Andrew Luck Gets to Walk Away. Not All Athletes Can.

Earlier this week, Andrew Luck, the 29-year-old starting quarterback for the Indianapolis Colts, retired. The announcement surprised the entire sports world: Luck is a former number one overall draft pick, a four-time Pro Bowler who, in the context of quadragenarians like Tom Brady, could have played for at least another decade. Colts’ owner Jim Irsay estimated Luck was giving up not just the $60 million he was owed over the life of his current contract, but as much as $450 million in future salary.

But I’m not shocked. Luck has played more than a decade of high-level, year-round football both for the Colts and at Stanford University. He’s dealt with a litany of injuries more reminiscent of someone involved in a car crash than a professional athlete, including a concussion, a torn labrum, and a lacerated kidney. That’s likely why the players around him have, nearly unequivocally, understood his decision. At some point, career viability matters less than the freedom to live a normal life without pain. And so on a Saturday afternoon in the August preseason, at the snap of a finger, Luck short-circuited our fandom and was gone.

What’s truly unusual about Luck isn’t the choice he made — it’s the fact that he had the freedom to make it. Luck is the son of former Houston Oilers quarterback and current XFL commissioner Oliver Luck, which at least theoretically means his extended family is not reliant on his NFL income. He’s a Stanford graduate, with a second career available to him if he chooses. Football might have needed Andrew Luck, but Andrew Luck doesn’t need football.

Most NFL players aren’t so — ahem — lucky. The majority have spent a good portion of their adolescent and adult lives perfecting physical skills to make a career out of football, sacrificing other opportunities to do so. In a 2011 survey, NCAA Division I football players reported an average of close to 40 hours a week of athletic activity in-season, double the NCAA’s own restriction on time spent in athletic activity. That means there was no time in college for labs, study sessions, or other enrichment that a normal student gets — all of which are important parts of determining a career path. As a result, the handful of players who manage to secure a career in professional football are left adrift once they are forced into retirement.

Even worse is the physical damage to players’ bodies. Luck’s injury list is the norm, not the exception. In the NFL, as long as you have four accredited seasons to your name, you’ll receive the same health care as current players for up to five years. That care comes with two issues. First, the average NFL career is about 3.3 years, meaning many players won’t qualify for that health care at all. Second, medical issues of former players can, and will, show up beyond that five year limit, leaving players on the hook for their own care. That’s particularly troubling given the new research around chronic traumatic encephalopathy (CTE), a neurodegenerative disease caused by repeated head injuries, which new studies estimate affects at least 10 percent of professional players. CTE is progressive and debilitating, but it often does not show symptoms until many years after the injuries that caused it.

The NFL may be great work if you can get it — the rookie minimum salary for the 53-man roster is $480,000 — but one has to reasonably ask: Is it worth it?

More than half of all NFL players come from a county with a poverty rate higher than the national average.

To answer that question, you also have to understand where the majority of NFL players come from, and what they look like. Today, more than half of all NFL players come from a county with a poverty rate higher than the national average. Nearly 70 percent of NFL players are African-American, and face a much higher likelihood of being in poverty than most demographic groups. The average household income for an African-American family hovers roughly around $40,000 a year, making NFL salaries particularly tempting. When a player is making the decision of whether an NFL career is worth the risk, it depends on who you ask and where they’re from.

In this context, it becomes pretty hard to fault Luck for stepping away from the game when he did. Hopefully, he will be able to heal his body and avoid the nagging injuries that plague many former players. Hopefully, he will find meaningful work that will allow him to take care of himself and his family. To step away from a career, a vocation, that you are passionate about is difficult no matter what it is, and for that Luck’s care and grace in the face of perplexity should be commended. But let’s not forget that Luck’s economic background and education allowed him to make a choice of passion, rather than a choice of need like so many others have to. And if we’re going to be shocked by anything in this whole saga, it should be that.



Impossible Burgers Aren’t Going to Change the Industry Until Everyone Can Afford Them

I got interested in plant-based meat alternatives when my 9-year-old son declared himself a vegetarian after New Year’s Day 2019. I thought finding options for a kid who loves hot dogs and hamburgers would be difficult.

Turns out, the market for meatless options is well developed. Not only was I able to find Beyond Meat products such as sausages and hamburger patties at the local grocery store, but there are restaurants like Bareburger, which my son and I frequent, that have a vegan menu consisting solely of plant-based meals. Plus, Burger King now sells the Impossible Whopper, a plant-based version of its popular Whopper hamburger.

