Cities jolted by a new CalPERS rate increase laid out in their annual pension reports this fall are finding few options for cost relief. Basically, they can pay more now to avoid higher costs later or curb the growth of employees and their pay.
As rising pension costs squeeze funding from government services, a big change could come from a state Supreme Court decision. Two unanimous rulings by appellate court panels allow cuts in pensions earned by current employees in the future.
Appeals of the two rulings have yet to be heard by the Supreme Court. How the high court will rule, and what might follow if the groundbreaking appellate rulings are upheld, is far from clear.
The productivity of workers in an economy depends, in part, on the flow of capital services enabling their production. Even in a closed economy, reductions in the corporate tax rates and the associated capital deepening may imply a higher marginal product of labor and higher wages. The ability of domestic U.S. firms to invest foreign profits overseas exacerbates the implications of corporate tax policy for domestic workers; an uncompetitive domestic corporate tax rate reduces the demand for U.S. workers by encouraging capital formation abroad. Indeed, when viewed in this way, the incidence of the corporate tax could theoretically fall entirely on U.S. workers, so long as workers are immobile and capital moves freely across borders.
Southern California wages are rising but a new report from University of Southern California shows that’s not going to make rents more affordable in the long run.
The annual USC Casden Real Estate Economics Forecast found that rents will keep rising over the next two years because the supply of apartments is tight and not enough new housing is coming online.
In Los Angeles County, average monthly rents are expected to rise to $2,373 by 2019 — up $136 from the 2017 average.
Backing up Hassett’s assertions, former CEA chair Glenn Hubbard recently wrote in the Wall Street Journal that too many economists fail to consider the share of the U.S. corporate tax burden borne by labor -- 60 percent according to his research. Neither the TPC, the CBO, nor the JTC (Joint Tax Committee) model these results. Instead, they ignore the evidence.
A recent analysis of the House tax plan -- which is nearly identical to the Trump plan -- by professors Alan Auerbach (Berkeley) and Laurence Kotlikoff (Boston University) concluded that it would boost wages by 8 percent. That’s a big number.
It’s the difference between a prospering and optimistic middle class and a pessimistic middle class that lives day-to-day, paycheck-to-paycheck.
This Working Paper focuses on this challenge through multiple case studies, covering both state and local governments. The case studies demonstrate a marked increase in both employer pension contributions and unfunded pension liabilities over the past 15 years, and they reveal that in almost all cases that costs will continue to increase at least through 2030, even under the assumptions used by the plans’ governing bodies—assumptions that critics regard as optimistic. It examines the impacts of increased pension contributions on other expenditures, including services traditionally considered part of government’s core mission. Pension costs have crowded out and will likely to continue to crowd out resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety.