Reality is Likely to be Far Less Rosy

Reality is Likely to be Far Less Rosy

Reality is Likely to be Far Less Rosy

Reality is likely to be less rosy…

Some economists are hoping that inflation has peaked and will tick down in the coming months, after the pace of inflation slowed slightly in April. But Erik Randolph, director of research for the Georgia Center For Opportunity (GCO), warns that the reality is likely to be far less rosy.

“What we saw with the April Consumer Price Index was disinflation. That means the rate of inflation decreased but inflation is still occurring and our purchasing power is declining,” Randolph said. “Meanwhile, wage increases are lagging behind price increases. The vast majority of workers will have lower standardsof living because their budgets will not buy as much as in the recent past. Some workers will get handsome pay raises, but they will be the exception rather than the rule.

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What’s needed?

“The core problem here is that the price level has risen, setting a new floor for costs. The only way to lower the price level, by definition, is to allow for deflation. But our policymakers are afraid of deflation because of the economic schools of thought that they adhere to. What is needed is new economic thinking in Washington, D.C. from economists who are not afraid of deflation but recognize it’s the only way to bring the price level down that benefits the most people. The mess we’re in now are the signs of stagflation, meaning the rising price level may be soon accompanied with slower economic growth and loss of employment. The only way to mitigate that scenario would be to adopt policies to allow for supply-side growth.”

Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

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Key Takeaways:
  • Welfare cliffs and marriage penalties are discouraging people from work and forming families.
  • The cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts.
  • GCO has created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. 

Important Link: BenefitsCliff.org

 

If you work in a nonprofit serving the poor, you need to know that the government benefits your clients receive are likely discouraging them from working or forming a family, two things that research shows could lift them out of poverty the fastest. 

This is an especially tough problem for nonprofits, like GCO, that work to get their clients into good-paying jobs and strengthen their family relationships.

What’s going on?

These disincentives to work are often called “welfare cliffs” and the disincentives to family formation are called “marriage penalties.” Essentially, “cliffs” are generated any time a person receiving government benefits gets a raise at work that causes them to lose more in benefits than they will earn in additional income from the raise. These same individuals can face a similar financial penalty IF they decide to marry. In many cases, they will lose more in benefits than their spouse is able to provide in new income to the household.

While you would think (hope?) cliffs and penalties are rare, they are not. Instead, they are baked into the structure of nearly all welfare programs and many of the cliffs are severe. It’s also important to know that welfare recipients don’t face a single cliff or a single penalty, but they face cliffs and penalties at a number of different points as they have additional income from working or through marriage.

Why does it matter?

For nonprofit leaders, the cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts. For workforce development nonprofits, cliffs could be the underlying reason why your clients don’t pick up additional work hours when they are offered or seem less than excited when they are offered a good promotion. In extreme cases, clients may quit jobs that seemed like a perfect fit simply because they panic when they learn they may lose a major benefit – like housing or childcare.

For nonprofits trying to help strengthen family relationships, marriage penalties may be driving behavior that is otherwise inexplicable, like seemingly happy couples refusing to marry or live in the same home. These dynamics can lead to stress for the couples affected and to a sense that a parent (usually the father) has abandoned the family when, if the system would allow it, he would be in the home. In these cases, children pay the biggest price.

What can you do about it?

Fortunately, we have created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. For nonprofits working with these families, you now have a tool (available for 10 states, with two more on the way) that will allow you to help your clients plan for the future. In some cases, knowing when cliffs are likely to happen will allow your clients to seek a larger raise that will help them bypass or leapfrog a cliff. In other cases, maybe the answer is seeking additional training or certifications that will get your client into a different payscale entirely – one that avoids the cliffs.

In the coming weeks, we will be adding a tool that will allow users to see the impact of penalties on couples who decide to marry. We will also be incorporating a solutions tool that will allow anyone to see how reforming our government benefit programs can actually eliminate cliffs and penalties entirely, giving recipients every reason to pursue work and form stable households.

