Post midterm: Can GOP reign without Trump

American voters woke on Tuesday to see which party would govern Congress, only to learn that the final results were unsettled, with vote counting to continue for days or weeks. One thing is uncertain: the much ballyhooed Red revival failed to materialize, and while the Democrats breathed a sigh of relief, for better returns than they thought, Republicans were furious as few of former President Trump’s favored candidates had significant gains.

While some wags have called this the thin pink line, others have noted that the country may have decided they wanted a balance of opinion for the ruling party, yet while we wait for the final tally, to see if the GOP can win the House, and/or the Senate, it’s also possible that the House could remain in the hands of the Democrats and retain Nancy Pelosi as Speaker of the House.

One issue seems to have defined voters to give the Dems the home field advantage and that is abortion, and women’s reproductive rights, that a majority of Americans favor abortion with some restrictions, at 60 percent according to Pew Research. And, while there were some Democrats, Bernie Sanders included, who felt that it might have not been enough, in the end it did prove to be enough.

Voters in Republican leaning Kentucky overturned an anti abortion amendment, one of the most restrictive in the country; and in MIchigan Gov. Gretchen Whitmer, ruling over a now Democratic controlled state legislature, won, in part as a champion of abortion rights, noted The Washington Post, and lastly in North Carolina where restrictions are now banned, in what was thought to be a veto proof majority.

Another surprise is that the ferocity of the MAGA crowd, and its doom and gloom scenario of militant teachers, marching lockstep with transgender and LGBT people, coupled with soft on crime Democrats, did not produce the desired push for that alleged Red wave.

The best case scenario, for the GOP, if they win a narrow victory in the House, is that the Biden administration might be able to have more legislative wins, while the more radical GOP, especially people like Marjorie Taylor Green might bear down on their Speaker of the House who will bear the brunt of their anger and force, currently favored to be Kevin McCarthy, and while he has worked the phones, is not an automatic choice, needing 215 votes from House lawmaker votes.

Some are saying that the sharp elbowed Jim Jordan might be the better choice, but in a contest of wills, it's all over but the fighting.

While Trump has been seen by many supporters as the head of the Republican party with his outsized influence, some observers are beginning to wonder if he has lost the Midas touch as both his candidates and his lie about winning the 2020 election seem to be fading, at least for now, as the deciding factor, but as we see, that does not mean it isn’t winning, for some.

While Trump says that he might run again, Scott Jennings, a Republican strategist told The Hill on Wednesday, “How can you look at these results tonight and conclude Trump has any chance of winning a national election in 2024?”

Nipping at his heels as a 2024 candidate is the victorious Florida Gov. Ron De Santis whose sweep over contender Charlie Christ, is already legend, and while predicted, there are some GOP supporters who see him as a more viable presidential candidate for 2024, one that carries less baggage than Trump with his cringe inducing moments, grinning in concert with Russian Federation President Vladimir Putin, his anti Asian labels of Covid as the Asian Flu, and his casting away of former supporters such as Jeff Sessions, or his litany of alleged violations of his financial empire, that seems to have been built on sand.

On the technical side it seems that mail in voting has reached a zenith and while extending the counts also seems to suggest that fraud is elusive, and with that, the absence of potential violence at the polls, gave a measure of safety to the electorate, and as President Biden noted, “without much interference at all. . .”

There were some election deniers who “tried to to undermine this election before polls even closes, seizing on problems with vote counting machines in Arizona and a likely delay in Pennsylvania to spin viral theories of vote manipulation” led by Trump who claimed that the election, was being stolen yet again from the Republicans, noted Rosalind S. Helderman of The New York Times.

While this was true, it has not been without support, as we heard over lunch, when two old duffers loudly proclaimed that the “Democrats stole the election from Trump,” before stomping out of the diner.

The durability of this lie has taken hold in the newly elected Congress, and among them are members of the House, Senate, governors, secretaries of state and attorney generals, nearly a thirds, so far, according to The New York Times analysis, but there has also been a significant number of election deniers that were not elected.

This seems to be a force majeure, in the GOP playbook, despite the fact that there has been no credible evidence that the 2020 election was fraudulent, but perhaps this statement of durability, says it all from Russell Fry, a Congressman from South Carolina, who said that it was “clear that it was rigged.”

One aspect of this election is that the absence of old fashioned retail politics with door to door visits seems in the abeyance and when it was done, it worked well, when it was not, candidates lost.

An emerging trend is ranked voting to support a closer support of a candidate and to avoid rancor on the part of some voters and while it was previously seen in the New York City mayoral race, it is now spreading to other state elections and Nevada is using it in the midterms

Simply put it asks voters to rank order their choice of candidates and avoids a run off, because it is an inherent part of the process, and allows for less rancor and as an advocate has said, it gives more room for voter principles.

