Category: Folbre

Nancy Folbre, UMass economics professor and contributor the NY Times Blog, Economix, describes what she calls the “resentment zone” in a recent Economix entry.  Low-income workers who get married, work more hours or pick up a second job, may lose means-tested benefits that they once qualified for.  According to Folbre, this has the same effect on households as paying more taxes.  In fact, when you account for both taxes paid and benefits lost, the marginal tax rate for low-income households often exceeds 35 percent.  This is the same rate applied to taxable income over $372,950 of married couples filing jointly for 2009.

March 22, 2010
The Resentment Zone:  Losing Means-Tested Benefits
By:  NANY FOLBRE

The rate at which benefits are phased out depends on which benefits people are taking advantage of. Participation rates for many programs, like food stamps, fall far short of 100 percent of those eligible.

Most government surveys don’t collect data on program participation. One that does, the Survey of Income and Program Participation (SIPP) is widely considered inaccurate.

But an innovative study of Wisconsin households that merges data from tax returns and state administrative data shows that some low-income families faced a combined state and federal marginal tax rate of 44 percent in 2000. Some fell off a cliff when they earned just enough income to disqualify them from the state’s public health insurance program.

UMass Amherst economics professor, Nancy Folbre, argues in her NY Times Economix blog that a massive default by “underwater” homeowners would actively reshape policies on home buying and lending.  Folbre claims that it would “decisively increase the bargaining power of indebted homeowners, force changes in current federal policy and state regulation, and give individual debtors far more leverage in negotiating with creditors.” However, Folbre points out that most homeowners who are underwater won’t simply “mail their keys to the bankers” because they already love the neighborhood they live in, don’t want to disrupt the flow of their personal lives and feel a moral obligation to their financial commitments.

March 1, 2010
Will ‘Underwater’ Homeowners Make Waves?
By NANCY FOLBRE

Bankers call it “negative equity,” but we all call it being “underwater.” A rising tide of articles point out that a large percentage of American homeowners — perhaps as many as 25 percent — owe significantly more on their homes than current market value.

If the difference between what they owe and what they could get if they sell is small, say less than 10 percent, homeowners may want to hold their breath and hope for the best. After all, home prices will probably rise eventually.

But if the difference is much greater than 10 percent, some experts argue, individuals should just walk away and mail their keys to the bank.

What would happen if all the homeowners in really deep water simply moved out and mailed their keys to the bank within the next six months?

A widespread strategic default would look something like a wildcat strike. It would decisively increase the bargaining power of indebted homeowners, force changes in current federal policy and state regulation, and give individual debtors far more leverage in negotiating with creditors.

Will this happen? The odds are against it. Many underwater homeowners are attached to their homes and neighborhoods and reluctant to disrupt their personal lives.

Bankruptcy significantly damages credit ratings, limiting future ability to borrow. Further, most individuals feel a moral obligation to meet their financial commitments.

On the other hand, evidence is mounting that many homeowners were misled by aggressive, largely unregulated lenders. They didn’t jump underwater — they were pushed.

UMass economics professor, Nancy Folbre, is cited in an op-ed article about teaching children about financial responsibility.  Folbre urges those working in child economic outcomes to push for policy changes because children can’t advocate for themselves.  “By the time they grow up, it’s too late to influence the policies that partly determine their own success in adulthood.” 
(Opinion:  How to Teach Kids Money Matters, 2/26/10)

Nancy Folbre, UMass  economics professor and contributor the NY Times Blog, Economix, examines gender inequality and trade-offs in a recent post.  Although women’s income, relative to men’s, has improved over the last forty years, increasing from 62 cents to the dollar in 1970 to 80 cents in 2008, Folbre argues that it has not come without trade-offs.  For instance, women are less likely to get full-time job because they are typically the family caretakers.  And although unmarried women, who don’t have as many responsibilities, earn almost equal pay as men, Folbre points out that “going without a family seems a rather steep price to pay for equality.”

February 22, 2010
Gender Trade-Offs
By NANCY FOLBRE

It’s pretty hard to get something for nothing. That’s one reason why economists like to analyze trade-offs.

Changing gender roles in our society have created some rather complicated trade-offs, and that helps explain why it’s hard to assess progress toward gender equality.

Women on nonfarm payrolls — a measure that includes part-time workers — now slightly outnumber men.  Employers find women attractive to hire in part because women typically earn less than men with the same education.

A recent comparative analysisof 21 countries by two sociologists at the University of Washington, Becky Pettit and Jennifer Hook, reports that women’s labor-force participation tends to be lower in countries where their earnings relative to men are higher.

For instance, in Germany and Italy, a smaller percentage of women work for pay than in the United States, but those who are employed earn more, on average, relative to men.  Women who overcome the obstacles to employment there tend to be high earners.

Across all countries, overall inequalities in wage income influence average differences in men’s and women’s earnings. So do public policies such as child care provisions that help adults cope with trade-offs between paid and unpaid work — and, more broadly, between economic independence and family commitment.

These trade-offs remain sharply significant in the United States.

In her recent New York Times Economix blog, UMass Amherst economics professor Nancy Folbre explains that we don’t really have an accurate calculation of the cost of caring for family (which includes elder care, child care, college education and so on) because we  have not developed a Dependent Price Index.

Economix
February 1, 2010
How Much Do We Spend Caring for Family?
By:  NANCY FOLBRE

Many social scientists, myself included, are struggling to quantify and analyze these trends. We need to develop a more systematic and unified approach.

Trends in real wages are typically adjusted for changes in the cost of living, as measured by the consumer price index. While this index needs improvement, no economist I know would ignore the need for it.

Trends in family income, however, are never adjusted for changes in the cost of caring for dependents, because we have not developed a comprehensive Dependent Price Index. The Department of Agriculture regularly estimates family expenditures on children, but ignores both the costs of college and the value of parental time.