For GCO, it is this last point – reforming the system – that remains the ultimate goal. In the meantime, we are looking for ways to mitigate the harm caused by the welfare system, so that as many people as possible can escape the system and break cycles of poverty now.



The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

U.S. Gross Domestic Product Update

U.S. Gross Domestic Product Update

U.S. Gross Domestic Product Update

stimulus

U.S. Gross Domestic Product update

U.S. Gross Domestic Product declined at a 1.4% rate in the first quarter of 2022. The numbers surprised economists, who had predicted a 1% gain.The Georgia Center for Opportunity’s (GCO) take: “The tab is coming due for all the reckless stimulus spending during the COVID-19 pandemic,” said Erik Randolph, GCO’s director of research. “The declining GDP in the first quarter is the strongest indicator yet that our nation is headed into a recession. Even worse, our trajectory is straight toward stagflation, an environment marked by rampant inflation combined with high unemployment. This will hurt poor and middle-class Americans the most.”

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An epidemic of teen depression (and what to do about it)

An epidemic of teen depression (and what to do about it)

An epidemic of teen depression (and what to do about it)

teens helping and hugging mental health

An epidemic of teen depression (and what to do about it)

Key Takeaways:

  • In the last 10 years, the number of teens identifying as having “experienced persistent feelings of sadness and hopelessness” doubled.
  • School connectedness was a key barometer of how well teens fared mentally.
  • Teens tend to be more isolated than their peers of past decades, more reliant on social media and smartphones to create a type of “pseudo community.”
  • GCO’s priorities is to offer relationship enrichment classes in local communities and schools.
Full Report:  Click Here

Nothing in life can replace genuine community

The United States has a teen depression problem. And it’s only getting worse.

That assessment is based off a new study from the U.S. Centers for Disease Control and Prevention released in April. It found that 44% of teens “experienced persistent feelings of sadness or hopelessness” in the most recent 12-month period. What’s more, 20% of teens “had seriously considered attempting suicide” and 9% “had attempted suicide.”

What’s truly eye-opening is when you compare these statistics with the reported mental health status of teens a decade ago. In 2009, for example, just 26% of teens reported having consistent feelings of sadness and despair. That means in roughly the last decade, the rate of teens who feel this way has nearly doubled. Rates of teens attempting suicide (from 14% to 19%) or committing suicide (6% to 9%) also increased during that period.

The COVID-19 pandemic has only worsened the problem, as teens have been more isolated than ever. The CDC survey was of 7,700 teens conducted in the first six months of 2021, when the young people were still mired in the worst of the pandemic school shutdowns and social isolation.

“These data echo a cry for help,” said CDC acting principal deputy director Debra Houry in a statement. “The COVID-19 pandemic has created traumatic stressors that have the potential to further erode students’ mental wellbeing.”

Importantly, the CDC report found that school connectedness was a key barometer of how well teens fared mentally. “Youth who felt connected to adults and peers at school were significantly less likely than those who did not to report persistent feelings of sadness or hopelessness,” the study concluded.

What’s interesting about this anecdote from the CDC report is the emphasis on community and positive social relationships in maintaining good mental health. Today’s teens tend to be more isolated than their peers of past decades, more reliant on social media and smartphones to create a type of “pseudo community.”

As a recent article in The Atlantic points out, “Compared with their counterparts in the 2000s, today’s teens are less likely to go out with their friends, get their driver’s license, or play youth sports.”

It goes without saying that the pandemic only worsened these problems. What’s more, our nation’s public discourse has continued to deteriorate and today has never been more toxic, in large part fed by a culture drenched in social media.

The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

Again to quote The Atlantic, “Outwardly, teens are growing up slower; but online, they’re growing up faster. The internet exposes teenagers not only to supportive friendships but also to bullying, threats, despairing conversations about mental health, and a slurry of unsolvable global problems—a carnival of negativity. Social media places in every teen’s pocket a quantified battle royal for scarce popularity that can displace hours of sleep and makes many teens, especially girls, feel worse about their body and life. Amplify these existing trends with a global pandemic and an unprecedented period of social isolation, and suddenly, the remarkable rise of teenage sadness doesn’t feel all that mysterious, does it?”

