Daily Digest - July 10: Communities Need a Better Kind of Banking

Jul 10, 2014Rachel Goldfarb

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Banks that Actually Serve Communities, What a Novel Idea (Philanthropy New York)

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Banks that Actually Serve Communities, What a Novel Idea (Philanthropy New York)

Roosevelt Institute Fellow Saqib Bhatti explains how community banks, unlike their national Wall Street-based counterparts, keep profits and funds in the community, where they support growth.

Port Truckers’ Strike Sends Ripples Through Labor World (MSNBC)

Ned Resnikoff looks at why the small port truckers' strike in Los Angeles is getting so much attention. He cites research from Roosevelt Institute Fellow Annette Bernhardt on worker misclassification.

SCOTUS’ Quiet Expansion of Harris (In These Times)

The Court's order in Schlaud v. Snyder could lead to a dramatic reversal in labor law, which would assume those who did not vote for a union are against it, writes Moshe Marvit.

Report: NY Tax Breaks Don’t Do Much to Create Jobs (The Journal News)

Joseph Spector says a new report from the state Authorities Budget Office shows that special tax breaks from local development authorities appear to have little effect on generating jobs.

Study: States That Raised Minimum Wage Had Stronger Job Growth (USA Today)

Paul Davidson reports on a new study from the Center for Economic and Policy Research, which shows a higher increase in payrolls over 10 months in states that increased their minimum wage.

Thomas Perez On Lawmakers Who Dis The Jobless: 'I Wanna Punch 'Em' (HuffPo)

In a meeting with the press about labor data, the Labor Secretary made harsh comments about lawmakers who still aren't helping the long-term unemployed, writes Arthur Delaney.

Jobs Are Staying Vacant Longer Than Ever (WaPo)

The average duration of job vacancies has hit a new high of 25.1 days, writes Catherine Rampell, but the evidence does not suggest there is a skills mismatch holding back hiring.

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Daily Digest - June 25: Konczal Rebuts Brookings' Findings on Student Debt

Jun 25, 2014Rachel Goldfarb

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The Devastating, Lifelong Consequences of Student Debt (TNR)

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The Devastating, Lifelong Consequences of Student Debt (TNR)

Roosevelt Institute Fellow Mike Konczal points out that the student debt crisis isn't about monthly payments, as the Brookings Institution suggests, but the life choices necessitated by debt.

What if We Treated Labor Like a Startup? (The Nation)

David Rolf, president of SEIU 775NW, suggests that organizing labor movements like startup incubators would help to develop new projects to improve working conditions.

Why Government Pension Funds Became Addicted to Risk (NYT)

Higher-risk investments have become necessary if pension funds are to hit return targets, writes Josh Barro, but come at a price in management fees and hide the real cost of the pensions.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Rob Johnson considers how big money in politics affects pension investment choices.

Why the Gap Thinks a Higher Minimum Wage is Good for Business (Vox)

Danielle Kurtzleben speaks to a vice president at Gap about the company's attempt to retain skilled and educated staff by setting a higher minimum wage company-wide.

Making a Withdrawal: Banks Shut Branches in Poorer Communities (AJAM)

Ranjani Chakraborty and Sarah Hoye examine what happens to communities where banks have eliminated branches. Fees from payday lenders for cashing checks and other services add up fast.

Mortgage-Investor Group Asks DOJ to Leave It Out of Bank Settlements (WSJ)

When banks get credit in their settlements with the Justice Department for modifying loans, mortgage investors want the loans they own excluded, writes Christina Rexrode.

Congrats, America. You Have Less Economic Opportunity Than You Did in 1970 (WaPo)

A new study quantifies varies kinds of opportunity over 40 years and finds that decreasing opportunity overall in the past decade is mostly due to the economy. Jim Tankersley and Jeff Guo report.

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Do Taxpayers Care if Student Loans Are Paid Off Too Quickly? (On Fair Value Accounting)

Jun 11, 2014Mike Konczal

With President Obama’s student loan announcement in the news this week, an argument over whether or not taxpayers make a profit from student loans is no doubt close behind. We do make a profit using the government’s accounting tools, but there’s an argument that we should instead use “fair value accounting,” or the rate at which the private market adjusts for risk (here’s Jared Bernstein with a recent piece). By that standard, we see a much smaller profit.