With rancor being on the front line in this politically divided country, depending on Nevada, and in the past, Alaska, spreading further to midterms might be a positive direction.

This might have helped Tom Ryan advance over JD Vance in the ever so tight Ohio race, where Vance came in as a darkhorse and emerged a victor in a game changer from an Ivy League educated brahmin to a flannel clad good ole boy, writ large.

One gain for Democrats is the number of Black officials across the state and federal slate: Wes Moore as governor of Maryland, joined by the first Black attorney general, Anthony Brown, and Summer Lee as the first Black Congresswoman for Pennsylvania.

For the LGBT community wins are also historic wins for the Dems: Beca Blunt to Congress from Vermont, Erick Russell as treasurer for Connecticut, who is not only gay, but Black, a first in the United States.

Erick Russell

All of this, of course, is background to the larger story of who will control Congress, and as of this writing, with Georgia as a runoff, Arizona and Nevada remain as the races to watch for in the Senate, and for the House: New York, Maryland, California, Colorado, Oregon, Nevada,and Alaska. With leads on both sides of the aisle in some districts.

Let the nail biting continue.

October employment in US keeps pressure on inflation

Friday’s report from the US Labor Dept for October showed, still, the resilience of the American job market with 261,000 jobs gained, despite the predictions of economists of a number closer to 200,000 based on the September report that had a gain of just below 315,000, and these consistently high numbers have caused the Federal Reserve Bank to issue another increase, this time, once again, of 3.75 percentage points to fight inflation.

The hgh job numbers coupled with high wages, have allowed many Americans to increase demands for both goods and services, even with those wages buying power reduced by inflation.

Wage growth has been a factor since late summer and its growth has kept pressure on Inflation, as The Wall Street Journal reported In August:

“Wage gains help consumers spend money in the face of higher prices for restaurant meals, groceries and lodging. But many companies are having to pay more for labor at the same time that other business expenses are rising, including for transportation and logistics, said Omair Sharif, head of forecasting firm Inflation Insights LLC.”

Those prices are passed on to consumers, he added.

As most Americans have seen, at the gas pump, and at the supermarket, “wages haven’t kept pace with inflation. Private sector wages and salaries declined 3.1% in the second quarter from a year earlier, when accounting for inflation,” added the Journal.

With the current inflation, the highest in 40 years, showing no signs of abatement, the central bank has its hands full to meet its Congressional mandate of maximizing employment and stabilizing prices, the latter being the most difficult. 

“What I see in this is the imprint of beginning weakness,” said Diane Swonk, the chief economist at KPMG. “But it’s not enough to derail the Fed.”

While many have blamed President Biden for failure to act, the responsibility lies fully in the hands of the Reserve, under the direction of Jerome Powell, and its measures, interest rate hikes, are the key to lowering the temperature of inflation, and this report does show that there has been some effect, just not enough, and as we have noted before, the efforts at calibration has risks: too much, and there is the chance of a deep recession, with attendant job loss (mostly on the lower end) sending shockwaves across the economy, but letting inflation become the norm, then we have the problem of the 70s and 80s, where inflation became the norm, until Paul Volcker stepped in to intervene.

The unemployment rate of 3.7 percent, what we refer to as the marquee rate, is normally balanced with the household survey, but that is being temporarily suspended due to a format change.

Equally worrisome is the labor force participation rate which at 62.2 has barely moved, with many people, on the sidelines, and some, especially older workers fearful of the still present Covid virus, and those who have sought training, and education for another field; and, this has become especially true for service workers in restaurants, and hotels, to relieve themselves of long hours standing on their feet. 

In total 4.1 million have quit their jobs.

 

Still others, mostly women, who don’t have adequate child care (an area that the US lacks) have left the workforce to care for them.

One often unnoticed facet of the jobs  market deficit has been a shortfall in immigration, and this shortage “has become an economic problem for America,” according to The Economist, they noted that it is “harder for companies to find workers and threatens to do more damage to the economy, But whereas unauthorised border crossing are a perennial controversy, the drop in overall immigration has barely registered in Congress.”

Looking at fiscal year 2020/2021, we have the addition of only 247,000 people, continuing a pre pandemic trend but that was exacerbated in 2017, by the Trump administration restrictions “from several predominantly Muslim countries.”

This has been especially seen in restaurants and accommodation sectors, “which draws a quarter of its employees from the foreign born population, [and] could not fill about 15% of job openings last year.”

In short,  before then,“New immigrants accounted for nearly 70% of the growth in the American labour force in the 2010s.”

