Here's a bunch of new housing information for you today. First up, supply of new single-family homes is down but demand is up:
This should mean a bump in selling prices, but not really:
The mean (average) price of a new home is down -1.8% from last month while the median price ticked up 3.3%. Still, mean prices have been pulling away from median recently, which generally means there's more activity in the high-priced area, and sure enough that's the case:
Since the start of the pandemic, there's been strong growth in expensive houses while cheaper homes have cratered. In May, houses in the $300s, $400s, and $500s each accounted for about a quarter of all sales. Houses below $200,000 accounted for 1%.
The Supreme Court on Tuesday rejected the theory that state legislatures have almost unlimited power to decide the rules for federal elections and draw partisan congressional maps without interference from state courts.
....The “independent state legislature theory” holds that the U.S. Constitution gives that power to lawmakers even if it results in extreme partisan voting maps for congressional seats and violates voter protections enshrined in state constitutions.
The vote was 6-3, which is closer than it should have been for this wacky idea, but at least it went down in flames. The whole thing was based on a shiny new conservative theory that when the Constitution says election rules shall be "prescribed in each state by the legislature thereof," then by God that's exactly what it means: the legislature and nothing but the legislature. Governors can't veto election laws; local courts can't overturn them; and voters can't express their will via popular referendums, as they can for all normal laws. The Founders meant this by deliberately omitting "legislature and laws thereof," or some such, from the Elections Clause. That's what the Court rejected today:
The argument advanced by the defendants and the dissent also does not account for the Framers’ understanding that when legislatures make laws, they are bound by the provisions of the very documents that give them life. Legislatures, the Framers recognized, “are the mere creatures of the State Constitutions, and cannot be greater than their creators.”
....Were there any doubt, historical practice confirms that state legislatures remain bound by state constitutional restraints when exercising authority under the Elections Clause. We have long looked to “settled and established practice” to interpret the Constitution. And we have found historical practice particularly pertinent
The whole idea was ridiculous from the start, but it's been gaining steam in right-wing circles ever since Florida courts intervened in Bush v. Gore two decades ago. If today's Court had gone along, it would have meant, for example, that the Florida Republican legislature could have unilaterally decided the 2000 election. It would mean North Carolina could enact its most egregious gerrymandering fantasies with no judicial review. It would mean absolute authority to set rules for things like voter ID laws and absentee voting no matter how ridiculous or racially tinged.
So we dodged a bullet and the Supreme Court demonstrated some common sense and respect for 200 years of freely accepted precedent. Score another one for the good guys.
A few days ago Rep. Lauren Boebert introduced a resolution to impeach President Joe Biden. Because why not?
But that's not all. For months Republicans have also been threatening to impeach Alejandro Mayorkas, the Secretary of Homeland Security, because they don't like his border policies.
Speaker Kevin McCarthy is floating the possibility that the House could open an impeachment inquiry into Attorney General Merrick Garland over Internal Revenue Service whistleblower allegations that Justice Department leadership improperly interfered in the Hunter Biden probe, which Garland has denied.
“If it comes true what the IRS whistleblower is saying, we’re going to start impeachment inquiries on the attorney general,” McCarthy said Monday on Fox News.
Hunter Biden! Of course. This is all based on the testimony of an informant and a couple of whistleblowers who talked to the FBI a while back. Republicans finally browbeat the FBI into letting them see the interview transcripts and then, in usual style, immediately leaked everything to the press.
The informant's story is about a $5 million bribe from Ukraine, apparently based on documents shopped around by Rudy Giuliani before the election. Joe Biden shared in the bribe, of course.
One of the whistleblowers says that Hunter once tried to strongarm a client to complete a business deal by texting a threat that his father—who was sitting next to him!—was "waiting for the call."
Both whistleblowers also claim that at one point prosecutors had teed up serious felony charges against Hunter that eventually got watered down. Which might even be true. But it's old news that there were internal disagreements during the course of the investigation, hardly an uncommon affair. In any case, we don't know who wanted to "slow walk" things. It could be anyone. But maybe Merrick Garland himself was involved!
So we're off to the impeachment races again. Gotta maintain your street credit with the right-wing loons, after all.
A group of scholars at American Compass has taken on the theme “We want to thrive, not just survive.” That is, they think American families should actively do well and live enjoyable lives, not just barely get along:
The breakdown in American capitalism over the past half-century is most apparent in its failure to deliver widespread prosperity for the American people. Success requires more than just rising material living standards: For citizens to flourish, they must have access to good jobs that pay family-supporting wages. For the nation to flourish, its growth and opportunities must be broadly shared.
....With wages stagnating and inequality rising, the costs of supporting a family have quickly outstripped a worker’s ability to do so. In 1985, a typical male worker could provide middle-class security for a family of four (food, housing, health care, transportation, education) on 40 weeks of earnings, leaving a comfortable cushion for other expenses and savings. In 2022, providing that same middle-class security would require 62 weeks.
In a poll commissioned by American Compass, 60% of parents say it's a big problem if both of them are forced to work just to get along. Nearly three-quarters of parents say that an important part of being middle class is being able to support their family on a single income.
