economics: social welfare

At Everyday Sociology, sociologist Karen Sternheimer made a nice observation about the problem of teen drinking. It’s not our biggest alcohol problem.

According to the CDC, the age group most likely to die from binge drinking is people 35-64 years old. In fact, three out of every four alcohol poisoning deaths are in this age group — 4.5 out of a total of 6 a day — and 76% of them are men, especially ones who earn over $70,000 a year.

So why all the PSAs aimed at teens?

Sternheimer argues that the focus on teens has to do with who what groups are identified as problematic populations. In the 1800s and early 1900s, she points out, laws were passed in several states making it illegal for African Americans and Native Americans to drink alcohol. Immigrants were also targeted.

Young people weren’t targeted until the student rebellions of the 1960s and ’70s. Like the “protest psychosis” attributed to black Civil Rights activists, the anti-establishment activism of young people was partly blamed on drug and alcohol use.

Today, she observes, the National Institute of Alcohol Abuse and Alcoholism focuses its attention on young people, minorities, women, and people with HIV.

It’s about power. She writes:

White, middle-class men over thirty typically have more social power than the groups commonly targeted as problems. They also vote, and no sane politician is going to campaign warning of the danger some of these men cause and how we can control them.

Not to mention, she says, how the alcohol industry would feel about the government telling their richest customers to curb their drinking. They much prefer that PSAs focus on young people. “This industry can well afford the much-touted ‘We Card’ programs,” says Sternheimer, “because teens usually don’t have the money for the expensive stuff that their parents can buy.”

The industry’s marketing to wealthy, white men, then, goes unchecked.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Americans have become increasingly critical of public policy as a means of addressing social problems.  Many believe that these policies don’t work; the reality is that public policies are often subverted in ways that make them ineffective or even counterproductive.

Take taxes and inequality.  As Danny Vinik, writing in the New Republic explains:

The vast majority of Americans—both liberals and conservatives—believe that state and local taxes should also be progressive. That’s the finding of a new report released by WalletHub Monday. The researchers surveyed 1,050 Americans on what they thought the combined rate of state and local taxes should be at various income levels. Not surprisingly, liberals want the rate structure to be a bit more progressive than conservatives do, but their responses [as the following chart shows] were relatively similar:

However the reality is quite different.  State and local taxes are actually quite regressive.  The Institute for Taxation and Economic Policy studied the “fairness of state and local tax systems by measuring the state and local taxes that will be paid in 2015 by different [non-elderly] income groups as a share of their incomes.”  They did this state by state and, as presented below, on an overall basis.  As we can see, the lower the income, the greater the state and local tax burden.

Here are some of the report’s key findings:

• Virtually every state tax system is fundamentally unfair, taking a much greater share of income from low- and middle-income families than from wealthy families. The absence of a graduated personal income tax and overreliance on consumption taxes exacerbate this problem.
• In the 10 states with the most regressive tax structures (the Terrible 10) the bottom 20 percent pay up to seven times as much of their income in taxes as their wealthy counterparts. Washington State is the most regressive, followed by Florida, Texas, South Dakota, Illinois, Pennsylvania, Tennessee, Arizona, Kansas, and Indiana.
• Heavy reliance on sales and excise taxes are characteristics of the most regressive state tax systems. Six of the 10 most regressive states derive roughly half to two-thirds of their tax revenue from sales and excise taxes, compared to a national average of roughly one-third . Five of these states do not levy a broad-based personal income tax (four do not have any taxes on personal income and one state only applies its personal income tax to interest and dividends) while four have a personal income tax rate structure that is flat or virtually flat.
• States commended as “low tax” are often high tax states for low-and middle-income families. The 10 states with the highest taxes on the poor are Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas, and Washington. Seven of these are also among the “terrible ten” because they are not only high tax for the poorest, but low tax for the wealthiest.

In short, we know how to construct tax policies that can lessen inequality, but we’re not using state and local taxes to do it.

Cross-posted at Reports from the Economic Front and Pacific Standard.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

One of the arguments against an increase in the minimum wage is that it will lead to higher unemployment.  One can make theoretical arguments for and against this proposition.  And, of course, the income gains from an increase in the minimum wage are likely to produce overall benefits for both low wage workers and the economy as a whole even if there is a rise in unemployment.

Economists have tried to estimate the employment effects of a rise in the minimum wage.  As a Vox article describes, two of them, Hristos Doucouliagos and T.D Stanley, looked at almost 1,500 estimates of the effects of minimum wage increases on employment and found that the estimates “clustered right around zero effect, but with more of those estimates showing a slight downward pressure on employment.”

They concluded, “with sixty-four studies containing approximately fifteen hundred estimates, we have reason to believe that if there is some adverse employment effect from minimum wage rises, it must be of a small and policy-irrelevant magnitude.”

Originally posted at Reports from the Economic Front.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Below are two figures. The first ranks the U.S. and other countries by income inequality before taxes and government interventions to reduce it. The second ranks the same countries after taxes and intervention.

What we see is that, whatever we’re doing to reduce inequality, it’s not working nearly as well as what other countries with high levels of income inequality are doing, with the sole exception of Chile.

Thanks to Christian Science Monitor for the images and Martin Hart-Landsberg for the tip.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.