The Agenda

Today’s Policy Agenda: Health Care Is Still the Talk of the Campaign Trail

Health care is still the talk of the campaign trail.

In a New York Times story this weekend by Jackie Calmes, she included this chart breaking down 2014 campaign ads by subject matter:

While Calmes focuses on the lack of emphasis on foreign relations in a time of escalating crises, another interesting finding is the extent to which the health-care issue is still dominating the airwaves and the debate between congressional candidates. Ross Douthat has commented before that the health-care debate is nowhere near finished because we are “in a society that’s growing older, consuming more care, and (especially if current secularizing trends persist) becoming more and more invested in postponing death.” And it’s true that Obamacare continues to be unpopular across the country. 

One worry, though, would be that at some point, Republicans’ negative messaging on the issue will see diminishing returns, and they need some positive ideas of their own. That is happening, if not incredibly rapidly: Scholars like Jim Capretta have laid the intellectual framework for what a replacement, market-based plan would like, and Senators Burr, Coburn, and Hatch have put forward the CARE Act to codify those principles.

Economic dynamism has disappeared.

In a Wall Street Journal blog post, Robert Litan of the Brookings Institution explains a new study on economic dynamism:

As baby boomers continue to retire, not only is the population of the United States growing older but so is the structure of our economy.

In a study just published on the Brookings Institution’s Web site, Ian Hathaway and I found that the share of mature firms, or those at least 16 years old, rose 50 percentage points between 1992 and 2011, from 23% to 34% of all firms in the U.S. economy. Not surprisingly, the share of all private-sector workers employed in such mature firms rose over the same time, from 60% to 72%.

Older firms may have more experience, but they are less likely to develop and commercialize the path-breaking innovations more characteristic of younger firms (think of the car, the airplane, air-conditioning, computers, Internet search). Yet Ian and I found that one of the main reasons for the aging firm structure is the declining share of not only startups but firms of all age groups short of the 16-year mark.

This Brookings study suggests that we’ve lost our entrepreneurial culture, which is a big part of what drives productivity increases. While the aging curve’s demographic shifts are more or less fixed at this point, Jim Pethokoukis writes often about other ways we could avoid stifling startups, like eliminating regulations that shield incumbents from competition and ending “too big to fail,” which distorts the financial system in a way that hurts small startups that need loans.

Again, Friday’s jobs report was decent but . . . low-wage workers aren’t getting the hours they need. Is Obamacare to blame?

For the Upshot, Neil Irwin breaks down last Friday’s jobs report. He writes:

The new jobs numbers are a mild disappointment, with emphasis on the mild. Yes, the total of 209,000 jobs reported to have been added to United States payrolls was a bit below the 230,000 economists were expecting, and well below the revised 298,000 of June. And yes, the unemployment rate ticked up to 6.2 percent from 6.1 percent.

But those numbers are hardly the stuff of catastrophe, and the fine print Friday was more positive. Revisions to previous months’ job growth numbers were slightly positive, for example, and the unemployment rate rose because some 329,000 people joined the labor force, driving up the labor force participation rate a bit.

The result: Nothing about these numbers should change your basic assessment of how the economy is doing, unless you had some outlandish view of how the economy was doing to begin with. Gradual, steady expansion in the job market, and the economy more broadly, continues apace…

Add it all up, and average weekly earnings rose only a trivial amount, up 35 cents a week, or four one-hundredths of a percent. Inflation data for July has not been published yet, but based on recent readings, the 2 percent gain in private-sector hourly pay over the last 12 months is barely enough to keep up with rising prices. A new report Friday, for example, showed a 1.7 percent rise in consumer prices for the 12 months ended in June.

The uptick in labor-force participation, however tiny it is, is encouraging, since the departure of a number of of prime-age males from the broader job market has been one of them most devastating effects of the recession.

But there’s another trend going on that isn’t necessarily showing up in the BLS data, which looks at the overall labor market and individual industries. The state of the job market looks considerably worse when looking at the low-wage job market, it turns out. Look at this chart tweeted by Jed Graham of IBD:

In some sense, Graham’s work suggests there’s really two job markets: one of high-skill workers that’s been recovering quite nicely and one that’s still seeing hours and wages cut. This isn’t surprising given the rise of globalization and technological change, which, however beneficial, don’t leave every person in the United States better off in the short term. Graham also argues that the increases in the cost of hiring created by the Affordable Care Act are causing the weak performance of the low-wage job market.


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