201812

December 17, 2018 12:24PM

69% Oppose Creating Federal Paid Leave Program If It Harms Women’s Career Prospects

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The national Cato 2018 Paid Leave Survey of 1,700 adults finds widespread support for creating a federal paid leave program, with 74% in favor. However, 69% of Americans would oppose establishing a federal paid leave program if it meant that fewer women would get promoted and become managers. But would establishing a federal program actually do this? Research suggests that it could and that’s why we asked about it on the survey:

Read about the full survey results and methodology here.

First, let’s consider the different career outcomes between women in the United States and women in Western Europe and Scandinavia. Academic research finds that American women are more likely to rise up the corporate ladder than their European counterparts who have access to generous family social welfare programs. 

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An analysis of OECD countries reveals that American women are about 3 to 14 times as likely as Scandinavian women to be employed as managers with 14.6% of American women who are managers compared to 4.6% of Norwegian, 4.2% of Swedish, and 1% of Danish women. American women are also more likely than women in France (5.1%), the United Kingdom (7.8%), Germany (2.7%), and the Netherlands (3.6%) to hold managerial positions. 

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Another measure of corporate success is the share of women who serve on company executive committees—these include the CEO and those who directly report to the CEO. The 20-First’s 2018 Global Gender Balance Scorecard finds that a majority—53%—of American companies have three or more women on executive committees.(1) In contrast, only 14% of European companies have three or more women serving on company executive committees. Some argue that once a company starts to have three or more women on executive committees, the company culture changes to see women in leadership roles as the norm rather than the exception.

But correlation is not causation, as every good statistics student knows. Just because Western European and Scandinavian countries have generous paid leave programs and family policies doesn’t mean it necessarily causes fewer women managers in Europe.  However, academic studies suggests that it might.

Studies have found that government-provided paid leave may lead to fewer women getting promoted and becoming managers because they take longer leaves than they otherwise would. Other studies have noted that employers, particularly smaller companies that have difficulty accommodating workers taking leave, may be less willing to hire female employees to begin with. Some argue that American women’s corporate success may be due to the fact that the United States does not provide generous family leave policies like Europe.

Because of this research, the Cato 2018 Paid Leave Survey examined what Americans think about establishing a federal paid leave program if it had harmed women’s careers.

The survey finds that voters would not be willing to sacrifice the progress women have made in the workplace if that were the cost of implementing a federal paid leave program: 69% would oppose while 29% would support making this trade-off.

A majority (57%) of mothers of children under three also oppose the idea if federal paid leave were to harm women's careers. Majorities of Democrats (63%), independents (68%), and Republicans (77%), men (67%), and women (71%) all would oppose establishing a federal paid leave program if it meant fewer women would get promoted.

These data indicate that policymakers have good reason to evaluate the academic research on the effects of government-supported paid leave programs on the corporate leadership gender gap before inaugurating this new program. 

For public opinion analysis sign up here to receive Cato's upcoming digest of Public Opinion Insights and public opinion studies.

 

Read about the full survey results and methodology here.

The Cato Institute 2018 Paid Leave Survey was designed and conducted by the Cato Institute in collaboration with YouGov. YouGov collected responses online October 1-4, 2018 from a national sample of 1,700 Americans 18 years of age and older. Restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of error for the survey is +/- 2.4 percentage points at the 95% level of confidence.

  





(1)The number for American companies is based on 37 out of 38 being companies based in the United States and 1 from Brazil.

December 17, 2018 10:04AM

Proving Your Wealth Is “Legitimate”

This story from WAPO sent a chill down my spine:

Until quite recently, Zamira Hajiyeva was living the high life, according to British authorities. She had a $15 million townhouse in London’s tony Knightsbridge neighborhood, a golf club in the English countryside and a gold-plated shopping habit at Harrods.

That was before a British court this year asked the 55-year-old from Azerbaijan an impertinent question: How did she afford those purchases?

That query is at the heart of a bold British push to try to reverse what the government believes is a flood of foreign investment stemming from overseas corruption and criminality.

In other words, the U.K. is shifting the burden of proof onto foreign investors; they must now prove their wealth is legitimate.

No doubt, some foreign investestments into the U.K., U.S., and elsewhere are attempts to launder ill-gotten gains.

But the slippery slope implications of the U.K.'s new approach are terrifying.

To start, governments can expand this "presumption of guilt" to its own citizens, not just foreign investors.  Can you prove all your wealth is from legitimate sources?  Unless you have kept scrupulous records your entire life, probably not.  And even if you can, doing so is likely an accounting and legal nightmare.

