Wages and Non-Wage Compensation

The exclusion of employer-sponsored health insurance premiums and medical benefits reduced federal tax revenues by $268 billion in 2011 alone-by far the largest federal tax expenditure. Moreover, the exclusion disproportionately subsidizes those with higher incomes. In this brief, we provide estimates of the revenue potential and distributional consequences of limiting the exclusion from income and payroll taxes at the 75th percentile of 2013 premiums, indexing by GDP. The policy would produce $264.0 billion in new tax revenues over the coming decade while preserving 93 percent of the tax subsidies available under the current policy.

This report explores workforce and asset development strategies for improving the economic security of extremely vulnerable families, those facing major challenges beyond poverty. Evidence drawn from the authors' own research, their review of relevant literature, and learning sessions conducted by the Annie E. Casey Foundation's Center for Community and Economic in Washington, DC, Chicago, and Portland, Maine, suggests that programs can succeed at improving the skills and employability of extremely vulnerable parents and increasing their savings to help tide them through emergencies. The paper also highlights opportunities to inform policy and support targeted research to advance this agenda.

For decades, the labor market has grown more polarized with employment and wages growing more slowly for middle-skill jobs than for other jobs. By most measures, polarization did not accelerate during the Great Recession. More polarization is evident, however, in the wages of re-employed workers.

To control rising pension costs, many states are reducing the generosity of the retirement plans they offer their employees, partly by increasing required employee contributions. These reforms, however, ignore the employee recruitment and retention problems created by traditional pension plans. Using New Jersey as a case study, this brief shows how state retirement plans discourage younger workers from joining the state's workforce, lock in middle-aged workers even if a job is not a good fit, and push older workers into retirement. Recent reforms make these plans even less appealing to a modern, mobile workforce.

When state pension plans are underfunded, someone eventually has to pay for the shortfall. Many recent reforms designed to improve plan finances shift burdens to the young, particularly by making many new employees net contributors to—rather than beneficiaries of—these plans. Using New Jersey as a case study, this brief shows how states require higher levels of employee contributions, invest them in somewhat risky assets, and then, like a bank or financial intermediary, pay back many employees less in benefits than what they contributed and expected to earn on those contributions.

Twenty-somethings fresh out of college or graduate school may need to rethink starting jobs in state government, cautions a report from the Urban Institute's Program on Retirement Policy. The new recruits could end up paying for their state’s unfunded pension liabilities without much to show for their efforts.

Nearly every state has experienced record economic insecurity recently, measured by the Economic Security Index (ESI) as the percentage of people losing more than a quarter of their available income from one year to the next without sufficient liquid wealth to offset the loss. More than one in six in New Hampshire (lowest), and nearly one in four in Mississippi (highest), suffered large losses between 2009 and 2010. All states experienced a substantial rise in insecurity between 1986 and 2010. The insecurity rank of states changed little over the 1986-2010 period--state differences in insecurity appear to be persistent.

In this paper we use data from the Current Population Survey to summarize labor market trends in the U.S. over the past 30 years. First we focus on secular trends over the four years (and three cycles) that constitute labor market peaks during this period: 1979, 1989, 2000, and 2007. Then we consider peak-to-trough changes in employment outcomes for each of the four recessions that have occurred in this period, including the Great Recession. Overall we find great unevenness in labor market performance across cycles and across demographic groups. Inequality has widened dramatically and important structural changes have occurred.