Between January 2013 and April 2013, twelve states and the District of Columbia experienced decline in overall employment. Earlier signs of weakness in the Northeast and Midwest were further realized over the three-month period from January 2013 to April 2013, with the Midwest job market stagnant at 0.0 percent, and the Northeast at 0.3 percent. Both the South and West experienced growth of 0.5 percent during this period. Utah’s growth of 1.7 percent leads the nation, with Texas’ job growth of 1.0 percent the only other state at or above 1 percent growth.
In April 2013, there were four states—Nevada, Illinois, Mississippi and California—with unemployment rates of 9.0 or more (down from seven states in March). The number of states in which the unemployment rate is now less than 5.0 percent increased to nine, led by Nebraska and North Dakota, each with rates less than 4.0 percent.

MORE: Graphs and data from the latest employment and unemployment numbers on EPI’s State of Working America

Too many states—and the workers struggling to get back on track—continue to bear the scars left by the Great Recession. Federal policy failures such as sequestration and the failure to renew extended unemployment benefits have been compounded at the state level by further layers of damaging austerity.

— Research assistance provided by Natalie Sabadish and Nick Finio

Five years after the beginning of the Great Recession, high unemployment rates are still taking a toll on families. In Texas, where the overall unemployment rate was 6.3 percent in the fourth quarter of 2012 (compared with a national average of 7.8 percent), African American and Hispanic families continue to bear the brunt of that economic pain.

This research brief supplements a recent report by the Economic Policy Institute’s Algernon Austin, Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013, which documents national trends in unemployment (Austin 2013). Drawing on federal Current Population Survey (CPS) data, this paper focuses on unemployment in Texas. It highlights the racial disparities that have prevailed throughout the recession (defined here as including the official recession from December 2007 through June 2009 and the weak and ongoing recovery through the fourth quarter of 2012):

• The unemployment rate of African Americans in Texas is 11.4 percent, more than two and a half times that of whites in the state (4.3 percent), and has been well over twice the white rate for much of the last five years.
• For Hispanic workers in Texas, the unemployment rate is 7.0 percent, more than one and a half times the white unemployment rate of 4.3 percent, and (as with African American unemployment in the state) has far exceeded the white rate for much of the last five years.

These data are the latest evidence exposing the myth of the “Texas Miracle,” studied by others at great length (McNichol and Johnson 2012). While Texas’s job growth seems impressive at first blush, scratching the surface quickly reveals that it has barely kept up with population growth: By February 2013, Texas still had a jobs deficit of nearly 590,000 jobs (the jobs needed to return to prerecession employment rates). Moreover, relatively large numbers of jobs created in Texas are in low-wage industries. Nearly half a million (452,000) workers with hourly wages in 2012 earned the minimum wage or less, an increase of more than a quarter million workers from 2007, when the recession began (and when the first of three increases in the federal minimum wage took effect) (Bureau of Labor Statistics 2008 and 2013). In 2012, Texas had the second-highest share of wage workers paid the minimum wage or less, at 7.5 percent, behind only Idaho’s 7.7 percent (Bureau of Labor Statistics 2013).

White unemployment in Texas

Texas’s white workers escaped the prolonged, deep unemployment plaguing white workers in other states and black and Hispanic workers in Texas (and elsewhere). Yet they endured two years of unemployment rates at or near 6.0 percent (from the fourth quarter of 2009 through the third quarter of 2011), as seen in Figure A. Texas’s white unemployment rate has declined steadily—though slowly—since peaking at 6.2 percent in the first quarter of 2010. In the fourth quarter of 2012, Texas’s white unemployment rate of 4.3 percent was one of the lowest in the nation.

African American unemployment in Texas

African American unemployment rates in Texas throughout the recession have been devastatingly high. They hovered near or above 14.0 percent for most of 2010, peaking at 14.8 percent in the second quarter of 2010. Even after apparently turning the corner with significant, steady declines beginning in the fourth quarter of 2011, the black unemployment rate increased in the third quarter of 2012, reaching 11.6 percent. Texas’s black unemployment rate of 11.4 percent in the fourth quarter of 2012 was more than two and a half times the unemployment rate of whites in the state. The gap between the black and white unemployment rates has been large and persistent. For much of the last five years, the unemployment rate of African Americans has far exceeded that of whites. At its peak in the second quarter of 2010, the unemployment rate of black workers (14.8 percent) was two and a half times the white unemployment rate (5.9 percent). The disparity in unemployment rates between African Americans and non-Hispanic whites has occurred nationwide for the past 50 years (Austin 2012). Several factors—race, age (the white labor force is older), education, and geography—have likely played a role in its persistence.

As shown in Figure B, the black unemployment rate in Texas is 2.6 percentage points lower than the national black unemployment rate of 14.0 percent.

Figure C depicts the black unemployment rate in Texas compared with the black unemployment rate in each of the other 23 states for which the black population is large enough to measure the unemployment rate with CPS data. It shows that Texas has the fifth-lowest black unemployment rate among these states.

Hispanic unemployment in Texas

Like African American Texans, the state’s Hispanic workers have experienced persistent, high levels of unemployment. As shown in Figure A, Hispanic unemployment rates stayed at or above 9 percent for two years (from the third quarter of 2009 through the second quarter of 2011), peaking at 10.1 percent in the fourth quarter of 2009. Hispanic workers have since experienced a slow decline in unemployment rates, making a full recovery elusive. In the fourth quarter of 2012, the Hispanic unemployment rate in Texas was 7.0 percent, which is much higher (by 2.7 percentage points) than the white unemployment rate in the state (4.3 percent). Since the beginning of the recession, Hispanics have continued to experience high unemployment rates relative to whites. The greatest disparity occurred at the peak of unemployment for Hispanic workers in the fourth quarter of 2009, when their 10.1 percent unemployment rate was 4.1 percentage points higher than the white unemployment rate (6.0 percent).

As shown in Figure B, the unemployment rate of Hispanic Texans is lower than the national unemployment rate of Hispanic workers (9.8 percent). Figure D shows the Hispanic unemployment rate in Texas compared with the Hispanic unemployment rate in each of the other 22 states for which the Hispanic population is large enough to measure the unemployment rate with CPS data. Among these states, Texas has the fourth-lowest Hispanic unemployment rate.

Conclusion

Texas’s recovery from the depths of the Great Recession has been steady and slow. Yet despite significant reductions in overall unemployment, roughly one in nine African American workers and about one in 14 Hispanic workers in the state continue to be unemployed. Others have stopped looking for work and have fallen out of the labor force altogether, adding to the human cost of an economic collapse and slow economic recovery that has taken a much greater toll on African Americans and Hispanics than whites. The devastating impact on Texas workers of all races demands strong federal job-creation efforts, as highlighted in From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming, by EPI’s Josh Bivens, Andrew Fieldhouse, and Heidi Shierholz (February 2013).

Methodology note

Races and ethnicities are presented in mutually exclusive categories, i.e., white refers to non-Hispanic whites, black refers to non-Hispanic blacks, and Hispanic refers to Hispanics of any race. The Bureau of Labor Statistics publishes national annual white, black, and Hispanic unemployment rates; however, its estimates are not based upon mutually exclusive categories and thus will differ slightly from the figures published in this paper.

About the authors

Mary Gable joined the Economic Policy Institute in 2006. She coordinates activities of state and local organizations through the Economic Analysis and Research Network (EARN) and analyzes public policies affecting low-income people. She previously directed programs serving people in poverty nationwide and conducted an independent evaluation of New Jersey’s welfare program. Her areas of interest include poverty, social services and welfare policy, child care, and low-wage work. She has a B.A. in political science from the University of Illinois at Urbana-Champaign, and an M.P.A. in social services and welfare policy and in gender and public policy from Columbia University.

Douglas Hall is the director of the Economic Analysis and Research Network (EARN) at EPI. Hall previously served as director of operations and research for the Connecticut EARN partner, Connecticut Voices for Children, where he played a leading role in work related to family economic security and state tax and budget issues. He is the author or co-author of dozens of reports, and his work has been extensively cited by statewide media. He has a master’s in public policy and administration from McMaster University in Hamilton, Ontario, and a Ph.D. in political studies from Queen’s University in Kingston, Ontario.

Acknowledgements

This issue brief was supported by grants from the W.K. Kellogg Foundation and the Open Society Foundations.

References

Austin, Algernon. 2012. “For African Americans, 50 Years of High Unemployment.” Economic Policy Institute, Economic Snapshot, February 22. http://www.epi.org/publication/african-americans-50-years-high-unemployment/

Austin, Algernon. 2013. Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013. Economic Policy Institute, Issue Brief #350. http://www.epi.org/publication/unemployment-rates-whites-latinos-african-americans/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper #355.

Bureau of Labor Statistics (U.S. Department of Labor) Local Area Unemployment Statistics. Various years. “States and selected areas: Employment status of the civilian noninstitutional population, January 1976 to date, seasonally adjusted” [online data table]. http://www.bls.gov/lau/ststdsadata.txt

Bureau of Labor Statistics. 2008. Characteristics of Minimum Wage Workers – 2007. http://www.bls.gov/cps/minwage2007tbls.htm#3

Bureau of Labor Statistics. 2013. Minimum Wage Workers in Texas – 2012. http://www.bls.gov/ro6/fax/minwage_tx.htm#tableA

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsbasic.