And where would this presumption of guilt stop? Will we someday have to prove we do not use outlawed drugs?

The presumption of innocence is fundamental to a free society.  The U.K. is playing with fire.

December 17, 2018 10:03AM

Another Failed Defense of the Jones Act

As the Cato Institute continues to press the case for Jones Act reform, defenders of this flawed and failed law have repeatedly made clear that they’ve taken notice. Fresh evidence of this was seen earlier this month with the publication of an op-ed on the leading maritime website gCaptain.com. Entitled “CATO’s Continued Attempt to Skin the Jones Act,” the piece was an obvious preemptive salvo launched a day prior to Cato’s recent conference on the law’s shortcomings. A close reading, however, reveals it to be another instance of Jones Act defenders missing the mark.

Examining the law’s history, author Sal Mercogliano—a professor at Campbell University—claims that prior to the outbreak of World War II that “the Jones Act, reinforced by the Merchant Marine Act of 1936 ensured that not only was there a domestic shipbuilding industry, but it could be ramped up to support the building of over 5,000 merchant ships…” This is, at best, incomplete. As the book Global Reach points out, during this time U.S. merchant shipbuilding was almost non-existent and the fleet itself in obvious decline:

By the mid-1930s American merchant shipbuilding had come to almost a complete halt. In the nearly twenty years following the end of World War I, America’s merchant fleet, including its cargo and passenger ships, was becoming obsolete and declining in numbers; nearly 90 percent of the merchant fleet was more than twenty years old, and few ships could do more than ten or eleven knots. Although the Maritime Commission established by the Merchant Marine Act of 1936 had planned to build 50 ships a year under its CDS provisions, by 1939 the United States had only about 1,340 cargo ships and tankers, fewer than the total built by U.S. shipyards in 1914-17, even accounting for wartime losses. In no respect was the U.S. commercial industry capable of meeting the demand for sealift posed by the looming conflicts in Europe and the Pacific.

It’s also worth pondering why, if the Jones Act should be regarded as a success, the Merchant Marine Act of 1936 was even needed.

Dr. Mercogliano’s explanation of stupefying U.S. shipbuilding costs—commonly estimated to be three to five times greater than those of Asian shipyards—similarly leaves much to be desired:

CATO contends that the Jones Act is a burden that American can no longer bear. Specifically, they cite the higher cost to build ships in America as opposed to overseas. The largest builders of commercial ships in the world today are the Republic of Korea, the People’s Republic of China, and Japan; nine out of every ten ships afloat are built in East Asia. The question that needs to be raised is why? It is the exact reason that the CATO Institute rails about with the United States – government subsidies. The South Korean government announced the injection of over $700 million dollars into Hyundai Merchant Marine to stabilize the largest Korean shipping line. It was announced that the South Korean government would be infusing over $1 trillion into shipbuilding, in violation of the World Trade Organization.

While it is true that Asian shipbuilders receive government largesse, both the amount and its alleged explanatory power are vastly overstated. The $1 trillion figure cited—a stunning two-thirds of South Korea’s GDP—has no basis in reality. In fact, a recent WTO case brought by Japan against South Korea over its shipbuilding subsidies uses the figure of $11 billion in financial assistance.

The main reason why U.S. shipyards are so wildly expensive is not subsidies but scale. Asian shipyards have it, while U.S. shipyards—where annual output of tankers and cargo ships is typically in the single digits—do not. As this 2015 National Defense University (NDU) report on the U.S. shipbuilding sector explains:

Many of the successful foreign shipbuilders enjoy significant economies of scale from commercial market share dominance. The Jones Act does not deliver the market share necessary for the United States to achieve competitive economies of scale and, therefore, the United States will likely never be competitive in the global commercial market.

A 2009 NDU report similarly held the Jones Act at least partly responsible for U.S. shipyards' lack of competitiveness:

Regarding the international market for commercial ships, U.S. shipbuilders face steep competition from shipbuilders in Asia who offer lower prices, are more efficient, and have higher industry best practice ratings. This is particularly true for the construction of vessels over 1,000 tons. This can be partially attributed to protectionist policies, such as the Jones Act, that have shielded domestic shipbuilders from the pressures of global competition. Thus while U.S. shipbuilders have remained competitive within the U.S. market, they were less so compared to foreign shipyards. None of the shipyards that the Industry Study Team visited expressed confidence that U.S. shipyards, as they are currently configured, could compete effectively in the global shipbuilding market.

Furthermore, the United States is hardly innocent in this regard. As yet another NDU report points out, the Philly Shipyard alone has received “approximately $500 million in direct subsidies and leases its facility from the city for only $1 per year” while the Austal shipyard in Alabama and VT Halter shipyard in Mississippi have received millions more.