On a somewhat brighter note, for Black Americans, the unemployment rate has been 5.3, from 5.8 percent unemployment,reflecting some possible changes, although mostly unattributable to a specific reason.

The outlook despite inflationary fears is solid and “All in all, the job market is still hot,” said Daniel Zhao, an economist at the career site Glassdoor, to The New York Times, and “There’s still some cushion before we actually hit the ground.”

For Biden, the report, coming just before the midterm elections, offers some good news, but it’s a mixed bag as he faces a barrage of criticism from the right, who seeing the inflationary numbers, say it is  all his fault. Nevertheless he said in a statement from the White House on Friday, “While comments by Republican leadership sure seem to indicate they are rooting for a recession, the U.S. economy continues to grow and add jobs even as gas prices continue to come down.”

While the Fed may make smaller interest rate increases, say some, at its December meeting, Powell had to backtrack hopes, by noting that any actions in that area would depend on the data, and indeed most Reserve observers have noted, much like his predecessor, Janet Yellen, he is data dependent.

Also part of the mixed bag is the effect on consumers and while the slight dip in employment shows some effect as we have noted, but mortgage rates took a slight dip before Friday’s numbers were released, down from the prior week of 7.16, yet as  Bankers Association, reported that the 30 year rate had fallen to 7.06 percent on the average, “mortgage rates have still shot up to more than 7 percent, up from 4.2 percent in March and from their pandemic low point of 2.7 percent”, according to The Hill.

Since mortgage rates on a 30 year fixed “don’t move in tandem with the Fed’s benchmark rate, but instead track the yield on 10 year treasury bonds” with multiple factors interplaying, it bears watching for investors and buyers.

For the rental market there is some easing according to the Zumper National Report, with one bedroom apartments decreasing to 0.8 percent to a dollar figure of $1,491.00, and two bedrooms lowered by 0.7 percent, or $1,832, across most urban markets; and while, this smaller decrease in rentals offers some hope, most realtors don’t see this as a trend, but something to be watched.

And, watched, it will be.

The November report, once released, will have a great deal of attention by the market, as well as the government, and commercial interests, as it might be a bellwether for the end of the 4th quarter of 2022,  as well as a harbinger for January of 2023.

FAFSA change creates headaches for college families

In our last report on why American colleges are so expensive, we focused on the costs, the financial aid process, and the role of accreditation in deciding how students receive both needs based and merit aids. But, now there are changes to the Free Application for Federal Student Aid (FAFSA) form, the fee-less form that opens the door to federally financial aid, and in some instances school, or state based aid.

For many years parents with multiple children enrolled in college, at the same time, received a discount making it more affordable for parents.

That has all changed and in a 2020 proposal from Sens. Lamar Alexander of Tennessee and Patty Murray of Washington State, the discount has been eliminated, in an effort to equalize access to aid for lower income families, especially those whose income is $100,000, or below to increase access to Pell Grants.

This is a form of academic outreach to those students, and their families, and the goal is to increase access to higher education for those who need it most. And, to note, Brandeis is using the new form to enhance that population and is using the version only for returning students whose gross family income is less than $100,000 according to Sherri Avery,  vice president of student financial services in a conversation with USA News.

Approximately 13 million college bound students complete the form, and some state that the changes to the FAFSA were designed to simplify the form both visually, and with content to match other formats; and in fact the number of questions were reduced from 108 to 36.

“It also uses a new formula for determining the “Expected Family Contribution” (EFC) — which will be renamed the “Student Aid Index” (SAI). The new FAFSA will still request information on the number of children in your household, but the SAI will no longer provide a discount for multiple children in college at the same time,” according to Mass Mutual’s blog.

“We also used to suggest to families with kids who are two years apart in school that the oldest child consider a gap year, so they can at least divide their EFC for those three years when their kids would be in college at the same time,” said Brock Jolly, a financial professional with The College Funding Coach in Vienna, Virginia. “These strategies will no longer work.”

The previous version had an equal division by the number of children enrolled concurrently.at college. 

Now, using a hypothetical calculation of a family income of $50,000 a first child would qualify for $8,000 with an EFC of $42,000 per year, but with the second child starting the following year, the EFC will be divided between the two children of $21,000 each, and then a third child would be calculated on a 33 percent basis. And, further for the hypothetical fourth child, based on school costs and rankings.

The winners are those aforementioned low income families, and the losers are the middle income and higher families.

While the high income families won’t get much they may get access to being able to simply write a check for annual tuition costs; and, Jolly noted to the blog that, “There are colleges out there that will make admissions decisions based upon your ability to pay full fare,so if school X looks at your FAFSA and sees that your family’s EFC (soon-to-be SAI) is six figures or more, they may be more likely to accept that student over another candidate who would need financial aid. A full-pay family may have a small leg up.”

