Federal Aid’s Role in Driving Up Tuitions Gains Credence – By Josh Mitchell Aug. 2, 2015 2:03 p.m. ET


A tour group at the Sterling Memorial Library on Yale University’s campus in New Haven, Conn., earlier this summer.

A tour group at the Sterling Memorial Library on Yale University’s campus in New Haven, Conn., earlier this summer. Photo: Craig Warga/Bloomberg News

 

Imagine a scenario in which the federal government helps households pursue the American dream with ultra-loose credit, only to see prices skyrocket and families take on loads of debt they can’t repay.

Yes, it sounds like the housing market of a decade ago, but some say it is also the challenge of today’s higher-education system.

The federal government has boosted aid to families in recent decades to make college more affordable. A new study from the New York Federal Reservefaults these policies for enabling college institutions to aggressively raise tuitions.

The implication is the federal government is fueling a vicious cycle of higher prices and government aid that could ultimately cost taxpayers and price some Americans out of higher education, similar to what some economists say happened with the housing bubble.

Conservatives have long held that generous federal-aid policies inflate higher-education costs, a viewpoint famously articulated by then-Education Secretary William Bennett in a 1987 column that came to be dubbed the Bennett Hypothesis.

 

West Virginia Is for Egalitarians – By Jordan Weissmann JAN. 27 2015 7:31 PM


Rising income inequality is a national issue. Actually, scratch that—it’s a global issue. But at the same time, it’s interesting to look at the rise of the rich on the state level, both because it might reveal a thing or two about inequality, and because Americans never tire of petty geographical rivalries.

Thar be rich folks in Connecticut. Photo by Spencer Platt/Getty Images

Thar be rich folks in Connecticut.
Photo by Spencer Platt/Getty Images

This week, the Economic Policy Institute, a liberal think tank, released a very cool analysis of how the top 1 percent of earners in each U.S. state has grown its share of income since 1979. The overarching point is that the story of American inequality isn’t just about Wall Street financiers from New York or Connecticut gobbling up an ever-growing share of the country’s economy. Rather, the aflluent are pulling away from their neighbors all over the country, from Portland to Palm Beach.

This strikes me as an interesting, though not exactly surprising, point. One percenters aren’t all hedge funders and bankers. They’re doctors, lawyers, and business executives too, and sometimes live in places like Missouri and Tennessee. Of course, just because you’re in the 99th percentile of earners in, say, the deep south, that doesn’t mean you make the cut for the U.S. as a whole. In Alabama, for instance, it only took an income of $272,000 to make the 1 percent threshold in 2012, compared to about $394,000 nationally, according to the World Top Incomes database. But the last few decades have delivered a rising share of income to the workaday rich, too—the top 5 percenters, who bring down low six-figure incomes, and live all over. If you’re wealthy by any state’s standard, you’ve done pretty well over the last few years.

One sentence that perfectly explains why the middle class has to care about inequality – Updated by Matthew Yglesias on January 19, 2015, 11:00 p.m. ET


Larry Summers sums up the cost of rising inequality to the typical American household: “If the US had the same income distribution it had in 1979, the bottom 80 per cent of the population would have $1 trillion — or $11,000 per family — more. The top 1 per cent $1 trillion — or $750,000 — less.”

Behind the startling figures is a startling point, at least by the standards of the 20th Century American economy: economic growth alone is no longer enough to address normal people’s desire for rising living standards. A rising tide might lift all boats, but the American economy no longer works that way.

Inequality — at least as an abstract concept — doesn’t have much juice as a political issue. But income and wage growth for middle class families is thequintessential political issue. And one of the major shifts beneath the surface of American politics over the past few years is the growing conviction among the Democratic Party’s wonks — including the centrist, not-so-populist ones like Summers — that you really can’t deliver on the thing voters care about without addressing inequality on a policy level.

Summers is the lead US author of a recent report that offers an outline for Hillary Clinton’s economic agenda, and the fingerprints of this turnabout are all over it. The “third way” idea that the state should provide education, infrastructure, and relief for the poor but not much else is really gone, in favor of a much more populist vision. And you see the same thing in the Obama administration’s latest tax proposals, that would offer much stiffer rates on wealthy investors in order to reduce the burden on middle class workers.

That kind of frank redistributionism isn’t the only possible approach to middle class income stagnation. But right now it seems to be the approach Democrats are converging on. And though Republicans have started appropriating populist rhetoric, I don’t really think they’ve articulated an approach to back that rhetoric up. Whoever’s able to connect these dots in a way that works substantively and makes sense to people is going to have a huge leg up in grappling with the economic issues of the years to come.

http://www.vox.com/2015/1/19/7855335/summers-inequality-middle-class

LA residents need to make $33 an hour to afford the average apartment – Ben Bergman January 15, 03:28 PM


 You need to earn at least $33 an hour — $68,640 a year — to be able to afford the average apartment in Los Angeles County, according to Matt Schwartz, president and chief executive of the California Housing Partnership, which advocates for affordable housing.

Finding affordable apartments is especially tough in Los Angeles, where 52 percent of people are renters, according to a new study. JUSTIN SULLIVAN/GETTY IMAGES

You need to earn at least $33 an hour — $68,640 a year — to be able to afford the average apartment in Los Angeles County, according to Matt Schwartz, president and chief executive of the California Housing Partnership, which advocates for affordable housing.

That’s more than double the level of the highest minimum wage being proposed by Mayor Eric Garcetti, which he argued would make it easier for workers to afford to live here. “If we pass this, this will allow more people to live their American Dream here in L.A.,” Garcetti proclaimed when he announced his plan to raise the minimum wage to $13.25 by 2017.

The $33 an hour figure is based on the average L.A. County apartment rental price of $1,716 a month, from USC’s 2014 Casden Multifamily Forecast. An apartment is considered affordable when you spend no more than 30 percent of your paycheck on rent.

To earn $33 an hour or more, you’d need to have a Los Angeles job like one of the following occupations:

But many occupations typically earn far below that $33 an hour threshold in L.A. County, according to the California Housing Partnership:

  • Secretaries: $36,000 ($17 an hour)
  • EMT Paramedics: $25,00 ($12 an hour)
  • Preschool teachers: $29,000 ($14 an hour)

That’s why L.A. residents wind up spending an average of 47 percent of their income on rent, which is the highest percentage in the nation, according to UCLA’s Ziman Center for Real Estate.

Naturally, people who earn the current California minimum wage of $9 an hour ($18,720 a year) would fare even worse in trying to afford an average apartment.

http://www.scpr.org/blogs/economy/2015/01/15/17806/la-residents-need-to-make-34-an-hour-to-afford-ave/?utm_source=Facebook&utm_medium=Social&utm_campaign=FBKPCC4694