Most people reference the CBO on this, though its numbers are entirely opaque. For instance, it says that it “relied mainly on data about the interest rates charged to borrowers in the private student loan market,” but there are gigantic adverse selection problems right out of the gate. The private student loan market is where the worst credit risks go, so of course they have higher rates. Is the CBO able to control for this? Nobody knows.

But beyond that, there’s a simple finance logic reason for why I don’t buy the argument for fair value accounting. I don’t believe that taxpayers face prepayment risk, and to whatever extent they do, it’s a matter of politics, not economics, that determines this.

The concept of prepayment risk might not make sense for people without some financial background, so let’s walk through it. If you lend money to a person you know, whether it’s a questionable relative or a partner who asks to hold some money until they get their check next week, you just want to get paid back in full. And, here’s the kicker, you are really happy if you get paid back sooner than you had expected. You want the money back.

Is that how private capital markets work? No. Let’s say you manage a large portfolio of private student loans. And let’s say you get a note at the office that they are being paid back more quickly than you had expected. Are you happy? No. You are not, and you might even get fired.

Why wouldn’t you be happy about getting paid back earlier?

1. You have to physically do something with the money you get paid back to get it earning more money again. No matter what you end up doing -- reinvesting it in student loans, putting it into a different set of assets, or just stuffing it in the equivalent of a mattress -- it takes time, energy, and resources, all of which cost money.

2. Often you want to set a certain time frame for repayment. Say you really want to have a cash flow at a certain date far off into the future because you are funding a pension or insurance liability. Getting paid back earlier doesn’t meet that goal, and it confuses your expectations for cash flows.

3. Crucially, you are likely to get paid back exactly when you don’t want the money. Say you locked in private student loans at a high interest rate, but then interest rates decline dramatically. At this point students will pay back their loans more quickly, which leaves you with more cash on hand at a time when interest rates are low.

This isn’t some partisan ideological point; it’s just basic finance. You can see it described in a CFA study guide under call and prepayment risk and reinvestment risk. (People more baller than I who actually did the CFA can nitpick specifics, but the general layout is correct.)

So private investors in student loans are genuinely worried that they’ll get paid back too quickly, and as a result charge a higher interest rate which leads to a larger discount rate. Because, and follow this, their goal isn’t to “get paid back.” Their goal is to achieve a consistent rate of return given a risk profile, with predictable cash flows given other institutional constraints. Getting paid back quickly is a risk to all this.

So, here’s my question: do taxpayers face this prepayment risk? If you saw a headline that said “student debtors are paying off their public student loans faster than expected,” would you be happy as a citizen, or furious?

I’d say happy. As a citizen, I’m not interested in earning a certain amount of profit consistently and with certainty over time, especially with the money paid back by student debtors, though I am as a private investor. If citizens were paid back more quickly, we could return the money to taxpayers, or use it for different purposes, or whatever. I certainly wouldn’t say “how are we going to continue to make the profit we were making?” as a citizen, though that’s exactly what I’d say if I were an investor in a private student loan portfolio. We could debate this -- perhaps you think the goal of the government here is to extract maximum financial profits no matter what. But it would be a political debate, divorced from the logic of financial market valuation.

This is not a trivial concern. Anyone with experience modeling a mortgage-backed security is very conscious of how greater prepayments impose massive risks and uncertainty. Normally the private sector goes to great lengths to imposes penalties and limitations on paying back loans early, though the government doesn’t do this for student loans. And since citizen do not face prepayment risks the way the private sector does, the discount rate for public funds, by definition, must be less than private funds when it come to student loans. Hence private sector discount rates aren’t a valid benchmark.

Note that the Financial Economist Roundtable (cited approvingly by Jason Delisle here) brings up prepayment risk specifically as something that fair value accounting is meant to capture. But the prepayment risk they specify -- which is “costly to lenders because prepayments are most likely to occur when market interest rates have decreased and loan values have appreciated,” reflecting the third issue noted above -- exists primarily because private capital has to reinvest money in a worse environment. Do taxpayers have to reinvest money they get from student loans? No, unlike private lenders, they don’t. The financial logic has broken down. (And don’t even get me started on using the private sector’s liquidity risk as a measure of the state’s.)

