on-demand workers

Simply categorizing on-demand workers as full-time employees is almost certainly too blunt an approach, and wouldn’t accurately reflect how the government should regulate the employer-employee relationship. For instance, a recent poll found that while most on-demand workers (72 percent) believe companies should be doing more to provide benefits, respondents were split on whether the government should regulate the sector.[i] Forcing businesses to treat all workers like full-time employees could severely impact businesses as well. One estimate put the additional costs of awarding employee benefits for Uber alone at $4.1 billion, an amount that could scuttle the company.^[ii]  [YI1] 

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[i] Ibid.

^[ii] Stephen Gandel, “Uber-nomics: Here's what it would cost Uber to pay its drivers as employees”, Fortune, September 17, 2015, http://fortune.com/2015/09/17/ubernomics/.

Restore the Estate Tax

Restore Estate Tax

The estate tax taxes wealthy individuals’ as they pass assets, including cash, real estate, and stocks, to their family members when they die. The estate tax is the most direct intervention at the federal government’s disposal to address the growing divide between the haves and have-nots explored above. The tax will generate about $246 billion over 2016-2025 under current law, according to Congressional Budget Office.[i]

During the Bush administration, the estate tax was dismantled, gradually increasing the exemption level until 2010 when the tax was virtually eliminated.[ii] These changes were scheduled to expire, but through a series of compromises between the Obama administration and Congress, were largely made permanent, with higher exemptions and lower top marginal rates.[iii]

The estate tax exemption should be returned to $1,500,000 per spouse (down from $5,430,000) with a top marginal rate of 50 percent (up from 40 percent), the same rate before the Bush tax cuts of the early 2000’s. A similar proposal by Rep. Jim McDermott, raising the top rate to 55 percent and a $1 million exemption, would generate an additional $269 billion in revenue and still only impact fewer than 2 percent of American households.[iv]These changes would simultaneously level the playing field for future generations, as well as provide revenue for other programs like education, health care, and infrastructure projects.

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[i] Congressional Budget Office, “Updated Budget Projections: 2015 to 2025,” March 9, 2015, https://www.cbo.gov/publication/49973.

[ii] Darien Jacobson, Brain Raub, & Barry Jonhosn, The State Tax: Ninety Years and Counting, (Washington, D.C.: IRS, 2006), 123-124, https://www.irs.gov/pub/irs-soi/ninetyestate.pdf.

[iii] Joint Committee on Taxation, “History, Present Law, and Analysis of Federal Wealth Transfer Tax System”, March 18, 2015, Table 1. 12, https://www.jct.gov/publications.html?func=startdown&id=4744.

[iv] Americans for Tax Fairness, “Fact Sheet: The Estate Tax (Inheritance Tax”, accessed July 5, 2016, http://www.americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-the-estate-inheritance-tax/.

defining the higher ed equity problem (in a gif)

The percentage of underrepresented minorities with a college degree has gone up a lot over the years. In 1974, only 5.5 percent of African American and Latinos had 4-year degrees. By 2015, those rates had grown to 22.5 and 15.5 respectively. That's good, but the white rate has grown too, from 14.0 percent in 1974, to 36.2 percent, too fast for the other groups to catch up. This widens the already existing gap in college degrees attainment, and inevitably holds back progress in other areas like the labor force. 

To illustrate, I made a gif of the attainment gap between black and white adults, and latino and white adults, over the last forty years. 

Hopefully this can help us make the case for HEA reauthorization to be more intentional about confronting racial inequity. We're going in the wrong direction, so our solutions will have to be explicit to right the ship. 

Best Jobs for Millennials

Read the full report here


Best Jobs for Millennials

Driving an Uber to get Through Med School Debt-Free?

From a July 16 Politico article:

But as he told reporters before being whisked away in another Uber, he’s having encounters that are shaping his views everyday, referring to a college student in Los Angeles who gave him a ride. 

“Because of Uber, he’s going to go to medical school debt-free,” Bush said. “We have $1.2 billon of student loan debt; we have people who are stuck because we haven’t reformed our higher education system. Uber’s giving that person a chance to start out and fulfill his dream.”