The Impossible Whopper doesn’t come as cheap as Burger King’s more traditional meat offerings: It’s $5.19, a dollar more than the regular Whopper’s $4.19.

That dollar might not seem like a lot, but it is an important issue, since many choose a vegetarian/vegan lifestyle for health or moral reasons. (While the health benefits of a plant-based diet are unclear, it is true that it lowers your carbon footprint.) Making this choice shouldn’t be limited to those with higher levels of income and wealth, as pointed out by economist Dr. Rhonda Sharpe:

Economics tells us the prices of goods are determined by the supply and demand for that given product.  Demand for meat alternatives will not be decreasing anytime soon, so for costs to fall we need to see an increase in supply.

There’s reason to believe that will happen. While Impossible Foods and Beyond Meat are the two pre-eminent firms in the industry, other well-established firms such as Nestle, Tyson, and Perdue are now looking to compete. Having large firms with extensive distribution networks should help lower the price as economies of scale already exist.

The higher prices of meatless options are due to the supply chains for the inputs, like proteins derived from peas, being less well established than the inputs for traditional meat options. Essentially, because the process of creating meat alternatives is so new, firms have not found efficient ways to produce it. As these manufacturers continue to expand and existing firms create more efficient supply chains, input prices should fall — leading to lower prices across the board.

However, we must be cautious about mergers and acquisitions in this industry. Established firms may acquire the new upstarts and not only keep prices high, but also chill research and development towards making improvements. There are tools in place to combat anti-competitive behavior, but they need strengthening.

And to be clear, meat alternatives aren’t only more expensive because they’re newer. Beef and other meats are cheaper because of government subsidies.

The other factor that may lower the costs of meatless options is the availability of the meals at restaurants, including fast food chains. Having several establishments compete should drive prices down. Several other fast food chains offer (in a limited capacity) meatless versions of their meals, such as White Castle’s Impossible Slider or Del Taco’s Beyond Taco.

Food deserts did not occur randomly, and in many cities are the outcome of systemic racism.

Even with the expected decrease in the price of meatless options, though, there is the concerning problem on the availability of meatless options for communities that lack grocery store options. Meat alternatives are offered at traditional supermarkets, with Beyond Meat products such as burgers, sausages, and crumbles already available and Impossible Foods getting approval by the Food and Drug Administration to have its products in stores.

But this is not helpful for communities in food deserts, where there is limited access to supermarkets or grocery stores.

Food deserts are a problem in many communities, both urban and rural. For many low-income individuals, the only option for groceries are places like Dollar General or Dollar Tree.

Food deserts did not occur randomly, and in many cities are the outcome of systemic racism. The process of redlining, creating race-based maps to exclude African Americans from receiving federal housing loans, not only prevented African Americans from obtaining mortgages in certain neighborhoods, but redlining also diminished the incentive for firms like grocery stores to locate in predominantly African American neighborhoods.

The problem is not just availability but also accessibility, as many individuals in food deserts have transportation issues. There are programs to address these problems and meat alternatives should be a part of the solution. Whole Foods has started to locate their stores in neighborhoods like the Englewood neighborhood of Chicago. Further policies to combat the structural issues must address the underlying inequality that plagues low-income communities.

As I have discovered from a summer living as a (pseudo) vegetarian/vegan with my kid, there are so many flavorful and delicious options with a plant-based diet. This is available to me because I live in a neighborhood where I have many transit options to Bareburger and where my local grocery store carries Beyond Meat sausages. But the choice to eat a plant-based diet should not be determined by your location.



The Government Spends 10 Times More on Foster Care and Adoption Than Reuniting Families

It sounds like a conspiracy theory: The United States government incentivizes foster care placements and forced adoption over social support and reunification with birth families. It seems unreal, possibly even illegal, and not at all like something a responsible government would do.

Unfortunately, it’s very real, and the root cause of many  of the problems in child welfare cases.

“Some people do phrase it as a conspiracy theory,” acknowledged Richard Wexler, executive director of the National Coalition for Child Protection Reform. “When they say the government makes money on foster care, that’s not true … on foster care they still lose money, but they lose less money [than on reunification]. And private agencies do make money on foster care in many cases.”