McNichol, Elizabeth, and Nicholas Johnson. 2012. The Texas Economic Model: Hard for Other States to Follow and Not All It Seems. Center on Budget and Policy Priorities. http://www.cbpp.org/cms/?fa=view&id=3739

This research brief supplements a recent report by the Economic Policy Institute’s Algernon Austin, Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013, which documents national trends in unemployment (Austin 2013). Drawing on federal Current Population Survey (CPS) data, this brief focuses on Michigan, highlighting the racial disparities that have prevailed throughout the recession (defined here as including the official recession from December 2007 through June 2009 and the weak and ongoing recovery through the fourth quarter of 2012):

• The unemployment rate of blacks in Michigan is 18.7 percent, about two and a half times that of whites (7.5 percent), and has been for much of the last five years.
• Of the 24 states with large enough African American populations to track with quarterly CPS unemployment data, Michigan has the highest African American unemployment rate.
• In Michigan, three groups—all workers, white workers, and African American workers—have higher unemployment rates than the national rate for the same group.

White unemployment

Michigan’s white workers were hit hard by the recession. For a total of eleven quarters or nearly three straight years (from the first quarter of 2009 through the third quarter of 2011), the white (non-Hispanic) unemployment rate was 9.0 percent or greater. The only state with a longer stretch of white unemployment above this threshold is Nevada, with 17 quarters—over four years (Nevada’s white unemployment rate for the fourth quarter of 2012 was 9.3 percent). As seen in Figure A, Michigan’s white unemployment rate has declined steadily—though slowly—since peaking at 12.8 percent in the third and fourth quarters of 2009. In the fourth quarter of 2012, Michigan’s white unemployment rate of 7.5 percent was ninth highest in the nation.

African American unemployment

African American unemployment rates in Michigan throughout the recession have been devastatingly high, hovering between 18 to 22 percent for most of the last three years, and peaking at 26.9 percent in the third quarter of 2010. Even after apparently turning the corner late in 2010 through mid-2011 with significant declines, the black unemployment rate shot up again in late 2011 before dipping and then increased again in the last two quarters of 2012, reaching 18.7 percent in the fourth quarter of 2012. As shown in Figure B, the black unemployment rate in Michigan was 4.7 percentage points higher than the national black unemployment rate of 14.0 percent. Figure C shows that among states with large enough black populations to measure unemployment, Michigan has the highest black unemployment rate.

Conclusion

Michigan’s recovery from the depths of the Great Recession has been impressive at times, spurred in particular by the successful bailout of the auto sector (New York Times 2012). Yet despite significant reductions in overall unemployment, nearly one in five African American workers continues to be unemployed. Others have stopped looking for work and have fallen out of the labor force altogether, adding to the human cost of an economic collapse and slow economic recovery that has taken a much greater toll on African Americans than whites. The devastating impact on Michigan workers of all races demands strong federal job-creation efforts, as highlighted in From Free-fall to Stagnation: Five Years After the Start of the Great Recession, Extraordinary Policy Measures are Still Needed, but are Not Forthcoming, by EPI’s Josh Bivens, Andrew Fieldhouse, and Heidi Shierholz (February 2013).

Methodology note

Races and ethnicities are presented in mutually exclusive categories, i.e., white refers to non-Hispanic whites and black refers to non-Hispanic blacks. The Bureau of Labor Statistics publishes national annual white, black, and Hispanic unemployment rates; however, its estimates are not based upon mutually exclusive categories and thus will differ slightly from the figures published in this paper.

About the authors

Douglas Hall is the director of the Economic Analysis and Research Network (EARN) at EPI. Hall previously served as director of operations and research for the Connecticut EARN partner, Connecticut Voices for Children, where he played a leading role in work related to family economic security and state tax and budget issues. He is the author or co-author of dozens of reports, and his work has been extensively cited by statewide media. He has a master’s in public policy and administration from McMaster University in Hamilton, Ontario, and a Ph.D. in political studies from Queen’s University in Kingston, Ontario.

Mary Gable joined the Economic Policy Institute in 2006. She coordinates activities of state and local organizations through the Economic Analysis and Research Network (EARN) and analyzes public policies affecting low-income people. She previously directed programs serving people in poverty nationwide and conducted an independent evaluation of New Jersey’s welfare program. Her areas of interest include poverty, social services and welfare policy, child care, and low-wage work. She has a B.A. in political science from the University of Illinois at Urbana-Champaign, and an M.P.A. in social services and welfare policy and in gender and public policy from Columbia University.

Acknowledgements

This issue brief was supported by grants from the W.K. Kellogg Foundation and the Open Society Foundations.

References

Austin, Algernon. 2013. Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013. Economic Policy Institute, Issue Brief #350. http://www.epi.org/publication/unemployment-rates-whites-latinos-african-americans/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper #355.

Bureau of Labor Statistics (U.S. Department of Labor) Local Area Unemployment Statistics. Various years. “States and Selected Areas: Employment Status of the Civilian Noninstitutional Population, January 1976 to Date, Seasonally Adjusted” [online data table]. http://www.bls.gov/lau/ststdsadata.txt

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsbasic.

New York Times. 2012. “A Million Jobs,” February 25. http://www.nytimes.com/2012/02/26/opinion/sunday/a-million-jobs.html?_r=0

This research brief supplements a recent report by the Economic Policy Institute’s Algernon Austin, Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013, which documents national trends in unemployment (Austin 2013). Drawing on federal Current Population Survey (CPS) data, this paper focuses on unemployment in Mississippi. It highlights the racial disparities that have prevailed throughout the recession (defined here as including the official recession from December 2007 through June 2009, and the weak and ongoing recovery through the fourth quarter of 2012):

• The unemployment rate of blacks in Mississippi is 14.3 percent, more than two and a half times that of whites (5.4 percent), and has been at least twice the white rate (and at times triple the white rate) for much of the last five years. In the first quarter of 2008, the black unemployment rate was more than four times the white rate.  The greatest percentage-point disparity occurred at the peak of unemployment for black Mississippians, in the first quarter of 2010, when the black unemployment rate was 19.8 percent (more than triple the 5.9 percent white unemployment rate) and again in the fourth quarter of 2010 and the second quarter of 2011 (19.6 percent vs. 5.7 percent in both quarters).
• Of the 24 states with large enough African American populations to track with quarterly CPS unemployment data, Mississippi has the ninth highest African American unemployment rate.
• Mississippi’s unemployment rate of 8.7 percent exceeds the national rate of 7.8 percent and its African American unemployment rate (14.3 percent) is statistically equal to the national black unemployment rate (14.0 percent).

White unemployment

Though they escaped the prolonged, deep unemployment plaguing white workers in other states, Mississippi’s white workers endured unemployment rates that more than doubled from 3.8 percent in the fourth quarter of 2007 to 7.9 percent in the third quarter of 2009, as seen in Figure A. In the three-plus years since, Mississippi’s white unemployment rate has declined steadily, though slowly—with a brief bump in the fourth quarter of 2011 to 7.9 percent (matching its previous peak)—to 5.4 percent in the fourth quarter of 2012. Mississippi’s white unemployment rate places it among the states with relatively low unemployment rates for white workers.

African American unemployment

African American unemployment rates in Mississippi throughout the recession have been devastatingly high, hovering in the 17-to-20-percent range for two years (from the fourth quarter of 2009 to the fourth quarter of 2011). In fact, after peaking at 19.8 percent in the first quarter of 2010, the rate hit 19.8 percent again in the third quarter of 2011. Even after apparently turning the corner in late 2011 and early 2012 with significant declines, the black unemployment rate in the fourth quarter of 2012 climbed to 14.3 percent, statistically equal to the national black unemployment rate of 14.0 percent (as seen in Figure B).

Although not shown in Figure A, the black-white gap in unemployment rates in Mississippi is among the largest in the nation. The figure does show that for much of the last five years, African American unemployment rates have been at least double—and sometimes more than triple—white unemployment rates. In the first quarter of 2008, the black unemployment rate was more than four times the white rate. The greatest disparity occurred at the peak of unemployment for black Mississippians, in the first quarter of 2010, when the black unemployment rate was 19.8 percent (more than triple the 5.9 percent white unemployment rate) and again in the fourth quarter of 2010 and the second quarter of 2011 (19.6 percent vs. 5.7 percent in both quarters). This disparity has occurred nationwide for the last 50 years (Austin 2012). Several factors, including race, age (the white labor force is older), education, and geography, have likely played a role in the persistence of the black-white unemployment gap.

Figure C depicts the black unemployment rate in Mississippi compared with the black unemployment rate in each of the other 23 states for which the black population is large enough to measure the unemployment rate with CPS data. It shows that Mississippi has the ninth-highest African American unemployment rate among these states.

