Tag Archives: pethokoukis

So How Are Millennial Men Doing?

by Allison05T Posted on April 3, 2017

Mother Jones

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James Pethokoukis has a pair of posts up today that reignite a longstanding question: What’s the right way to measure inflation? And what does that mean about earnings and income mobility over time?

These are both complicated questions, but we can start with a very simple chart. If we want to compare, say, 30-year-old men to their fathers, and their fathers to their fathers, we can do it pretty easily. The Census Bureau collects data on median cash earnings (i.e., not counting health care, employment perks, or government benefits) and then all we have to do is adjust for inflation. But which measure of inflation?

The CPI story is grim: In the previous generation, young men earned about 8 percent more than their fathers. That’s not great, but it’s better than nothing. However, in this generation, millennial men earn 10 percent less than their fathers.

The PCE story is different. In the previous generation, young men earned 22 percent more than their fathers. That’s pretty good. In the current generation, millennial men earn about the same amount as their fathers. Stagnation like that is bad news, but at least millennials aren’t literally losing ground.

So which should we believe? There are arguments for both, and it’s a political hot potato too since inflation measures show up in all sorts of benefit calculations. It would be nice if the economic community could thrash out agreement on an overall best measure, and then make it available as a standard series going back 70 years, but if it turns out that the new measure leads to (for example) lower cost-of-living adjustments for Social Security benefits, you can expect a massive pushback. Republicans have shown a particularly aggressive form of this kind of political hackery in the past, approving of new inflation measures that would decrease benefits, but opposing the same measures if they meant that people might pay higher taxes.

All that conceded, we really should be able to agree on a good, general-purpose inflation measure. We can still have lots of different measures for specialized purposes, but the headline inflation rate should be something that, say, 90 percent of economists can agree about. (There will always be a few outliers.)

In a way, though, this doesn’t matter too much for the question of how millennial men are doing. On one measure, their market earnings have dropped from 124 percent of per-capita GDP to 72 percent. On the other measure they’ve dropped from 108 percent to 72 percent. That’s pretty grim either way.

For more on this, Pethokoukis points us, first, to a new study by Bruce Sacerdote, which suggests that consumption has increased substantially over the past several decades, once you adjust for inflation bias and include the growth of government benefits. On a less happy note, he also points us to a study by Scott Winship about income mobility. Winship concludes that although there’s still a fair amount of income mobility within the broad middle class, there’s very little at either end. Poor kids stay poor, and rich kids stay rich.

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So How Are Millennial Men Doing?

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Road Funding Isn’t Broken. Why Fix It?

by JarrodLNFcyejkz Posted on January 6, 2015

Mother Jones

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James Pethokoukis is skeptical that even with gasoline prices plunging toward the two-dollar mark, Congress will consider raising the gasoline tax. Me too. But then there’s this:

Of course, another idea — as transportation experts Matthew Kahn and David Levinson wrote in a 2011 report — is to just freeze the gas tax as is and use revenue solely to bolster existing roads and bridges, including the addition of new pricing schemes to reduce congestion. Funding for new capacity would come from a new federal highway bank, which would loan money to states contingent on meeting stringent performance tests and demonstrating ability to repay the loans. Other options include axing the tax completely and letting states fund their own projects or public-private partnerships. How about some fresh, innovative thinking on infrastructure rather than defaulting to the status quo?

There are plenty of places where we could use fresh thinking. But is this really one of them? It’s infrastructure development. The simplest and most straightforward way of doing it is to raise money via taxes and then spend it. Loans aren’t innovative. Dumping it all on the states isn’t innovative. Public-private partnerships aren’t innovative.

In fact, all of this is the opposite of innovative. They’re just Rube Goldberg mechanisms to avoid transparent taxation and spending, something that we already do way too much of via subsidies and tax expenditures. Here’s my idea of innovative:

  1. We figure out how much we want to spend on transportation infrastructure.
  2. We decide which taxes are the fairest, most efficient funding source.
  3. We set tax rates to match (1) and (2).
  4. We spend the money.

That’s clear and transparent. It’s reasonably efficient. It’s an appropriate way to fund public goods. What’s not to like?

Generally speaking, my point here is that just because something is traditional doesn’t mean it’s a dinosaur. We should pick and choose our targets for reform and innovation, not use them merely as buzzwords. If you want to build a road, nothing much has changed over the past century. You just need to raise the money and then break ground. You might want to do more or less of it, or build different kinds of roads, or build roads to different places. But funding them? We already know how to do that. Why muck it up?

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Road Funding Isn’t Broken. Why Fix It?

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