In the United States, child welfare agencies are tasked with ensuring the health and safety of the nation’s children. Each agency receives a complex web of funding from federal, state, and local sources, leaving it accountable to a hodgepodge of authorities. Although these agencies are often referred to as “child protective services” and considered by many as a cohesive national program, state and local agencies are only linked by a loose set of federal guidelines that provide broad definitions for child maltreatment, along with the Adoption and Safe Families Act (ASFA).

First enacted in 1997 under the Clinton administration, ASFA has undergone several rewrites, but its overarching purpose has remained steady: to ensure “timely permanency planning for children.” Part of the emphasis on “permanency” includes financial reimbursements for foster care programs, as well as adoption bounties, which are lump sums in the thousands paid to states for each child they successfully adopt out after a certain threshold.

This starts with the Federal Foster Care Program (Title IV-E of the Social Security Act), which functions as an open-ended entitlement grant. There is no upper limit to the amount of funding that can be provided for eligible foster children each year. States receive reimbursements ranging from 50 cents to approximately 76 cents for each dollar spent on daily child care and supervision, administrative costs, training, recruitment, and data collection.

But when it comes to programs that support family reunification, the budget slims. Title IV-B of the Social Security Act, which governs federal reunification funding, includes a capped entitlement component and a discretionary component. So, unlike foster care funding, these dollars come with a set limit.

And that limited money isn’t all for reunification services. Title IV-B also includes provisions that allow for some of this funding to go toward foster care programs. A portion is also required to go toward adoption promotion.

The result of this imbalanced funding structure? The federal government spends almost 10 times more on foster care and adoption than on programs geared toward reunification.

One of the less-known sources of federal funding for child welfare programs is the Temporary Assistance for Needy Families (TANF) program. TANF is supposed to be a cash-assistance program servicing low-income families with children, In reality, TANF funds can be used to support many services designed to help “needy” children, including child protection agencies. The result is that many states use TANF funds to finance foster care, child welfare investigations, and adoption or guardianship payments.

Because child welfare program data are self reported, it can be difficult to track exactly how each dollar is spent, but Wexler was able to identify eight states using TANF to pay for adoption subsidies, 23 states funding CPS investigations, 27 states funding foster care, and three states diverting TANF money to fund residential treatment facilities for child welfare involved children.

Considering that three-quarters of substantiated child maltreatment cases are related to neglect, which is often the result of poverty, it seems exceedingly unjust that funds supposedly intended to offset the worst effects of poverty are instead being used to finance the separation of mostly poor families.

The harder the system deems the child to place, the higher the bounty.
– Richard Wexler

Under ASFA, states are — with few exceptions — required to file for the termination of parental rights when a child has been in foster care for 15 of the past 22 months. In an attempt to curtail the infamous foster care hopscotch, which leaves children whose parents have lost their rights bouncing from foster home to foster home, the government created adoption payment incentives.

Adoption bounties range from $4,000 to $12,000 per child. As Wexler explained, “the harder the system deems the child to place, the higher the bounty.”

But in order to begin collecting that money, a state must exceed the last year’s number of adopted children, thus incentivizing states to permanently re-home an ever-increasing number of children each year. As can be expected, the number of adoptions increased in the five years after the implementation of ASFA, while reunifications declined. The Bush administration’s Adoption and Promotion Act of 2003 further codified this adoption bounty system by allocating $43 million yearly to states that succeed in increasing the number of adoptions from foster care.

Many states contract with private agencies that oversee out-of-home placements and service referrals for child welfare involved children. Said Wexler, “that agency will probably be paid for each day that child remains in foster care … So the private agency has an incentive to convince itself that the child really, really can’t go home and has to stay with them for a long, long time.”

What does this look like on the ground? Painfully delayed referrals to support services such as parenting classes and addiction treatment, judges hesitant to find fault with the way agencies and providers handle cases, and private agencies eager to deem parents unfit for reunification.

There have been some recent moves at the federal level aimed toward shifting some of these financial imbalances. The Family First Act, signed into law in 2018, now allows federal reimbursements for mental health services, evidence-based substance use treatment, and in-home parenting support. Its purpose is to create similar incentives for helping families stay together.

Unfortunately, the act does not support many of the common needs that lead to family separation, such as housing or child care support. And because the programs it does support must meet stringent requirements in order to be eligible for reimbursement, foster care and adoption subsidies continue to exceed reunification programs by the hundreds of millions.



The Next Recession Will Be Harder Than It Needs to Be. Here’s Why.