Conclusion

Mississippi’s recovery from the depths of the Great Recession has been slow. Despite significant reductions in overall unemployment, about one in seven African American workers in the state is unemployed. Others have stopped looking for work and have fallen out of the labor force altogether, adding to the human cost of an economic collapse and slow economic recovery that has taken a much greater toll on African Americans than whites. The devastating impact on Mississippi workers of all races demands strong federal job-creation efforts, as highlighted in From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming, by EPI’s Josh Bivens, Andrew Fieldhouse, and Heidi Shierholz (February 2013).

Methodology note

Races and ethnicities are presented in mutually exclusive categories, i.e., white refers to non-Hispanic whites and black refers to non-Hispanic blacks. The Bureau of Labor Statistics publishes national annual white, black, and Hispanic unemployment rates; however, its estimates are not based upon mutually exclusive categories and thus will differ slightly from the figures published in this paper.

About the author

Mary Gable joined the Economic Policy Institute in 2006. She coordinates activities of state and local organizations through the Economic Analysis and Research Network (EARN) and analyzes public policies affecting low-income people. She previously directed programs serving people in poverty nationwide and conducted an independent evaluation of New Jersey’s welfare program. Her areas of interest include poverty, social services and welfare policy, child care, and low-wage work. She has a B.A. in political science from the University of Illinois at Urbana-Champaign, and an M.P.A. in social services and welfare policy and in gender and public policy from Columbia University.

Acknowledgements

This issue brief was supported by grants from the W.K. Kellogg Foundation and the Open Society Foundations.

References

Austin, Algernon. 2012. “For African Americans, 50 Years of High Unemployment.” Economic Policy Institute, Economic Snapshot, February 22. http://www.epi.org/publication/african-americans-50-years-high-unemployment/

Austin, Algernon. 2013. Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013. Economic Policy Institute, Issue Brief #350. http://www.epi.org/publication/unemployment-rates-whites-latinos-african-americans/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper #355.

Bureau of Labor Statistics (U.S. Department of Labor) Local Area Unemployment Statistics. Various years. “States and selected areas: Employment status of the civilian noninstitutional population, January 1976 to date, seasonally adjusted” [online data table]. http://www.bls.gov/lau/ststdsadata.txt

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsbasic.

This research brief supplements a recent report by the Economic Policy Institute’s Algernon Austin, Unemployment Rates Are Projected to Remain High for Non-Hispanic Whites, Latinos, and African Americans throughout 2013, which documents national trends in unemployment (Austin 2013). Drawing on federal Current Population Survey (CPS) data, this paper focuses on unemployment in New Mexico. It highlights the racial disparities that have prevailed throughout the recession (defined here as including the official recession from December 2007 through June 2009, and the weak and ongoing recovery through the fourth quarter of 2012):

• The unemployment rate of Hispanics in New Mexico is 8.2 percent, more than one and a half times that of non-Hispanic whites (4.7 percent), and has been near or more than double the white rate for many quarters over the last four years (seven out of 21 quarters).
• Of the 23 states with large enough Hispanic populations to track with quarterly CPS unemployment data, New Mexico has the ninth-lowest Hispanic unemployment rate.
• Despite relatively low white and Hispanic unemployment rates in New Mexico, the current policy trajectory coupled with the state’s slow job growth makes a full recovery unlikely.

The jobs context in New Mexico

New Mexico’s relatively upbeat unemployment picture (with low white unemployment rates and a Hispanic unemployment rate lower in the state than the nation overall) masks a disturbing economic trend for all workers statewide. New Mexico’s job growth over the last three years has been too sluggish to make up for the jobs lost during a relatively short period in the recession. According to the New Mexico Department of Workforce Solutions (2013), Bureau of Labor Statistics data released in January 2013 show that over-the-year job growth (comparing January 2013 with January 2012) of 0.4 percent (3,500 jobs) placed New Mexico fourth from the bottom among all states. To return to prerecession unemployment rates, New Mexico would have to create 2,500 new jobs each month over the next three years (author’s analysis of Current Employment Statistics and Local Area Unemployment Statistics).¹ Moreover, New Mexico’s labor force participation rate (59.7 percent in 2012) (author’s analysis of Local Area Unemployment Statistics) and employment-to-population ratio (55.4 percent in 2012), have consistently and significantly lagged national rates (63.7 percent and 58.6 percent, respectively, in 2012) signaling a deeper malaise in the economy not necessarily reflected in the official measures of unemployment (Bureau of Labor Statistics, 2013).²

White unemployment in New Mexico

Though they escaped the prolonged, deep unemployment plaguing white workers in other states and Hispanic workers in New Mexico, the state’s non-Hispanic white workers endured three quarters of unemployment rates at or above 6.0 percent (from the first through third quarters of 2010), as seen in Figure A. New Mexico’s white unemployment rate has declined slowly—with some bumps—since peaking at 6.9 percent in each of the first two quarters of 2010. In the fourth quarter of 2012, New Mexico’s white unemployment rate of 4.7 percent placed it among the states with relatively low white unemployment rates—the rate was 1.6 percentage points lower than the national white unemployment rate of 6.3 percent that quarter.

Hispanic unemployment in New Mexico

Hispanic unemployment rates shot up in mid-2008 and were hovering near 10 percent in late 2009, peaking at 9.9 percent in the fourth quarter of 2009. Immediately following that peak, New Mexico’s Hispanic workers experienced a sharp decline in unemployment rates, but a recovery has remained elusive. In the fourth quarter of 2012, the Hispanic unemployment rate in New Mexico was 8.2 percent, which is much higher (by 3.5 percentage points) than the state’s white unemployment rate of 4.7 percent (as seen in Figure B) and lower than the national unemployment rate for Hispanic workers.

As shown in Figure A, the gap between Hispanic and white unemployment rates in New Mexico has been wide for much of the last five years, with Hispanic unemployment rates close to or more than twice the white rate in seven of the last 21 quarters. The greatest disparity occurred near the peak of unemployment for Hispanics in the third quarter of 2009, when their 9.8 percent unemployment rate was more than double the 4.6 percent white unemployment rate.

Figure C depicts the Hispanic unemployment rate in New Mexico compared with the Hispanic unemployment rate in each of the other 22 states for which the Hispanic population is large enough to measure the unemployment rate with CPS data. It shows that New Mexico has the ninth-lowest Hispanic unemployment rate among these states.

Conclusion

New Mexico’s recovery from the depths of the Great Recession has been slow. Despite reductions in overall unemployment, roughly one in 12 Hispanic workers in the state continues to be unemployed. Others have stopped looking for work and have fallen out of the labor force altogether, adding to the human cost of an economic collapse and slow economic recovery that has taken a much greater toll on Hispanics than whites. The devastating impact on New Mexico workers of all races demands strong federal job-creation efforts, as highlighted in From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, But Are Not Forthcoming, by EPI’s Josh Bivens, Andrew Fieldhouse, and Heidi Shierholz (February 2013).

Methodology note

Races and ethnicities are presented in mutually exclusive categories, i.e., white refers to non-Hispanic whites and Hispanic refers to Hispanics of any race. The Bureau of Labor Statistics publishes national annual white, black, and Hispanic unemployment rates; however, its estimates are not based upon mutually exclusive categories and thus will differ slightly from the figures published in this paper.

About the author

Mary Gable joined the Economic Policy Institute in 2006. She coordinates activities of state and local organizations through the Economic Analysis and Research Network (EARN) and analyzes public policies affecting low-income people. She previously directed programs serving people in poverty nationwide and conducted an independent evaluation of New Jersey’s welfare program. Her areas of interest include poverty, social services and welfare policy, child care, and low-wage work. She has a B.A. in political science from the University of Illinois at Urbana-Champaign, and an M.P.A. in social services and welfare policy and in gender and public policy from Columbia University.

Acknowledgements

This issue brief was supported by grants from the W.K. Kellogg Foundation and the Open Society Foundations.

Endnotes

1. This calculation uses both CES (Current Employment Statistics) and LAUS (Local Area Unemployment Statistics) data from the Bureau of Labor Statistics, which provide an estimate similar to EPI’s national-level estimate of the jobs shortfall—combining CES and CPS (Current Population Survey) data. This estimate is based on the dates of the national recession, not individual state recessions, which vary state to state.

2. The labor force participation rate is the share of working-age people who are either employed or unemployed (i.e., jobless but actively seeking work). The employment-to-population ratio is the share of the civilian noninstitutional population 16 years of age and older that is employed.

References

Austin, Algernon. 2013. Unemployment Rates Are Projected to Remain High for Non-Hispanic Whites, Latinos, and Hispanics throughout 2013. Economic Policy Institute, Issue Brief #350. http://www.epi.org/publication/unemployment-rates-whites-latinos-african-americans/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper #355.

Bureau of Labor Statistics (U.S. Department of Labor) Current Employment Statistics Program. Various years. Regional and State Employment and Unemployment [database].

