Analysis

The Shutdown Shook Faith in Government Jobs, and That’s Bad For Everyone

The federal government has reopened after the longest shutdown in history, which caused federal workers to miss two paychecks and cost the economy $11 billion dollars — $3 billion of which will never be recouped. The scariest part, though, might be that this horror show is starting to seem normal.

This is the third time the government has shut down in the last year and — unless President Donald Trump drops his demand for a border wall — everything from the national parks to the National Science Foundation could be closing up shop again on Feb. 16.

In the face of all that, America’s federal workers are thinking twice about their careers — and that’s bad for workers and the country.

Historically, the federal government (and public service writ large) has been a pretty good place to work. Not only does it allow people to serve their country (which many are keen on), it is the kind of quality job that all people should have. There is stability. There are retirement benefits. There is health care. There is paid leave. There is pay transparency. There is a union.

Due in large part to the fact that the federal government has offered stable opportunities for advancement and a secure job with a steady paycheck, the federal workforce has disproportionately attracted people of color and people with disabilities. The latest data show that people of color are overrepresented in the federal government: More than 18 percent of workers in the federal government are black (compared to about 11 percent of the overall labor force) and Native Americans are more than one-and-a-half times as likely to work for the federal government than be in the overall labor force. Fourteen percent of full-time federal workers are people with disabilities, compared to 3.8 percent in the overall labor force. Veterans, who comprise nearly a third of the federal government, are also disproportionately represented.

But while federal jobs tick many of the job-quality boxes, satisfaction has been declining. The latest data reveal that morale at the Departments of Education and Health and Human Services fell by more than 10 percentage points between 2017 and 2018, and morale at the Consumer Financial Protection Bureau dropped by an astounding 25 percentage points.

One can only imagine what basement these numbers would be in if the survey happened this week.

This decline is likely due in no small part to the fact that attacks on federal workers have been mounting in recent years. Their work has been condescendingly dismissed by Trump, and National Economic Council Director Larry Kudlow referred to their unpaid efforts during the shutdown as “volunteering.” They have been asked to work with fewer staff due to hiring freezes and for diminishing wages due to Republican-pushed pay freezes.

There are high costs to everyone when we treat federal workers like disposable widgets.

Public sector unions have come under attack, both by Trump and the Supreme Court. And now workers have literally been forced to make do without pay, while many have still been having to show up and clock in. More and more work is being shifted to contractors who have fewer protections and who will likely not even be paid for the time they could not work during the shutdown. (Contractor satisfaction, which is likely even lower, deserves a whole article unto itself.)

Is it any wonder there have been reports of federal workers departing government service?

This could spell trouble, not just for the workers themselves who deserve far more than to be pawns in Trump’s racist game of chicken with the economy, but for our country in general. Reduced employee morale can lead to lower productivity — not a good thing when you’re trying to run a business, much less a country. We’ve also seen what it looks like when we don’t sufficiently invest in public services: lines get longer, corporations get away with defrauding the American people, and people die waiting for the services and benefits they need.

And if Trump’s divisiveness leads to less diversity within the workforce, the evidence indicates that could be bad for the public, too, because it matters who our public servants are. Research finds that having a diverse public labor force is important for the consideration of the interests of people of color in a range of circumstances.  For example, having more black and Latino bureaucrats is related to having more Latinos and blacks judged eligible for rural housing loans. Having a larger share of black federal workers in the Equal Employment Opportunity Commission is positively related to the number of discrimination claims filed by black workers.

There are high costs to everyone when we treat federal workers like disposable widgets — and in the wake of the shutdown we may find out exactly how high they are.

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Explainer

So You Want to Tax The Rich: A How-To Guide

Taxing the rich has been a hot subject of late thanks to a few Congressional Democrats. First, New York Rep. Alexandria Ocasio-Cortez floated the idea of raising the top marginal income tax rate to 70 percent. Then Massachusetts Sen. Elizabeth Warren proposed a “wealth tax” on those who have at least $50 million in assets. And today, Vermont Sen. Bernie Sanders proposed increasing the estate tax for those who inherit more than $3.5 million.

These ideas have been met with predictable consternation from conservatives. CEOs and Wall Street-types gathered at the annual World Economic Forum in Davos even had a good laugh when asked about Ocasio-Cortez’s idea.

But raising taxes on the rich isn’t a joke. It’s an economic necessity.

Today, the wealthiest 1 percent of Americans have as much wealth as the bottom 95 percent combined. In every state in the U.S., income inequality has increased since the 1970s; overall, this level of inequality hasn’t been seen since the 1920s. Despite this, taxes on the richest Americans have generally decreased — a trend that was exacerbated by President Donald Trump’s 2017 tax cuts.

