Government Executive - Authors - Matt Phillips

Let Us Now Celebrate America's Incredibly Low Productivity

Matt Phillips, Quartz — Wed, 08 Jun 2016 10:36:12 -0400

Put your feet up, America.

Just released numbers from the US Bureau of Labor Statistics shows U.S. worker productivity declining during the first three months of the year at a 0.6 percent pace, as measured by GDP per hour worked. That’s not as steep as the 1 percent drop that was the initial estimate reported for the quarter. But still.

It was the second straight negative reading, and in keeping with the post-Great Recession weakness that has caused certain economic observers to wring their hands raw. They should take a page from their proletarian compatriots, and chill.

Why? Well, because there was also a load of good news included in today’s productivity update. Hours and wages both climbed, with inflation-adjusted U.S. hourly compensation rising at a 4.2 percent rate in the first quarter. That’s the latest in a string of solid readings on pay after a long spate of flat wages.

Indications of rising hours worked along with peppy wages are worth celebrating, even if they’re partially to blame for the ongoing weakness in U.S. productivity. Productivity is conventionally described, as it was by the Wall Street Journal (paywall) today, as the “the main factor behind the economy’s ability to lift Americans’ long-term living standards.”

Well…that’s only kind of, sorta, true if you define living standards as GDP-per-capita. I don’t. Employers don’t dole out per capita chunks of GDP to their employees every two weeks. In the United States, it’s wages and other forms of compensation that really determine standards of living.

In other words, it’s not just productivity that determines how well people within an economy live. It’s how the fruits of that productivity are shared. And for the last few years, workers have had to tear at the fatty, leftover gristle of GDP after employers and corporations have taken the choice cuts. Since the 1970s, the vast majority of the benefits of improving productivity have gone to employers rather than workers.

This is a big reason why US median household income is essentially where it was 25 years ago.

As an aside, low productivity isn’t ideal. The best situation for the U.S. economy would be rising levels of hours worked, compensation and productivity, which would produce a bigger pie—and bigger slices of pie—for everyone. But we don’t live in an ideal world. So for right now, after the recent period of flat wages, I don’t mind of pay outpaces productivity for a bit. After decades of lagging, a period of catch-up would be in order.

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Report: Harriet Tubman Will Replace Andrew Jackson on the Front of the $20 Bill

Matt Phillips, Quartz — Wed, 20 Apr 2016 12:49:03 -0400

This story has been updated

African-American abolitionist Harriet Tubman will replace Andrew Jackson on the front of US $20 bill. And a portrait of Alexander Hamilton, the first US Treasury secretary and the subject of a hit musical now on Broadway, will remain on the front of the $10 bill.

As part of an announced overhaul of the design for the $5, $10 and $20 notes, Tubman’s appearance on the $20 will mark the first time in more than 100 years that a woman will figure on the front of a US bill.

“Her incredible story of courage and commitment to equality embodies the ideals of democracy that our nation celebrates, and we will continue to value her legacy by honoring her on our currency,” US Treasury Secretary Jacob Lew said in a statement on the change.

Born into slavery in 1820 on Maryland’s eastern shore, Tubman escaped to freedom in 1849. But she repeatedly returned to the south to guide some 300 escaped slaves to freedom in the north, utilizing the system of safe houses and way stations known as the Underground Railroad. She died in upstate New York in 1913.

Tubman’s image will be replacing that of the seventh president of the US, Andrew Jackson, a populist leader and hero of the War of 1812, who built his personal fortune as a large-scale slaveholder in Tennessee. Jackson is known in part for signing the Indian Removal Act of 1830, which forced all eastern Native Americans to move west of the Mississippi River. It culminated in the 1838 removal of roughly 15,000 Cherokee people from Georgia to Oklahoma. Some 4,000 died along the forced march, which became known as the Trail of Tears. Jackson’s image will, however, feature on the reverse of the $20 note.

The front of the new $20 will bear the portrait of Harriet Tubman, whose life was dedicated to fighting for liberty. pic.twitter.com/8lAEkoD78p
— Treasury Department (@USTreasury) April 20, 2016

Last June, Lew announced that Hamilton’s portrait on the $10 would be replaced with a portrait of a woman. But that plan ran into opposition, amid a surprise upsurge in popularity for Hamilton, who is the subject of an eponymous musical which won the prestigious Pulitzer Prize for drama earlier this week. The reverse side of the $10 will be redesigned to showcase leaders of the women’s suffrage movement Lucretia Mott, Sojourner Truth, Susan B. Anthony, Elizabeth Cady Stanton, and Alice Paul.