Bureau of Labor Statistics (U.S. Department of Labor). 2013. “Regional and State Unemployment—2012 Annual Averages” [news release]. http://www.bls.gov/news.release/pdf/srgune.pdf

Bureau of Labor Statistics (U.S. Department of Labor) Local Area Unemployment Statistics. Various years. “States and Selected Areas: Employment Status of the Civilian Noninstitutional Population, January 1976 to Date, Seasonally Adjusted” [online data table]. http://www.bls.gov/lau/ststdsadata.txt

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsbasic.

New Mexico Department of Workforce Solutions, Economic Research & Analysis Bureau. 2013. Labor Market Review, vol. 42, no. 1. http://www.dws.state.nm.us/Portals/0/DM/LMI/lmrJan13.pdf

This research brief supplements a recent report by the Economic Policy Institute’s Algernon Austin, Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013, which documents national trends in unemployment (Austin 2013). Drawing on federal Current Population Survey (CPS) data, this paper focuses on unemployment in North Carolina. It highlights the racial disparities that have prevailed throughout the recession (defined here as including the official recession from December 2007 through June 2009 and the weak and ongoing recovery through the fourth quarter of 2012):

• The unemployment rate of African Americans in North Carolina is 17.3 percent, more than two and a half times that of whites (6.7 percent), and has been close to or more than twice the white rate for much of the last three years.
• Of the 24 states with large enough African American populations to track with quarterly CPS unemployment data, North Carolina has the fourth-highest African American unemployment rate.
• In North Carolina, three groups—all workers, white workers, and African American workers—have higher unemployment rates than the national rate for the same group.
• Although the unemployment rate of Hispanic workers in North Carolina has remained markedly lower than that of African American workers, at 7.4 percent in the fourth quarter of 2012, it is still higher than that of North Carolina’s white workers (6.7 percent).

The jobs context in North Carolina

Several factors have exacerbated the effects of the recession on working families in North Carolina. Federal and state budget cuts have disproportionately affected African American and Hispanic workers in the state. Also, because African American workers have historically been overrepresented in public-sector employment, state and local public-sector job losses have hit them the hardest (Cooper, Gable, and Austin 2012). The recession also compounded harmful employment trends decades in the making. Many black and Hispanic workers live and work in North Carolina communities with declining industries. These communities have been slowest to recover, adding to the human cost for workers of all races. Moreover, while the impact of the recession has been relatively less harsh for white workers, the long-term decline in manufacturing has dealt a serious blow to workers—white, black, and Hispanic—statewide. North Carolina has the second highest rate of manufacturing job loss since 1995 (among all states for which Bureau of Labor Statistics Consumer Expenditure Survey data are available).

White unemployment

Though they escaped the prolonged, deep unemployment plaguing white workers in other states, North Carolina’s white workers endured a year of unemployment rates above 9.0 percent (from 9.5 percent in the third quarter of 2009 to 9.2 percent in the second quarter of 2010), as seen in Figure A. North Carolina’s white unemployment rate has declined steadily—though slowly—in the three years since it peaked at 9.8 percent in the fourth quarter of 2009. In the fourth quarter of 2012, North Carolina’s white unemployment rate was 6.7 percent.

African American unemployment

African American unemployment rates in North Carolina throughout the recession have been devastatingly high. They hovered in the 17-to-20 percent range for three years (from the first quarter of 2010 to the first quarter of 2012), peaking at 20.1 percent in the third quarter of 2011. Even after apparently turning the corner with steady declines from late 2011 through mid 2012, the black unemployment rate rose again in the last two quarters of 2012, reaching 17.3 percent—3.3 percentage points higher than the national black unemployment rate of 14.0 percent (as seen in Figure B).

Although not shown in Figure A, the black-white gap in unemployment rates in North Carolina is among the largest in the nation. The figure shows that for much of the last two years, African American unemployment rates have been at least double white unemployment rates. The greatest disparity occurred at the peak of unemployment for black North Carolinians. In the third quarter of 2011, the black unemployment rate was 20.1 percent, about two and a half times the 8.1 percent white unemployment rate. Disparities similar to North Carolina’s have occurred nationwide for the past 50 years (Austin 2012). Several factors, including race, age (the white labor force is older), education, and geography, have likely played a role in the persistence of the black-white unemployment gap.

Figure C depicts the black unemployment rate in North Carolina compared with the black unemployment rate in each of the other 23 states for which the black population is large enough to measure the unemployment rate with CPS data. It shows that North Carolina has the fourth-highest African American unemployment rate among these states.

Hispanic unemployment

Unemployment rates of Hispanic North Carolinians have not been nearly as high as those of African Americans in the state, although Hispanic unemployment is still slightly higher than white unemployment. The Hispanic unemployment rate in North Carolina was 7.4 percent in the fourth quarter of 2012, less than half that of black North Carolinians (17.3 percent) and 0.7 percentage points higher than that of white North Carolinians (6.7 percent). North Carolina’s Hispanic unemployment rate is 2.4 percentage points lower than the national Hispanic unemployment rate of 9.8 percent (as seen in Figure B).

Conclusion

North Carolina’s recovery from the depths of the Great Recession has been steady and slow. Yet despite significant reductions in overall unemployment, roughly one in six African American workers in the state continues to be unemployed. Others have stopped looking for work and have fallen out of the labor force altogether, adding to the human cost of an economic collapse and slow economic recovery that has taken a much greater toll on African Americans than whites. The devastating impact on North Carolina workers of all races demands strong federal job-creation efforts, as highlighted in From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming, by EPI’s Josh Bivens, Andrew Fieldhouse, and Heidi Shierholz (February 2013).

Methodology note

Races and ethnicities are presented in mutually exclusive categories, i.e., white refers to non-Hispanic whites, black refers to non-Hispanic blacks, and Hispanic refers to Hispanics of any race. The Bureau of Labor Statistics publishes national annual white, black, and Hispanic unemployment rates; however, its estimates are not based upon mutually exclusive categories and thus will differ slightly from the figures published in this paper.

About the authors

Mary Gable joined the Economic Policy Institute in 2006. She coordinates activities of state and local organizations through the Economic Analysis and Research Network (EARN) and analyzes public policies affecting low-income people. She previously directed programs serving people in poverty nationwide and conducted an independent evaluation of New Jersey’s welfare program. Her areas of interest include poverty, social services and welfare policy, child care, and low-wage work. She has a B.A. in political science from the University of Illinois at Urbana-Champaign, and an M.P.A. in social services and welfare policy and in gender and public policy from Columbia University.

Douglas Hall is the director of the Economic Analysis and Research Network (EARN) at EPI. Hall previously served as director of operations and research for the Connecticut EARN partner, Connecticut Voices for Children, where he played a leading role in work related to family economic security and state tax and budget issues. He is the author or co-author of dozens of reports, and his work has been extensively cited by statewide media. He has a master’s in public policy and administration from McMaster University in Hamilton, Ontario, and a Ph.D. in political studies from Queen’s University in Kingston, Ontario.

Acknowledgements

This issue brief was supported by grants from the W.K. Kellogg Foundation and the Open Society Foundations.

References

Austin, Algernon. 2012. “For African Americans, 50 Years of High Unemployment.” Economic Policy Institute, Economic Snapshot, February 22. http://www.epi.org/publication/african-americans-50-years-high-unemployment/

Austin, Algernon. 2013. Unemployment Rates Are Projected to Remain High for Whites, Latinos, and African Americans throughout 2013. Economic Policy Institute, Issue Brief #350. http://www.epi.org/publication/unemployment-rates-whites-latinos-african-americans/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. From Free-fall to Stagnation: Five Years after the Start of the Great Recession, Extraordinary Policy Measures Are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper #355.

Bureau of Labor Statistics (U.S. Department of Labor) Consumer Expenditure Survey. Data for January 1995 through January 2013. Data for this period were unavailable for Alabama, the District of Columbia, Hawaii, and Oklahoma.

Bureau of Labor Statistics (U.S. Department of Labor) Local Area Unemployment Statistics. Various years. “States and Selected areas: Employment Status of the Civilian Noninstitutional Population, January 1976 to Date, Seasonally Adjusted” [online data table]. http://www.bls.gov/lau/ststdsadata.txt

Cooper, David, Mary Gable, and Algernon Austin. 2012. The Public-Sector Jobs Crisis: Women and African Americans Hit Hardest by Job Losses in State and Local Governments. Economic Policy Institute, Briefing Paper #339. http://www.epi.org/publication/bp339-public-sector-jobs-crisis/

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau. http://www.bls.census.gov/ftp/cps_ftp.html#cpsbasic.

There’s a sense today that we, as a country, are dividing into two Americas. In one, corporate stockholders and owners of capital become increasingly wealthy as profits and dividends continue to rise. In the other, ordinary workers gain more education, work longer hours and improve their productivity, yet often struggle to make ends meet.

We see this divergence in the economic data. Since the 1970s, productivity has risen dramatically, along with corporate profitability and pay for the highest earners. Yet middle- and low-wage workers’ incomes have barely changed. In fact, for the lowest-paid workers, incomes have actually fallen – partially because of the erosion in value of the minimum wage.