I have yet to see an argument addressing this head-on, much less a convincing one, but perhaps this post will change that.

Follow or contact the Rortybomb blog:
 
  

 

With President Obama’s student loan announcement in the news this week, an argument over whether or not taxpayers make a profit from student loans is no doubt close behind. We do make a profit using the government’s accounting tools, but there’s an argument that we should instead use “fair value accounting,” or the rate at which the private market adjusts for risk (here’s Jared Bernstein with a recent piece). By that standard, we see a much smaller profit.

Most people reference the CBO on this, though its numbers are entirely opaque. For instance, it says that it “relied mainly on data about the interest rates charged to borrowers in the private student loan market,” but there are gigantic adverse selection problems right out of the gate. The private student loan market is where the worst credit risks go, so of course they have higher rates. Is the CBO able to control for this? Nobody knows.

But beyond that, there’s a simple finance logic reason for why I don’t buy the argument for fair value accounting. I don’t believe that taxpayers face prepayment risk, and to whatever extent they do, it’s a matter of politics, not economics, that determines this.

The concept of prepayment risk might not make sense for people without some financial background, so let’s walk through it. If you lend money to a person you know, whether it’s a questionable relative or a partner who asks to hold some money until they get their check next week, you just want to get paid back in full. And, here’s the kicker, you are really happy if you get paid back sooner than you had expected. You want the money back.

Is that how private capital markets work? No. Let’s say you manage a large portfolio of private student loans. And let’s say you get a note at the office that they are being paid back more quickly than you had expected. Are you happy? No. You are not, and you might even get fired.

Why wouldn’t you be happy about getting paid back earlier?

1. You have to physically do something with the money you get paid back to get it earning more money again. No matter what you end up doing -- reinvesting it in student loans, putting it into a different set of assets, or just stuffing it in the equivalent of a mattress -- it takes time, energy, and resources, all of which cost money.

2. Often you want to set a certain time frame for repayment. Say you really want to have a cash flow at a certain date far off into the future because you are funding a pension or insurance liability. Getting paid back earlier doesn’t meet that goal, and it confuses your expectations for cash flows.

3. Crucially, you are likely to get paid back exactly when you don’t want the money. Say you locked in private student loans at a high interest rate, but then interest rates decline dramatically. At this point students will pay back their loans more quickly, which leaves you with more cash on hand at a time when interest rates are low.

This isn’t some partisan ideological point; it’s just basic finance. You can see it described in a CFA study guide under call and prepayment risk and reinvestment risk. (People more baller than I who actually did the CFA can nitpick specifics, but the general layout is correct.)

So private investors in student loans are genuinely worried that they’ll get paid back too quickly, and as a result charge a higher interest rate which leads to a larger discount rate. Because, and follow this, their goal isn’t to “get paid back.” Their goal is to achieve a consistent rate of return given a risk profile, with predictable cash flows given other institutional constraints. Getting paid back quickly is a risk to all this.

So, here’s my question: do taxpayers face this prepayment risk? If you saw a headline that said “student debtors are paying off their public student loans faster than expected,” would you be happy as a citizen, or furious?

I’d say happy. As a citizen, I’m not interested in earning a certain amount of profit consistently and with certainty over time, especially with the money paid back by student debtors, though I am as a private investor. If citizens were paid back more quickly, we could return the money to taxpayers, or use it for different purposes, or whatever. I certainly wouldn’t say “how are we going to continue to make the profit we were making?” as a citizen, though that’s exactly what I’d say if I were an investor in a private student loan portfolio. We could debate this -- perhaps you think the goal of the government here is to extract maximum financial profits no matter what. But it would be a political debate, divorced from the logic of financial market valuation.

This is not a trivial concern. Anyone with experience modeling a mortgage-backed security is very conscious of how greater prepayments impose massive risks and uncertainty. Normally the private sector goes to great lengths to imposes penalties and limitations on paying back loans early, though the government doesn’t do this for student loans. And since citizen do not face prepayment risks the way the private sector does, the discount rate for public funds, by definition, must be less than private funds when it come to student loans. Hence private sector discount rates aren’t a valid benchmark.