The new $10 will honor five heroes of the women’s suffrage movement and continue to feature Alexander Hamilton. pic.twitter.com/dHd50pLjMm
— Treasury Department (@USTreasury) April 20, 2016

The Treasury also announced alterations to the $5 bill. The bill will continue to feature President Abraham Lincoln on the front. But the reverse side of the note will depict images related to the Lincoln Memorial in Washington, D.C., including African American opera singer Marian Anderson’s performance at the memorial in 1939 and Martin Luther King Jr.’s famous “I Have a Dream” speech delivered there as part of the March on Washington in 1963.

The new $5 will honor historic events at the Lincoln Memorial & continue to feature President Lincoln. pic.twitter.com/8jxgxxE7EW
— Treasury Department (@USTreasury) April 20, 2016

Jackson has been on the $20 bill since 1928. (The position was previously held by Grover Cleveland.)

The redesign of the new bills won’t be unveiled until 2020, and the design process is currently underway. In a conference call announcing the changes, Lew repeatedly said he had directed the US Bureau of Printing and Engraving to accelerate the process of producing the notes. But he also stressed the importance of meeting security requirements for the new bills.

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The U.S. Mint Might Stop Producing Pennies

Matt Phillips, Quartz — Tue, 19 Apr 2016 15:51:32 -0400

It’s getting serious.

The Wall Street Journal’s Nick Timiraos reports that in a March 2015 memo to US president Barack Obama, Treasury Secretary Jacob Lew said he planned to suspend production of the venerable penny.

While the existence of the memo had not been disclosed previously, the idea of ditching the one-cent piece has been a perennial debate for a few decades now. Among the arguments for: Pennies fall out of circulation almost immediately, forcing the US mint to continually stamp out more, and they cost almost twice as much to produce as they’re worth, according to the most recent data from the US mint.

But unless you’re a card-carry member of the US zinc lobby—pennies have been 97.5% zinc since 1982—Lew’s proposal shouldn’t be a big deal to you.

The US would be following the sensible, penny-free path carved out by countries including Sweden, Finland, Australia, Canada, New Zealand, Israel, Brazil, and the Netherlands, which have similarly dropped diminutive denominations of their currencies with little noticeable impact. Britain and Norway also have eliminated their lowest-denomination coins.

(Image via foreverseptember/Shutterstock.com)

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Google Just Revealed the Incredibly Simple Formula for Killer Résumés

Matt Phillips, Quartz — Wed, 09 Mar 2016 11:00:00 -0500

It’s not exactly E=mc².

But for would-be job hunters, it’s probably a lot more useful.

In a Q&A-style interview with Google’s senior vice president of people operations Laszlo Bock, The New York Times’ Tom Friedman fished a few seriously helpful words of wisdom out of the search giant’s human resources chief. This one is perhaps the most concrete.

How do you write a good résumé?

“The key,” [Bock] said, “is to frame your strengths as: ‘I accomplished X, relative to Y, by doing Z.’ Most people would write a résumé like this: ‘Wrote editorials for The New York Times.’ Better would be to say: ‘Had 50 op-eds published compared to average of 6 by most op-ed [writers] as a result of providing deep insight into the following area for three years.’ Most people don’t put the right content on their résumés.”

Google has seemed to get a lot more rational about its hiring habits under Bock, who notably admitted that the famous brain-teasers the Mountain View, Calif. company once used to winnow potential hires proved to be a complete waste of time. Moreover, it’s becoming increasingly clear that the résumé is far from dead even for the most sophisticated big-data operations. Although—as always—poorly written CVs do quickly get buried.

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Jeb Bush Does Not Understand Productivity, But No One Really Does

Matt Phillips, Quartz — Fri, 10 Jul 2015 13:00:00 -0400

Let’s be clear: Jeb Bush’s pronouncement that Americans need to work longer hours to help boost US productivity makes no sense at all, and not just because it’s politically tone-deaf .

While often used as a fancier-sounding word for effectiveness or efficiency, productivity has a specific economic definition. It’s the amount of output per units of inputs such as capital, land, labor, and commodities. Because labor is the easiest to measure of them all, most economists end up talking about labor productivity. So essentially when we talk about US productivity statistics, we’re talking about output—or GDP—per hour worked.

