Moneybox
A blog about business and economics.

April 9 2015 1:13 PM

Kansas Isn’t the Only State Turning Its Back on Poor Families

There's been a lot of attention focused on the welfare reform bill that legislators in Kansas passed last week because it was such an obviously demeaning jab at the poor. Along with strip clubs, casinos, liquor stores, and cruises ships, it bans families from spending cash benefits at movie theaters or swimming pools—as if we should consider it a moral outrage for an impoverished parent to take her kid swimming because she relies on government help. The law would also stop beneficiaries from withdrawing more than $25 of their aid in cash each day, a rule that exists in not one other state. Originally, the limit was going to be set at $60, but legislators for some reason settled on the lower figure, despite the fact that ATMs don't usually give out $5 bills. In Topeka, making life harder for the needy apparently didn't involve a great deal of thought. 

Still, keeping the poor out of the local AMC theater wasn't really the main point of the bill. In the end, the law was mostly designed to kick more Kansans off of cash assistance altogether, in part by lowering the maximum length of time that families could receive help from 48 to 36 months. That's not as colorfully vicious as telling parents that it's a crime to take their kid to go see Cinderella, but in the grand scheme of things, it's the much more important change.

It's also in keeping with a national trend. States today spend far less on cash aid to the poor than they did when Bill Clinton signed welfare reform and created the modern Temporary Assistance for Needy Families program. That was part of the plan. Clinton's legislation was meant to give states more freedom to experiment with moving low-income parents from welfare to work and allowed them wide latitude to run their versions of TANF as they saw fit. At first, that led them to dedicate more resources to things like child care and helping jobless adults find work. But spending on those efforts peaked around 2000 and has more or less gradually shrunk once you account for inflation.

tanf_3

Chart by Jordan Weissmann

And there's a very good reason for that. The federal block grants that help fund today's welfare program aren't adjusted for inflation, meaning that they're worth a little less to the states every year. As a result, lawmakers have an incentive to gradually weed out beneficiaries to preserve resources. Worse yet, because of the somewhat loose guidelines governing how TANF dollars can be used, some governors may be tempted to divert the program's funding in order to fill their states' budget holes. As the Center on Budget Policy and Priorities notes, about one-third of the program's money is now devoted to a diffuse category of activities they refer to as "other," which covers things like child welfare services and early education—things that states might well fund anyway, whether or not TANF existed. Money saved on cash assistance is money that can be spent on those functions instead.

There have been some positive changes in welfare over the past 15 years. Many states, including Kansas, are using an increasing portion of their funds to buttress their own versions of the federal Earned Income Tax Credit, which boosts pay for low-wage workers. But ultimately, the pot of money devoted to helping needy families find work or support their families while they look is being whittled down. In the future, you're not just going to see more states trying to make life harder on the poor. You're going to see more states simply turning their backs on them altogether.

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April 9 2015 12:42 PM

Sabra Is Recalling a Huge Amount of Hummus. What’s That Mean for You?

Sabra Dipping Co., the brand known for its hummus, baba ghanoush, and other Mediterranean-style offerings, is recalling roughly 30,000 cases of its classic hummus because of concerns about listeria contamination. So far, there haven’t been any confirmed reports of the product causing illness in consumers, but the company initiated the recall after a random sample taken at a store on March 30 by the Michigan Department of Agriculture and Rural Development tested positive for Listeria monocytogenes. That’s a bacterium known to cause serious and sometimes fatal infections in young children, pregnant women, the elderly, and other people with weakened immune systems.

What’s this mean for you, concerned hummus consumer? Well, in its press release, Sabra lists the classic hummus products affected by the recall. (They include 10-ounce, 30-ounce, and 32-ounce hummus containers that are “best before” May 11, as well as the 17-ounce six pack and classic/garlic hummus dual packs with the same “best before” date.) Sabra is advising consumers who bought any of these products to “dispose of or return it to the place of purchase for a full refund.” So for starters, definitely check the dates on any Sabra hummus you may have purchased recently. The company has also provided a toll-free hotline for consumers to call with questions during business hours. That’s nice, but when I tried the hotline four times this morning and afternoon I repeatedly got a busy signal, which may not bode so well for people who are actually trying to reach Sabra with concerns about their potentially contaminated hummus. (I also contacted Sabra for more information directly a couple of times and will update this post if it responds.)

Update, April 9, 1:30 p.m.: A spokeswoman for the U.S. Food and Drug Administration reiterated in an email that consumers who have purchased Sabra hummus recently should check the label and, “if their food item is included in the recall, return it to the store where they bought it or dispose of it.” The FDA helpfully maintains a site on listeria, which advises that symptoms can take between a few days and a few weeks to manifest, and may include “fever, chills, muscle aches, diarrhea or upset stomach, headache, stiff neck, confusion, and loss of balance.” The Centers for Disease Control and Prevention estimates that one in seven cases of listeria occur in pregnant women.

