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- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
The unemployment rate for workers aged 55 and older increased last month for the second month in a row, from 3.7% in January to 3.8% in February. The overall unemployment rate stayed constant at 4.9%.
More older workers are joining the labor market. From 2005 to 2015, the labor force participation rate for men aged 55 to 64 increased from 69.3% to 69.8%. The labor force participation rate of older women increased somewhat more - from 57.0% to 58.5%.
An increasing labor force participation rate for older workers represents an increase in the supply of labor. Whereas an increase in the demand for labor will increase job opportunities and wages, an increase in supply may be associated with reduced both wages and job quality.
The increase in the labor force participation rate from 2005 to 2015 was associated with a slowing in the rate of growth in wages of older workers, indicative of weak demand for labor. Between 1995 to 2005, real weekly earnings for men and women aged 55 to 64 increased by 7.1% and 23.7%, respectively. But between 2005 to 2015, real weekly earnings increased only 2.5% for men and 1.1% for women. This sluggish rate of growth of weekly wages wasn’t the result of a decline in the number of hours worked. The median hours worked among full-time older workers stayed constant at 40 hours per week between 1995 and 2015.
Without well-designed retirement plans, saving for retirement becomes difficult and delaying retirement becomes necessary. This could be why the Bureau of Labor Statistics predicts older workers’ labor force participation rate will continue to grow in the coming decade, especially for women, who have a projected participation rate of 62.9% by 2024. If older workers are unable to retire, it has a ripple effect on the entire labor market, as increasing competition from older workers decreases the bargaining power of younger workers.
We need to ensure older workers a viable path to retirement by creating reliable retirement savings programs to supplement Social Security. For example, Guaranteed Retirement Accounts (GRAs) require employee and employer contributions over a worker’s lifetime and provide guaranteed lifetime income in retirement. With the confidence provided by secure retirement income, older workers can choose to leave the labor market according their own needs, rather than hanging on to undesirable jobs out of financial desperation.
Notes: Data for median weekly earnings in current dollars for men and women age 55 to 64 as well as historical and projected labor force participation rates are taken from the Bureau of Labor Statistics. Inflation adjustments are made using the Consumer Price Index. Median usual hours worked per week figures for workers aged 55 to 64 are calculated by the author from CPS Annual Social and Economic Supplement.
“A Comprehensive Plan to Confront the Retirement Savings Crisis” is a proposal for a new approach to national retirement savings by SCEPA Director Teresa Ghilarducci and Blackstone President Tony James.
The plan proposes a simple, immediately effective solution to address the fundamental flaws in today’s broken retirement system. If we stay on our current path, America will face rates of poverty among senior citizens not seen since the Great Depression. The strain of this population will have resounding effects across the economy, the government and future generations.
In response to this challenge, Ghilarducci and James have researched and developed a national plan that ensures every worker a more secure retirement. The plan details a single, sustainable framework that allows Americans to save consistently, generate the returns necessary and retire with guaranteed lifelong income. And by repurposing lopsided subsidies and strategically using existing government infrastructure, this plan can be implemented with no new taxes, bureaucracy or increase of the federal deficit.
This plan was developed by an unlikely partnership between Ghilarducci and James. Together, they’ve developed a simple, actionable solution to this impeding crisis.
- “A Comprehensive Plan to Confront the Retirement Savings Crisis” Report
- “A Comprehensive Plan to Confront the Retirement Savings Crisis” Summary
- “A Smarter Plan to Make Retirement Savings Last” in the New York Times
- “Pushing Aside 401(k)’s for Mandatory Savings Plans” in the New York Times
- “One Fix for the American Nest Egg: Make People Save” in the Wall Street Journal
- “Workers and Employers Would Be Forced to Save 3% of Pay Under New Retirement Proposal” in Investment News
- “The Plan That Could Render Your 401(k) Obsolete” in CBS News
- “National Retirement Savings Plan Proposed” in Benefits Pro
- “Is A Mandatory U.S. Retirement Saving Plan In Your Future?” in Reuters
- "America May Finally Be Ready for Mandatory Retirement Savings" in Time's Money Magazine
University of Massachusetts Amherst economist Gerald Friedman is at the center of a heated debate on the economic impact of presidential candidate and U.S. Senator Bernie Sanders’ economic platform and the role of outside policy experts in political campaigns.
Friedman analyzed Sanders’ proposals and found large, positive economic effects from increased government spending, such as a real GDP-growth rate of 5.3%, which is higher than the U.S. economy has ever sustained. To some, Friedman’s results seem implausible. However, his GDP growth rate is the result of standard modeling techniques and the size a consequence of the scale and scope of Sanders’ ambitions.
In response, four former chairs of the Council of Economic Advisors (CEA) under Presidents Obama and Clinton called on Sanders to distance himself from Friedman’s proposals on the basis of their apparent implausibility. Rather than disputing Friedman’s methods, they claimed the exorbitant results risk damaging the Democrats’ reputation as the “party of evidence-based economic policy.” The former CEA economists equated Friedman’s conclusions regarding the growth rate with the “grandiose predictions” made by outside experts supporting Republican’s economic proposals, including those using a supply-side, tax-cut model to support the growth potential of tax cuts.
In turn, the CEA letter and Krugman’s columns generated a backlash of their own. Jamie Galbraith responded with an open letter. Friedman himself wrote directly to Krugman and Mother Jones’ Kevin Drum summarized the controversy.
New School economists and scholars are dedicated to scrutiny and debate, and believe this process should apply to Friedman’s results just as it should apply to any economist’s results. In this case, the quick jump to questioning political motives appears to have skipped over this exercise in rigor that is the hallmark of economists’ professional ethos.
This is why we have invited Gerald Friedman to speak at The New School Department of Economics seminar series at 4:00pm on May 3, 2016. Friedman’s lecture is tentatively titled, “What would Sanders Do? Or, How a Naive College Professor Stumbled into a Professional and Media Buzzsaw." The lecture will be held at 6 East 16th Street in room 1009.