The lower income families may get more in traditional forms of aid such as work-study, and loans with possible low interest rates.

This new reality means that spreadsheets used to calculate estimated costs will be revised, but let’s also remember that parents don’t know what aid their children could get since that is not given till acceptance, and as we’ve noted schools can afford to be stingy, especially with in-state calculations for state based schools, where parents lack the competitive edge, with lowered tuition versus students from out of state paying more.

Often overlooked, especially for those students desiring entrance to posh schools such as Harvard, Princeton, or Dartmouth is that these schools are well endowed, and can offer more, especially to low income students, especially with merit aid.

For some the drill down on college applications for their high school seniors not only took a U turn with the changes of the FAFSA sibling discount, there is another option and that is to complete the College Scholarship Service (CSS) Profile, and while the detailed questions might be intimidating, the sibling discount is available.

In its original converge, The New York Times quoted “Sandy Baum, a nonresident senior fellow at the Urban Institute, said she understood the financial strain that families might feel when multiple children were in college. But given that college costs are now paid by saving and borrowing over a decade or more, she said, it doesn’t make sense to give, essentially, a bonus to families just because they have two children attending college simultaneously.

“There’s no reason why a family with twins should get more money,” she said. “It’s not fair to families with different spacing” of children.”

The National Association of Student Financial Aid Administrators has noted “Eliminating the sibling bump also makes it possible to create a simple chart that families can check to see if they qualify for Pell grants, according to a statement from the association. Factoring in the number of students in college would have made it “unworkable.”

US Jobs report for September kept on growing

If there is too much of a good thing,then the September Jobs Report released by the US Labor Dept on Friday, then that news of 263,000 nonfarm payrolls gave the Federal Reserve enough of the jitters to wonder how much more that can be done to lessen the hiring, and by turn, the still high wages that desperate employers are using to lure the best talent that is needed to attract them, and enough to frustrate the Feds as they struggle to meet their twinned mandate of full employment and 2 percent inflation.

There is so much resilience in the American economy, and that has recovered nearly all of the jobs lost to the Covid pandemic, yet there are still employers that need workers, even after lessening educational requirements, forgiving prior marijuana convictions, but still the need for more employers.

Women are still underrepresented and child care workers are one group that have lost employees, and the consequence is that many women are staying at home to take care of their children. Labor Force participation, overall, has stayed relatively the same, and 62.3 percent, a notch higher than in August.

While some have definitely decided to reevaluate their skill set and move away from prior jobs, but for many men, largely unaffected by child care are holding back, a conundrum for the Reserve, who is expected as The New York TImes stated, another “jumbo sized” rate increase, with bets of another 0.75 percent. And, while time will tell, the economy is like a watched pot that never boils.

The unemployment rate has inched down to 3.7 percent from 3.5 making it robust and also resilient, which equals a fifty year low; but, the elephant in the room is still inflation that has nibbled away at wage increases, as the public struggles to deal with high rents, and food prices, some even seeing double dollar increases on such prosaic groceries, such a doughnuts, not to mention the more protein based options such as meat.

Those wages up by 5 percent on an annual basis, and monthly by 0.3 percent, are not keeping up with inflation is a huge problem for consumers even as they have moved away from consumer products to services.

Fed governor Phillip T. Jeffries told the Times that he felt that “upward wage pressures in the future” can be problematic. But, some areas have faced challenges, and transitions, for example from the traditional nursing home, to aging in place with home health care aids, an area that has surged.

Some see that  a recession is inevitable, or are we inevitably, say some, conjoined with European central banks that say the same things, or are we on rosier shores in the US, or are we simply rearranging deck chairs on the Titanic?

Of course, the Fed moves, calibrated as they need to be, will lead to less jobs, especially for those wage earners at the low end.

“Mohamed El-Erian, Allianz’s chief economic adviser, said on Sunday that the U.S. is heading toward a recession that was “totally avoidable” amid ongoing concerns about inflation and economic stability, reported The Hill on Sunday, and also said that there was simple mismanagement by the Fed.

“One is mischaracterizing inflation as transitory. By that, they meant it is temporary, it’s reversible, don’t worry about it. That was mistake number one. And then mistake number two, when they finally recognized that inflation was persistent and high. They didn’t act. They didn’t act in a meaningful way,” 

Taking a closer look at some significant changes that Inflation has done has led to a lessening in an area that many had thought steady, leisure and hospitality, whether it's hotel room service, or restaurant servers. 

Retail is also seeing a downward path with major retailers such as Walmart saying that they will cut their holiday hiring, while the online retail giant, Amazon says it will not. 