In order to make and maintain the investments America needs in health care, education, infrastructure, and beyond, more revenue simply must be raised. And given the current concentration of wealth in America, raising taxes on the rich is one of the only logical places to start. (Plus, income inequality is demonstrably bad for democracy, as it allows the wealthy to accumulate huge amounts of money that they can then spend in order to elect people just like them or who will be sympathetic to their interests.)

There are plenty of ways to go about raising those taxes on the rich in order to combat these problems, but here are four broad ways to bring some balance back into the tax code.

1. Raise taxes on income.

Unsurprisingly, ultra-wealthy public figures including former Wisconsin Gov. Scott Walker and Republican Rep. Steve Scalise (LA), balked at Ocasio-Cortez’s suggestion to raise the top income tax rate to 70 percent from its current 37 percent, complaining that this would rob the rich of most of their money. That’s based in a misunderstanding of how marginal tax rates work, because rates do not apply to the entirety of one’s income. In the case of a 70 percent rate on incomes of more than $10 million, it is only the 10,000,001st dollar and beyond that will be taxed at 70 percent. Under the American system of progressive income taxation, everyone pays the same rate on the same dollars, so everybody pays 12 percent on dollars 9,526 to 38,700, 22 percent on dollars 38,701 to 82,500 and on up the income scale.

Ocasio-Cortez and others have also proposed adding additional tax brackets, to separate out the super-duper-rich from the merely super-rich. Today, those making $600,000 or more annually are taxed at the same rate on their wage income as those making millions or billions of dollars, because the code tops out at that 37 percent rate. Ocasio-Cortez envisioned at least one new bracket with a higher tax rate at 10 million, and perhaps more besides.

Contrary to the hue and cry that met Ocasio-Cortez’s suggestion, historically, America’s top tax rate has been 70 percent or higher. It’s only since the Reagan administration that today’s levels came into vogue; in the 1950s, for instance, the top marginal rate exceeded 90 percent, a time when economic growth in the U.S. reached some of the highest rates on record.

Applying a 70 percent rate to incomes of more than $10 million would raise about $700 billion over 10 years. That alone would more than cover the cost of SNAP, which provides food for 42 million Americans, for a decade.

2. Raise taxes on investments.

Currently, the most anyone can be taxed on their wage income, which they make from going to work and collecting a paycheck, is 37 percent. However, the peak tax rate on the money made from investments such as stocks (which are known as capital gains) is just 20 percent. Nearly all of the benefits from the lower tax rate on investments flow to the wealthiest Americans, because they make the vast majority of the investment income in the country. The Tax Policy Center estimates that just 4 percent of households in the bottom 80 percent of households will face any capital gains tax from 2018.

While the gap between investment and wage income is supposed to boost economic growth by encouraging the rich to spread their money around, the evidence that it actually does so is thin. The gap does, however, contribute to income inequality in a significant way.

In a recent New York Times op-ed, former Obama administration official Steven Rattner called for raising the capital gains tax to equalize it with taxes on income. As recently as the 1980s, capital gains income and wage income were treated equally, so there’s no reason to think that the current standard is something that can’t change. (Of course, the White House is now mulling over unilaterally cutting capital gains taxes instead.)

3. Raise taxes on wealth.

America currently leads the world in the number of billionaires, who hold about $3.2 trillion in wealth. In 2018, the world’s billionaires increased their collective wealth by $2.5 billion per day. A “wealth tax,” as it’s known, would tax the assets held by the very richest Americans every year. Warren specifically called for applying a 2 percent tax on Americans with assets of more than $50 million, and a 3 percent tax on those who have more than $1 billion.

This is another avenue for addressing the fact that wage income and investment income are treated so differently, but it also gets at the fact that the current tax system allows untaxed benefits to accrue and accrue, and even be passed on from generation to generation, tax free, since the capital gains tax is only levied when assets are sold. Four other countries in the Organization for Economic Cooperation and Development currently tax wealth in this way, though that is down from 12 in 1990.

In many ways, a tax like this would merely apply to the rich the same rules that already apply to the middle-class, since middle-class wealth is mainly built via property, i.e. homeownership, that is taxed annually.

Warren’s proposal is estimated to raise about $2.75 trillion over 10 years from about 75,000 families. That could cover the 10-year cost of the Children’s Health Insurance Program 17 times.

