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Article Artículo

A Message From Our Co-Directors

As we do every December, we here at CEPR are reaching out to ask that you consider making an end of the year donation to support our work. Usually this entails regaling you with a list of all our accomplishments over the past year.

But this year we decided to do something different (which, given the extraordinary events of this past year, we felt was fitting). We want to talk candidly and honestly about the challenges we progressives face, and discuss where we need to go from here. 

CEPR / December 14, 2016

Article Artículo

Private Equity is Not All Hostess Twinkies

The NYT ran a lengthy piece this weekend on how two private equity (PE) firms, Apollo Global Management and Metropoulos & Company, made a huge return on buying up the rights to Hostess Twinkies and a few of the company’s other brands, following the company’s bankruptcy. There are a couple of issues that deserve somewhat further attention than the article gives them.

First, while the article notes that its bankruptcy occurred under the ownership of Ripplewood Holdings, another PE company, it doesn’t discuss the issues which led to the original bankruptcy. Although the full story of Ripplewood’s control of Hostess would require another article of at least equal length, it provides a useful example of a private equity failure. Ripplewood borrowed heavily, putting the company in a precarious financial state. It also never made the investments necessary to modernize its facilities, putting it at a competitive disadvantage.

As the article notes, the bankruptcy relieved the company of its debts and pension obligations. The latter of which would fall to the Pension Benefit Guaranty Corporation (PBGC), which is run by the federal government. The PBGC is itself under serious strain presently, due to the collapse of many large pension funds. Furthermore, even if the PBGC is able to pay benefits at the legally guaranteed levels, most former Hostess workers will still see large cuts from the pensions they had earned while working.

This point is worth noting in the context of what appears to be the main basis for the huge returns earned by the two PE companies. It appears that they were able to buy the rights to Twinkies and other Hostess brands at a price that was far below the actual market value. While this indicated good insight on the part of the PE fund managers, if these brands had been sold for closer to the correct market value, there would have been more money to pay workers’ pensions and other creditors.

CEPR / December 12, 2016

Article Artículo

Affordable Care Act

Health and Social Programs

United States

Workers

Obamacare and Part-Time Work, Part 3: Part-Time Employment & Unemployment

This is the last blog post in a three-part series on the Affordable Care Act’s potential effects on part-time employment. The first and second posts can be read here and here. 

The first blog post in this series looked at Obamacare’s effect on voluntary part-time employment, arguing that the law may have given workers the freedom to shift from full-time to part-time schedules. The second post said that when some workers cut back on their hours, it likely freed up opportunities for other workers. According to the post, this allowed part-time workers seeking full-time jobs to increase their hours. It may also have given unemployed workers seeking part-time jobs a better shot at being hired.

Instead of advancing a new argument about Obamacare’s effect on part-time work, this post simply examines the changes in different types of part-time employment over the past couple of years. Regardless of whether we believe that Obamacare is behind these positive changes, it’s clear that the forecasts made by the law’s critics simply haven’t come true.

It is worth noting that part-time employment is actually down slightly since before Obamacare went into effect. But more importantly, the experience of working part-time has itself improved dramatically. For instance, the share of part-time workers with health insurance increased nearly 6 percentage-points between 2013 and 2014. And after three years of completely stagnant wages, part-time workers saw significant wage growth beginning in 2014. If Obamacare is supposed to immiserate part-time workers, this misery isn’t showing up in the data; if anything, part-time workers’ wages and benefits both began rising right when the Affordable Care Act (ACA) went into effect.

CEPR and Nicolas Buffie / December 12, 2016

Article Artículo

Affordable Care Act

Health and Social Programs

United States

Workers

Obamacare and Part-Time Work, Part 2: Involuntary Part-Time Employment

This is the second blog post in a three-part series on the Affordable Care Act’s potential effects on part-time employment. The first and third posts can be read here and here.

In 2013, critics of the Affordable Care Act (ACA) rolled out a new complaint about the law: it would lead to a dramatic increase in involuntary part-time employment. Maria Bartiromo, Robert Samuelson, and Fox News all argued that firms would move workers from full-time to part-time status due to the law’s “employer mandate”. And while most critics have since shifted to other arguments against the ACA, Fox News has continued pushing this particular line.

To be clear, there is anecdotal evidence that at least some firms really are cutting back on their workers’ hours. So there has undoubtedly been at least some increase in involuntary part-time employment as a result of the mandate.

