January 24, 2021

Bucks: Continuing the Conversation on Paid Parental Leave

Dozens of readers wrote to us with their company’s parental leave polices after reading the Your Money column, which discussed how American public and private organizations offer the least generous paid leave policies in the world.

Some readers were stunned that even the largest companies offered so little paid time off, especially during a newborn’s critical early months when nursing can benefit both mother and child. Several Canadian readers, whose a country has a more liberal policy, chimed in with their thoughts and went as far as calling the American way barbaric. Other readers agonized about how to make sure their infants will be cared for when they return to work, while others viewed child care as the individual parent’s problem.

So we’ve decided to begin a progress report that will highlight employers’ paid parental leave policies (similar to the way we keep track of companies that equalize the cost of health insurance for same-sex couples). We started with responses we received from some of the largest companies, which we’ve listed in a chart.

But we’d like to expand the chart over time so that it becomes a repository of sorts, highlighting the most and least generous policies. So please tell us about your own employer’s policy with the form below, or in the comment section.

Here’s a sampling of recent comments from readers:

Christine, from Toronto, wrote:

From where we stand in Canada, the lack of maternity leave makes Americans look like barbarians. Here we pay a small portion of our pay into unemployment insurance and after a child is born the mother can take up to a year off and earn up to 55% of her pay up to a maximum amount of about $1500 the month. The father can take a portion of this leave instead of the mother if necessary. Guess what — people are still having on average of 2 children per family and our economy is not falling apart…

AnnieOmaha, NE, said:

As one can see by many comments here, this country is dysfunctional when it comes to working and having families. Yes, new parents should be given generous family leave packages, their children are someday going to drive our economy, funding Social Security, Medicare, Medicaid (or what ever form of benefits exist). It’s fine if you don’t want to have children, but who do you think will replace retiring people? The sad, bad joke is the notion, put forward by many conservatives, that the USA cares about “family values.”

And Criordan, from Brooklyn, wrote:

The Walt Disney Company: FMLA unpaid leave only. Zero paid leave. Ironic for a company whose main customer base are families with children.

You can submit your employer’s policy here:

Article source: http://bucks.blogs.nytimes.com/2013/02/25/continuing-the-conversation-on-paid-parental-leave/?partner=rss&emc=rss

Tentative Accord Reached to Raise Taxes on Wealthy

While the Senate moved toward a vote on legislation to avoid the so-called fiscal cliff, the House was not going to consider any deal until Tuesday afternoon at the earliest, meaning that a combination of tax increases and spending cuts would go into effect as 2013 began. If Congress acts quickly and sends the legislation to President Obama, the economic impact could still be very limited.

Under the agreement, tax rates would jump to 39.6 percent from 35 percent for individual incomes over $400,000 and couples over $450,000, while tax deductions and credits would start phasing out on incomes as low as $250,000, a clear win for President Obama, who campaigned on higher taxes for the wealthy.

“Just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans,” Mr. Obama said at a hastily arranged news briefing, with middle-income onlookers cheering behind him. “Obviously, the agreement that’s currently being discussed would raise those rates and raise them permanently.”

Democrats also secured a full year’s extension of unemployment insurance without strings attached and without offsetting spending cuts, a $30 billion cost.

As negotiators tied up the last points of dispute, officials said that the two top Democrats on Capitol Hill — Senator Harry Reid of Nevada and Representative Nancy Pelosi of California — had signed off on the agreement. In an effort to win over other Democrats uneasy with the proposal, Vice President Joseph R. Biden Jr., who had bargained directly with Republican leaders, traveled to the Capitol on Monday night for a 90-minute meeting with his former Senate colleagues.

“I feel very, very good,” Mr. Biden said after the meeting. “I think we’ll get a very good vote.”

In one final piece of the puzzle, negotiators agreed to put off $110 billion in across-the-board cuts to military and domestic programs for two months while broader deficit reduction talks continue. Those cuts begin to go into force on Wednesday, and that deadline, too, might be missed before Congress approves the legislation.

To secure votes, Mr. Reid also told Democrats the legislation would cancel a pending congressional pay raise — putting opponents in the politically difficult position of supporting a raise — and extend an expiring dairy policy that would have seen the price of milk double in some parts of the country.