4. Raise taxes on inheritances.

 The Republican tax bill also raised the exemption on the estate tax – which is levied on inheritances – to $11 million, meaning a married couple can pass on $22 million tax free. During the Clinton administration, the exemption was under $1 million, and was $175,000 as recently as 1981. Lowering the exemption and increasing the top marginal estate tax rate, which currently stands at 40 percent, would not only raise billions of dollars in revenue but reduce the ability of the richest families to entrench income inequality via handing vast fortunes on to the next generation. (Congressional Republicans are currently calling for the estate tax to be repealed entirely, which would only benefit 2 out of every 1,000 families. For the same price, Congress could literally buy everyone in America a pony.) 

Sen. Bernie Sanders (I-VT) on Thursday intends to release a plan to lower the estate tax exemption to $3.5 million and add several new brackets, including a 55 percent rate on inheritances of more than $50 million and a 77 percent rate on those of more than $1 billion.

Also, doing away with what’s known as step-ups on inheritance, as the Obama administration proposed, would be beneficial. Under current law, when an asset is bequeathed to someone else, the increase in value is never taxed. Instead, the inheritor simply gets to start counting his or her own increase from the value on the day the asset was inherited. (As an example, if your grandfather bought stock for $2 per share, then passed it to you when it cost $10 per share, you never have to pay the tax on that $8 increase.) Closing this loophole could raise more than $600 billion over 10 years, enough to cover the cost of the entire Pell Grant program, which sends more than 20 million low-income students to college every year, 1.5 times for that decade.

This isn’t an exhaustive list of ways to increase revenue from the richest Americans, of course. But any of them is a start. And for any member of the 1 percent who might balk at paying higher tax rates, just remember: It beats getting eaten.

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Feature

Burnout Is a Capitalism Problem, Not a Millennial One

Over the weekend, the New York Times ran another iteration in the conversation about millennial burnout, this time focusing on the hustling economy — a topic that has been amply critiqued in recent years. Writer Erin Griffith explored “toil glamour” and the high expectations to love the work you’re doing so much that you’ll put in long hours at the hustle. #RiseAndGrind, you’re falling behind. It followed on Anne Helen Petersen’s incredibly popular Buzzfeed piece on millennial burnout that focused on debt, disrupted career paths, dashed dreams, and reluctance to do errands.

The fundamental flaw of such pieces — often beautifully written and deeply intimate — is that they are personal. They highlight the struggles of a narrow swath of the authors’ generation, but fail to consider the larger implications that their experiences may have for the country as a whole. They bemoan a failure to achieve a promised life, but this life was only promised to, and expected by, a specific group of people.

That life includes a specific set of circumstances to measure against, with a further expectation that you love what you do for a living or you’re not living the life you deserve. But this concept of a promised land is not limited to the millennial generation. In fact, for a hundred years, that dream lifestyle has mostly looked the same: The ability to buy a nice home in a cute neighborhood with a middle-class income, an emotionally rewarding dream job, and exotic vacations to warm climates every winter. (For a uniquely millennial twist, add a French bulldog with an active social media presence.)

The idea of “passion jobs,” where people pursue jobs that are emotionally fulfilling, has its roots in the 1900s. Every generation since has experienced frustrations when running up against the reality of the working world, whether the aftermath of the Depression for the Silent Generation, the corporate restructuring that narrowed opportunities for Generation X, or the tyranny of the precarious “gig economy” for millennials.

This dream is a specifically middle-class one, though, and it speaks primarily to a relatively small group of people: Those who always assumed they would go to college, for example, and who undertook debt to do so. People who assumed that they would be rewarded with gainful employment as a rite of passage, because this, too, was something they were told. White people. Nondisabled people. People who haven’t been thrown out of their homes or excluded from jobs because of their gender or sexual orientation. People who don’t have financial obligations to family members that may have started as soon as they were old enough to work.

For a disabled Latinx millennial with no college degree scrubbing toilets and caring for two generations at home, reading about how getting knives sharpened is too exhausting to contemplate is not necessarily relatable, even if that person is struggling with the same fundamental problem: Employers who view them as disposable and the familiar refrain that if you bootstrap hard enough, you’ll come out on top. The failed promise for many people from working and lower-class backgrounds isn’t a house with a picket fence, but basic human dignity, a life where your needs are met and you are treated with respect, whether janitor or CEO.

This is a basic function of capitalism: Walling off communities that should be able to find common ground.

Treating the experience of feeling beaten down by a job that abuses you as something exceptional that primarily affects a class of predominantly white knowledge workers in New York, D.C., and Los Angeles makes commentary on the subject feel self-indulgent and privileged. It confuses a lost middle-class dream with something much deeper. It fails to expand to a larger conversation about what it means to be poor — not broke — and working class in America, and how exhausting and demoralizing it can be to have no money and feel like you have no future.