The minimum wage was first enacted in 1938 to ensure that even the lowest-paid workers would still receive an adequate level of pay. Through the ’60s and ’70s, Congress made regular increases that kept the minimum wage equal to roughly half the average wage of production workers. At its peak in 1968, the minimum wage was close to $10 per hour in today’s dollars. Yet after decades of delayed and inadequate increases, today’s minimum wage of $7.25 is about 37 percent of the average wage. We have let the lowest-paid workers fall considerably behind.

A minimum wage of $7.25 is not enough to live on. Full-time minimum-wage workers today earn about $15,000 a year. In 1968, they earned about $20,000 per year in today’s dollars. While certainly not enough for a life of luxury, it is enough for a family of three to stay above the poverty line – which can’t be said for today’s minimum-wage workers.

Many of these workers have to rely on public assistance such as food stamps or the earned income tax credit, because their wages are simply too low. Programs like the EITC are important protections against poverty, but we shouldn’t let them act as subsidies to low-wage employers, who currently pay lower wages because the American taxpayer will make up the difference.

We need to re-establish the basic labor standard that if you work full time, you’ll earn at least enough to get by. If we raised the federal minimum wage to $10 per hour, nearly 30 million American workers would get a raise, nine million of whom are parents. And contrary to popular misconception, most of these workers are not teenagers working part time: 88 percent are at least 20 years old, and 55 percent work full time.

Opponents will argue, as they always have, that raising the minimum wage will kill jobs or make it harder for businesses to hire new workers. Economists have studied these claims to death and the best research shows that minimum-wage increases have little to no effect on employment. In fact, there is ample evidence that labor market conditions can improve after a minimum-wage increase because low-wage workers have more money to spend, and they’re less likely to be scrambling to find higher-paying jobs. That’s why 85 percent of small businesses already pay wages higher than the minimum, and some big corporate entities are following suit.

If we’re going to live in one unified America, we need an economy that works for all Americans. For too long, low-wage workers have not seen the benefits of a growing economy. Raising the minimum wage is one step toward fixing that. There are 19 states that already have minimum wages higher than the federal minimum, and 73 percent of Americans support raising the minimum wage. It’s time for Congress to act.

Here’s the math. Under the program a total of $100 billion of Apple’s cash reserve is to be returned to shareholders through increased dividends and its share repurchase program by the end of 2015. Apple’s financial statements indicate that $9 billion has already been distributed to shareholders, which leaves another $91 billion to be returned. Based on the consensus earnings forecast for Apple, the company will earn about $125 per share between now and the end of calendar 2015, which translates to about $110 billion in net income.¹ Thus, a rough forecast of Apple’s net income between now and the end of 2015 is nearly $20 billion higher than the amount remaining to be distributed under the capital return program. This differential suggests that Apple’s cash position may continue to grow over the next few years.

The continued exceptional health of Apple’s cash reserve suggests that a significant share of it could be used to advance other priorities without harming the company’s financial security. As discussed here, with Apple shareholders taken care of by the capital reserve program, Apple should now turn its attention to using its cash reserve to address the labor rights violations suffered by the workers making the company’s products.

1. This rough calculation assumes the company’s share repurchase program occurs at a steady pace, at a price of $435 per share, its market price as of this writing. Also, the consensus forecast, of course, is just that; actual net income could be lower or higher.

But it’s time to move past 1986. Economic research and trends over the past quarter-century make clear that the “broaden the base and lower rates” blueprint is flawed. The right mantra should be “broaden the base and raise top rates.” More precisely, policymakers should broaden the base by repealing tax preferences for capital income and—instead of raising the current 39.6 percent top statutory income tax rate—add higher tax rates for higher taxable-income thresholds to better match the skewed distribution of income.

This paper expands on Fieldhouse (2013), which reviews major findings from the public finance economic literature and their policy implications, to illuminate salient findings for upcoming debates regarding tax reform. Its main findings show why adding new higher top tax rates and broadening the base are complementary activities that would increase tax revenues and restore progressivity (needed to counter growing after-tax income inequality) all without hurting economic growth:

• Enthusiasm for lowering marginal tax rates is based partly on the false idea that lower marginal tax rates are a powerful spur to economic growth. Recent research on behavioral responses to taxation, as well as historical and cross-country regression analyses of top tax rates and macroeconomic performance, strongly suggest that these growth effects are substantially overstated.
• Also contrary to a popular myth, raising current top tax rates on high-income households would not sharply reduce productive economic activity. While tax increases do decrease upper-income households’ reported taxable income more  than they decrease moderate-income households’ reported income, it is not because upper-income households choose to work less, but because they  take advantage of their greater capacity to shift income from one category to another or one time period to another to reduce their taxes. Thus raising tax rates while broadening the tax base (by eliminating or curbing tax expenditures such as deductions, exclusions, credits, exemptions, and preferential treatment of capital income over labor income) and improving tax enforcement to minimize this avoidance thus could deter inefficient allocations of capital that are made simply for tax purposes.
• There is a revenue-maximizing tax rate (i.e., the tax rate associated with top of the Laffer curve), which is estimated as a function of behavioral responses to top tax rates. The U.S. top statutory federal income tax rate of 39.6 percent is still well below that “revenue-maximizing” rate based on best estimates of behavioral responses to the existing tax structure, by roughly 26 percentage points, according to some estimates.
• Tax reform that broadens the tax base and minimizes tax-avoidance opportunities would actually further increase that revenue-maximizing top statutory federal income tax rate, by as much as an additional 10 percentage points.  Simply put, high-income households would have less ability to avoid taxes by shifting the form or timing of their compensation, and this would decrease their overall behavioral response of reported income to top tax rates.
• In the current top tax bracket, roughly the top 1.0 percent of households, income has become increasingly skewed toward the top. Therefore, rather than raising the top tax rate on married joint-filers making just above the $450,000 threshold, new tax brackets should be created; for example, a 45 percent tax bracket for joint-filers with taxable income above $2 million and a 50 percent tax bracket for joint-filers with taxable income above $10 million.
• One of the best base-broadening policies would be to end the preferential tax treatment of capital gains, which are now taxed at a top statutory rate of 20 percent, well below the 39.6 percent top statutory rate on ordinary income for taxpayers in the top tax bracket. Many highly compensated workers have the ability to reclassify labor income as capital income, and avoid taxes by shifting  the timing of realizing income for tax purposes; they also access tax shelters that inefficiently reallocate capital from more productive uses. Base-broadening should therefore include reducing the gap between tax rates levied on wage income versus capital gains and other sources of investment income.
• In addition to tackling the preferential capital gains tax rate, policymakers should consider repealing two preferences that increase avenues for tax-avoidance and amplify the overall behavioral response of capital gains realizations with respect to capital gains tax rates: the “step-up basis of capital gains at death” (which allows for taxes to be avoided on inherited capital assets, particularly stocks) and the “carryover basis of capital gains on gifts” (which allows for taxes to be avoided on capital assets given as gifts). Repealing these preferences would decrease efficiency losses from capital gains taxation and increase the revenue-maximizing capital gains tax rate.

The fallacy of broadening the tax base and lowering tax rates

Broadening the tax base simply means subjecting more gross income to taxation by eliminating or curbing tax expenditures such as deductions, exclusions, credits, exemptions, and preferential treatment of capital income over labor income. Such reforms have value beyond raising revenue; they would help the tax code adhere more closely to the principle of horizontal equity, a core public finance and taxation theory concept stating that two people with the same income should not pay significantly different effective tax rates based on the ability to exploit tax code preferences or loopholes.¹ As explained below, these base-broadening reforms should be complemented by higher top rates—not lower top rates, as was the case in the 1986 tax reforms—in order to restore lost tax progressivity and ensure revenue adequacy for the future.

Why the 1986 tax reforms are a poor template

The Tax Reform Act of 1986 broadened the tax base, most notably by repealing the preferential treatment of capital gains, and lowered the top individual income tax rate from 50 percent to 28 percent.² Policymakers intended the 1986 model to be both revenue neutral and distributionally neutral (Shaviro 2011), meaning that effective tax rates would remain roughly unchanged across incomes.³ This mandate for revenue and distribution neutrality was also later incorporated in the recommendations made by President George W. Bush’s Advisory Panel on Federal Tax Reform, although the Bush-era tax cuts themselves violated this spirit by lowering overall effective tax rates, disproportionately so for high earners (Fieldhouse and Pollack 2011).⁴

Targeting these objectives today would imprudently disregard economic and budgetary shifts over the past quarter century. The Bush-era tax cuts significantly shrank projected future budget surpluses—helping turn them to structural budget deficits—and left revenue short of what is needed to fund the projected rapid growth of federal health programs in coming decades. (This outlook is essentially unchanged by the lame-duck budget deal.) Meanwhile, rising income inequality—exacerbated by reductions in top tax rates (Hungerford 2011; Hungerford 2012)—has surpassed Gilded Age levels, and will continue to be exacerbated for some time by the sustained, depressed demand for labor and ongoing jobs crisis (Bivens, Fieldhouse, and Shierholz 2013).