Anticipating Senate approval of the deal, Speaker John A. Boehner late Monday said the House would “honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation.”

The nature of the deal ensured that the running war between the White House and Congressional Republicans on spending and taxes would continue at least until the spring. Treasury Secretary Timothy F. Geithner formally notified Congress that the government reached its statutory borrowing limit on New Year’s Eve. Through some creative accounting tricks, the Treasury Department can put off action for perhaps two months, but Congress must act to keep the government from defaulting just when the “pause” on pending cuts is up. Then in late March, a law financing the government expires.

And the new deal does nothing to address the big issues that Mr. Obama and Mr. Boehner hoped to deal with in their failed “grand bargain” talks two weeks ago: booming entitlement spending and a tax code so complex that few defend it anymore.

Jennifer Steinhauer and Robert Pear contributed reporting.

Article source: http://www.nytimes.com/2013/01/01/us/politics/tentative-deal-is-reached-to-raise-taxes-on-the-wealthy.html?partner=rss&emc=rss

Economix Blog: Nancy Folbre: A Real Right to Work

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

All Americans willing and able to work have a right to paid employment. If the private sector can’t generate sufficient jobs, the public sector should provide them.

Today’s Economist

Perspectives from expert contributors.

This definition of “right to work” obviously differs from the one that Republican legislators in Michigan deployed when they passed a new law absolving workers from the responsibility of paying union fees even if they gain contract benefits from them. But perhaps their actions will dramatize the need to challenge their framing and reclaim the genuine meaning of the phrase.

Most of us live in a world in which paid employment is the only avenue to economic self-sufficiency. Without it, families maintained by working-age adults are largely dependent on the kindness of strangers, otherwise known as extended unemployment insurance and food stamps. Yet, for more than four years, this nation has tolerated levels of unemployment that have essentially made it impossible for most of those seeking paid employment to find it, with a ratio of unemployed workers to job openings of more than three to one.

Some Republicans have long insisted that many of the jobless, relaxing in a billowy social safety net, simply aren’t trying hard enough to find a job. My fellow Economix contributor Casey Mulligan makes a similar argument when he contends that the poverty rate should have risen ­between 2007 and 2011, but didn’t ­because public assistance was neutralizing the effect of job loss and undermining incentives to work.


But Shawn Fremstad of the Center for Economic Policy and Research challenges that methodology, pointing to measurements showing that the poverty rate did rise significantly among working-age adults over this period.

Further, increased unemployment contributed to economic stress across most of the social spectrum, not just among the poor and near poor. Between 2007 and 2011, average household income declined in all four bottom quintiles.

Expansion of unemployment insurance and means-tested benefits are not the best solution to persistently high unemployment. As John Stuart Mill emphasized many years ago, those who are capable of supporting themselves should not rely on the habitual aid of others. But Mill went on to explain why such aid is sometimes necessary:

Energy and self-dependence are, however, liable to be impaired by the absence of help, as well as by its excess. It is even more fatal to exertion to have no hope of succeeding by it, than to be assured of succeeding without it. When the condition of any one is so disastrous that his energies are paralyzed by discouragement, assistance is a tonic, not a sedative: it braces instead of deadening the active faculties.

Paralysis by discouragement is a pretty good description of a growing segment of the United States population. In general, the higher the unemployment rate in a state, the higher the percentage of discouraged workers (those who did not search for work in the previous four weeks, for the specific reason that they believed no jobs were available for them) and the higher the percentage of marginally attached workers (those who did not search for work in the previous four weeks, for any reason).

Labor force participation has declined significantly since the last recession began, especially among less-educated men.

The best way to encourage American workers, increase family income and reduce public spending on unemployment insurance and food stamps is to create more jobs. The simplest way to create more jobs is to increase public-sector employment. The federal government could also invest in programs to encourage small businesses to hire workers to improve our aging physical infrastructure (including roads and bridges), our social infrastructure (including early childhood education and home services for the elderly) and our environmental sustainability (including improved energy efficiency and installation of the solar voltaic technologies that Germany now heavily relies upon).

All these investments offer a high social rate of return that private businesses can’t easily capture on their own.