If you just boosted the amount of hours worked, you wouldn’t actually boost productivity. And even if output rises a little bit, it doesn’t necessarily mean it’s worth it. Anyone who has spent the last few hours of a long day listlessly picking at a project knows that productivity can fall as work time increases.

On the other hand, Bush is correct that labor productivity has been soft lately.

For now, that’s fine. The weak productivity readings of late reflect the fact that people have seen a recovery in the amount of hours they’ve worked over the last couple quarters. That’s good. It’s a sign of improvement in the job market.

Over the long term, of course, productivity is seen as a key ingredient of economic growth. The problem is, nobody knows exactly how to raise it. It’s not simply a matter of boosting hours worked. What’s really needed is an increase in so-called total factor productivity, a metric that captures the efficiency of the interplay of investment, labor, and technology.

Unfortunately, total factor productivity is sort of like the economic equivalent of dark matter. It’s in the leftover bits of GDP growth that you can’t explain through inputs of labor and capital. We know it’s there but we can’t actually see it. And politicians certainly can’t juice it simply by persuading people to work longer hours.

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Obamacare Fixed U.S. Health Care Inflation

Matt Phillips, Quartz — Fri, 06 Mar 2015 10:33:37 -0500

The cost of health care is rising at the slowest rate since President John F. Kennedy was in office.

A key U.S. health care inflation gauge updated earlier this week shows medical care inflation rising 0.55 percent in January, compared to January 2014. This is the slowest rate since 1961, when healthcare inflation fell sharply amid a broad anti-inflation push launched by Kennedy. (The anti-inflation push came to a famous head when Kennedy all but declared war on US Steel for backing out of a wage and price deal the White House had brokered.)

While health care prices started to decline in 2008 as the U.S. economy soured, they’ve taken a sharp leg lower after the passage and implementation of the Affordable Care Act, widely known as “Obamacare,” in 2010. Some would argue that this merely reflects lessened utilization of health care in the aftermath of a recession. That was true for a while. But real spending on medical care—as well as medical hiring—have both turned up sharply over the last year, suggesting rising demand.

It’s hard to overstate how important this. Galloping health care inflation was one of the prime reasons the U.S. fiscal future has looked so bleak. Roughly one out of every four dollars spent by the government in the United States has gone toward medical care in recent years, mostly through the giant federal programs Medicare and Medicaid. In 2014, lower-than-expected medical costs was one of the main reasons the U.S. budget deficit amounted to a smaller-than-expected 2.8 percent of GDP.

The mechanism by which Obamacare has corralled health care costs remains kind of murky. But it’s important to recognize that a big part of the new law—including caps on Medicare payments and penalties for costly readmissions—was intended to do just that. And it’s working.

(Image via Nataliia K / Shutterstock.com)

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Let’s Admit It: Governments Never Really Pay Off Their Debts

Matt Phillips, Quartz — Mon, 09 Feb 2015 20:00:00 -0500

Since the European debt crisis first flared in 2010, Greece has been held out as an example of the worst kind of profligate borrower. And it’s true Greece has a bad fiscal record. Government spending was large and inefficient, tax collections nearly nonexistent. Perhaps worst of all, government statisticians cooked the books to cover it up.

So in the case of Greece, there’s a strong—and understandable—temptation for lenders to see Greece’s resulting debt in moral terms. That’s one of the reasons why creditors find it so difficult to cut Greece’s debt burden by further restructuring it, essentially writing off part of the debt, as part of an agreement with Greece’s new government. That government, led by the leftist coalition party Syriza, rose to power on its promise to renegotiate the terms of the bailout, which has helped destroy roughly a quarter of the Greek economy.

The most rigid moralizing has been done by Germany, for a variety of reasons financial, historical and cultural. (Amateur cultural critics have also long pointed out that the German word for debt—Schulden—comes from the word for guilt, Schuld.)

The finger-wagging is profoundly unhelpful. At the end of 2013, Greece owed upwards of €300 billion, or roughly 175% of GDP. It will never pay that debt in full and everyone knows it.

And Germany should know it better than most. After World War I, the victorious allies forced Germany to agree to paying insurmountable reparations as retribution for the war. At the time, John Maynard Keynes warned in his Economic Consequences of the Peace of the futility of such an approach.