Sabra isn’t the only company to issue a listeria-related recall recently. Late last week, ice cream–maker Blue Bell Creameries halted operations at a facility in Broken Arrow, Oklahoma, after a 3-ounce cup of chocolate tested positive for listeria. A few days later, the FDA told Blue Bell that a pint of its banana pudding ice cream manufactured at the same plant back in February had also come back positive for the bacteria. Blue Bell has now recalled more than 25 products in the last month. Like Sabra, Blue Bell said earlier this week that no illnesses linked to its products have been confirmed yet. On the other hand, Kansas health officials said last month that contaminated Blue Bell ice cream might have contributed to the deaths of three hospital patients in the state. And on Thursday, a spokeswoman for the CDC said three people in Texas had contracted the same strain of listeria during hospital stays after consuming Blue Bell products. So that doesn’t look too good for Blue Bell.

As for you: Take a careful look at the hummus in your fridge and the ice cream in your freezer. And good luck getting through on that hotline.

April 8 2015 5:49 PM

Would You Buy a Fancy Hamburger From McDonald’s?

Last month, McDonald’s took a moment for some much-needed self-reflection. “McDonald’s current performance reflects the urgent need to evolve with today’s consumers, reset strategic priorities and restore business momentum,” the company wrote in a release accompanying its ugly February sales figures. “The goal going forward is to be a true destination of choice around the world and reassert McDonald’s as a modern, progressive burger company.”

Now, in what’s presumably intended as a step toward that goal, McDonald’s says it will reintroduce a premium sirloin burger to U.S. restaurants for a limited time. The so-called Sirloin Third Pound burger will reportedly appear on the menu from May 12 until late June but might hit some locations even sooner.* From the Wall Street Journal:

The sirloin burgers—one with bacon, another with mushrooms, and a third with classic lettuce-and-tomato toppings—are served on a wooden surface similar to a cutting board, aiming to signify freshness—an attribute McDonald’s image has been lacking lately.

The keyword here is reintroduce, because a highly similar burger—the Angus Third Pounder—has been on the McDonald’s menu before. It first launched in 2009 but was pulled in May 2013 as beef prices rose and sales failed to take off. Customers seemed to feel that, at $4 to $5 apiece, the Angus Third Pounder wasn’t different enough from the Quarter Pounder or Big Mac to merit its significantly greater price. Around the same time, McDonald’s also did away with its upscale Fruit & Walnut Salad and Chicken Selects.

So why does newly appointed McDonald’s CEO Steve Easterbrook seem to think the Angus Third Pounder could work this time around? Again, from the Journal:

“They are trying this again because a decent burger place has to have a premium burger,” said John Gordon, principal at Pacific Management Consulting Group. “Consumers are more sophisticated and expect better,” plus the company needs some pricier products to boost profitability.

That’s all well and good, but the Angus Third Pounder is no Egg McMuffin. Adding another burger to the menu will also presumably complicate things in the kitchens that McDonald’s is known to be trying to simplify. The point is, it’s a little strange for a chain ostensibly trying to pare down its offerings to now be bringing back an option that failed after four years on the menu. But hey, you can’t be a “modern, progressive burger company”—one that earns back market share from, say, Five Guys and Shake Shack—without a modern, progressive burger. Maybe 2015 will be the Angus Third Pounder’s year to shine.

*Correction, April 13, 2015: This post originally misstated that McDonald’s was bringing back the Angus Third Pounder. The new burger, while a third-pound burger sourced “100 percent from Angus and other breeds of cattle from North America,” is not 100 percent Angus and instead is being called the Sirloin Third Pound burger.

April 8 2015 5:21 PM

Worried Your Country Doesn’t Have Enough Babies? Make It Easier for Women to Work.

Europe's low birth rates have turned it into an aging continent, which has more than a few people panicking about the region's economic prospects. As the New York Times reports today, the sense of crisis has grown bad enough that sex educators in Denmark have started talking up the glories of parenthood. “For many, many years, we only talked about safe sex, how to prevent getting pregnant,” the leader of a sex-ed nonprofit told the Times. “Suddenly we just thought, maybe we should actually also tell them about how to get pregnant.” To put it another way, they're subtly nudging kids to get knocked up. Not necessarily tomorrow. But, you know, when they're old enough.

As the Times notes, it's not entirely clear how worried the developed world should be about demographic decline. It's true that without population growth, economies can't expand as quickly. As the number of retirees per worker rises, it could also become harder for countries to support their elderly. But between improvements in productivity and looser immigration rules, it may be possible to undo some of the deleterious effects of a graying society.

But let's assume, for the sake of argument, that Europe's dearth of babies really is an existential threat to its future. What should countries do? Make sure more women are working, for starters.

That's less counterintuitive than it sounds. As economists Fang Guo and Yuko Kinoshita have pointed out, women in the industrialized world tend to have more children in countries where they're more likely to work. In countries with pro-family policies like subsidized day care and paid parental leave, women face less pressure to choose between work and children. And with two incomes instead of one, couples are better able to afford having kids.

A necessary caveat: Some aspects of this graph may be a little outdated, since it averages together a long period of time. In Germany, for instance, the labor force participation rate for women in their prime working years is now higher than in the United States. Yet its birthrate is still one of the lowest in the world, and it's falling. Employment opportunities aren't a cultural cure-all.

