Wednesday , February 22 2017
Home / Jared Bernstein: On the economy / A look at a few recent articles that caught our attention: immigration, SNAP, ACA repeal.

A look at a few recent articles that caught our attention: immigration, SNAP, ACA repeal.

Summary:
First, Eduardo Porter of the NYT wrote a controversial piece about the negative impacts of immigration (not Porter’s view–he’s reporting, not endorsing). I’ll have a lot more to say about the research in the piece, but to put it mildly, I’m unconvinced. The piece reports on research suggesting the increase in low-skill immigration has put downward pressure on productivity growth, by lowering the skill level of the workforce. This immediately triggered my BS meter, as no one really knows what makes productivity growth go up and down. Given the sharp slowdown in this key variable in recent years–which really is a problem–our ignorance enables people to plug in the thing they don’t like as the cause. Neither does the pattern of immigrant flows make much sense in this regard, at least from

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First, Eduardo Porter of the NYT wrote a controversial piece about the negative impacts of immigration (not Porter’s view–he’s reporting, not endorsing). I’ll have a lot more to say about the research in the piece, but to put it mildly, I’m unconvinced.

The piece reports on research suggesting the increase in low-skill immigration has put downward pressure on productivity growth, by lowering the skill level of the workforce. This immediately triggered my BS meter, as no one really knows what makes productivity growth go up and down. Given the sharp slowdown in this key variable in recent years–which really is a problem–our ignorance enables people to plug in the thing they don’t like as the cause.

Neither does the pattern of immigrant flows make much sense in this regard, at least from 40,000 feet up. As immigrant flows from the south (of persons with relatively low education levels) accelerated in the 1990s, so did productivity growth. As southern flows sharply decelerated, productivity growth slowed as well.

Where immigration increasingly matters in macro terms is around issues of labor supply. Our aging demographics is one reason for slower labor force growth, which in turn is a main factor in slower output growth. Diminished immigration plays a role in that, as this research note I got just this AM from the Goldman Sachs econ team (no link) shows.

Reduced immigration would result in slower labor force growth and therefore slower growth in potential GDP—the economy’s “speed limit”. In addition, academic studies suggest there could be negative knock-on effects on productivity growth. As a result, we see immigration restrictions as an important source of downside risk to our 1.75% estimate of potential growth…

Given that my BS meter is symmetrical, I’m skeptical of this upside productivity claim as well, but the labor-force-growth part of this sounds right.

The other really troublesome bit of Porter’s reporting comes from this bit of what seemed much more like racism than economics to me and to Ben Spielberg, who tweeted:

A look at a few recent articles that caught our attention: immigration, SNAP, ACA repeal.

Like I said, more analysis to come on this. I fully admit a BS meter doesn’t take the place of doing the work. But I also submit that my BS meter rarely fails me.

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Next, Chuck Lane objects to a recent piece by Ben S and me on SNAP, or food stamps. We made two arguments. Our main point was that the NYT mis-reported on a study that the paper suggested showed SNAP recipients:

…buy very different, and nutritionally much worse, food than households that don’t use food stamps.

In reality, here’s the study’s headline finding: “There were no major differences in the expenditure patterns of SNAP and non-SNAP households, no matter how the data were categorized.” A related finding — one that reflects an important truth that comes out of the Times piece — was: “Less healthy food items were common purchases for both SNAP and non-SNAP households.

We then argued:

American diets could surely use some improvement. But the improvement mechanism the Times’ reporting discussed — paternalistic bans on the types of food low-income people are allowed to buy with food stamps — is the wrong way to promote healthier eating.

Lane glossed over our first point, though he shouldn’t. Mis-reporting on that study is a big deal and even the NYT public editor got into the mix, supporting the case made by me and Ben. Especially with facts on the run these days, it’s really important to get this sort of thing right.

But Lane disagreed with our paternalism point, and he’s not alone. I’ve long heard the argument that as long as taxpayers are footing part of SNAP recipients’ grocery bill, we should have some say on what’s in their basket.

End of the day, this just comes down to how you feel about paternalistic policies. Lane makes a fair case with which some readers will agree. We strongly object to imposing such rules on one group of people–the poor–because we can, while the same behaviors by more affluent people are out of the reach of policy makers.

But Lane likely goes too far when he suggests that our anti-paternalism will “undermine” food stamps, or that a more paternalistic program would be less vulnerable to cuts. I’d love to see some evidence to support that claim and fear that those who would cut or “block grant” the program would not be moved by restrictions on what recipients could buy.

Finally, I’d urge Lane and others to consider the evidence we show:

Anderson and Butcher analyzed the relationship between SNAP benefits and both food spending and food-related activities. As the figure below shows, they estimate that a $30 boost to SNAP benefits would increase vegetable consumption by about 1.5 percent, increase the time spent on food shopping and preparation by 2.5 and 3.5 percent, respectively, and decrease fast food consumption by about 2.5 percent.

More evidence, less chin-stroking!

*******

Finally, and this deserves more attention than I can give it right now, but some of the gears of “repeal and replace” Obamacare are moving and must be scrutinized.

Today’s papers have articles about President Trump’s executive order on the ACA that is making some changes to IRS rules and to requirements of insurers in the exchanges. My CBPP colleagues Aviva Aron-Dine and Edwin Park take you through some of these changes and their impact on consumers.

The Trump Administration’s new proposed rule on health care would raise premiums, out-of-pocket costs, or both for millions of moderate-income families. If finalized as proposed, the rule would reduce the amount of health care that marketplace plans have to cover. That would allow individual-market insurers to offer plans with higher deductibles and other out-of-pocket costs than they can now sell through the marketplaces. It would also have the hidden impact of reducing the Affordable Care Act’s (ACA) premium tax credits, which help moderate-income marketplace consumers afford health care. As a result, the rule would force millions of families to choose between higher premiums and worse coverage.

I’ve got one point about this, and it’s one that seems fundamental in whatever’s coming in this space of ACA repeal, replace, delay, or repair. It’s my belief, based on focus groups and polling, that there is a large gap between what health consumers, especially those with low or moderate incomes, want from Trump, Ryan, et al, and what they’re likely to get. What’s on offer–high deductibles, less helping paying for coverage, more paperwork, more power to insurers, less comprehensive coverage–isn’t at all what people were looking for when they complained about Obamacare.

More to come…

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Jared Bernstein
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.