By contrast, there is no evidence that lower tax rates for the rich promote either job creation or economic growth (a detailed study on this topic by the Congressional Research Service was withdrawn as a direct result of Republican protest).

President Obama and Congressional Democrats have called for more stimulus spending aimed at job creation, only to meet tremendous opposition from Republicans. Preoccupation with deficit reduction has crowded out discussion of job creation. Public employment grew steadily during the previous Bush administration. During the Obama administration, however, it has significantly declined.

Now, it appears that any remaining concern with job creation may be thrown over the fiscal cliff.

The next time someone with a comfortable paycheck tells you that American workers no longer have a work ethic, please explain to them that right now, there’s not enough paid work to go around.

Which is why we should fight for a real right to work.

Article source: http://economix.blogs.nytimes.com/2012/12/17/a-real-right-to-work/?partner=rss&emc=rss

Geithner Offers New Fiscal Proposal to Boehner

The proposal, loaded with Democratic priorities and short on detailed spending cuts, was likely to meet strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced $400 billion in savings from Medicare and other entitlements, to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might well be outnumbered by upfront spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.

“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”

Beneath the outward shows of frustration and rancor, Democrats said a deal could still come before hundreds of billions of dollars in automatic tax increases and spending cuts threaten the fragile economy next year. Senator Charles E. Schumer, Democrat of New York, pointed to conservative Republicans who have publicly suggested that the House quickly pass Senate Democratic legislation extending the expiring tax cuts for income below $250,000.

“All you have to do is just listen to what’s happening out there, and you realize there is progress,” he said.

But publicly, the leaders of neither side were giving an inch. And Republican aides said the details of the White House proposal pointed to a re-elected president who believes he can bully Congress.

“They took a step backward, moving away from consensus and significantly closer to the cliff,” said Senator Mitch McConnell of Kentucky, the Republican leader.

The president’s proposal does stick to the broad framework of the deal Mr. Boehner wants: an upfront deficit-reduction “down payment” that would serve to cancel the automatic tax increases and spending cuts while still signaling seriousness on the deficit, followed by a second stage when Congress works next year on overhauling the tax code and entitlements to secure more deficit reduction.

But the details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year. Tax rates would go up for higher-income earners, as in the Senate bill, but Mr. Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve. He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at. The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent.

Administration negotiators also want the initial stage to include an extension to the payroll tax cut or an equivalent policy aimed at working-class families, an extension of a business tax credit for investments and the extension of a number of expiring business tax credits, like the research and development tax credit.

To ensure that there are no more crises like last year’s impasse, Mr. Geithner proposed permanently ending Congressional purview over the federal borrowing limit, Republican aides said. He said that Congress could be allowed to pass a resolution blocking an increase in the debt limit, but that the president would be able to veto that resolution. Only if two-thirds of lawmakers overrode that veto could Congress block a higher borrowing limit.

Article source: http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html?partner=rss&emc=rss

It’s the Economy: The Other Reason Europe Is Going Broke

But G.D.P. per capita (an insufficient indicator, but one most economists use) in the U.S. is nearly 50 percent higher than it is in Europe. Even Europe’s best-performing large country, Germany, is about 20 percent poorer than the U.S. on a per-person basis (and both countries have roughly 15 percent of their populations living below the poverty line). While Norway and Sweden are richer than the U.S., on average, they are more comparable to wealthy American microeconomies like Washington, D.C., or parts of Connecticut — both of which are actually considerably wealthier. A reporter in Greece once complained after I compared her country to Mississippi, America’s poorest state. She’s right: the comparison isn’t fair. The average Mississippian is richer than the average Greek.

Europe is undergoing not one but two simultaneous economic crises. The first is a rapid, obvious one — all about sovereign debt, a collapsing currency and austerity measures — that we hear about all the time. The second is insidious but more important. After decades of trying, Europe as a whole still can’t quite figure out how to be flexible enough to compete in the global economy.

The story of how Europe lost its flexibility can be told in three stages. First came rapid growth that economists called “convergence.” With a lot of help from the U.S., Europe developed massive industrial capacity in the postwar years. Many of Western Europe’s economies grew so fast that governments could easily afford health and unemployment insurance and other benefits that, by U.S. standards, were remarkably generous. Most observers expected that its wealth would soon “converge” upon that of the U.S.