There’s also the small matter that the Jones Act itself, which mandates the purchase of U.S.-built ships, functions as a massive de facto subsidy scheme.

And for all of the finger pointing at foreign subsidies, it’s instructive that when the Clinton administration reached an international deal for an end to shipbuilding subsidies—one that included Japan and South Korea—U.S. shipbuilders performed an about face and turned it down. One would expect a rather different response if subsidies were indeed the decisive factor preventing these shipbuilders from competing with their foreign counterparts.

Mercogliano later goes on to discuss the Jones Act’s national security justification and the heavy U.S. reliance on foreign-flagged shipping during Operations Desert Shield and Desert Storm. While conceding that, despite having the Jones Act in place, the conflict “highlighted a shortfall in American sealift capacity,” Mercogliano seems to argue that this had largely been remedied by the time of the 2003 Iraq War with “all the cargo shipped to that conflict [going] on ships crewed by American merchant mariners.”

Other sources, however, paint a rather different picture. According to a 2009 Naval War College paper the shipping situation was in fact arguably even more dire than during Desert Shield/Storm:

With 77.6 percent of cargo being moved by United States government owned vessels, TRANSCOM still had to turn to the United States and foreign flagged merchant fleets during the deployment of OIF. In fact, since the United States flagged merchant fleet continued to decline between Desert Shield/Desert Storm and OIF, United States flagged merchant vessels delivered only 1.3 million square feet or a mere 6.3 percent of OIF deployment cargo. Therefore, even with TRANSCOM’s high priority of funding after Desert Shield/Desert Storm they were still required to use foreign flagged merchant vessels to move 3.3 million square feet or 16.0 percent of OIF deployment cargo.

While this looks like an 11 percent improvement from Desert Shield/Desert Storm, OIF required 12.1 million square feet less of cargo. Therefore, if the required cargo to be moved was equal to that of Desert Shield/Desert Storm then foreign flag vessels would certainly have been used to carry the majority of the additional cargo. In fact, using a conservative estimate of foreign flag vessels picking up 50 percent of the difference in cargo between the two conflicts would have brought the percentage of cargo carried by foreign flag vessels to 28.6 percent, one percent higher then (sic) during Desert Shield/Desert Storm.

Since this time the Jones Act fleet has only further deteriorated. When Operation Iraqi Freedom began in 2003 the number of Jones Act ships stood at 151. Today it is a mere 98.

None of this is to suggest that the piece is entirely devoid of useful facts or information. Mercogliano, for example, notes that the Jones Act’s namesake, Sen. Wesley Jones of Washington state, was “particularly interested in the cabotage provision between his home state and the Alaska territory.” This does not surprise, with the Jones Act resulting in two Canadian shipping companies that served Southeast Alaska driven from that market—a development that almost surely benefited competitors in Jones’s home state.

Refreshingly, Mercogliano also acknowledges that, should the Jones Act be repealed, “Americans could see a reduction in their freight rates and the opening of new water routes between American ports.”

Perhaps most importantly, while he uses his conclusion to oppose repeal of the Jones Act, Mercogliano concedes that reform is needed stating, “Does the Jones Act need reform? Yes, what 98-year-old law does not need updating.” We may differ on the exact reforms required, but acknowledging that not all is well with the Jones Act is an important first step. 

December 14, 2018 4:23PM

Trump Administration Continues to Expand Interior Immigration Enforcement

Today, the Department of Homeland Security (DHS) released a report detailing deportations (henceforth “removals”) conducted by Immigration and Customs Enforcement (ICE) during fiscal year 2018.  This post presents data on removals in historical context – combined with information from Pew and the Center for Migration Studies on the number of illegal immigrants present in the United States.

ICE deported 95,360 illegal immigrants from the interior of the United States in 2018, up from 81,603 in 2017.  Removals from the interior peaked during the Obama administration in 2011 at 237,941 (Figure 1).  The Trump administration would have to increase the pace of interior removals dramatically to reach Obama’s previous peak.  Unless something dramatic changes, that won’t happen as local law enforcement agencies are much less likely to cooperate with President Trump’s ICE than they were with President Obama’s ICE.   ICE also removes large numbers of illegal immigrants apprehended at the border.  Since 2012, border removals have outnumbered those from the interior of the United States.

 

Figure 1

Interior and Border Removals by ICE, 2008-2018

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Source: Immigration and Customs Enforcement.