Recessions are hardest on those who can least afford it.

Take the Great Recession, the economic plunge that followed the 2008 financial crisis. It cost those in the poorest 10 percent of Americans more than 20 percent of their incomes, which was more than twice the drop experienced by the richest 10 percent. It was black and Hispanic workers, as well as workers who didn’t have a college degree, who saw higher rates of unemployment and longer durations without a job than other workers.

Overall, the recession exacerbated already existing inequalities in wealth and income, with black and Hispanic families, as well as women, falling further behind their white, male counterparts in terms of asset building.

And the next recession could be even harder.

It’s not because that next recession, whenever it arrives, will reach the depth and breadth of the Great Recession. Rather, it’s because federal and state governments have been undermining the programs that protect people when an economic downturn arrives, such as unemployment benefits or nutrition assistance, essentially since the Great Recession ended. This means those programs will be even less effective when they’re next called into action, making the next recession more painful than it would be otherwise.

These concerns are even more important now that there are some flashing red signs that a recession may come sooner than anyone would hope.

To start, nine states have cut the duration of their unemployment benefits systems to below the previously standard 26 weeks, with Florida cutting all the way down to 12. During the recession, when the average length of unemployment approached 40 weeks, more conscientious states extended benefits up to 99 weeks.

While five of the states that have cut unemployment benefits have rules in place to automatically expand benefits if the unemployment rate rises, the other four don’t. And since the conservatives who now control the Senate were against those Great Recession benefits expansions, there’s no guarantee of federal help if states do not act to fix their stingy systems.

Also, having a workable benefits system in place doesn’t necessarily ensure people get the help they need. In 2007, 35 percent of unemployed workers received benefits. Today, barely more than a quarter do due to the imposition of more stringent eligibility requirements. In some states it’s substantially worse: In 2017, for instance, just 10 percent of unemployed workers in North Carolina qualified.

So the main bulwark against poverty when mass unemployment occurs has been whittled down from a standard that even before the recent cuts left America among the least generous countries in the world.

Then there’s nutrition assistance. During the recession, the Supplemental Nutrition Assistance Program (SNAP) provided help to nearly 50 million people per month at its peak in December 2012. But the Trump administration — after trying and failing to convince Congress to cut the program — has unilaterally imposed new limits that are going to make it so the program reaches fewer people in the future.

One change, in particular, makes it harder for states to waive certain requirements during periods of high unemployment, which is exactly the time at which eligibility should be expanding.

The Trump administration is also providing waivers to states so that they can add work requirements to Medicaid – to date, six states have had their waivers approved. So when workers lose their jobs, and thus their employer-based health insurance, Medicaid will be that much harder to turn to.

An economic problem is going to collide with a political one

Other steps state governments have taken will also make recession response harder. One of the fundamental problems during an economic downturn is that most states have balanced budget requirements, meaning they have to cut their budgets and suck money out of the economy at the precise moment households are doing the same thing, creating a vicious cycle of economic contraction. Education is a particular favorite for reductions; 12 states still aren’t spending as much on their education system today as they were before the Great Recession.

To deal with that reality, states have rainy day funds they are meant to deploy during rough times to counteract some of that budget slashing. However, about a third of states don’t have the money available in their funds to get through even a moderate downturn. Some of those states, such as Kentucky and Missouri, decided to lower tax rates for their wealthiest earners this year, which didn’t really help bolster those reserves.

Come an economic downturn, the federal government could step in to fill the void states create, just as it did during the Great Recession, providing aid so that states don’t have to, for instance, lay off as many teachers as they would otherwise. But there’s not much reason to believe conservatives in the U.S. Senate would be for that, either. So, an economic problem is going to collide with a political one, creating more pain for more people. (It doesn’t help that Republicans in Congress used $1.5 trillion on a tax cut for the rich and big corporations that had little economic effect, and will embolden those who think additional spending is impossible due to federal deficits and debt.)

Of course, there’s no divining whether a recession is imminent. It may be that the warning signs this time are just a false alarm. But another recession is going to come eventually. And when it does, it’s going to be more painful than necessary, not due to any innate economic condition, but because of choices policymakers made.



Waiting For A Check To Clear Sucks. The Fed Wants to Fix That.

Many people have shared the experience of depositing a check and then waiting while it takes days to clear; the money is there, but not there.