There is a nagging sense, while reading works like these, that the authors are desperately striving for class mobility to distance themselves from their imagined vision of poverty. They aren’t like those other people — the ones without college degrees, the ones caring for family members at home, the ones with messy lives who are experiencing intergenerational poverty. They’re better than that and deserve better, and thus have no reason to find common cause with the garbage men and housekeepers, doormen and farmworkers of the world, even if both are experiencing sexual harassment, a vast wage gap between worker and executive, workplace instability, and other “millennial burnout” woes.

This is a basic function of capitalism: Walling off communities that should be able to find common ground before they have an opportunity to build coalitions and power. Sweeping rhetoric that claims to speak for a whole generation while only describing narrow experiences is fundamentally alienating for members of the same generation who may find little in common with the way “burnout” is presented, even if they are also experiencing it. It can verge on the offensive when it borrows from the language marginalized people have developed to describe the bone-deep, existential pain of living in a world where they, and their lives, are not valued.

This isn’t a “millennial burnout” problem. This is a capitalism problem. Let’s start treating it like one.

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Feature

The Shutdown Is Holding Back Farmers From Spring Planting

In Asheville, North Carolina, vegetable farmers Becca Nestler and Steven Beltram are stuck between the impending spring season and the trickle-down effects of the government shutdown. Last week, when I spoke with Nestler — my friend since college — I asked about the farm. “We’re just stuck,” she told me. “We can’t even talk to our loan officer.”

The longest government shutdown in history has rendered many federal agricultural services unavailable, including the thousands of Farm Service Agency (FSA) offices that assist farmers with dozens of programs, such as disaster relief and annual farm operating loans. This is the time of year when Nestler and Beltram should be working with their FSA officer to prepare their annual loan packet — but with the office closed and their officer furloughed (and prohibited from using work cell phones or email to respond to farmers), they’ve had no choice but to wait.

“Usually by now we’re far enough down the road that we know the loan is going to get processed,” said Beltram. “But right now, we don’t have those assurances, because we haven’t been able to communicate with [the FSA].” With spring just around the corner, every week counts. Last year, they applied for their loan on Jan. 1 and received their funds five weeks later, on Feb. 6.

Last week, some FSA offices re-opened for a three-day period to work solely on existing loans and 1099 tax form preparation for borrowers, as those forms are due on Jan. 31. Secretary of Agriculture Sonny Perdue also announced that FSA offices would reopen on Jan. 24 for two weeks, and would offer “a longer list of transactions” for farmers, including operating loans. At the end of two weeks, if the government has still not reopened, FSA offices will move to a three-day work week schedule. All FSA employees will work without pay until the government re-opens.

Even with these measures, and even if the government does re-open soon, the damage has already been done. “I mean, if I’m reading the tea leaves, the best case scenario is they’re going to show up on the 24th with a huge backlog of stuff to do … and we’re not going to get our loan near on time,” said Beltram.

In fiscal year 2018, the USDA loaned a total of $5.4 billion, which helped farmers buy property, equipment, and necessary inputs, such as seeds and fertilizer — all of which are vital to farm operations and also prop up small rural economies.

Take tomatoes. At the beginning of February, Beltram and Nestler order seedlings from a local greenhouse, which requires a 50 percent deposit. By mid-March, they’ll begin fertilizing and prepping their fields, and seedlings will be transplanted in mid-May. They’ll spend money on inputs — fertilizer, irrigation and field supplies, fuel for their vehicles, shipping boxes, and labor — for tomato plants that won’t mature to generate revenue until mid-August. That’s at least six months without cash from sales.

“So every spring, we go to our lender, which is the FSA, and they loan us operating funds to put our crop in the ground,” said Beltram. “It’s the way farming has always been. … If you weren’t working with the bank 100 years ago, you were going to the general store and buying everything on credit until your crops came in.”

Factoring in costs for their entire 60-acre farm (which also includes organic leafy greens), Beltram estimates they’ll need $200,000 just in establishment costs, before they even think about harvest.

As they purchase their supplies and pay their employees, those funds naturally ripple out to others in the community. But the shutdown has brought this seasonal farm economy to a halt, freezing out farm families and small businesses already on the brink.

I don’t know any farmers in this area that have money sitting around right now.
– Steven Beltram

The shutdown situation also exacerbates a rough few years in farm country. In November, the USDA projected that net farm income would decline by $10.8 billion (14.1 percent) in 2018 — just 3.3 percent above the 2016 level, which was the lowest since 2002. As a result, the United States is losing farms in an eerie echo of the 1980s farm crisis, an economic disaster that upended rural America. In Wisconsin alone, 638 dairy farms closed up shop in 2018. Adding to the problems, President Donald Trump’s trade war made pawns out of commodity farmers, resulting in retaliatory tariffs that had sweeping and disastrous effects.