Note that the Financial Economist Roundtable (cited approvingly by Jason Delisle here) brings up prepayment risk specifically as something that fair value accounting is meant to capture. But the prepayment risk they specify -- which is “costly to lenders because prepayments are most likely to occur when market interest rates have decreased and loan values have appreciated,” reflecting the third issue noted above -- exists primarily because private capital has to reinvest money in a worse environment. Do taxpayers have to reinvest money they get from student loans? No, unlike private lenders, they don’t. The financial logic has broken down. (And don’t even get me started on using the private sector’s liquidity risk as a measure of the state’s.)

I have yet to see an argument addressing this head-on, much less a convincing one, but perhaps this post will change that.

Follow or contact the Rortybomb blog:
 
  

 

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Daily Digest - March 17: The Pacific Standard for Bad Deals

Mar 17, 2014Rachel Goldfarb

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On the Wrong Side of Globalization (NYT)

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On the Wrong Side of Globalization (NYT)

Roosevelt Institute Senior Fellow and Chief Economist Joseph Stiglitz argues that trade deals like the proposed Trans-Pacific Partnership create a race to the bottom for regulations, and exacerbate inequality.

The Great Corporate Cash-Hoarding Crisis (AJAM)

David Cay Johnston says that multinationals keeping their cash abroad instead of investing in their businesses or paying income taxes on it is what is keeping the U.S. from a real economic recovery.

10 Things Elizabeth Warren's Consumer Protection Agency Has Done for You (MoJo)

Erika Eichelberger lists the changes the Consumer Financial Protection Bureau has already pushed through since its creation in 2011, which affect homeowners, student loan holders, and anyone with a credit card.

Capping Public Service Loan Forgiveness at $57.5K Defeats Its Purpose (HuffPo)

People who use the PSLF program are trying to do good for the country, and according to Tim Lowden, this proposed cap would create a disincentive to entering these absolutely vital careers.

Income Gap, Meet the Longevity Gap (NYT)

Two U.S. counties, separated by only 350 miles, have life expectancies that differ as much as Sweden and Iraq. Annie Lowrey reports on how inequality is affecting the length of people's lives.

Paul Ryan’s Worst Nightmare: Here’s the Real Way to Cut Poverty in America (Salon)

Michael Lind thinks planning to avert future poverty is great, but we could reduce poverty today with a simple solution: increased government spending in the form of generous welfare and social insurance programs.

The Cost of Kale: How Foodie Trends Can Hurt Low-Income Families (Bitch Magazine)

Flat wages and rising food costs are only exasperated by food gentrification and trends, says Soleil Ho. From 2007 to 2012, wages remained stagnant, while the cost of feeding a family increased 18 percent.

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Daily Digest - March 10: Main Street Pays Rent to Wall Street

Mar 10, 2014Rachel Goldfarb

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Could a Wall Street Firm be Your Landlord? (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren points out the possibility that new rental-backed securities from Wall Street could pose a civil rights problem if they capitalize on communities of color.

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Could a Wall Street Firm be Your Landlord? (Melissa Harris-Perry)

Roosevelt Institute Fellow Dorian Warren points out the possibility that new rental-backed securities from Wall Street could pose a civil rights problem if they capitalize on communities of color.

US Postal Service Inspector General Proposes Launching Low-Fee Public Bank (Real News Network)

Postal banking would aim to help low-income Americans who are currently unbanked, says Roosevelt Institute Fellow Mike Konczal, without the predatory fees they would face at traditional banks.

The Real Story Behind the Detroit Pension Fight and What it Means to America's Future (Alternet)

Lynn Stuart Parramore speaks to Roosevelt Institute Senior Fellow Rob Johnson about the so-called pensions crisis. The key takeaway: cutting pensions is a choice, one that will cause harm for generations.

More on CBO and the Limits of Economic Analysis (On The Economy)

Jared Bernstein responds to a critique from Roosevelt Institute Senior Fellow Jeff Madrick, arguing that what needs to change isn't the Congressional Budget Office's analyses, but our lack of skepticism.

Unemployment in February Remains Elevated Across the Board (Working Economics)

Heidi Shierholz compares February's jobs report to pre-recession numbers, and argues that the sustained high unemployment across the board is proof that the jobs crisis comes from a lack of demand.