For low-income people, that experience isn’t just annoying. It can also be a real financial hardship. Mismatches between available funds and expenses can create a spiral of bank overdraft fees and denied transactions, and the deeper in someone gets, the more insurmountable it can feel.

“It’s very embarrassing,” a commenter told TalkPoverty, describing a day of being hit with three separate overdraft fees while waiting on  processing for a paycheck.

That’s something that could change as early as 2024 with a proposed real-time payments system recently announced by the Federal Reserve, America’s central bank. With FedNow, as it’s being called, funds could be moved any day, any time, nearly instantly.

The move is long overdue and has big implications for people who cannot afford to wait for a transaction to clear, such as the 1.8 million people earning minimum wage or less. A waiter making a tipped minimum wage, for example, can ill afford to deposit a paycheck and wait for it to clear with their rent deadline looming, and the technology already exists to fix the problem.

Real-time payments are used all over the world to move funds rapidly; they are a type of “faster payments,” which speed the payment process relative to the current standard, but they aren’t just faster. They are, as the name implies, virtually instant.

The United States, though, has remained stuck in the past with an outdated payments system created decades ago that doesn’t operate every day or at all times throughout the day.

In places such as Mexico, the U.K., Japan, Australia, and Turkey, both private firms and central banks own and operate faster payment systems — and in the U.S., a consortium of banks known as the Clearing House operates its own, called, creatively, RTP (for Real-Time Payments). RTP has been rolling out since 2017, and is open to all federally-insured financial institutions. The Clearing House claims RTP is active on 50 percent of direct deposit accounts in America, but the service’s initial customers were the same larger banks that make up the Clearing House.

These account for a large volume of American bank accounts, but a smaller segment of American banks; good for Chase, but perhaps not good for clients, especially since RTP controls pricing and access, potentially to the detriment of some users.

The Fed, building on the work of a task force formed to explore faster payments, wants to leverage its already extensive network of connections with banks, credit unions, and other financial institutions large and small. The goal is not to replace RTP, but to offer another option, and specifically a public one, which offers a net good and adheres to the government’s critical role in promoting fair access, pricing, and opportunity for all.

This is important because while the Clearing House has promised to hold rates steady, there’s no guarantee it will. Smaller banks are concerned about being cut out by what former Independent Community Bankers of America president and CEO Cam Fine described as a “monopoly.” Clearing House’s target date of 2020 for covering all direct deposit accounts in the U.S. is also likely unrealistic, while the Fed’s existing network and reach could make near-universal access much more logistically possible.

Fine notes that the Federal Reserve has been involved in payment processing for over 100 years; this is just another iteration of the central bank’s duties, a sentiment echoed by Chairman Jerome Powell.

Real-time payments can’t wipe out the payday loan industry, but they can take a chunk out of it.

Real-time settlement has big implications for businesses, especially small ones. But for low-income people, it could be transformative. Americans spend $24 billion in overdraft fees annually, some of which are driven by issues resolvable via faster payments; if there’s no lag between deposit and funds availability, there’s less likelihood of engaging in a transaction that will overdraw an account. If someone expects to get paid on Friday, the funds are instantly available, and they can pay their rent without worrying about a financial penalty.

People also spend about $7 billion on payday loans, which one in ten Americans have used. Real-time payments can’t wipe out the payday loan industry, but they can take a chunk out of it, since some of those loans are taken out in desperation by people who need money immediately, not after the time it takes for a bank to settle. Similarly, Americans spend approximately $2 billion cashing checks every year. That’s not just people who don’t have bank accounts; it includes people who can’t afford to wait for their accounts to clear.

That’s billions of dollars low-income people can ill-afford going into the pockets of companies with entire families of products built upon exploiting financial vulnerabilities.

Thomas Hoenig, former president of the Federal Reserve in Kansas City, former vice-Chair of the Federal Deposit Insurance Corporation, and currently a senior fellow at the Mercatus Center, notes that FedNow has another potential benefit as the system is built out: It could extend to other financial institutions such as remittance services. Immigrants sending money home through Western Union could therefore benefit from modernization to U.S. payments system, as a faster payments service in the United States can communicate with similar systems overseas, instantly transferring funds from senders to recipients.

Real-time payments will not fix issues like a federal minimum wage that hasn’t increased since 2009, repeated attacks on nutrition programs, and attempts at undermining unions. But they will help low-income people get, and move, their money faster, reducing the strain that comes from living paycheck to paycheck but not actually knowing when the funds in your paycheck will be accessible.