But many parents, like Corrie, a working-class mother from Ohio, say they can't do it:
Corrie cites the rise of the “working homeless,” of which she is part. Though she and her husband have been married for almost 20 years and he has kept a steady factory job while she worked part-time at McDonald’s while also raising their three children, they are unable to afford rent in the current market and have moved in with her sister’s family.
So now let's get down to brass tacks. Have men's earnings shrunk so much that they can no longer support a family on just their own income alone? In a word, no:
Individual men earned more in 2020 than in 2010. More than in 2000. More than in 1990. More than in 1980. As much as in 1970. And way more than in 1960.
This is nothing fancy. It doesn't account for taxes or government assistance. It's just ordinary paycheck income. And it's no great shakes: Men's earnings have been close to stagnant for half a century, which is far worse than we'd like to see.
That said, their earning power to support a family hasn't gone down. They can still do it. The American Compass report makes the usual point that even if earnings are flat, expenses have gone up in some important categories: rent, health care, education, and so forth. True enough. But expenses have also gone down for things like food, clothing, and TVs. It's about a wash in the end.
So what accounts for the widespread dissatisfaction with modern life? Here are a few guesses:
Alex Tabarrok theorizes that we have more money for stuff but less time for it—so we rush through everything and feel harried even though our standard of living is actually as high as it's ever been.
Another possibility is that we really do have less money for common goods because we spend a lot of it on stuff we didn't even have half a century ago: computers, videogames, the internet, cell phones, and so forth. We can argue all day long about whether this tsunami of new technology really improves our standard of living,¹ but there's no question that on a pure money basis it makes us seem a little poorer because we're spreading our income around on more stuff.
Finally, there's waste. We buy and then discard an awful lot of stuff these days, which means that much of our income is squandered and actual consumption of stuff we enjoy has gone down. This makes us seem poorer because, in a way of our making, we are. If we lived a little more carefully, we'd probably all end up a little happier and more prosperous too.
Then again, here's a final possibility: it's all a mirage. We're not mostly dissatisfied with modern life. Long-term polls certainly don't show it—not among men vs. women, not among the entire population, and not among the middle-aged:
Despite all this, if you carefully choose to write only about the borderline working class—as our news outlets and scholars so often do—you can certainly get the impression that everyone is living hand to mouth. In reality, it ain't so.
Sen. Joe Manchin has been at war with the administration for months over its implementation of last year’s landmark climate law. He is even accusing President Joe Biden of breaking a promise to him. “They’re going to try to screw me,” the West Virginia Democrat said earlier this year of White House officials.
Technically, Manchin is mad at the Treasury Department, which is responsible for implementing the Inflation Reduction Act, a bill that was practically handwritten in person by Manchin last year. So what's the beef?
Among other things, the IRA includes subsidies for electric cars. Manchin was never thrilled by this, but he signed off on it anyway under one condition: the cars had to be made in America so the subsidies didn't end up benefiting China. But if you scroll down about a million words into the story you get this:
In the latter stages of negotiations, Manchin signed off on a title dubbed “clean vehicle credits,” laying out new, strict critical mineral sourcing requirements for EV batteries....But Treasury has gone ahead and proposed guidance that would allow more EVs to receive the credit than Manchin had originally envisioned, including by introducing a metric to determine whether a critical mineral in an EV battery can count toward meeting eligibility requirements.
Officials have also pulled a term from 2021’s bipartisan infrastructure law — “constituent material” — to allow metal powders used in EV battery electrodes to count as critical mineral processing, a move that Manchin argues will weaken the IRA’s domestic sourcing requirements.
So the fuss is all about how (a) "critical minerals" are approved for use in EV batteries and (b) whether "metal powders" on the battery electrodes are just a gigantic loophole for China to slither through. As to the former, the law says minerals can be sourced from North America or our free trade partners. "Free trade" is undefined, but at minimum includes:
Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, South Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore.
In addition, the EU, which thinks the EV subsidies violate trade agreements in the first place, is in rapid negotiations to get itself approved as a free trade partner for graphite, lithium, manganese, cobalt, and nickel. All of America's allies are similarly rushing to get themselves approved as suppliers, and Treasury's guidelines say that "supplier" can mean you either mined the stuff yourself in an approved country or merely imported it and then processed it an approved country. Manchin says that's too much and Treasury needs to rein things in.
This is Joe Manchin's worst nightmare.
Beyond all this, Manchin has a beef with Treasury defining leased vehicles as "commercial" for purposes of getting the subsidy. On this, though, he appears to be just plain wrong and Treasury is right.
So there you have it. Manchin is dead set on limiting EV subsidies because . . . I don't know why, really. He wants to protect the conventional auto market for some reason. But all this becomes moot before long, anyway. The required domestic content of batteries goes up to 80% in 2027, which should go a long way toward tightening everything up.
And the total cost? The subsidies amount to about $4 billion per year, and God only knows how much the critical material requirements are worth to domestic manufacturers. A horseback guess puts it at about $1 billion per year.