Why Americans Should Take August Off (The Nation)

Vacationing isn't a sign of laziness, writes Bryce Covert; it boosts spending and productivity, both of which would be great for the U.S. economy.

New on Next New Deal

What Les Misérables Can Teach Us About Paul Ryan's Poverty Plan

"Honest work, just reward" is a central conceit in GOP anti-poverty plans, but Nell Abernathy, Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative, says this ignores the realities of low-income work.

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Daily Digest - March 7: Holding Banks to a Higher Standard

Mar 7, 2014Rachel Goldfarb

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What's the Deal: How to Make the Financial System Safer for Everyone with Mike Konczal (YouTube)

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What's the Deal: How to Make the Financial System Safer for Everyone with Mike Konczal (YouTube)

Roosevelt Institute Fellow Mike Konczal explains why banks need higher capital standards to prevent another collapse and discusses the economic reform issues that the Roosevelt Institute will be working on throughout 2014.

Obama's Budget and the Politics of Poverty (To The Point)

Mike Konczal speaks with Warren Olney about how the parties aim to split the budget for anti-poverty programs. The GOP would increase funding for some programs, but at the cost of others.

Paul Ryan Accidentally Makes the Case Against Means-Testing (MSNBC)

When Paul Ryan brings up a child who feels unloved because he gets free lunch instead of a brown-bag lunch, Ned Resnikoff sees an opening for giving all students free lunch.

Together, New Haven Activists and Leaders Strike Back Against Wage Theft (In These Times)

For the first time, local police brought larceny charges against an employer who shortchanged his workers. Melinda Tuhus says these steps will help to protect low-wage workers, including undocumented workers.

Unions and Job Security (PolicyShop)

Matt Bruenig counters a recent argument that unions can't provide real job security anymore. He says the point isn't absolute job security anyway, but safety from firing without cause.

The Foreclosure Nightmare Isn’t Over Yet (MSNBC)

Suzy Khimm reports on one family's five-year fight against foreclosure in Maryland. Policies requiring mediation have kept them in limbo, as have the mortgage servicer's repeated runarounds.

Democrat Says CFTC's Low Budget 'Sucks' (The Hill)

Rep. Sam Farr (D-CA) says that the Commodity Futures Trading Commission's lack of sufficient funding could be very dangerous if it handicaps enforcement, reports Tim Devaney.

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Daily Digest - February 4: A Vision for the Opportunity Community

Feb 4, 2014Rachel Goldfarb

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Students Rethink How to Build Community (The Nation)

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Students Rethink How to Build Community (The Nation)

Roosevelt Institute | Campus Network Senior Fellow for Equal Justice Erik Lampmann explains how the Campus Network's new Rethinking Communities initiative, which is evaluating institutions like universities on their local impact, could build a more equitable economy for the future.

  • Roosevelt Take: Roosevelt Institute Associate Director of Networked Initiatives Alan Smith writes about the theory behind Rethinking Communities' focus on local economies.

Would the U.S. Postal Service Make a Better Banker for the Poor? (Bloomberg Businessweek)

Joshua Brustein takes up the question of postal banking as a method for the unbanked poor to avoid exploitative payday lenders and their ilk. He sees a future in which banks become worse at retail banking, which makes postal banking a solid possible alternative.

Banks Don’t Do Much Banking Anymore—and That’s a Serious Problem (Pacific Standard)

David Dayen writes about how "shadow banks," which include hedge funds, private equity firms, and the like, have taken a primary role in the lending industry as banks do less and less traditional banking. That's a big concern, because shadow banks are far less regulated and expand risk in the entire financial system.

State Could Be First In The Nation To Make Sure Workers Can Take A Vacation (ThinkProgress)

Bryce Covert reports that Washington lawmakers have proposed a bill that would mandate paid vacation for workers who put in at least 20 hours a week at employers with 25 or more employees. There's nothing like this anywhere else in the U.S.

Placed on Unpaid Leave, a Pregnant Employee Finds Hope in a New Law (NYT)

Rachel L. Swarns reports on one of the first cases invoking New York City's new Pregnant Workers Fairness Act. The law is meant to protect workers like Floralba Fernandez Espinal, who was placed on unpaid leave from her retail job when she brought a note from her obstetrician requesting accommodations.