Solutions to this problem are not easy, but we know from our work at the Georgia Center for Opportunity (GCO) that nothing in life can replace genuine community. That community ranges from a good school to a healthy family life to thriving relationships to meaningful work. Teenagers need this just as much as adults — perhaps even more so as they pass through these key years of development.

One of GCO’s priorities is to offer relationship enrichment classes in local communities and schools. That includes students in middle and high school. Joyce Mayberry, vice president of GCO’s family team, “Teaching young people the dynamics of healthy relationships is so important, now more than ever. We’re seeing the devastating results of a loss of meaningful relationships, but it’s not too late to reverse course. All it takes is a direct investment in sharing the tools and approaches that work with young people.”

The bottom line is this: A key way to combat this epidemic of teen depression and poor mental health is through real community, where teens experience relationships face-to-face with friends, family, and broader society. That’s also one of the best ways to break the social media addiction — substituting real relationships for fake ones in a virtual world. Ultimately, it all loops back to community.

New Research Predicts Long-Term Pain for Labor Market

New Research Predicts Long-Term Pain for Labor Market

New Research Predicts Long-Term Pain for Labor Market

social distancing

Long-term pain for labor market due to the COVID-19 pandemic

New research predicts long-term pain for the labor market due to around 3 million workers who plan to remain permanently sidelined over concerns of physical illness or physical impairment due to the COVID-19 pandemic.

The Georgia Center for Opportunity’s (GCO) take: “The authors of the long social distancing study have produced very helpful data on those no coming back into the labor force, estimating a 3.5 million shortfall in March by comparing the current observed level with a linear trend using the time period of January 2015 to December 2019 as the basis for the forecast,” said Erik Randolph, GCO’s director of research. “Using the current employment statistics survey instead of the current population survey, our own research shows a shortage of 6.6 million employed persons that would include persons holding multiple jobs. We use the same method of comparison by subtracting the forecasted data from the observed data, but instead of using a linear trend as the basis for comparison that can often overestimate the forecasts, or the reverse, we use an ARIMA forecast model, not for five years but starting at the low point after the Great Recession. In addition, our research provides forecasts and analyses for each of the 50 states where there is a wide disparity when it comes to job recovery.”

For more, read Randolph’s research report on the economic impact of the pandemic shutdowns.

 

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Georgia Unemployment Rate: Lowest Record Since 1976

Georgia Unemployment Rate: Lowest Record Since 1976

Georgia Unemployment Rate: Lowest Record Since 1976

employment rate

State unemployment rate stands at a record low

On Friday, April 15th, the U.S. Bureau of Labor Statistics released state employment numbers for Georgia. They show that our state unemployment rate stands at a record low of 3.1%, the lowest since the BLS began tracking in 1976.

The Georgia Center for Opportunity’s (GCO) take: “At 3.1%, Georgia is tied with Arkansas for the 16th lowest unemployment rate, a half point below the national unemployment rate of 3.6%,” said Erik Randolph, GCO’s director of research. “Georgia is among the 16 states that have recovered all the private employment lost due to the pandemic. According to our analysis, Georgia ranks 10th in the nation when comparing private employment to each state’s pre-pandemic private employment growth trajectory.”

“Labor force participation is still an area of weakness. Georgia’s rate ranks 26th in the nation. While Georgia’s labor force participation rate edged up from 61.9% in February to 62.1% in March, it is still below its pre-pandemic rate of 62.8%. It is also well below the states with the highest rates. Nebraska leads the nation with 69.8% participation, just 0.2 points below its pre-pandemic rate”

“The national economic picture is worrisome and can put a damper on the improving job picture. Rising inflation and supply-side problems are creating uncertainty that will impact entrepreneurial decision-making and alter the economic outlook. Some economic indicators are beginning to point to a possible economic slowdown. Although these prognostications are not certain, they are concerning.”

For more, read Randolph’s research report on the economic impact of the pandemic shutdowns.

 

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