 

The Obama administration removed 1,242,486 from the interior of the United States during its full eight years, averaging 155,311 removals per year.  Data from the earlier Bush administration are more speculative, but they show an increase in deportations during the last half of Bush’s administration that continued during Obama’s first term before flattening and, finally, dropping rapidly in his second term.    

The percentage of all illegal immigrants removed from the United States is a better measure of the intensity of interior enforcement than the total numbers removed.  Based on estimates of the total size of the illegal immigrant population from Pew, ICE removed about 0.89 percent of the illegal immigrant resident population from the interior of the United States in 2018, up from 0.76 percent in 2017.  Interior removals as a percent of the illegal immigrant population peaked at 2.11 percent in 2009. 

 

Figure 2 

Removals as a Percent of the Illegal Immigrant Population

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Sources: Immigration and Customs Enforcement, Pew, and Author’s Estimates.

 

ICE under President Obama’s administration removed an average of 1.38 percent of the interior illegal immigrant population per year of his presidency.  The Obama administration’s interior removal statistics show a downward trend beginning in 2011 and continued until the end of his administration.  So far, ICE under President Trump has only managed to deport an average of 0.83 percent of the illegal immigrant population each year.   

The Obama administration also focused immigration enforcement on criminal offenders (not all illegal immigrants are criminals).  During the Obama administration, 52.6 percent of all illegal immigrants removed were convicted criminals, including those convicted of immigration crimes.  About 57 percent of those deported during the Trump administration were convicted criminals. 

 

Figure 3

Criminal Removals as a Percent of All Removals

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Source: Immigration and Customs Enforcement.

 

The Trump administration is continuing to ramp up interior immigration enforcement.  The 2018 figures show a reversal of the declining interior immigration enforcement efforts under the Obama administration, but they have not reached Obama’s previous deportation records.  Trump is unlikely to come close, but he will continue to try.

 

December 14, 2018 1:46PM

Trump Administration Increases Immigration Enforcement at Businesses

President Trump’s administration has increased immigration enforcement at worksites, just as he promised.  Immigration and Customs Enforcement (ICE) arrested 2,304 people at worksites in the fiscal year 2018, a more than 7-fold increase from the previous fiscal year and about 6.7-fold more than the last full year of the Obama administration. 

ICE’s worksite arrests fall into two categories: criminal or administrative.  Any citizen or noncitizen whom ICE suspects of having committed a criminal violation, such as identity fraud, can be arrested.  Administrative arrests are for civil violators of the Immigration and Nationality Act (INA), which means that only non-citizens can be arrested for such violations.  An administrative arrest is usually the first step toward deportation for an immigrant.  ICE doesn’t make most of its initial administrative arrests as it relies on other law enforcement agencies to arrest illegal immigrants, but it does directly arrest those at worksites in these cases.

Figure 1 shows the rapid and recent increase in all ICE criminal and administrative arrests.  The number of arrests peaked in 2008 at 6,287 after several steady years of increases, but then declined during Obama’s presidency with a single blip in 2011.

Figure 1

All ICE Arrests at Worksites

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Sources: Immigration and Customs Enforcement and Congressional Research Service.

President Trump’s ICE is making more administrative arrests and a greater percentage of those come from worksite enforcement (Figure 2).  In 2016, only 0.35 percent of all of ICE's administrative arrests (those that ICE makes itself) were at worksites.  In 2018, 3.7 percent of all of ICE's non-custodial arrests were at worksites.  Since 2017, administrative arrests are up 8.9-fold compared to a 5.6-fold increase in criminal arrests over the same time.  As a share of all ICE administrative arrests, those conducted at worksites are up about 10.7-fold over 2016, the last year of the Obama administration, and 8.8-fold since 2017.      

Figure 2

Worksite Administrative Arrests as a Percent of All ICE Administrative Arrests

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Source: Transactional Records Access Clearinghouse, Immigration and Customs Enforcement, and Congressional Research Service.

The I-9 worksite audit was a major innovation in immigration enforcement unrolled during Obama’s administration, which Trump’s administration is using with alacrity (Figure 3).  Although the number of worksite audits increased about 4.4-fold from 2017 to 2018, from 1,360 to 5,981, only a small fraction of all establishments were actually audited.  The Business Dynamics Statistics (BDS) at the U.S. Census reports that there were more than 6.8 million business establishments in 2016, the last year for which data is available.  Not all of those 6.8 million establishments have employees besides the founder and, since he doesn’t have to fill out an I-9 form, not all of them would be subject to audits.  With the aid of a back of the envelope estimate, I assume that about 3.9 million of those establishments had more than one employee in 2016.  Thus, it’s unlikely that the 5,981 ICE I-9 audits in FY2018 covered more than 0.15 percent of all business worksites. 