Furthermore, to the degree that many tax expenditures are most accurately viewed as government spending programs administered through the tax code (Marron and Toder 2012), New York University School of Law professor Daniel Shaviro rightly notes that “a revenue neutrality norm in which the budgetary gain from their repeal ostensibly needs to be offset by rate cuts is intellectually incoherent” (Shaviro 2011).

Despite the fact that revenue neutrality and distributional neutrality are clearly inappropriate goals for tax reform today, the 1986 reforms are viewed as a template largely because they succeeded politically, passing a divided Congress and enacted by a lame-duck president. Similarly, comprehensive reform today would have to overcome major political hurdles, particularly Republican intransigence over raising revenue.

But there is an additional economic dimension that drives enthusiasm for the “broadening the tax base and lowering rates” formulation: Many believe that low marginal tax rates are a powerful spur to economic growth. However, recent research on behavioral responses to taxation, as well as historical and cross-country regression analyses with respect to top tax rates and macroeconomic performance, strongly suggest that these growth effects are substantially overstated (Fieldhouse 2013).

Moreover, cleaning the tax code of exemptions and credits and other tax expenditures will decrease efficiency losses from the existing structure of the income tax code by subjecting more gross income to higher tax rates both through mechanical channels (i.e., reduced revenue loss from tax expenditures, ignoring behavioral effects) and behavioral effects (i.e., reduced avoidance).

Behavioral responses of upper-income households indicate that broadening the tax base is complemented by higher marginal tax rates

The bottom-line parameter for assessing the economic effects and desirability of tax changes is the “elasticity of taxable income” (ETI), which is simply the change in reported taxable income (and hence revenue) that accompanies changes in marginal tax rates. The higher the ETI (in absolute-value terms), the more distortionary the changes in tax rates.⁵ Simply put, if taxable income is very elastic with respect to tax changes, then small increases in marginal rates will cause large decreases in reported income. If this elasticity is greater than one, then raising tax rates will actually decrease total tax collections—the famous phenomenon of being on the wrong side of the “Laffer curve.”⁶

Over the last half century, much policymaking toward top marginal tax rates took for granted that high-income households were very responsive to tax changes, and could well be close to the wrong side of the Laffer curve. New evidence demonstrates that this is not true. In a review of the literature, McClelland and Mok (2012) conclude, “There is little compelling evidence that high-income taxpayers have substantially higher elasticities with respect to their labor input than lower-income taxpayers.”

Further, much of the measured responsiveness of high-income households to tax changes is not a function of them reducing productive economic activity (i.e., working less or saving less) in response to higher tax rates. Instead, this responsiveness largely reflects these households’ ability to avoid taxation through income-shifting or income-timing (i.e., strategically reclassifying the form of income or timing the realization of income for tax purposes). As McClelland and Mok (2012) find, “Higher estimates of the elasticity of broad income among high-income taxpayers appear to reflect their greater ability to time their income rather than greater changes in their labor supply.”

This key finding indicates that policymakers need not worry that potential economic output will be affected by upper-income households’ predominant behavioral responses to changing top rates, as shifting the form or timing of their compensation has a negligible effect on long-run potential growth.

As evidence of this finding, upper-income households’ taxable income (after deductions) is empirically more responsive to tax rate changes than their broad income (before deductions). Gruber and Saez (2002), for example, have found a higher 0.57 ETI after deductions and a lower 0.17 elasticity of broad income before deductions. This important finding implies that reported taxable income becomes less responsive to tax rate changes when the tax base is broader—i.e., when avoidance strategies are minimized through stricter tax enforcement and/or a cleaner tax code with fewer deductions, exemptions, and exclusions, as well as tax neutrality between capital and labor income.

This result also strongly indicates that tax reform that broadens the tax base is actually complemented by higher marginal tax rates, as the ETI is the principal economic parameter determining the revenue-maximizing tax rate (Saez, Slemrod, and Giertz 2012). That is, the broader the tax base, the lower the behavioral responses to taxation (the lower the ETI), and thus the higher the revenue-maximizing top tax rate. In current tax policy debates, however, raising top rates and broadening the base are generally treated as substitutes.

Research by Saez, Slemrod, and Giertz (2012) and Diamond and Saez (2011) suggest that top tax rates are currently well shy of revenue-maximizing levels, and that broadening the tax base and minimizing avoidance would even further increase the revenue-maximizing rate. Based on a preferred estimated ETI of 0.25, Diamond and Saez (2011) estimate the revenue-maximizing top income tax rate is 73 percent (combining federal, state, and local taxes). This implies that policymakers could raise the top statutory federal income tax rate to roughly 66 percent—more than 26 percentage points above the prevailing 39.6 percent rate (see Fieldhouse 2013 for details on these calculations).⁷

But Diamond and Saez (2011) also note that Gruber and Saez’s (2002) pre- and post-deduction elasticities for the top of the income distribution, ranging from 0.17 to 0.57, imply a revenue-maximizing total top income tax rate of between 54 percent and 80 percent, depending on how narrow or broad the tax base is. This range of estimates would imply revenue-maximizing top federal income tax rates between 37 percent and 76 percent (Fieldhouse 2013).⁸

Again, the important takeaway from this range of estimates is that base-broadening (i.e., eliminating exclusions, deductions, credits, and preferences) increases the revenue-maximizing tax rate. This is to suggest that base-broadening tax reform is complemented by a higher top tax rate, but not necessarily by raising the current 39.6 percent top statutory income tax rate. That rate is applied to taxable income above $450,000 for married joint filers, a threshold that has been reduced precipitously from roughly $1 million in the early 1970s and roughly $3 million in the early 1950s (adjusted to 2012 dollars), as discussed in Fieldhouse (2013). The growth and distribution of income within the top 1.0 percent of households by income (those in the top tax bracket, roughly speaking) is also quite skewed; better policy would add higher tax rates to better match the skewed distribution of income. For instance, EPI’s most recent progressive budget blueprint proposed adding a 45 percent income tax rate above $2 million in taxable income and a 50 percent income tax rate above $10 million in taxable income, both for joint filers (Bivens et al. 2012).

Conversely, base-broadening tax reform is all too often focused on reducing top marginal tax rates already below best estimates of the revenue-maximizing rate.

The most important base-broadener: ending the preferential tax treatment of capital income

Much of upper-income households’ greater ability to minimize tax liability stems from the capacity to time, shift, and shelter income afforded by the preferential treatment of capital income over labor income, particularly the preferential tax rates on capital gains. The equalization of tax rates on capital gains and ordinary income from the Tax Reform Act of 1986 has long been ended, and the Bush-era tax cuts created a new preferential rate on dividends (previously taxed as ordinary income). Indeed, the American Taxpayer Relief Act (ATRA) of 2013 (i.e., the lame-duck budget deal) made permanent preferential 20-percent top statutory rates on both long-term capital gains and qualified dividends for taxpayers in the top 39.6 percent tax bracket.⁹ Thus, for upper-income households, capital income is taxed at substantially lower rates than ordinary income.

Capital income is heavily concentrated at the top of the income distribution, with roughly 75 percent of the benefit of the preferential rates on long-term capital gains and qualified dividends accruing to the top 1.0 percent of households ranked by income (Toder and Baneman 2012).¹⁰ Economist and tax policy expert Leonard Burman (2011) concluded in testimony before the Senate Finance Committee that “the biggest loophole is the lower tax rate on capital gains,” adding later that “lower capital gains tax rates fuel inefficient tax shelters that entail a significant economic cost” (2011).

Many highly compensated workers have the ability to reclassify labor income as capital income, famously in some cases through “carried interests” in partnership profits (the “carried interest” loophole). This loophole allows much of the compensation of some financial-fund managers to be taxed at the preferential capital gains rate, as opposed to the higher ordinary income tax rate, and thus additionally avoiding uncapped Medicare payroll taxes on wages and salaries. Other capital income preferences, notably the tax exclusion for interest on municipal bonds, allow households to shift income or wealth into assets whose returns are excluded from taxable income.

Further, unlike dividends payments subject to annual taxation when disbursed, tax filers have discretion in determining when to realize capital gains (or losses) and subject them to taxation (or deduct losses). Capital gains taxes are assessed on the difference between the sale price and the purchase price of an asset, which is known as the basis for capital gains. For assets that are bequeathed, the basis price for heirs is reset to the value at the time of transfer rather than at the time of purchase (this is known as the “step-up basis of capital gains at death”). In other words, families can avoid capital gains taxation altogether by never realizing capital gains until shortly after assets are bequeathed, thereby minimizing intergenerational tax liability. For example, if an heir inherits a stock portfolio valued at $1 million, she could immediately liquidate it to pay zero income tax (assuming there has been no subsequent appreciation or depreciation). Sufficiently large bequests would be subject to some estate tax liability (indeed, the step-up basis is intended to avoid double taxation of intergenerational transfers), but the estate tax has been deeply hollowed out over the past 12 years, and a historically high exemption and low top rate were made permanent by ATRA. The step-up basis of capital gains would be repealed statutorily if the estate tax were repealed (TPC 2013), and, interestingly, would on net likely generate substantial revenue because projected estate tax receipts have fallen so sharply.¹¹

The tax code also enables households to avoid paying taxes on capital gains accruals by allowing them to transfer the donor’s basis valuation to a donee along with appreciated assets given as gifts—the “carryover basis of capital gains on gifts.” Many recipients of such gifts are tax-exempt institutions, so these accruals will likely never be subject to any taxation.