But the European economy did not recover from the worldwide oil shock of 1973 nearly as quickly as its American counterpart. For more than 25 years (phase two), as its population aged, Europe’s economy grew more slowly than the United States’. Its active capitals belied bloated businesses that were losing contracts to U.S. competitors or growing suburban ghettos filled with a permanently unemployed underclass.

Even its major successes — like Germany’s impressive machine-tool and automotive-industrial sectors — were refinements of old ways of making money rather than innovations in new industries. Western Europe played a remarkably small role in the computer and Internet revolutions. (On the other hand, Estonia, with less than two million people, gave the world Skype.) When the economic forecasts were written during Europe’s doldrums, the Continent looked destined to become a decrepit old-age home with too few young people around to pay the bills.

Enter phase three: what might be called the Principled Compromise. Increasingly since the mid-1990s, European leaders have been trying to figure out how to keep up with this new globalized digital economy. To compete with the U.S., China, India and Brazil, Europe focused more intently on broadening its internal market. It’s easier for businesses to stay competitive when there are a few hundred million potential customers using the same currency and not requiring customs forms.

To many American eyes, however, Europe’s creation of a common market and currency was only half the battle — and probably the less important half. It’s a core view of U.S. business that success requires a degree of destruction. If workers can’t be fired, companies can’t drop unproductive businesses and invest in more promising new ones. If workers know they’ll get generous government benefits no matter what, so the theory goes, they’ll get lazy.

Article source: http://feeds.nytimes.com/click.phdo?i=f064184e859232c1cbac361690545581

Economix Blog: Home Prices Are Down, but Rentals Are Rising

The housing market is gasping for air, and home prices are down to 2003 levels, according to the SP/Case-Shiller Home Price Indices.

But that does not mean all housing is cheap. Rents are actually rising, according to the latest inflation data from the Labor Department. Last year, rents were essentially flat, but they have been rising steadily since the end of 2010. In August, rents paid for primary residences were up 0.4 percent compared with July, and 2 percent above a year earlier.

Bureau of Labor Statistics and IHS Global InsightIndex of rents paid for primary residences using 1982-1984 as a base.

The reason is simply a matter of increasing demand for rental properties. In a better economy, the people who are now renting might be looking to buy a house. Many people do not have the financial capacity to get a mortgage. Interest rates are at historic lows, but lenders are making prospective borrowers go through ever more hoops to qualify for loans. People who are insecure about their jobs do not want to commit to mortgages, and those who are scraping by on unemployment insurance or savings certainly cannot buy a house.

“A lot of people are really changing their attitudes toward housing,” said Chris G. Christopher Jr.,
senior principal economist at HIS Global Insight. “So there is more renting going on.” With prices down, he said, housing “doesn’t seem like a very good investment.”

Article source: http://feeds.nytimes.com/click.phdo?i=beaf2750d6de39f22ec8272993b4a597

Payrolls Show Strong Growth but Jobless Rate Rises

Employers added 244,000 jobs in April, more than economists had forecast and an increase from 221,000 in March, the government reported on Friday.

As a measure of how far uphill the economic climb remains, though, the unemployment rate actually nudged up to 9 percent, from 8.8 percent a month earlier. The Labor Department uses a different survey, of households rather than employers, to calculate that rate, which tends to be volatile.

The monthly snapshot of the job market showed that government workers continued to receive pink slips, but the private sector more than picked up the slack, adding 268,000 jobs in April, the most in five years. Hiring was spread broadly, with manufacturing, retail, health care, and leisure and hospitality industries all expanding.

Including some revisions to reflect more hiring in February and March, the nation’s employers have added an average of 192,000 jobs a month this year, compared with just 78,000 monthly last year.

“This is very encouraging for the sustainability of the recovery,” said James F. O’Sullivan, chief economist at MF Global.

Another brighter sign was among the long-term unemployed. The number of people out of work for more than six months eased to 5.8 million, its lowest level since October 2009. Still, 13.7 million people remained without work and were still looking.

Earlier in the week, a number of reports indicated that the economy had stumbled in the days since the Labor Department compiled its survey. The biggest worry was a rise in new claims for unemployment insurance, and a survey of companies showed a slowdown in new orders and hiring.