A gamble, maybe, or is caution, the watchword?

Meanwhile the tone from the White House is optimistic as President Biden said to workers at a Hagerstown, Md. Volvo plant, “Our job market continues to show resilience as we navigate through this economic transition, the pace of job growth is cooling while still powering our recovery forward.”

With the November midterms nipping at his heels Biden has tried to sell the middle course as a path to recovery, while his Republican opponents want to tag him, and him alone, with failure to address inflation, which is really the province of the Federal Reserve, but with swords drawn for a fight, truth doesn't matter, but votes do.

Many economists don’t necessarily believe in this cooling as having much effect, but it plays well in Peoria, as the old comedians used to say.

Can De Santis recover from the migrant transport?

 For many months Florida Gov. Ron De Santis has been seen as a viable candidate for the 2024 presidential race against incumbent Joe Biden, and for the Republican party this meant that they could capitalize on the issues that former President Donald Trump championed: anti masks, the Covid pandemic, that he called, “the Chinese Flu,” but most of all his anti immigrant stance that he kept front and center of his initial campaign statements.

Those that supported those positions, but recoiled at the ill will towards his personality, found a new hero in De Santis, the “un Trump”, as he played the GOP playbook better than Trump, with statements and actions geared towards his base: the masking debate in public schools, the suspicions that Covid was not real, and his anti LGBTQ stance, especially when it came to public school textbooks and the push against Critical Race Theory, even though it is only taught in law and other graduate schools; but, the truth didn’t matter, because these,and other controversial positions are the bread and butter of the GOP.

He seemed like a sure winner ready to battle Trump for the nomination, until his recent transports of mostly Venezuelan asylum seekers, who had been granted permission to stay in the US, pending  legal processing, to Martha's Vineyard the elite Democratic vacation spot home to the late Jacqueline Kennedy Onassis, Valerie Jarrett, and former President Barack Obama and his family, plus many others.

The pie in the face event pushed the issue of legal, and illegal migration, front and center to the Biden administration, and then Texas Governor Greg Abbott went even further by sending buses full of migrants to the home of Vice President Kamala Harris, which was duly covered by FOX TV even thought there was no notice to Washington D.C. Mayor Muriel Bowser.

A sticking point in the story is that the migrants were in Texas, not Florida, and took a circuitous route to South Carolina, and then to the Vineyard.

In both instances, local governments and authorities, especially those on the vacation island scrambled to feed, clothe, and house these refugees and migrants, many of who came with nothing more than the clothes on their backs, as they escaped from the economic, and political perils of living in Venezuela, many earning less than the US equivalent of $20.00, per month, plus gang violence fueling fears, and the willingness to undertake a tortuous journey, much of it on foot to reach the American border.

Clearly branded as a political stunt, these actions are beginning to hurt the perfect pitch of De Santis, and his efforts to be a presidential candidate. And, while the moral outrage from many liberal circles has been countered by the applause of his supporters, his image is being tattered by those who think that he has gone too far..

There is life outside of talking points, and a pending lawsuit by some of the migrants that they were duped with false information, by a shadowy women named “Perla” who lured the migrants with the promise of jobs, and housing and a mostly false brochure outlining benefits in Massachusetts (written in Florida) is angering many, especially independent voters who might be the linchpin in De SaIntis efforts, even as he tag teams with Abbott, in an enterprise that shows hubris to some, and cockiness to others.

Ready technology, much of it pocket sized, has sent the images of the displaced far beyond the intentions of Abbott and De Santis.

A bit of bragging never hurt: “All the people in D.C. and New York were beating their chest when Trump was president, saying they were so proud to be sanctuary jurisdictions, De Santis told a group in the Florida Panhandle, and “The minute even a small fraction of what those border towns day with every day are brought to their front door, they all go berserk.”

There is a grain of truth in his statement, but using part of a $12 million war chest of taxpayer money might not go down as well as he expects, despite questions about what exactly a sitting governor might be charged with, the lawsuit notwithstanding.

What remains unclear is that only $615,000 was used, but this was a claim by his Democratic rival Charlie Crist, and yet from others that the amount may be interest of the $5.8 billion dollars given to Florida as part of the American Rescue Plan.

Recent reports have said that $1.6 million dollars was given to a contractor, possibly the private air carrier, or others, but some reports have indicated that the $615.00 was given to the carrier, as partial payment, and there is the amount of $950.00, which came from a public records, with some speculation that this was another payment to the same carrier, but questions remain if these are shell companies, to hide the true identities of the recipients.

It is known that Vetrol was a political donor to the Republican Party.

The New York Times reported that some in Latin America “have accused Mr. De Santis and Mr. Abbott of being largely out of touch with the crisis on the ground in Venezuela,” and even hypocrisy toward their criticisms of the Maduro government.