Figure 3

I-9 Audits

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Sources: Immigration and Customs Enforcement and Congressional Research Service.

ICE clustered its I-9 audits by time in 2018.  It sent out 5,278 (88 percent) of the 5,981 notices of inspection for the audits during the two periods of January 29 through March 30 and July 16 through July 20.  Those big operations were meant to frighten illegal immigrants and their employers.  Since ICE only audited about 0.15 percent of establishments, it has to rely on fear to increase compliance with immigration laws at worksites.

The Trump administration was supposed to reduce expensive economic regulation.  In many other sectors of the economy, Trump has followed through on this promise.  Immigration is the exception. 

 

December 14, 2018 1:19PM

78% of Americans Support Parental Leave Savings Accounts

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Nearly 8 in 10 Americans (78%) support creating family and medical leave savings accounts. The national Cato 2018 Paid Leave Survey of 1,700 adults finds the public favors allowing workers to set aside money in tax-advantaged savings accounts that could be used if they need to take family or medical leave. A fifth (20%) would oppose the creation of family and medical leave accounts.

Read about the full survey results and methodology here.

Establishing family leave savings accounts enjoys rare bipartisan support: 82% of Democrats, 80% of Republicans and 69% of independents support offering tax-advantages to people who set aside money for parental, family, or medical leave. 

Women (80%) and men (76%) also overwhelmingly agree about establishing these types of accounts. These numbers include 85% of Democratic women, 82% of Republican women, and 78% of Democratic and Republican men. 

Support for parental and family leave savings accounts aren’t reserved for the wealthy. Nearly three-fourths (73%) of those earning less than $25,000 a year also support such savings accounts. Support heads upwards from there with 86% in favor among those earning $80,000 a year or more.

Finding an image of a piggy bank or savings jar with “family leave” or “parental leave” written on the side to compliment this post was difficult. Instead, one can easily find images of piggy banks and savings jars with labels to save for retirement, to buy a house, for college as well as future travel and stocks. For these needs and wants, we’ve cultivated a culture of saving.

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Over time our society has fostered a set of social norms that we instill in our young people starting at an early age. We were reminded when we were young, just as we remind the next generation, to start saving early for an education, a house, big purchases, emergencies, investments in the future, etc. We were reminded to delay consumption today so we have more for later. Doing so can provide peace and security to feel like we’ve done our part to prepare for the future. People usually don't enter the world with a set of expectations about the value of saving and what they should save for. Thus it's useful to establish social norms that encourage saving early on.

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However, a gap exists in our present cultural norms when it comes to saving for parental and family leave. The fact that I could not easily find an image of a piggy bank or savings jar with “parental leave” or “family leave” as a savings goal is indicative of our culture not yet establishing a norm for these savings goals. While family leave savings accounts need not crowd out other innovations to help support working people who take time to care for new children, family members, or themselves, it can be part of the discussion. These poll results suggest society may be ripe for establishing new social norms of saving for parental and family leave.

 

 

December 13, 2018 4:03PM

CBO Findings on Farm Subsidies

As the $867 billion farm bill goes to the president for his signature, the Congressional Budget Office reminds us why farm subsidies don’t make much sense.

CBO just released a new “options” report that includes more than 300 pages of ideas for reducing budget deficits. The report suggests ways that Congress could cut farm subsidies, and it describes how the world has changed since these programs were put in place in the 1930s:

During the Great Depression of the 1930s, the 25 percent of the population that lived on farms had less than half the average household income of urban households; federal commodity programs came about to alleviate that income disparity.

One argument for eliminating Title I commodity support programs is that the structure of U.S. farms has changed dramatically since then: The significant income disparity between farm and urban populations no longer exists. In 2014, about 97 percent of all farm households (which now constitute about 2 percent of the U.S. population) were wealthier than the median U.S. household. Farm income, excluding federal program payments, was 52 percent higher than median U.S. household income.

Moreover, payments made through programs that support commodity prices and incomes are concentrated among a relatively small portion of farms. Three-quarters of all farms received no farm-related government payments in 2014; most program payments, in total, went to mid- to large-scale farms (those with annual sales above $350,000).

Title 1 refers to ARC, PLC, and other programs that shovel billions of taxpayer dollars to the growers of corn, soybeans, wheat, and other crops.

Let me reiterate:

  • About 97 percent of all farm households are wealthier than the median U.S. household.
  • Farm income was 52 percent higher than median U.S. household income.
  • Subsidies are slanted toward the largest farms.

Further arguments against farm subsidies are here, here, and here.