“He said, ‘These debts will never be paid, so why not, sort of draw a line under them and go on to the future,'” Robert Skidelsky, a Keynes biographer and economic historian, said in a recent talk hosted by the London School of Economics. “And in fact they weren’t paid.”

First they were famously inflated away in the 1920s in the Weimar hyperinflation. Hitler stopped reparations payments altogether in 1933. Then came World War II, of course, followed by a debt restructuring in 1953. That restructuring did much to contribute the country’s economic recovery after the war, not to mention the economy and stability of the continent as a whole.

You don’t have to look far to find other glass houses. Britain essentially defaulted by going off the gold standard in 1931. Currency devaluation was the preferred mode of default for the French. And while it’s often said that the US has never defaulted on its obligations, that’s not true either. Even if countries don’t stop making payments outright, inflation eats into the value of debts over time, alleviating the burden. The fact is, governments never really pay back all the money they borrow, at least not in real (i.e. inflation-adjusted) terms.

“If one looks at the history of public debt, almost all public debt that’s ever been issued has been, in the end, inflated away or had its real value reduced through restructuring,” said Felix Martin, a macroeconomist and bond investor, who took part in the LSE discussion.

This brings us back to Greece, which, it must be said, really stands out as one of the world’s most prolific defaulters. Reinhart and Rogoff famously noted that the country has been in default for roughly half of the years since it gained independence from the Ottoman Empire in the 1832.

This throws a wrench into the “moral hazard” argument against debt forgiveness, which usually suggests that allowing debtors to stiff creditors encourages such behavior in the future. After all, who were these lenders who thought it wise to extend lend so much money to a country that’s spent half of its existence defaulting on its debts?

We know who they were. They were French and German banks, among others. Many argue that bailout of Greece—and its painful conditions—was actually a bit of backdoor help for the German and French financiers.

Of course, it’s not reasonable to expect creditors to immediately forgive all Greece’s debts. Nor is it reasonable to expect Greeks to stand by while a disastrous economic policy is dictated to them. But the most unreasonable thing of all would be expecting to see the debt repaid in full.

(Image via bluecrayola/Shutterstock.com)

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How the Dollar Went From a Simple Banknote to the World's Currency

Matt Phillips, Quartz — Thu, 13 Nov 2014 21:00:00 -0500

It must be wonderful to be so desirable at age 100.

Yes, it was in late 1914 that the U.S. Federal Reserve note , the official incarnation of the U.S. dollar, first shot from the U.S. Treasury’s Bureau of Printing and Engraving.

There’s been little official fanfare. But the dollar itself has spent its centenary year pulverizing the competition and turning global markets upside down .

This is all the more remarkable given the dire warnings about the dollar’s health over the last few years. Economists and financial talking heads—mostly of a conservative, monetarist stripe—have continually cautioned that the Federal Reserve’s efforts to resuscitate the U.S. economy by creating loads of money from thin air and using it to buy bonds would ultimately undermine the dollar, set off a wave of inflation, spook global investors, unhinge interest rates, saddle the Treasury with crippling interest payments, and cause the U.S. economy to once again stall.

These folks—here are some of the leaders among them —have been completely wrong. But to understand why, you really have to understand the history of American money. And what better time for that than the dollar’s 100th birthday?

Of course, the U.S. had paper currency before 1914. The earliest, the continental dollar , was printed to keep the lamps lit in the first days of the republic. But it collapsed amid hyperinflation in the 1780s.

For nearly a century after that unsightly episode, the U.S. currency system was a mishmash of private banknotes issued by state-chartered banks, specie coins issued by the Treasury, and foreign coins and banknotes. It didn’t work particularly well. Private banknotes were fine in the general vicinity of the issuing bank, but they were only accepted at a discounted rate further afield .

A bank note issued under the National Banking System, which prevailed until 1913 (Federal Reserve)

It wasn’t until the 1860s, in the midst of the U.S. Civil War, that the federal government gave printed money another full-fledged try. But until the Federal Reserve Act of 1913, the system was still a bit of a mashup, with individual banks also printing their own currencies.

