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Article Artículo

Government

Workers

Should College Students Really Be Working More?

With the costs of college tuition skyrocketing, the affordability of higher education is becoming a major issue in the 2016 presidential campaign. Some commentators have argued that the proper solution to rising costs is putting more money in the pockets of students. Specifically, they argue that colleges should expand their work-study programs so that students can get jobs and pay their tuition.

If students want to work full- or part-time jobs to pay for their textbooks, housing, tuition, etc., it would be unfair to deny them that opportunity. However, it should be noted that asking students to work their way through college is unlikely to have a large effect on college affordability, for one simple reason: most college students are already employed.

CEPR and Nicolas Buffie / October 23, 2015

Article Artículo

Thomas Friedman Says It's All So Complicated

Yes folks, back in the good old days we just had the Soviet Union and the U.S.:

"I was born into the Cold War era. It was a dangerous time with two nuclear-armed superpowers each holding a gun to the other’s head, and the doctrine of “mutually assured destruction” kept both in check. But we now know that the dictators that both America and Russia propped up in the Middle East and Africa suppressed volcanic sectarian conflicts."

But now we have ISIS and Al Qaeda and so many other small radical groups. It is all so complicated. And when we get to the economy:

"Robots are milking cows and IBM’s Watson computer can beat you at 'Jeopardy!' and your doctor at radiology, so every decent job requires more technical and social skills — and continuous learning. In the West, a smaller number of young people, with billions in college tuition debts, will have to pay the Medicare and Social Security for the baby boomers now retiring, who will be living longer. 'Suddenly,' argues Dobbs, [Richard Dobbs, a director of the McKinsey Global Institute] 'the number of people who don’t believe they will be better off than their parents goes from zero to 25 percent or more.'

"'When you are advancing, you buy the system; you don’t care who’s a billionaire, because your life is improving. But when you stop advancing, added Dobbs, you can 'lose faith in the system — whether that be globalization, free trade, offshoring, immigration, traditional Republicans or traditional Democrats. Because in one way or another they can be perceived as not working for you.'"

Okay, we get it, Thomas Friedman is very confused. But that's not new. Let's try to look at the substance.

Dean Baker / October 22, 2015

Article Artículo

Economic Growth

Government

CBO’s Unnatural Estimates of the Natural Rate of Unemployment

In recent months, members of the Federal Reserve (“Fed”) have been weighting the idea of raising interest rates. This is a tremendously important decision that can affect the labor market prospects for thousands or even millions of workers.

Some members of the Fed have been citing the low unemployment rate, which fell to 5.14 percent last quarter, as the main impetus for raising rates. These members argue that the labor market is nearing the “non-accelerating inflation rate of unemployment,” (NAIRU) at which unemployment becomes so low that it triggers accelerating inflation.

However, if the NAIRU is even lower than 5 percent, then a decision to raise interest rates based on a mistaken estimate of the NAIRU would needlessly throw many Americans out of work.

The drop in the estimates of the NAIRU from the Congressional Budget Office (CBO) should give us some cause for concern. The table below shows the history of CBO NAIRU estimates since the start of 2012.

CEPR and Nicolas Buffie / October 21, 2015

Article Artículo

Globalization and Trade

The TPP and Nonsense on Trade

The early signals from the Obama administration are that the nonsense will be flowing fast and thick in its effort to push the Trans-Pacific Partnership (TPP). We got an indication of the level of the nonsense factor in a CNN article reporting on the administration's efforts to promote the still secret agreement.

CNN cites a column that President Obama had in a New Hampshire newspaper that told readers:

"...trade is a substantial driver of New Hampshire's economy. Over 20,000 American jobs are currently supported by goods exports from New Hampshire, with 32 percent of Made in New Hampshire goods exports shipped to TPP partners."

What exactly does it mean for over 20,000 New Hampshire jobs to be supported by exports? Suppose the exports are car parts that are sent to Mexico to be assembled into a car that is shipped back to the United States. Are the workers in New Hampshire suppose to celebrate because their parts are being exported to Mexico (a TPP partner) rather than being shipped to be assembled in Ohio?

This is obviously a ridiculous thing to say and certainly President Obama knows it. He repeats the line because it has been focus group tested and he can apparently count on reporters not pointing out its absurdity.

Dean Baker / October 20, 2015