New on Next New Deal

Obama and the GOP Present Two Very Different Paths to Opportunity for All

Roosevelt Institute Senior Fellow Richard Kirsch contrasts the messages presented by the president in the State of the Union with Rep. Cathy McMorris Rodgers’s official GOP response. Both focus on opportunity, but only one emphasizes the need for collective action.

Internet for the Public Interest Needs Protection

Roosevelt Institute | Campus Network member Areeba Kamal calls on the Federal Communications Commission to redefine Internet Service Providers as common carriers in the wake of a court decision that struck down net neutrality regulations.

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Daily Digest - December 11: Bipartisan Budgets Mean Everyone's A Little Unhappy

Dec 11, 2013Rachel Goldfarb

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There Are Six Big Arguments Against the Volcker Rule. Here’s Why They’re Wrong. (WaPo)

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There Are Six Big Arguments Against the Volcker Rule. Here’s Why They’re Wrong. (WaPo)

Roosevelt Institute Fellow Mike Konczal takes on some of the most common arguments against the Volcker Rule, which claim that the rule is either unnecessary or even counterproductive. In the process, he makes his own case for why the rule is in fact needed.

The Most Important Economic Stories of 2013—in 41 Graphs (The Atlantic)

Matthew O'Brien kicks off the end-of-year round-ups with a list of graphs and charts. Roosevelt Institute Fellow Mike Konczal's contribution shows the year's growth estimates from the Federal Reserve - evidence, Mike says, of a wasted year for returning to full employment.

U.S. Budget Agreement Eases Spending Cuts Over Two Years (Bloomberg)

Heidi Przybyla and Derek Wallbank explain the first bipartisan budget deal since 1986. The deal doesn't extend unemployment benefits and it saves money by increasing federal employees' pension contributions, but it's a deal, and it's likely to prevent another government shutdown.

Boeing Looks Around, and a State Worries (NYT)

Kirk Johnson looks at Boeing's options after the machinist union's rejection of a new contract that would have frozen pensions and harmed future union members. State after state is courting Boeing with special deals, even though it means passing up tax revenue from a massive airplane factory.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Richard Kirsch explains that the Machinists Local 751 rejected Boeing's proposed contract to take a stand for what middle class jobs should look like today and into the future.

Is Service Work Today Worse Than Being a Household Servant? (AJAM)

David Cay Johnston poses this fascinating question along with a comparison of compensation for household cooks in the 1910s and modern fast-food cooks. Few would want to return to the Gilded Age, but many service-sector jobs had more security and stability then.

How The Residents Of SeaTac’s Lives Will Change With A $15 Minimum Wage (ThinkProgress)

Bryce Covert speaks to workers at the airport in SeaTac, Washington who will be getting a raise on January 1 thanks to the town's new minimum wage increase. Even as they plan how they will use the money, they are just as excited for the provision of the new law guaranteeing paid sick leave.

Why Every City Needs Its Own Minimum Wage (The Atlantic Cities)

Richard Florida explains an interesting model for calculating local minimum wages based on a region's median wage. He argues that a minimum wage between 50 and 60 percent of the regional median wage would be a better reflection of local cost of living.

New on Next New Deal

Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits

Nell Abernathy, Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative, lays out the economic argument for maintaining unemployment insurance almost entirely in quotes from conservatives, demonstrating that this isn't only a progressive cause.

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Daily Digest - December 9: Stepping Up When Congress Won't Raise the Wage

Dec 9, 2013Rachel Goldfarb

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The Fight for Fair Wages (All In With Chris Hayes)

Roosevelt Institute Fellow Dorian Warren discusses the possibility of a minimum wage increase, and whether Congress will do anything about it. Even if Congress won't act, he's excited by the cities and states that are pushing ahead of higher wages already.

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The Fight for Fair Wages (All In With Chris Hayes)

Roosevelt Institute Fellow Dorian Warren discusses the possibility of a minimum wage increase, and whether Congress will do anything about it. Even if Congress won't act, he's excited by the cities and states that are pushing ahead of higher wages already.