The Biden administration has struggled, internally, as we have learned, with how to handle the increase in immigration at the border and the mess that was inherited from Trump whose detention of migrant children, and whose videotaped tears, filled nightly news segments; with some saying that internal dissension has contributed to a fractured response to the burgeniung numbers at the Southern border.

When arriving Haitians, escaping violent gangs, were seen being whipped by Texas border guards, all viewers were appalled. Coupled with the welcome of the  Afghanistan refugees, and its comparatively smooth entry, after the US withdrawal, accusations of racism abounded, making many observers question what would be a consistent, even moral response from the Administration.

Chiming in was President Andreas Manuel Lopez Labrador of Mexico who criticized Abbott's authorization of the Texas National Guard to detain migrants, and he noted, “Since there are elections in November, then they’re looking for sensationalism, for scandal,” and that such actions were “immoral.”

For Venezuela the “shattering of the economic, social and democratic crisis” has been branded the worst by economists, resulting in 6.8 million Venezuelans, “more than a fifth of the population have left the country . . .” noted the Times.⁹

Equally troubling is that the United States has struggled with immigration for decades, especially a large influx of Eastern and Southern Europeans after World War I, and after World War II it created an asylum process for those fearing prosecution of race, religion and nationality; and, problematic are those that have filed false claims, knowing that the process can take years.

Title 8 from the Biden administration has drilled down on those that are filing false statements and can deport them, is not as well known as the fears of job loss by Americans, and the racial bias that underlies many of these self same fears.

Legality, including actions by the San Antonio Sheriff Javier Salazar bring moral outrage, but even then we have to return to actionable offenses.

There are also appeals to the US Department of Justice, as California Gov. Gavin Newsom, a Democrat, has “encouraged Garland to investigate where the false hopes, and inducements “would support charges of kidnapping under relevant state laws,” and could lead also to charges of racketeering, reported The Hill, and, he has been joined in this by Massachusetts Attorney General Rachel Rollins.

This will be an ongoing struggle and one that might garner headlines, while even more migrants arrive in even more Democratic strongholds.

Updated Sept. 25th at 1:48 CDT

Why are American colleges so expensive?

When President Biden made his historic and unprecedented student debt loan relief for tens of millions of Americans, last month, encircling $10,000 in debt for those earning less than $125,000, and $20,000 for those low income students who received Pell grants, the reactions were mixed: some praised him and others panned him; and, those critics included some that said, it was not enough, or it was a handout to deadbeat debtors.

The program championed by Senators Elizabeth Warren and Chuck Schumer, came after a long slog, but  there were plenty of lawmakers on both sides of the aisle that disagreed, including, some Democrats worried about their chances in the November midterms, as well as Republicans who didn’t want the president to gain points with young voters.

This is all set against the backdrop that “45 million people owe $1.6 trillion for federal loans taken out for college - more than they owe on car loans, credit cards or any consumer debt other than mortgages,”  reported The New York Times.

What wasn’t asked, and is the $64,000 question: why are American colleges so expensive?

To help answer that question we did a meta analysis on some of the more salient research on the topic: journal articles, and private research organizations. What follows is not comprehensive and we’ve spared the reader charts, graphs and data that would obfuscate, rather than enlighten.

A core problem

While many parents and students get sticker shock when they see the price tags at some of the best private, as well as public schools; take for example Columbia College in New York City which even two years ago, came in at a whopping $61,000 per year, exclusive of fees and other costs, such as books and housing, aid becomes paramount for all but the wealthiest students.

Scholarships, grants and other forms of aid lessen the overall price tag, but what remains are key problems, and as Forbes noted in their analysis, “colleges are not transparent about their true prices.” 

Parents, therefore, are starting the process with one hand tied behind their back, since true costs, and aid packages, are not known until the student is accepted, making it akin to buying a pig in a polke, and “knowing that students will have few alternatives by the time they actually see what they see what they will pay, [and] colleges have every incentive to be stingy with financial aid.”

Problematic for many low income students, and especially students of color, is that the help of the Pell Grant, “hasn’t kept pace with inflation or the cost of college, a fact given by Mamie Voight, in policy research at the Institute for Higher Education Policy, in Washington, D.C."

That makes it easy to see that there are systemic problems with both the admission process, as well as the administration of aid, need based, or merit.

It is especially notable that in some states there has been a rise in American students going to college, for example, in 1980 one half of high school graduates enrolled in college, and that number is 70 percent today, noted Business Insider, recently.in a cover story.

For others that picture is changing with many areas across the nation wondering if both the cost, and the time are worth it,noted in another coverage, by nbcnews.com.

