Kerry. It implied that such concerns may affect China’s willingness to buy and hold U.S. debt.
The purchase of U.S. government bonds is the mechanism through which China “manipulates” the value of its currency. By buying U.S. bonds it raises the price of the dollar relative to the Chinese yuan, thereby making its exports cheaper to people living in the United States.
As a matter of policy, both the Bush and Obama administration claimed to be committed to ending this “manipulation.” While the dollar has fallen against the yuan in the last decade it is still priced at a level that results in a huge U.S. trade deficit with China. The position of both administrations has been that their pressure is leading to a gradual reduction in the value of the dollar relative to yuna, however this article suggests that concerns over default may lead to much more rapid progress.
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