However, the discussion surrounding the employer mandate paints a rather incomplete picture of the ACA’s effect on involuntary part-time work, for two reasons. First, the discussion often lacks empirical evidence about the potential size of the mandate’s impact. To the extent that economic analysts have looked into this particular issue, they have generally found that the mandate caused little to no increase in involuntary part-time work, with even the largest purported increases being completely invisible in the aggregate national data.[1]

CEPR and Nicolas Buffie / December 07, 2016

Article Artículo

Haiti

Latin America and the Caribbean

World

Breakdown of Preliminary Election Results in Haiti

More than two weeks after Haitians went to the polls to elect a new president, 16 Senators and 25 Deputies, preliminary results from all races have finally been released. Presidential results have already been contested by the second, third and fourth place finishers while many legislative races will likely be contested as well. However, if the preliminary results are upheld, the November 20 elections will have consolidated nearly unprecedented political power in the hands of PHTK, the party of former president Michel Martelly. While PHTK and its allies appear to have scored electoral victories at both the presidential and legislative level, their political success has occurred in a context of extremely low turnout, raising questions about the significance of their mandate to govern moving forward.

Presidential Results

At the presidential level, Jovenel Moïse of PHTK came in first place with 55.67 percent of the vote. If these results hold,  Moïse will secure the presidency without having to compete in a second-round election. In second, third and fourth place were Jude Celestin of LAPEH with 19.52 percent, Jean-Charles Moïse of the Platfom Pitit Dessalines (PPD) with 11.04 percent and Maryse Narcisse of Fanmi Lavalas (FL) with 8.99 percent.

While the top four vote getters in the 2016 election were exactly the same as in last year’s election, the results of which were thrown out due to widespread irregularities, the composition of the vote changed dramatically. Jovenel Moïse, who was widely believed to have benefitted from fraud in the 2015 elections, was the only one of the four to increase their vote total over last year. This appears to largely stem from the far wider geographical support that Jovenel Moïse received in 2016, coupled with the other top candidates losing substantial ground.

 Haiti vote share department 2016

As can be seen above, Jovenel Moïse received over 50 percent of the vote in each department except for the Artibonite and the Sud Est. Similar to in 2015, the strongest areas of support were in the north of the country, where he runs a banana export business. But perhaps the most surprising result this year was that he also received 50 percent of the vote in the Ouest department, home to some 40 percent of registered voters. In 2015, he received just over 20 percent of the vote in the Ouest. This accounts for nearly the entire increase in the number of total votes received by Jovenel Moïse this year.

Still, even with Jovenel Moïse increasing his votes from 2015, the main reason why he was able to win in the first round was that all three other candidates lost significant numbers of votes. Celestin received 185,000 fewer votes, Jean-Charles 104,000 and Narcisse 14,000. If these candidates had simply received the same number of votes as last year, Jovenel Moïse would not have been able to win in the first round.

The long campaign, and the consolidation of private sector funding behind PHTK certainly helped in this regard. With more resources, PHTK was able to more actively campaign and build support throughout the last year. It takes significant money to have party staff across the entire country, an especially important factor in getting one’s supporters to come out to vote on election day. As a result, PHTK had a wider national presence of political party representatives than other parties, according to local observer organizations.  

Another factor that contributed to the vastly different result was that many more voters were either unable or unwilling to participate in this year’s election. The Provisional Electoral Council (CEP), announced that participation was just 21 percent, compared to 26.6 percent last year. However the rate announced by the CEP includes many thousands of votes that were not counted due to irregularities. If one looks just at valid votes, the participation in this year’s election drops to 17.3 percent. The 26.6 percent figure from last year was based on valid votes.

Jake Johnston / December 06, 2016

Article Artículo

Affordable Care Act

Health and Social Programs

United States

Workers

Obamacare and Part-Time Work, Part 1: Voluntary Part-Time Employment

This is the first blog post in a three-part series on the Affordable Care Act’s potential effects on part-time employment. The second and third posts can be found here and here.

In 2013, shortly before the main provisions of the Affordable Care Act (ACA) went into effect, critics warned that the law might have dire effects on working hours. They said that the ACA would lead employers to shift workers from full-time to part-time positions, prompting a dramatic increase in involuntary part-time employment. CNBC host Maria Bartiromo argued that the law would make the U.S. “a part-time employment country”; Washington Post columnist Robert Samuelson and others stated that the U.S. would become “a nation of part-timers.” In contrast, there is an extensive literature on health insurance related “job lock.” (Gruber and Madrian review this literature.) According to this literature, there is reason to believe that many workers are employed full-time only because they need health care insurance. If they have the option to get insurance outside of employment, they may decide to take time off from a job to care for children or other family members, they may start their own business, or they may decide to work part-time. There is considerable evidence that many workers have chosen the option of voluntary part-time employment since the exchanges were put in place at the start of 2014.

CEPR and Nicolas Buffie / December 06, 2016