Tuesday, March 20, 2018

Inadvertent arguments made by what is unsaid

From ‘Sick With Worry’: GOP Bill to Eliminate Public-Service Loan Forgiveness Threatens Social-Work Sector by Raina Lipsitz.

I hadn't read much about the Public-Service Loan Forgiveness program in a long time and thought I would catch up. Passed during the Bush years, I viewed it at the time with multiple levels of skepticism. The legislation seeks to subsidize government employment by forgiving student loans of government employees after a certain time frame of having maintained routine payments.

When it passed, I focused primarily on the economics. Is there anything about government service from a labor market perspective that prevents salaries from reaching a natural equilibrium in a reasonable time frame (the only real justification for an employment subsidy)? No. If social workers are being paid too little to attract sufficient qualified talent, then salaries will rise. There is no point in a subsidy and there is always an argument against subsidies.

The generic argument against subsidies is that pure free market pricing signals a great deal of information about supply and demand. Subsidies muddy that signal and subsidies, from a budgeting perspective, become permanent. Rather than a fix for a transient situation, they usually become a hidden drag on the economy. They benefit a select few at a cost to the many and so they frequently are also a corrupting influence on the political process, reducing citizen trust in government.

In addition, at the time of passage in 2007, government employment was more secure than the private sector (a longstanding phenomenon) and there have been a number of studies that seem to indicate government employment was better compensated than for the same work in the private sector. In other words, the labor market structure was already tilted in favor of government employment. It seems to me that if that is the case, then there is no need for further subsidy.

A further issue is that because the subsidy is in the form of education loan forgiveness, that also effectively serves as a subsidy of the education sector. And if there is a sector where the mismatch between investment and return (both privately and publicly) is exceptionally ambiguous and possibly negative, it is the education sector. If you want an economy with maximal efficient allocation of resources, subsidizing education through hidden channels is not a good idea.

Finally, I have a grave concern about public servants (politicians and bureaucracy) becoming overly isolated from the quotidian concerns of citizens through excessive shielding. What is the moral basis for central government taking resources from one group in order to subsidize another group already being priviliged over those being taxed?

The waters are further muddied by intersectional and partisan concerns. Social work is a highly gendered work sector and public servants are highly skewed to one party over the other.

Those were my concerns then. What has happened in the decade since? I was hoping the article might shed some light.

That was not to be. It is essentially an emotional appeal that existing government workers, already well compensated and with great job security might be less well off without the money coming to them from their fellow citizens who are less well paid and have greater job insecurity. That is not an especially compelling argument.

A journalist's reporting would not be complete without some significant innumeracy.
Expensive advanced degrees are required to enter and/or advance in many public-service jobs, including social work. Ending PSLF would make it extraordinarily difficult for low-income people to obtain these degrees and significantly harder to recruit educated young people in high-need fields like social work, where the median annual wage is $46,890 and 69 percent of workers are over 35. The demand for social workers, especially in health care and social services, is growing, but pay has remained stagnant and workers are aging out of the field.
$47,000 for a single worker is pretty close to the total average household income of $50,000. It implies that two government employees with all their perks and job security would, together, be making nearly twice as much as the average citizen household.

The more egregious innumeracy is the "69 percent of workers are over 35 . . . workers are aging out of the field" claim. 69% of the adult workforce over the age of 35 actually sounds about right. Lipsitz makes it sound disproportionately old. Is it? To her credit, she includes the link to the source data. You run the numbers and the percentage of the total workforce over 35 is . . . . 65%. So social workers are marginally older but not much. And there is no aging out of the field.

So this is a one sided article seeking to justify a continued subsidy of an already privileged group at the expense of their fellow citizens and does not do a very credible job of making the argument.

But what is unsaid may make a clearer argument than what is said. Lipsitz makes no argument about how Public-Service Loan Forgiveness has been beneficial to the Republic. She argues that it is beneficial to the recipients, but that is not a hard case to make. Free money to a class of people rarely has many opponents among those beneficiaries.

Lipsitz makes no case as to how this subsidy benefits anyone other than the recipients. That being the case, that sounds like a pretty compelling case for dispensing with the subsidy as an unneeded waste of money.

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