The system still had a lot of problems. Foremost was its tendency to go spectacularly bust—see 1873 , 1884, 1890, 1893 and 1907—and sink the U.S. economy into sometimes deep recessions. After J.P. Morgan organized a massive bailout during the panic of 1907 , the government decided that relying on the kindness of private bankers probably wasn’t the best policy. A few years later, the Federal Reserve Act of 1913 created the U.S. central bank, and endowed it with the ability to “furnish an elastic currency.” (Essentially, that meant the central bank could expand the money supply as needed to prevent creeping doubts about the availability of cash from turning into destructive runs on the banks.)

Still, that didn’t immediately make the dollar the reserve currency—the default for international transactions—that it is today. The pound sterling had held that spot since 1821, when Britain reinstated the gold standard at a fixed rate after the Napoleonic wars. Countries using the gold standard agreed to make the value of their currency equal to a fixed amount of gold. The U.S. didn’t join the gold standard until 1870s.

Thus, though the U.S. economy had overtaken Britain’s around 1870, London remained the center of world finance in 1914. Corporations and governments flocked to the City’s banking houses to raise money. Brazilian coffee farmers shipped their products to Spanish restaurants, and took payment in pounds by calling at the London offices of their bankers. Japanese importers of Henry Ford’s cars paid for them in London with bills of exchange.

The Number of U.S. Dollars per British Pound

It took the First World War to bring the dollar to preeminence. In wartime, countries would typically abandon the gold standard, and pay military expenses with freshly printed paper money, usually resulting in a spiral of inflation. When the war hit Europe in 1914, most of the warring countries abandoned the gold standard.

Britain held on, reasoning that going off gold would devastate the City of London. But since the U.S. didn’t enter the war until 1917, it had more money to lend than the U.K., where the war effort was devouring every scrap of spare capital. Countries like Canada, Chile, Argentina, and Switzerland began to borrow in the U.S., by selling dollar-denominated bonds designed to appeal to U.S. investors.

As the war dragged on, Britain went from lender to borrower. And after the dollar-denominated Angl0-French loan of October 1915—organized by JP Morgan to fund the allied European powers—"the U.S. dollar no longer took a backseat to the British pound,” wrote William Silber, an NYU professor and author of a book on the origins of the dollar as a reserve currency.

The dollar gained further prestige when the U.K. was suddenly forced off the gold standard in 1919, inflicting large losses on international merchants with British bank accounts full of pounds. By the time the U.K. went back to gold in 1925, the damage was done. The dollar had become the world’s leading currency.

In World War II, much as it had during World War I, the U.S. benefitted from its late entry into the fray. It spent much of the early part of the war shipping exports to the Allies, and collecting much of their gold as payment. After the war, it was impossible to reconstitute the gold standard mostly because the U.S. owned almost all the world’s gold.

So instead of basing the world monetary system on gold, the advanced economies based their currencies on the U.S. dollar. The dollar was still linked to gold, meaning foreign government central banks could, in theory, redeem exchanged dollars for U.S. gold whenever they wanted. Under this system—the post-war arrangement known as Bretton Woods—the exchange rates to the dollar were fixed at a certain price, but there was some leeway for devaluation if necessary.

There was, however, an inherent tension in this system. Under the Bretton Woods system, most countries—besides the U.S.—operated with trade surpluses: They exported more than they imported. As a result, they ended up with growing piles of dollars. (The Chinese have a similar situation today.) They needed a place to put these dollars. The only financial market big enough to absorb them was the market for U.S. Treasury securities. In other words, these countries were all lending money to the U.S..

That encouraged the U.S. to run large deficits and build up its foreign debt. Eventually foreign lenders began to doubt, rightly, whether it could cough up all the gold they were theoretically entitled to. That’s why president Richard Nixon snipped the last strand of a linkage between gold and the U.S. dollar in the early 1970s.

The early days of the post-gold world were rough. At moments in the 1970s, the value of the dollar fluctuated wildly, amid fears about rampant U.S. inflation.

But since then, the U.S. currency has only seemed to grow more central to the world financial order. More cross-border trade and financial flows are now settled in dollars than ever before. And it remains by far the most popular currency for countries to stash their national savings.

There are many theories why. The sheer size of the U.S. economy. The dominance of U.S. financial markets. But it’s also just sheer inertia. Only the U.S., after the two world wars, had the large, open financial markets that a reserve currency requires. And the U.S., unlike Japan and Germany, did not try to protect its export sector by dissuading foreigners from holding its currency. (Switzerland, whose franc is often thought of as a junior reserve currency, is doing just that at the moment .) So the dollar became, and stayed, the default.