So that's what this temper tantrum is all about: $5 billion or so for consumers and mineral providers annually. What a drop in the bucket. What a waste of a good temper tantrum.
Are we at the start of a big ol' bull market? Maybe. But I'm skeptical of the hype:
Since the beginning of the year the S&P 500 has been virtually flat—right until the beginning of June. Then it started to surge a bit, but even at that it's grown only 8.5% on a real basis since January 1. Not bad, but three weeks is hardly something to bet the ranch on. Stay cool.
Americans are becoming fed up with lousy service while eating out. Many restaurants face a continued drought of experienced workers and are still working to get new hires up to speed. At the same time, customers are giving restaurants less leeway than earlier in the pandemic recovery, chefs and restaurant operators say, as customers remain peeved about rising prices and pandemic-era surcharges that linger on bills.
....Wages for hourly restaurant and bar workers have shot up in the past year, rising 5.2% in April from last year, according to the Labor Department. The steep rise in costs for cooks and servers has prompted many restaurants to rethink their labor models, as sales aren’t covering the expenses in many cases, operators said.
Ahem. I wouldn't say that 5.2% qualifies as "shot up." Adjusted for inflation that comes to 1.1% over the past year—or about 20 cents per hour. Here's what restaurant pay looks like over the past few years:
Adjusted for inflation, restaurant pay has been flat for nearly two years. That hardly represents a massive effort at attracting new workers. Nevertheless, it turns out we really are still shortstaffed in our restaurants—by a little bit:
Compared to the final month before the pandemic, we're short about 160,000 restaurant workers, mainly because of shortfalls in full-service restaurants. Limited service restaurants have already recovered and now employ more workers than they did before the pandemic. Overall, restaurants continue to have problems because they refuse to raise their pay, but even at that their problems remain pretty small.
A week ago the New York Times ran a piece about people fleeing big cities to become remote workers during the pandemic. It started off like this:
In the two years leading up to the pandemic, for example, about 20,000 remote workers moved away from the San Francisco metro area. Then during 2020 and 2021, 110,000 did.
That was their first mistake. San Francisco is an insane outlier, unique for its combination of extraordinary appeal to new workers along with strict rules against building new housing to put them anywhere. It's a miracle the place is even able to operate.
So that's just not an example to use if you're serious about examining this stuff. The Times did include a little chart showing how many people have moved in and out of various other large cities, but for some reason they used raw numbers instead of adjusting for population. So I did that for them. Would you like to see it?
San Francisco is way out there on its own, with nearly triple the emigration rate of even New York and Los Angeles—which are no slouches themselves. In all, there are only three large cities outside the Bay Area where remote workers in 2021 left at a rate greater than 1%.
So there you have it. Yes, there was apparently some out-migration from wannabe remote workers during the pandemic, but only in a very few places. Aside from the Bay Area, it wasn't really that big a phenomenon.
Yesterday's tromp through Mississippi's reading scores for third-graders got me a little curious about taking a slightly deeper dive. I'm not sure why. Just bored, maybe.
As you'll recall, in 2013 Mississippi established a set of reading reforms primarily focused on teaching phonics. These reforms included a mandate to hold back kids who don't pass a reading test at the end of third grade—which was controversial at the time but has been maintained ever since. In the Mississippi system, third-graders are initially tested at the end of the school year in May. Those who fail are given a second chance. If they fail again they're urged to attend an intensive summer school session, after which they get a third chance. Here's what the failure rate looks like at each round:
In the the initial round of testing 26% of third-graders failed. For comparison with a different test, I've added a column for Mississippi's failure rate on both the main and long-term NAEP:
Main: 37% ("below basic")
LTT: 24% ("below 150")
That's a big difference and I don't know what to make of it, so I leave its interpretation to each of you. If the results from the main NAEP are accurate, it looks like Mississippi is simply conducting a fairly easy test in order to get its failure rate down. If the LTT results are right, the Mississippi test is right on the money.
Boys fail at nearly double the rate of girls. Black students fail at nearly triple the rate of white students. Military kids do great. So do high-income kids. None of these results look especially out of the ordinary to me.
Finally, here are the NAEP reading failure rates over time—for fourth graders since that's who NAEP tests. Since 2013, the national failure rate has gone up a few points while in Mississippi it's gone down 10 points. The NAEP is a "low stakes" test, meaning that its scores don't affect anything: low-scoring kids don't get held back, teacher evaluations aren't affected, there's no teaching to the test, etc. For this reason it's considered pretty reliable since there's little incentive to cheat.
Overall, none of this gives me any reason to change my mind from yesterday. It looks to me like Mississippi's reading reforms are not a panacea but have worked pretty well.
This should mean a bump in selling prices, but not really:
The mean (average) price of a new home is down -1.8% from last month while the median price ticked up 3.3%. Still, mean prices have been pulling away from median recently, which generally means there's more activity in the high-priced area, and sure enough that's the case:
Since the start of the pandemic, there's been strong growth in expensive houses while cheaper homes have cratered. In May, houses in the $300s, $400s, and $500s each accounted for about a quarter of all sales. Houses below $200,000 accounted for 1%.