Student debt advocates are no doubt encouraged to see so many presidential candidates discuss student debt. While the price problem isn't going away any time soon, it's also good to see discussions of the potential benefits of the sharing economy to help students pay for college expenses. Certainly the flexible hours and independence would work well for students balancing classes, homework, and everything else. 

But still: Jeb Bush said his Uber driver could go to Med school debt free from driving an Uber car. Is that typical? What would that look like? 

Well the median debt load from medical school is $180,000.  Take away the median non-medical school debt of those graduates and you're left with $160,000. Let's assume it takes 4 years to complete that degree and the debt is spread out evenly. That's $20,000 per year, or about $110 per day. 

The average Uber driver in the Los Angeles market (where Bush talked to this man) makes $16.98 per hour, but that's gross wages. The missing factor here is how many miles Uber cars drive. Then we'd apply the federal governments' $0.57 cost per mile, to get an idea of the actual income (Uber drivers need to pay for gasoline, depreciation, and insurance). Pando just assumed a 5 mile average trip length, which I'll use here, but if anyone has a better assumption I'm all ears. But this assumption cuts the wages by $2.88, meaning the average Uber driver could earn $14.11 per hour.

So a medical student with the median debt load,  driving an Uber car in Los Angeles, would have to work 7.8 hours per day, every day, for 4 years. That's 1,460 days straight. Every weekend, every holiday, while pursuing a medical degree. 

Now did this man take on the median amount of debt? There's no way of knowing (just as there's no way of knowing if he already owned a car or not, a huge variable in the sharing economy).  Los Angeles is home to the medical school with the 7th highest average debt, the University of Southern California (Keck), where the average debt load is $219,473, much higher than our baseline.  But let's say the man was on the 20th percentile, meaning that 80 percent of all medical school graduates took on more debt than him: you'd still have to drive 3.9 hours per day.

To tell you the truth, that's a lot more feasible than I thought it would be. Disruptive technologies and business models that allow students to work on their own time and make well-above a service sector wage are very exciting, and should fully explored. But I'd caution against holding them up as a panacea to our college affordability problem. Fully addressing that will take state reinvestment, bolstering of the Pell grant for income students, holding bad actors accountable, and reforming our loan repayment system. 

Assumptions and calculations in the chart below:

Cartogram of Youth Population by State

The relationship between income and research on financial decisions

Bonus: What sources do consumers consult before making major financial decisions? 

Bike Commuting in D.C. Increases 3-Fold From 2007

A short memo I out together for WABA last fall. Need to pick this project back up and look at different cities, and stratify by age. Any other thoughts? What does transportation tell us about a neighborhood, an economy, or society? 

Bike Commuting in D.C. Increases 3-Fold From 2007

D.C. Residents

• An estimated 4.5 percent of all District workers got to work via bicycle in 2013.

·      That’s a slight increase from 4.1 percent in 2012, and only 1.7 percent in 2007.

• Nearly 15,000 (14,800) workers commuted to work via bicycle in 2013.

·      That’s a slight increase from 13,300 in 2012, and a huge jump from 4,900 in 2007.

While cycling continues to grow as a preferred means of transportation to and from work for Washingtonians, cars and mass transportation still dominate: Public transportation accounted for 38.5 percent of commuting while individual vehicles accounted for 37.6 percent.

Metro Area

In the broader Washington metro area, an estimated 28,000 commuters got to work on their bikes in 2013.

•       Not bad considering just over 11,000 rode bikes to work in 2007. (An estimated 24,000 commuters cycled to work in 2012).

Perhaps not surprisingly, a smaller proportion of total commuters used bicycles to get to work however: (around 1 percent).

• That’s still a slight increase from 2012’s 0.6 percent, and a drastic improvement from 2007’s 0.4 percent.

Not surprisingly, driving remains the most popular way to commute for the larger Metro area:

Gender Disparities Persist

Despite impressive gains in cycling as a preferred means of getting to and from work, gender disparities persist in the District and the wider Metropolitan area.

Males made up 63.2 percent of bike commuters in D.C. The disparities are slightly worse in the wider Metro area, with making up nearly 70 percent of bike commuters.