In discussions with Economic Policy Institute staff about the revenue-maximizing capital gains tax rate, Leonard Burman noted that the capital gains realization elasticity is raised by the step-up basis of capital gains.¹² Essentially, the additional option this step-up basis affords taxpayers for intergenerational avoidance of capital gains taxes means they have another avenue through which to respond to higher capital gains tax rates. Consequently, repealing the step-up basis would decrease efficiency losses from standing capital gains taxation and push up the revenue-maximizing long-term capital gains tax rate. The carryover basis of capital gains on gifts almost certainly elevates the capital gains realization elasticity as well, although the elasticity, revenue, and progressivity implications are much more modest.¹³

More broadly, the preferential tax rate on capital gains opens a host of income sheltering and tax arbitrage opportunities. In testimony before the Senate Finance Committee, Burman (2012) noted that “the difference in tax rates between capital gains and other income is a prime factor behind individual income tax shelters,” and that tax code arbitrage was distorting investment decisions away from more productive uses of capital.

Broadening the tax base by repealing the step-up basis of capital gains and the carryover basis of capital gains on gifts would make raising the capital gains tax rate more efficient and would also increase the revenue-maximizing tax rate. Improving tax neutrality between income forms by more closely harmonizing the tax rates on capital gains and wages and salaries—or better yet by repealing the capital gains and dividends preferences altogether—would in turn decrease the ETI with respect to marginal ordinary income tax rates.¹⁴ Again the lesson is clear: Base-broadening (in this case minimizing the opportunity to exploit different tax rates applying to different legal classifications of income sources) increases revenue-maximizing top rates. Therefore, a broader base and higher rate should be seen as complementary, not substitutable.

The preferentially low 20 percent top statutory tax rate on qualified dividends has much less of a justification than the capital gains preference, notably because there are fewer avenues for tax avoidance behavioral responses since dividends are taxed annually as they are disbursed.¹⁵ And prior to the 2003 Bush tax cuts, qualified dividends were taxed as ordinary income. In discussions with Economic Policy Institute staff about the revenue-maximizing capital gains tax rate, Tax Policy Center staff suggested that behavioral responses to the tax rate on qualified dividends are close to negligible.¹⁶ From a corporate finance perspective, there is some merit in horizontally equitable tax treatment between capital gains and dividends to avoid distorting firm payout strategy, such as tilting the balance toward share repurchases (passed on to shareholders as capital gains) over dividends payments because of tax reasons. But there is also a strong revenue and equity argument for again taxing qualified dividends as ordinary income and simultaneously raising the capital gains rate—or better, repealing the capital gains preference entirely—which, by decreasing or eliminating this tax wedge, would mitigate concerns about tax arbitrage driving corporate payout strategies.

Conclusion

Put simply, if the aim of tax reform is to generate revenue and restore lost progressivity, lowering top income tax rates as the 1986 framework did would be a step in the wrong direction. And this is true even if reform leads to a broader base. Lowering top marginal rates on labor or capital income would decrease the progressivity of the tax-and-transfer system and likely exacerbate market-based income inequality growth (Fieldhouse 2013).

Short of reneging on the nation’s commitments to ensuring health care for the elderly, poor, and disabled, Congress must raise substantially more revenue than projected under current policy. To do that, we don’t need a repeat of 1986-style reform. Instead, we need a context-based overhaul that eliminates some of the more regressive tax preferences and decelerates income inequality growth. This overhaul should also heed lessons from recent public finance research and begin viewing a broader base as an opportunity to raise rates while decreasing efficiency losses.

And the greatest opportunities for base-broadening with respect to decreasing tax avoidance and income sheltering, as well as increasing progressivity, are the tax preferences for investment income, including the “carried interest” loophole, preferential rates on capital gains and qualified dividends, step-up basis of capital gains, and tax exclusion for municipal bond interest.

In short, we need tax reform that ensures revenue adequacy for the future, restores lost tax progressivity, and treats raising top marginal rates and broadening the tax base as complements rather than substitutes.

— Andrew Fieldhouse is a federal budget policy analyst with the Economic Policy Institute and The Century Foundation. He previously worked as an assistant budget analyst and research assistant with the House Budget Committee. His areas of research and interest include federal tax and budget policy, political economy, public investment, and macroeconomics. Andrew has provided frequent commentary on the current budget debate and the impact of fiscal policy on the economic recovery.

— The Economic Policy Institute is a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy. EPI stresses real-world analysis and a concern for the living standards of working people, and it makes its findings accessible to the general public, the media, and policymakers through books, studies, and popular education materials. The Century Foundation conducts public policy research and analyses of economic, social, and foreign policy issues, including inequality, retirement security, election reform, homeland security, and international affairs. With offices in New York City and Washington, D.C., The Century Foundation is nonprofit and nonpartisan and was founded in 1919 by Edward A. Filene.

Endnotes

1.  The corollary principle of vertical equity states that taxpayers with greater resources should pay a higher share of their income in taxes than those with fewer resources, or that effective tax rates should rise with income. As this paper discusses, tax preferences for capital income undermine both vertical and horizontal equity principles at the top of the income distribution.

2.  The statutory preferential rate on long-term capital gains was 20 percent prior to reform, which repeal effectively raised to 28 percent.

3.  Most of the base broadening in the Tax Reform Act of 1986 was actually on the corporate income side, although distributional analysis of tax changes typically assigns the incidence of corporate income tax changes to individual shareholders. On the individual income tax side, the biggest base-broadening reforms were repealing the preferential tax rate on capital gains and establishing limits on contributions to tax-preferred retirement plans, both of which were reversed in 1997 (Gravelle and Hungerford 2012). Most itemized deductions were left untouched, although the mortgage interest deduction was capped (at high levels), and deductions for sales taxes and consumer interest were repealed (Gravelle and Hungerford 2012).

4.  The Bush-era tax cuts generally refer to the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 and Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003, although there were a number of tax changes over 2001–2008. Subsequent tax changes primarily accelerated the implementation of provisions in the 2001 and 2003 tax cuts.

5.  ETIs can be estimated with respect to any marginal tax rate, but much of the public finance literature is concerned with the ETI with respect to the net-of-top-marginal tax rate (i.e., 1-τ, where τ is the top marginal tax rate), the most policy-relevant variable for comprehensive tax reform and its revenue implications. Note that economic distortions from tax rate changes can influence both productive and unproductive economic activity.

6.  More accurately, if the absolute value of the point elasticity of taxable income with respect to the marginal tax rate is equal to 1, then the top of the Laffer curve has been reached. If the absolute value of the point elasticity of taxable income with respect to the marginal tax rate is greater than 1, then top tax rates are higher than the revenue-maximizing rate—that is, the tax structure is “on the wrong side” of the Laffer curve. Note also that elasticities are dependent on both the starting marginal tax rate and tax avoidance opportunities afforded by tax enforcement and preferences.

7.  Their preferred ETI estimate of 0.25 is based on best estimates of the long-run elasticity, ranging between 0.12 and 0.40, reported in Saez, Slemrod, and Giertz (2012).

8.  While a small part of this range of estimates falls below the prevailing top tax rate, it is important to remember that both the 1) revenue-maximizing federal income tax rate given a revenue-maximizing total income tax rate and 2) revenue-maximizing total income tax rate given a specified elasticity are nonlinear relationships, and their preferred estimate from the midpoint elasticity of 0.25 is strong evidence that the revenue-maximizing top tax rate is on the high end of this range. See Fieldhouse (2013) for calculations of the revenue-maximizing top federal income tax rate from this range of top total income tax rates.

9.  As a result of the Affordable Care Act, investment income for households with adjusted gross income above $200,000 ($250,000 for joint filers) is additionally subject to a 3.8 percent Medicare Hospital Insurance surcharge as of January 1, 2013.

10.  This compares with 26.4 percent of the benefit of itemized deductions, 15.9 percent of the benefit of exclusions, 8.3 percent of the benefit of above-the-line deductions, and 8.3 percent of the benefit of nonrefundable tax credits, all for the top 1.0 percent of households by income (Toder and Baneman 2012).