Bernard Baumohl, chief global economist with the Economic Outlook Group, has spent most of the last year as a strong optimist, but sounds increasingly cautious.

“There are just too many economic indicators that point to an economy that has been slowing,” said Mr. Baumohl, noting last week’s report that output slumped to 1.8 percent in the first quarter of the year. “It almost looks like a bull that’s charging through a crowd, utterly impervious to what’s in front of it.

“Regretfully, I think the pace of hiring will slow down in May and June,” he added. “I think in this case the job market is a lagging indicator, and I think it will probably fall off as well, as more signs point to a weakening economy.”

President Obama, speaking at Allison Transmission, a maker of transmissions that is increasingly moving into hybrid products, hailed the job numbers while acknowledging headwinds from high gas prices and interruptions caused by the earthquake in Japan. “There are always going to be some ups and downs like these as we come out of a recession,” he said. “But the fact is that we are still making progress.

“And that proves how resilient the American economy is, and how resilient the American worker is, and that we can take a hit and we can keep on going forward.” 

Manufacturing has been one of the surprising pillars of the recovery, adding back 250,000 of the 2.3 million jobs it lost during the recession. In April, it grew by 29,000 jobs, up from 22,000 in March.

A weakened dollar has helped exports, and companies are describing an increase in demand at home. Quality Float Works, a family-owned company that makes floating metal balls and valves in Schaumburg, Ill., shrank by six workers during the recession. Since the beginning of the year, it has hired two people and aims to hire two more.

Jason W. Speer, vice president and general manager, said that although high prices for energy and raw materials had temporarily made the firm hesitate, “we’ve been getting long-term commitments from our customers, and we have felt fairly comfortable.” He added: “I can easily see hiring two or more before the end of the year, if we have no more bumps.”

Economists who saw signs of lasting momentum said they did not believe a few hiccups in coming months would derail the recovery this time. “I do view this impending softness as a temporary response to the rise in oil prices,” said Ian Shepherdson, chief United States economist at the High Frequency Economics research firm, “not a fundamental reversal.”

Austan Goolsbee, the chairman of the president’s Council of Economic Advisers, said several signs pointed to continuing strength in hiring, including slower productivity gains after a fairly sharp run-up. After companies squeeze all they can out of their existing workers, they need to add more. “This is clearly the track you want to be on to plow your way,” Mr. Goolsbee said.

Average hourly earnings increased by 3 cents, to $22.95, and the average workweek was flat at 34.3 hours. Heather Boushey, senior economist at the liberal Center for American Progress, said she was concerned that neither wages nor hours were moving strongly upward, as would be expected if companies were wringing all they could out of their existing workers. “We’re not out of the woods,” she said. “As much as I think it would be such a relief to say, ‘Hey, this is the out-of-the-woods report.’ ”

Among job seekers, the least educated, African-Americans and teenagers continue to have the highest unemployment rates. For workers in the 55-and-over age group, the average duration of unemployment spiked to 53.6 weeks, compared with 39.4 weeks for those younger.

A weak area was government — local, state and federal — where the work force contracted by 24,000 jobs. Construction added 5,000 jobs, though mostly because of gains in heavy and civil engineering, probably helped by the remaining federal stimulus dollars devoted to infrastructure projects like highways. Most other segments of construction, including residential, shrank.

Temporary help, which has been strong, lost 2,300 jobs. Executives of two temporary services companies, Tig Gilliam, chief executive of the Adecco Group North America, and Jorge Perez, senior vice president of North America for Manpower, said companies that had relied on contract workers early in the recovery were now hiring.

Amanda Fisher, who was laid off from her hostess job at a high-end restaurant in New York City last October, applied for work with Manpower in November. After a couple of jobs in retail, she took an assignment as a customer service representative at a furniture company. Last month, the company offered her a full-time job with benefits.

“I have a real grown-up job,” said Ms. Fisher, 21, who said she spent eight months out of work and was intermittently homeless early in the recession. Several of her friends, she said, were still “in terrible situations.”