An unfair marketplace

That debate aside, for the moment, at least, accessing aid makes it clear that there are limited options for an atypical student, which might be why many choose the local public college, and live at home, to save on expenses; but, by staying “in state” leaves competitive providers no incentive to offer discounts, “or improve the quality of education,” Forbes surmised.

The reliable US News and World Report, whose guide to colleges and graduate schools has gained near biblical status, noted the tuition hike of 36 percent from 2008 to 2018 compared to “real median income in the U.S. grew just over 2.1 percent in the same period, according to the Center on Budget and Policy Priorities.”

At issue is also the debt that is taken on,and that can result in defaults with “one million people defaulting on their student loans.”

For Black students, in particular, this becomes of prime importance since they “hold the most debt  of any other racial group” according to The Hill, citing the PBS NewsHour that showed, “among 2016 graduates, nearly 40 percent of Black students graduate college with $30,000 or more in debt compared to only 29 percent of white students, 23 percent of Hispanic students and 18 percent of Asian students.”

This is underpinned not only by historical racism in the U.S. but the lack of ability to acquire wealth through homeownership by their grandfathers, who returning from World War II were denied access (many of them middle class) to better housing, most often in white neighborhoods, by restrictive covenants, or if that did not work by violence, to drive them away if they had succeeded.

Fast forward to the present day, and the lack of “integrated wealth” has caused “Black families to seek more and more student loans.”

Of equal consequence for all borrowers, but especially for Black graduates, who after graduation, (who often have to face racism in applying for professional jobs) is the issue of repayment.

“Because of the way that the repayment system is set up, people are only making payments on the interest, and not principal, so their balances balloon over time,” said Kat Welbeck, director of advocacy and civil rights at the Student Borrower Protection Center.

Increased costs keep rising

The bad news for high school applicants is that costs are getting higher said Zane Heflin, policy analyst at The New Center, who has said, “These colleges are trying to raise tuition to appeal to a broader group of students by allowing that to take the place of actual quality,” and furthermore, “there are a lot of perverse initiatives on the part of the colleges to raise their sticker price.”

A large part of that price surge are the ever increasing menu of amenities, part of what some have called, “our collective desire for the all frills college experience” that so many value in American universities, but that they charge for, “climbing walls, state of the arts mega student centers,seriously pimped out dormitories,” noted Thebestschools.org, in August.

This is far removed from returning vets from World War II on GI Bill who faced large state universities with cinder block walled dorm rooms, with toilets and showers down the hall, and at most, a weight room, a track team, and some basketball and tennis courts at the athletic center.

Consequently, It needs no saying that the schools are marketing themselves to wealthier students, and this specific market wants those frills, and is willing to pay the cost.

Adding it all up for a final tally was CNBC who stated that there is an average debt, per student of $37,172 totalling $1.5 trillion of “total debt spread among 44 million Americans.”

Rounding up total costs, in federal lending and grants, according to The Atlantic, “are more than $3,000 per year per student for the ancillary services alone."

Add that to higher and higher salaries of not only teachers, but administrative staff, that require college degrees plus advanced degrees,and often wrap around services, like counseling, and the perfect storm has been created.

Also significant is that many state legislatures cut their education budgets, especially during the Covid lockdown, forcing budget cuts that increased tuition by public colleges to cover the missing dollars.

Market Conditions

There is a much larger picture than parents and prospective students might not imagine, and Beth Akers, a senior fellow at the American Enterprise Institute, where she focuses on the economics of higher education,and author of “Make College Pay”, looked deeper in her research, and especially how the “market” itself is a character in a never ending drama; and, noting that “the decision to go to college is finally a cost benefit calculation, on rising to the middle class.”

Taking a look at this long term analysis, there is a market ready to exploit the value that is seen as a “golden ticket”, which in turn inflates college tuition. And, this is a market that is competitive, with few alternatives.

Accreditation is another factor that prevents a competitive market that would reward students and parents alike, and it is “difficult for a school to access federal financial aid, which means that the playing field is not level between traditional schools and new ones.”

Akers does note that the problems “are deeply ingrained in America’s higher education system and reversing them will take work: and her proposals are two fold: first off, increase transparency, and quality data “should be made more available and accessible, along with data on typical earnings after graduation. This will help inform students whether a particular college degree is worth the cost.”

A move that when suggested has had colleges and universities roaring in protest.

The result would be an increase in competition that would allow healthy competition, and secondly “removing accreditors from their role based on student outcomes,” and force current players to make their product more competitive with lower prices.