11.  EGTRRA repealed the estate tax for 2010, and in that year replaced the step-up basis of capital gains at death with a modified carryover basis for capital gains bequests. The estate tax and step-up basis of capital gains were reinstated in 2011. The Office of Management and Budget (OMB) Federal Receipts Analytical Perspective from the president’s fiscal 2014 budget request estimated that the step-up basis of capital gains would result in $149.8 billion of revenue loss over fiscal 2014–2018. Extrapolating from this score for economic growth, we estimate that repealing the step-up basis would save $337.7 billion over fiscal 2014–2023. Conversely, the Congressional Budget Office projects that only $197.6 billion will be collected from estate and gift taxes over fiscal 2014–2023 (CBO 2013). The Bush-era tax cuts gradually hollowed out the estate tax from an exemption of $675,000 ($1.35 million for married couples) and top rate of 55 percent in 2001 to an exemption of $3.5 million ($7 million for married couples) and top rate of 45 percent, before repealing the tax entirely for 2010. The estate tax was reintroduced for 2011 and 2012 at an inflation-indexed exemption of $5 million ($10 million for married couples) and top tax rate of 35 percent—the least progressive structure of the most progressive federal tax since the 1930s. ATRA permanently set an inflation-indexed exemption of $5 million ($10 million for married couples) and top tax rate of 40 percent, at a cost of $369.1 billion relative to current law (JCT 2013).

12.  This conversation was regarding elasticity assumptions in the Urban-Brookings Tax Policy Center’s microsimulation tax model, but it was suggested that the same would hold true of elasticity estimates used by other official scorekeepers, notably the Joint Committee on Taxation. For more on capital gains realization elasticities and revenue modeling, see Gravelle (2010).

13.  The OMB Federal Receipts Analytical Perspective from the president’s fiscal 2013 budget request estimated that the step-up basis of capital gains would result in $149.8 billion of revenue loss over fiscal 2014–2018, roughly six times the $24.5 billion cost of the carryover basis of capital gains on gifts (OMB 2013).

14.  Saez, Slemrod, and Giertz (2012) note that raising the top income tax rate while holding the top capital gains rate fixed at lower levels could increase the ETI with respect to marginal ordinary income tax rates (as increased tax arbitrage incentives fueled greater tax avoidance). See footnote 70 in Saez, Slemrod, and Giertz (2012).

15.  See endnote 9.

16.  See endnote 12.

References

Bivens, Josh, Andrew Fieldhouse, Ethan Pollack, and Rebecca Thiess. 2012. Investing in America’s Economy: A Budget Blueprint for Economic Recovery. Economic Policy Institute report as adapted for the Peter G. Peterson Foundation’s Solutions Initiative II. http://www.epi.org/publication/investing-america-economy-budget-blueprint/

Bivens, Josh, Andrew Fieldhouse, and Heidi Shierholz. 2013. From Free-fall to Stagnation: Five Years After the Start of the Great Recession, Extraordinary Policy Measures are Still Needed, but Are Not Forthcoming. Economic Policy Institute, Briefing Paper No. 355. http://www.epi.org/files/2013/bp355-five-years-after-start-of-great-recession.pdf

Burman, Leonard. 2011. “Tax Reform Options: Marginal Rates on High-Income Taxpayers, Capital Gains, and Dividends.” Testimony before the Senate Committee on Finance, September 14. http://www.urban.org/uploadedpdf/901447-Burman-Tax-Reform-Options.pdf

Burman, Leonard. 2012. “Tax Reform and the Tax Treatment of Capital Gains.” Testimony before the Senate Committee on Finance, September 20. http://www.finance.senate.gov/imo/media/doc/092012%20Burman%20Testimony.pdf

Congressional Budget Office. 2013. “Individual Income Tax Receipts and the Individual Tax Base—February 2013 Baseline” [Excel spreadsheet]. http://www.cbo.gov/sites/default/files/cbofiles/attachments/43901_TaxReceipts.xls

Diamond, Peter, and Emmanuel Saez. 2011. The Case for a Progressive Tax: From Basic Research to Policy Recommendations. CESifo Working Paper No. 3548. http://elsa.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf

Fieldhouse, Andrew. 2013. A Review of the Economic Research on the Effects of Raising Ordinary Income Tax Rates: Higher Revenue, Unchanged Growth, and Uncertain but Potentially Large Reductions in the Growth of Inequality. Economic Policy Institute-The Century Foundation, Issue Brief No. 353. http://www.epi.org/files/2013/raising-income-taxes.pdf

Fieldhouse, Andrew, and Rebecca Thiess. 2013. The ‘Back to Work’ Budget: Analysis of the Congressional Progressive Caucus Budget for Fiscal Year 2014. Economic Policy Institute Policy Center. http://www.epi.org/publication/back-to-work-budget-analysis-congressional-progressive/

Fieldhouse, Andrew, and Ethan Pollack. 2011. Tenth Anniversary of the Bush-era Tax Cuts: A Decade Later, the Bush Tax Cuts Remain Expensive, Ineffective, and Unfair. Economic Policy Institute Policy Memo No. 184. http://www.epi.org/page/-/EPI_PolicyMemorandum_184.pdf

Gravelle, Jane. 2010. Capital Gains Tax Options: Behavioral Responses and Revenues. Congressional Research Service.

Gravelle, Jane, and Thomas Hungerford. 2012. The Challenge of Individual Income Tax Reform: An Economic Analysis of Tax Base Broadening. Congressional Research Service. http://assets.opencrs.com/rpts/R42435_20120322.pdf

Gruber, Jon, and Emmanuel Saez. 2002. “The Elasticity of Taxable Income: Evidence and Implications.” Journal of Public Economics, vol. 84, pp. 1–32.

Hungerford, Thomas. 2011. Changes in the Distribution of Income Among Tax Filers Between 1996 and 2006: The Role of Labor Income, Capital Income, and Tax Policy. Congressional Research Service. http://taxprof.typepad.com/files/crs-2.pdf

Hungerford, Thomas. 2012. Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945. Congressional Research Service. http://graphics8.nytimes.com/news/business/0915taxesandeconomy.pdf

Joint Committee on Taxation. (JCT). 2013. “Estimated Revenue Effects of the Revenue Provisions Contained in an Amendment in the Nature of a Substitute to H.R. 8, ‘The American Taxpayer Relief Act Of 2012,’ as Passed by the Senate on January 1, 2013.” https://www.jct.gov/publications.html?func=startdown&id=4497

Marron, Donald, and Eric Toder. 2012. How Big Is the Federal Government? Urban Institute and Urban-Brookings Tax Policy Center. http://www.taxpolicycenter.org/UploadedPDF/412528-How-Big-Is-The-Federal-Government.pdf

McClelland, Robert, and Shannon Mok. 2012. A Review of Recent Research on Labor Supply Elasticities. Congressional Budget Office, Working Paper 2012-12. http://www.cbo.gov/sites/default/files/cbofiles/attachments/10-25-2012-Recent_Research_on_Labor_Supply_Elasticities.pdf

Office of Management and Budget (OMB). 2013. Analytical Perspectives, Budget of the United States Government, Fiscal Year 2014 – Federal Receipts. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/receipts.pdf

Saez, Emmanuel, Joel Slemrod, and Seth Giertz. 2012. “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review.” Journal of Economic Literature, vol. 50, no. 1, pp. 3–50.  http://elsa.berkeley.edu/~saez/saez-slemrod-giertzJEL10round2.pdf.

Shaviro, Daniel N. 2011. 1986-Style Tax Reform: A Good Idea Whose Time Has Passed. Tax Analysts, May 25. http://www.taxanalysts.com/www/features.nsf/Articles/CF7C354F881B80DE8525789B005A9626?OpenDocument

Tax Policy Center (TPC). 2013. “Capital Gains Taxation.” Tax Policy Center’s Tax Topics website. http://www.taxpolicycenter.org/taxtopics/encyclopedia/Capital-Gains-Taxation.cfm

Toder, Eric, and Daniel Baneman. 2012. Distributional Effects of Individual Income Tax Expenditures: An Update. Urban-Brookings Tax Policy Center. http://www.urban.org/UploadedPDF/412495-Distribution-of-Tax-Expenditures.pdf

Health insurance (both public and private) provides financial insulation from unpredictable and potentially large economic health shocks. The value of insurance has been reinforced recently  in a randomized health insurance experiment demonstrating that Medicaid drastically reduced the percent of people who faced catastrophic out-of-pocket medical expenditures (from 5.5 percent to about 1 percent).² Receipt of Medicaid also halved the odds that beneficiaries would experience other forms of financial strain (like taking out loans or delaying other payments) due to out-of-pocket medical expenditures.

The extreme concentration of health costs shown in the infographic also demonstrates that containing health-care cost growth necessitates focusing on the few very high spenders. These are, almost by definition, extremely sick people that desperately need care. Yesterday, we released a new report that examines the problems associated with efforts that implicitly ignore this point by forcing people into less-comprehensive insurance.

1. Authors’ analysis of Medical Expenditure Panel microdata (MEPS). 2010. Full-year Consolidated Data File, PUF no. HC-138 [machine-readable microdata file]. Rockville, Md.: Agency for Healthcare Research and Quality. http://meps.ahrq.gov/data_stats/download_data_files_detail.jsp?cboPufNumber=HC-138.

2. Baicker, Katherine, et al. 2013. “The Oregon Experiment – Effects of Medicaid on Clinical Outcomes.” The New England Journal of Medicine, vol. 368, no.18, pp. 1713–1722.