This article has been revised to reflect the following correction:

Correction: May 6, 2011

Because of an editing error, an earlier version of this article misstated, in one reference, the reason for the increase in the unemployment rate. As the article noted elsewhere, the rate was based on a household survey, which showed a decline in employment; it did not reflect an increase in the number of job seekers.

Article source: http://feeds.nytimes.com/click.phdo?i=401951b15ceaa4961e06563700031680

Most States Seen Raising Jobless Tax on Businesses

Unemployment taxes remain low by historical standards: the survey, by the National Association of State Workforce Agencies, found that states have effectively cut the unemployment tax rate on businesses by 64 percent since the unemployment program began collecting taxes from employers in 1938.

The stubbornly high unemployment that has upended the lives of millions of Americans has also depleted the unemployment trust funds of most states: 32 of them owe the federal government more than $48.3 billion that they borrowed to continue paying jobless benefits.

Unless Congress acts, that money will have to be repaid — with interest. The survey found that seven states were thinking about borrowing from the private sector to repay the loans.

Some analysts say that states kept unemployment taxes too low during boom years, so their trust funds were ill-prepared to weather the downturn. Now states find themselves forced to raise taxes on employers just as they need them to create jobs, and to consider cutting benefits while huge numbers of people are relying on them to survive.

Richard A. Hobbie, the executive director of the association of work force agencies, said the survey found that states would collect an average of 16.5 percent more in unemployment insurance taxes this year than they did last year.

The survey did not measure reductions to benefits. Michigan recently decided to pay only 20 weeks of jobless benefits, down from the 26 weeks that most states pay, and other states are following its lead. (The federal government pays for extended benefits after the state benefits run out.) Other states are capping or reducing the amount of money they pay in benefits.

George Wentworth, a senior staff lawyer for the National Employment Law Project, said an unusually large number of states were contemplating benefit cuts. “A number of state legislatures are looking at reducing benefits as one of the ways to try to restore solvency, even though in most states it’s not going to get you there,” he said. “It really erodes the stimulus aspect of the program, and it undermines its purpose, which is to provide workers with a partial wage replacement that they can manage on until they find another job.”

Article source: http://feeds.nytimes.com/click.phdo?i=7dc745d0a691b3e00c173b1da544dc88

Economix: The Dependence Economy

Over the weekend I attended a talk by Credit Suisse’s chief economist, Neal Soss, on the structural and cyclical challenges facing the economy. The cheekily titled chart below — showing how much more dependent Americans have become on government money, including in many cases Tea Partiers — is taken from his presentation:

transfer payments as a share of personal incomeSource: Bureau of Economic Analysis, Credit Suisse

The red line shows what share of personal income comes from wages — that is, what Americans earn from working. The blue line shows what share comes from transfer payments, which are made to individuals, usually by the federal government, through social benefit programs like unemployment insurance, disability insurance and Social Security. (Note that the two lines use different scales, shown on the vertical axes, and that the scale for wages does not start at zero.)

As you can see, the share of income that Americans earn by working has been falling, from more than two-thirds of their income in the mid-1950s to just over half of their income today. Meanwhile, they have been growing more and more dependent on money from social benefits programs, growing from about 4 percent in the mid-’50s to about 18 percent in February 2011.

Certainly part of the reason Americans have been getting more dependent on government money is that the job market is so poor. Unable to find work, many Americans are getting most, if not all, of their income from unemployment benefits.

But the lousy job market accounts only for the spike at the end of the blue line (and likewise the steep slide at the end of the red line), where the numbers correspond with the Great Recession and its aftermath. The chart shows that the overall trends long predate the financial crisis.

These underlying trends are partly because of demographic changes; an aging populace means that an ever-smaller share of Americans are working, and so a larger share are receiving Social Security benefits and Medicare, which is also getting more expensive. Policy changes, more Americans’ going on disability and growing inequality, which in some cases may be leaving more Americans on the dole, are also likely contributing to the growing Dependence Economy.

Whatever the causes, these  trends are not infinitely sustainable. The money for transfer payments has to be transferred from somewhere, after all — and if not from other people’s wages, then from China and other foreign creditors. But foreign creditors won’t foot the bill forever without an exit strategy.

Article source: http://feeds.nytimes.com/click.phdo?i=7ec3135d0a87534948f24991d64066fa