More broadly, the dominance of the dollar also stems from those squishy, somewhat mystical elements of financial markets: Confidence and trust. This is where economics blurs with philosophy and sociology. Perhaps some of the best thinking on these topics was done by George Simmel in his 1907 opus, the Philosophy of Money . In it, he posits that that the usage of money is, essentially, a mechanism of spreading trust throughout an ever-widening circle of anonymous individuals. (A 2001 article from the Journal of Economic Issues summed up Simmel’s thinking on money.)

The last few years have seriously tested that trust in the U.S.-dominated economic order. The country suffered its most drastic economic collapse since the Great Depression. The staid Federal Reserve undertook an extreme quantitative easing policy. U.S. political brinkmanship pushed the country uncomfortably close to default. Yet none of it dented the dollar’s credibility. It’s very difficult to imagine, these days, what would.

( Image via Nikita Waller / Shutterstock.com )

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One in Four Americans With College Degrees Shouldn’t Have Bothered

Matt Phillips, Quartz — Fri, 05 Sep 2014 14:00:00 -0400

Roughly 25% of those with bachelor’s degrees in the US derive no economic benefit from their diplomas.

That’s the takeaway from analysts at the Federal Reserve Bank of New York . The same analysts have argued in the past that the benefits of a college degree, on average, still outweigh the costs . (Other Fed studies have suggested that, on average, those with bachelor’s degrees earn $800,000 more than people who finished only secondary school.) And while median earnings of college students typically remain between 60% and 70% higher than those with high school diplomas, there’s still a surprisingly large chunk of students who don’t do any better than those who never went to four-year schools.

The Fed’s analysts divided the pool of college degree holders into quartiles. They found that people in the lowest quartile earned roughly the same amount of money as those with only a high school diploma.

The analysts wrote:

These figures suggest that perhaps a quarter of those who earn a bachelor’s degree pay the costs to attend school but reap little, if any, economic benefit. In fact, once the costs of attending college are considered, it is likely that earning a bachelor’s degree would not have been a good investment for many in the lowest 25 percent of college graduate wage earners. So while a college degree appears to be a good investment on average, it may not pay off for everyone.

Now in some senses, this isn’t a surprise. There’s always a broader distribution of outcomes that get buried under averages. But it is an important reminder that a college education by no means punches your ticket into the US middle class.

( Image via hxdbzxy / Shutterstock.com )

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Maybe Less Productive Employees Just Need a Little Siesta Time

Matt Phillips, Quartz — Mon, 21 Jul 2014 17:00:00 -0400

In an effort to boost productivity during the summer months, the city of Seoul is encouraging government workers (paywall) to take a siesta of up to an hour. This might be a good model for the country, which appears to be the most sleep-deprived of the world’s developed economies.

The most recent numbers from the Organisation for Economic Cooperation and Development (OECD) , the organization that crunches comparable data on the world’s developed economies, show that South Koreans sleep an average of 469 minutes (7.8 hours) a day. That’s the lowest among the 18 countries for which the OECD gathered data. The OECD average for shuteye is 502 minutes (8.4 hours). The French, who snooze the most among the rich nations, clock 530 minutes (8.8 hours) of sleep a night.

Why such a lack of sleep in Korea? Hard to say for sure, but the Korean propensity to log long work hours likely cuts into workers’ downtime. While that sounds admirable, the Korean workplace culture of rampant overtime and few vacations results in some of the worst levels of worker productivity among the advanced economies.

Reprinted with permission from Quartz . The original story can be found here .

( Image via racorn / Shutterstock.com )

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Countries Without Paid Maternity Leave: Swaziland, Lesotho, Papua New Guinea and the U.S.

Matt Phillips, Quartz — Thu, 16 Jan 2014 14:00:00 -0500

The world’s sole superpower requires the same level of paid maternity benefits as fellow economic powerhouses Swaziland, Lesotho and Papua New Guinea. That is to say, zilch.

Here’s a map of how different countries around the world fund legally required paid maternity benefits. It’s compiled by the United Nation’s International Labor Organization , which has some of the best comparative data on the subject. The pink blotches represent countries where new mothers are on their own and no paid leave is required by law. (Note that Australia is pink because the Aussies added paid parental leave in 2011 ; the data are from 2009.)