The Volcker Rule is Nearly Finished. Here’s How We’ll Know if it’s Any Good. (WaPo)

Roosevelt Institute Fellow Mike Konczal looks at key areas that will indicate whether the Volcker Rule is strong enough to regulate banks as intended. He emphasizes enforcement, since this rule aims to cause dramatic cultural and institutional change on Wall Street.

What is Deficit Mania Doing on the News Pages? (MoJo)

Kevin Drum points out that when reporters take for granted that Congress should prioritize deficit reduction above all else, they aren't doing their job. There's another side to this story, which considers the unprecedented nature of deficit cuts in a recession.

Wanted: More Unemployment (NYT)

Binyamin Appelbaum says that this month's job report isn't anything to be happy about. Since labor force participation has stayed basically stagnant while the unemployment rate drops, we're actually seeing people drop out of the labor force entirely.

Yes, McDonald's Can Do Better (TAP)

Catherine Ruetschlin writes about a new report she wrote with Amy Traub, published by Demos, which shows the math for how Wal-Mart and other low-wage employers could raise wages without passing on costs to consumers.

‘From Bean to Cup,’ Starbucks Labor Action Heats Up (In These Times)

Michelle Chen reports on supply chain-wide labor activism at Starbucks, where baristas are joining in solidarity with factory workers who produce their cups. The factory is pushing to allow temp workers at the factory, which would cut union negotiating power.

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Daily Digest - November 13: Senator Warren Would've Voted For Dodd-Frank, And Then Some

Nov 13, 2013Rachel Goldfarb

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Elizabeth Warren vs. the Democratic Elites (All In With Chris Hayes)

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Elizabeth Warren vs. the Democratic Elites (All In With Chris Hayes)

Chris Hayes discusses Senator Warren's keynote at a Roosevelt Institute and Americans for Financial Reform conference on financial reform yesterday. He argues that she needs to convince the rest of the Democrats to adopt her views of the banking industry.

  • Roosevelt Take: Senator Warren's speech aired live on C-SPAN 2, and you can watch the archived video here.

Elizabeth Warren’s Populist Insurgency Enters Next Phase (Salon)

David Dayen looks at the new report on financial reform from the Roosevelt Institute and Americans for Financial Reform. He says the proposals aren't just about regulations, but about what economy we want for our citizens.

  • Roosevelt Take: You can read the report, "An Unfinished Mission: Making Wall Street Work For Us," here.

Gary Gensler's Successor Has His Work Cut Out for Him (Bloomberg Businessweek)

Matthew Philips thinks that Timothy Massad, who has been nominated to be the next chairman of the Commodity Futures Trading Commission, is well equipped to take on the difficult challenge of enforcing the regulations Gary Gensler pushed through.

Yellen’s Challenge at the Fed: Speaking Persuasively to Investors (NYT)

Binyamin Appelbaum suggests that Janet Yellen's work begins this week with her confirmation hearings. As someone who has pushed the Fed to more clearly articulate its plans, she'll need to start doing just that in front of the Senate Banking Committee.

Two Fed Officials Say Aggressive Policy Action Still Needed (Reuters)

Jonathan Spicer and David Bailey report on statements by the Presidents of the Federal Reserve Banks of Atlanta and Minneapolis which emphasize the need for full employment. Both think that the Fed needs to retain accommodative policies for now.

Occupy Wall Street Activists Buy $15m of Americans' Personal Debt (The Guardian)

Adam Gabbatt explains how the Rolling Jubilee managed to eliminate so much medical debt so quickly. The secondary debt market sells debts for much less than the amount owed, which meant the program was able to have a much larger impact than planned.

The Government’s Human Price Scanners (WaPo)

Emily Wax-Thibodeaux reports on the work of "economic assistants" at the Bureau of Labor and Statistics, who travel the country to record the prices of goods. By recording every detail, like differences in vet fees at night, these relatively unknown workers help to create the Consumer Price Index.

New on Next New Deal

What Do the Millennials Want From the Affordable Care Act?

Roosevelt Institute | Campus Network Senior Fellow for Health Care Anisha Hedge says that Millennials aren't interested in the ultra-partisan arguments for or against the ACA. They're more interested in how the law works, and how they can get health insurance.

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