February 2012 – UMass Econ in the News

Badgett: President should end workplace discrimination

M.V. Lee Badgett, UMass Amherst economics professor and director of the Center for Public Policy and Administration, writes a column in the online New York Times about how President Obama could stop workplace discrimination based on sexual orientation for companies doing business with the federal government by issuing an executive order. She argues that such a move would underline the president’s commitment to non-discrimination and would be a sound business practice for contractors who would see improved production and less workplace strife. (New York Times, 2/6/12)

In the past, executive orders setting standards for contractors have not only put an American ideal of equal opportunity into practice; they have also helped show employers that ending discrimination is good for business. Employers who act out of bias waste valuable training and often pass over the best person for the job. In the case of gay and transgender workers, workplace discrimination comes with an added cost to employers, leading other lesbian, gay, bisexual and transgender workers to fear disclosure and contributing to stress, illness and lower productivity.

Perhaps the most convincing evidence that nondiscrimination policies are good business policy comes from businesses themselves. A recent Williams Institute study of the 50 largest federal contractors and the 50 biggest Fortune 500 companies found that nearly all had policies against sexual orientation discrimination, and almost all said that diversity was good for business. They also described their policies against sexual-orientation and gender-identity discrimination as a sound business decision, resulting in more productive and loyal employees, more good ideas and a stronger customer base. That means the federal government and American taxpayers get more efficient contractors, whether for designing software applications or supporting troops in Afghanistan.

Requiring federal contractors not to discriminate against workers based on sexual orientation or gender identity lets the American public win twice — as taxpayers and as workers. New research of mine shows that by issuing an executive order, President Obama could cover more than 16 million additional workers against discrimination. Following the legacy of almost every president since World War II and the lead of most of the nation’s top companies, the president should once again put our government on the side of equal opportunity for all.

Crotty’s “The Austerians Attack!” makes cover of In These Times

“The Austerians Attack!” an article by James Crotty, UMass Amherst economics professor emeritus, is the featured cover story for the February issue of In These Times.

In the article Crotty writes about recent austerity measures, like public-sector layoffs and budget cuts, that have been imposed as a way to reduce the deficit. Crotty argues that it is possible to shrink the public debt burden without compromising important social spending. Crotty’s article offers a historical context to the current deficit and to possible solutions. (In These Times, 1/30/12)

Fronts in the austerity war

The state and local government battle: The Right has mounted a ferocious attack on New Deal programs at the federal, state and local government levels.

But excessive long-term growth in social spending did not cause the large current and prospective deficits at the state and local levels. The four main causes of these deficits are:

1. Slow economic growth since 2001.

2. The deep recession that hit in mid 2008. In 2009, 20010 and 2011, state revenues fell by an average of 13 percent each year – a revenue loss unprecedented in the post-World War II era.

3. A collapse in the value of pension fund assets as a result of the financial meltdown. Between mid-2007 and mid-2009, pension fund accounts lost $900 billion in value.

4. An erosion of the tax base. Thanks to a decades-long process of corporate tax cuts, state corporate income taxes fell from 10 percent of state revenue in the 1970s to 5.4 percent by 2010. Tax erosion has been exacerbated by the fact that in response to the crisis – and even in the face of exploding deficits – many states have further cut corporate taxes. Governors justify such tax cuts on the grounds that they will help attract new business to their states. But these cuts create a typical “race to the bottom” dynamic in which, as a whole, states gain no additional investment.

The combination of revenue losses and the rise in spending on the social safety net, caused by the recession, generated a total estimated annual budget gap of $140 billion in 2010, or 21 percent of state spending commitments. Federal grants covered about one-third of the gap that year, but those funds are drying up. Since almost all states are legally required to avoid deficits, and since most states refuse to raise taxes substantially (if at all), the gap has to be eliminated primarily through spending cuts. Thus, the austerity war rages.

States are cutting funds for programs such as healthcare for the poor, home care for the infirm, and support for education at the elementary, high school and college levels. From the official end of the recession in June 2009 to June 2011, more than 467,000 state and local jobs were lost, including 188,000 jobs in schools. At a similar point after the end of the 2001 recession, 249,000 jobs had been added.