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August US Jobs Report shows resiliency, despite inflation

The United States economy has, once again, proved its resiliency with the August Jobs Report that showed continued strength in the monthly report issued by the Labor Department that showed  a healthy 315,000 non-farm jobs exceeding predictions of 300,000, and while not the show stopping number from July, employment is on the rise and also with wages, and there was a slight uptick in the employment rate to 3.7 percent, but that is less worrisome than the still red-hot job market.

The good news is that the slowdown is what the Federal Reserve wants to cool down inflation, and those still high job numbers also come with higher wages, and those higher wages, even while nibbled from higher prices are causing the central bank worries on how to bring it all down, in a calibrated way, and not by the earlier miscalculations from the 1970s where two decades of robust inflation ruled, or rather ruined the day.

While some economists are concerned that this slowdown is what is needed, there are others that feel that last year’s predictions of a soft landing  for the nation’s economy are long gone.

The New York Times reported that, “The central bank is still all but certain to raise interest rates at its meeting this month, probably by at least half a percentage point and perhaps by three-quarters of a point. That decision may rest on what happened to consumer prices in August; that data is scheduled to be released on Sept. 13, a week before the Fed’s meeting.

Fed Chair, Jerome Powell, whos has been on the hot seat for some months is someone who is data driven, and it will take some more data for he, and the regional governors to make a final consensus, and vote, on the size of the increase; but, there are many who are predicting another huge increase, perhaps as much as 0.75 percent, but all bets are on the table.

Politically, the news couldn't have come at a better time for President Joe Biden whose ratings are still tanked, and with the midterms around the corner, and he had this to say:

“Jobs are up, wages are up, people are back to work. And we’re seeing some signs that inflation may be — may be, I’m not over promising — may be beginning to ease,” Mr. Biden said at the White House. Coupled with falling gas prices, he said, “America has some really good news going into Labor Day weekend.”

While American employers, for some time, have complained about not finding the right type of worker with the right qualifications, and many are still saying it, others have noticed an increase in more qualified people returning to work, and that very well maybe as the TImes noted, a reflection of inflationary process as many people try to walk the financial tightrope, especially with high rents, and especially in large urban areas as New York, Los Angeles and Chicago.

“And headlines about layoffs and a possible recession may be spurring some people to return to work while they can. A recent survey conducted by the career site ZipRecruiter found that job seekers were feeling less confident about their searches, and were putting more importance on job security than on flexibility.

In fact, labor force participation (LFP) did show an increase of 0.3 percentage point, at an overall 62.4 overall percentage.

“People are spending down that pandemic nest egg a little more quickly than they expected because of rising prices, and now feel a bit more nervous and a bit more desperate to find a job,” said Julia Pollak, the chief economist at ZipRecruiter.

Desperation may be facing American Blacks as they face dim prospects for greater employment, and this report gives them a 6.9 unemployment rate, nearly double that of whites, (but steady across the board over several months) making cuts into wealth building, not only to just meet basic needs.

Often times flourishing in the service sector, these are some of the jobs that drew them into great demand, and with some employers waving aside less previously held requirements such as a high school diploma, or misdemeanors, or even weak performance and job histories, these are the same areas that could be cut as the Fed works to calibrate ways to cool down, what is still a red hot jobs market.

That, as former Treasury secretary Larry Summers noted last year in an analysis, could result in double digit unemployment for Blacks, historically seen unemployment seen across the decades and eroding the wage increases they gained over the last few months.

Rising wages have become, despite inflation’s deleterious effect on them, a concern for Powell and this slowdown in employment which may increase by year’s end also has can help, but is a double edged sword for many, especially in the service sector, and with two  jobs available for every job seeker, the elevation in wages to 5.2 percent is being watched as a barometer for anti-inflation measures.

Coupled with supply chain issues and commodity pressures has increased the pressure for Powell to determine how to juggle all of the balls to fight inflation in the coming months.

That aside, many are quitting jobs to attain those higher wages, for those that need qualified employees, especially in the private sector, and as The Hill reported, “Job seekers on Indeed.com are looking for ever-higher wages, Ann Elizabeth Konkel, an economist at Indeed Hiring Lab, explained. The number of Indeed users seeking jobs with a $20 per hour wage rose above those seeking $15 per hour in June 2022, and the number of jobseekers looking for $25 per hour is up 122 percent over the past 12 months.”

Coming out on top for August were retail, 44,000, manufacturing, 22,000, and business services, 68,000, and healthcare with 48,000 - although still reduced from burn out by staff caring for COVID-19 patients. And, while these areas are expected to grow, they are also vulnerable to downturns, as predicted, by later Fed actions..

For now, just now, this is the time for those looking to gain, or change employment to do so now, to lock in either a better wage, or better working conditions. As the old adage says: “Strike while the iron is hot.”