“Had [President Trump] set out to ruin America’s small farmers, he could hardly have come up with a more effective, potentially ruinous one-two combination punch than tariffs and the shutdown,” wrote Iowa radio news director Robert Leonard in a New York Times op-ed.

Climate change brought extreme weather to farm country as well. In North Carolina, Hurricane Florence was estimated to cost farmers more than $1 billion in damage and loss. And over the course of the season, Nestler and Beltram received more than 100 inches of rain (Asheville’s annual average is 45 inches), which caused massive flooding and wiped out 30 percent of their entire crop.

“It was the worst year we’ve ever had at the farm, financially,” said Beltram. “I don’t know any farmers in this area that have money sitting around right now. Everybody I know either broke even or lost money this year.” And then came the shutdown: He knows farmers who can’t pay their rent, buy groceries, or pay for day care because of the effect the government’s closure has had on their finances.

Beltram and Nestler plan to head to the FSA office as soon as it re-opens, but don’t expect to get their loan funds until mid-March, at best. In the meantime, they’ll go to the bank to apply for a bridge loan, and are considering the possibility of cash advances from credit cards until their FSA loan can be processed.

“I’ve been farming long enough that I can’t sweat things too much. I just have to have faith that it’s all going to work out,” Beltram said. “But there’s no question that our livelihood is seriously threatened by what’s going on.”

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First Person

D.C.’s High Housing Costs Pushed Me In and Out of Homelessness for 30 Years

Everyone always forgets about apartment building laundry rooms. That’s where I used to go when the temperature dipped below freezing — the doors are unlocked and they’re usually in the basement, far away from residents who might be tempted to call the cops to report us. If anyone knew to check, they could find as many as 20 people in a single building, huddling there away from the cold.

That’s why, when volunteers conduct the annual Point-In-Time Count by canvassing cities to count the number of people experiencing homelessness, I tell my partners to start in the laundry rooms. The count is always scheduled for the last 10 days in January, one of the coldest times of the year. Our hope is that the weather drives people off the streets and into the shelters, where it’s easier to get an accurate count. Then volunteers fan across the city in an attempt to count the remaining people who are still spending the night outside.

In a city as unaffordable as Washington, D.C., it’s not hard to find yourself included among the thousands of people experiencing homelessness during the Point-in-Time Count. I know, because I’ve been on both sides of it: For three years I have helped count people, because for nearly 30 years before that I was one of them. I’ve lived in this city my entire life, and I’ve watched it change drastically. In 1980, I got my first apartment – a studio near 9th and Kennedy – and my minimum wage job was enough to cover the $200 a month rent. Now, average rent for a studio in D.C. is $1,642. I could work those same jobs and still land in a shelter at the end of the night. The margin of error has been completely erased.

For decades, that margin was my most consistent home. I jumped from job to job, unable to stay anywhere long-term. I was enthusiastic about the work one minute, and the next I’d find myself quitting in a fit of disappointment. Looking back now, I can see how undiagnosed and untreated manic depression jeopardized my livelihood. But in the moment, all I could focus on was how I couldn’t make rent.

With housing out of reach, I alternated between staying in shelters and living on the street — there were some abandoned warehouses in the Northeast corner of the city that functioned as my go-to spot. But the instability — in and out of jobs, apartments, the streets, and shelters — only compounded my mental illness and I spiraled into addiction.

It’s impossible to explain how much of your brain homelessness takes up. It isn’t just the fact that you don’t have a home to call your own. It affects every part of your daily life, until meeting your most basic needs (What bathroom can I use? When will my next meal be? Will there be room in the shelter tonight?) requires all your time and energy.

When volunteers from the Point-in-Time Count found me, I was inches away from suicide. When I volunteer in the count, I see the memories of those days reflected in the faces of friends who are still living a life I know well. I ask them the same questions about how they’re doing and what they need to be able to do better every year, but I already know the answer.

The blame for my homelessness is always placed on me — my mental illness, my substance misuse, my joblessness — but never on the housing market. That is exactly backwards. It wasn’t until a nonprofit helped me get a subsidized apartment that I was finally able to address the things that made it so hard for me to support myself. That’s when I was able to find a doctor, get diagnosed, start treatment, and hold a steady job.

Many people will look at the numbers from this year’s Point-in-Time Count and ask how to decrease that number. My experience reveals a simple answer: If we don’t want our neighbors to be homeless, then we have to give them homes that they can actually afford. Until we do that, I’d recommend starting your outreach in the laundry room.

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