Does this matter? Certainly. Women are now breadwinners for 40% of US families with children under the age of 18. And while it’s true that there is some paid maternity leave in the US—New Jersey, California and Rhode Island have family leave programs that new mothers can use and some well-heeled companies provide it—there’s not much. Just 12% of US workers get paid time off to tend to babies or parents who are ill, reports Bloomberg.

Economists have long noted strong links between family-friendly policies and labor force participation among women. Indeed, in the 1990s, the US had the sixth-highest female labor force participation rate among the 22 nations tracked by the OECD. By 2010, the US ranked 17th. One recent study attributed roughly 30% of this “stunning reversal” to the US’s lack of family-friendly policies , compared with expansion of such policies among other OECD countries.

In the midst of an epoch-making tumble tied to the retirement of the baby boom, the US labor force needs all the workers it can get. And that might mean rethinking its outlier status on benefits for new mothers.

( Image via JMiks / Shutterstock.com )

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Analysis: If Washington Wants to Derail the US Economy, This Is the Way to Do It

Matt Phillips, Quartz — Tue, 27 Aug 2013 10:04:10 -0400

It looks like we’re going to do this again.

Economists estimate the US will reach the debt ceiling of $16.7 trillion at some point in late October or early November. (Update: Treasury secretary Jack Lew now says it will be in mid-October.) But before that, a new budget or an extended resolution allowing the US government to keep the lights on will have to be cobbled together before the start of the 2014 fiscal year, which starts Oct. 1. In short: We’re about to enter another silly season in Washington.

Wrangling over US fiscal policy is more than political theater. It has real implications for the US economy. To remind us of that fact, let’s look at how the brinksmanship of August 2011, which ultimately led to the downgrade of the US sovereign debt rating by Standard & Poor’s in Aug. 5 of that year, left a clear and deep dent in US economic and market data.

It clearly spooked the stock market…

Read the full story at Quartz.

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The U.S. Is Cutting its Deficit Faster Than it Ever Has Before

Matt Phillips, Quartz — Mon, 12 Aug 2013 11:14:58 -0400

The latest US budget statement is due at 2 p.m. ET on August 12, and is expected to show that the US deficit continued to decline in July, falling to a consensus -$90.5 billion. That’s still in the red, to be sure. But it’s worth noting just how sharply US deficits have been declining. Check out this chart from economists over at Barclays.

How has the US done it? No giant mystery here: Spending has been falling and government tax revenue has been rising.

Ok, but why, exactly? Barclays economists say tax receipts are rising largely because of better individual tax revenue. And those are improving for a few reasons. Worker incomes are up a bit thanks to improvements in the job market. Taxes on capital gains from the buoyant US stock market are also helping. And then there’s the fact that tax rates rose thanks to the budget deal cobbled together with Congress late last year .

Moody’s Says the US Government Is Now a Super Safe Bet

Matt Phillips, Quartz — Fri, 19 Jul 2013 11:52:32 -0400

Turns out, if you raise taxes and cut spending, deficits decline. That’s precisely what the US has done over the couple years. It raised both payroll taxes and taxes on high earners at the beginning of the year as part of fiscal cliff negotiations. And it cut spending—messily—with the sequester. Here’s the result, per the US Congressional Budget Office .

Another result: Moody’s upgraded its outlook on the US government’s AAA rating to “stable” from “negative” yesterday.

Fitch to U.S.: Debt Ceiling Shenanigans Will Hurt Your Credit Rating

Matt Phillips, Quartz — Fri, 01 Mar 2013 10:09:33 -0500

This is about as transparent as the credit rating firms get:

“The debt ceiling limit which comes back into force on May 19, certainly if that wasn’t addressed in a timely fashion, we don’t think another debt ceiling crisis like we had in August 2011 would be consistent with the U.S. retaining its AAA rating,” David Riley, managing director of sovereign ratings, said on Bloomberg Surveillance in an interview with Sara Eisen.

It’s tough to keep all of the different US fiscal hurdles straight. Today is the deadline to avoid the across-the-board spending cuts we call the “sequester.” Then next hurdle is March 27, when the current stopgap legislation that’s funding the government expires. That could prompt a government shutdown. But according to Fitch, the big worry is another fight over the debt ceiling—which we’re due to hit on May 18. Essentially, that amounts to US politicians playing footsie with the idea of default.

Read the rest of this article at Quartz.

(Image via Torian/Shutterstock.com)

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