There is, also, some mixed news for Denmark on this graph. Its women are already much more likely to be in the labor force than in almost any other developed country, which sadly means there isn't much room for improvement on that front. However, its birthrate also isn't nearly so bad as Germany's or Spain's. Can some awkward-sounding sex-ed classes push it any higher? Of that, well, I'm not so sure.

April 8 2015 2:33 PM

The “Netflix for Books” Has Started Selling Books You Might Actually Want to Read

In what’s either great news or terrible news depending on your personal tastes, Paula Hawkins’ The Girl on the Train is now available for purchase on Oyster, an e-book startup, for $12.99. So are several hundred thousand other titles, but Oyster is really playing up The Girl on the Train among its new offerings. “You’ll never have to go anywhere else to get a books [sic], because everything you’re looking for is on Oyster,” the company writes on its blog. “The Girl on the Train? Absolutely.”

Before Wednesday, Oyster existed only as a subscription e-book platform, or “Netflix for books,” as just about everyone likes to call it. Users paid Oyster $9.95 a month and in exchange got unlimited access to the company’s library of roughly 1 million online books. Oyster says that service has grown about 20 percent month-over-month over the past year and currently generates more than 100 million pages read a month. “What we’re doing with this launch is bringing every book in the world into that system,” says Willem Van Lancker, the company’s co-founder and chief product officer.* “We see this as a natural extension of our existing business.”

Of course, another way to put “natural extension” would be smart decision to start offering on Oyster the popular books that people used to have to purchase somewhere other than Oyster. Previously, Oyster’s library included titles from HarperCollins, Simon & Schuster, and Macmillan, but not other big publishers—like Hachette and Penguin Random House. One common critique of Oyster, as well as comparable subscription book services such as Kindle Unlimited and Scribd, was that the million-odd books in its library didn’t actually include a lot of the books people actually wanted to read. Oyster’s new e-book store, on the other hand, will work with the 10 biggest publishers to carry “virtually any book you can think of.”

Looking to the broader e-book market, having contracts with all five big publishers bodes well for Oyster, especially after the bitter Amazon-Hachette feud that dragged on for months last year (and a new Amazon battle with HarperCollins that could be right around the corner). Oyster declined to say how it makes money or compensates publishers on deals from its e-book store. The industry standard is for the online retailer to take 30 percent of sales and the publisher to get 70 percent, of which a quarter is usually paid out to the author. Publishers and aggregators on Oyster’s subscription platform are paid each time a book is read, with the amount based roughly on the e-book list price.

Van Lancker didn’t want to talk about how much Oyster’s users had been clamoring for new titles, but he did volunteer that about 80 percent of books read by subscribers are found through Oyster’s discovery features (think Netflix-style algorithmic recommendations). Numbers like that would suggest the two-pronged subscription and retail strategy has a lot of potential, especially if Oyster’s algorithms start recommending e-books in its store to the most dedicated readers. Then again, Oyster’s book prices—which Van Lancker described as “competitive”—from a cursory search aren’t all that great. The Girl on the Train is selling for $12.99 on Oyster versus $6.99 on Amazon. Gone Girl on Oyster is $9.99; on Amazon it’s $4.20. Other Oyster-Amazon price comparisons that I searched at random: The Lowland ($11.99 vs. $9.65), The Big Short ($11.99 vs. $9.73), Gods Without Men ($11.99 vs. $9.99).

Anyway, you get the idea. Amazon has long maintained that e-books are highly price elastic—i.e., something that consumers will buy a lot more of as the price drops. Where publishers have asked to set higher prices, Amazon has insisted that keeping the cost low will actually make more money for everyone involved because “the pie is simply bigger.” For now, it looks like Oyster wants to test that proposition.

*Correction, April 8, 2015: This post originally misspelled the last name of Oyster co-founder Willem Van Lancker.

April 8 2015 2:07 PM

Young Adults Are Getting More Suburban. So Why Does Your City Seem Full of Twentysomethings?

One of the reasons it's a really terrible idea to talk about millennials as a single demographic block is that, more than any group of Americans before, our lives are shaped by whether we went to college. Culturally and economically, a 29-year-old with a bachelor's degree is basically living in a different world than a 29-year-old who never made it past high school. We're the inequality generation, and the biggest dividing line is still education.

That's why I appreciated Trulia economist Jed Kolko's post at FiveThirtyEight this week digging into the question of whether young adults are really more likely to live in an urban neighborhood than they were 15 years ago. The conventional wisdom about millennials is that we're city types, much more so than Gen X or the Baby Boomers. But on the whole, Kolko finds, that's not especially true. The percentage of 25- to 34-year-olds living in a high-density ZIP code is actually down a bit since 2000. The kids are actually getting a bit more suburban.

But the picture changes when you look at the breakdown by educational attainment. It turns out that the percentage of young college graduates living in urban areas has risen since 2000. But the share of high-school grads living downtown has decreased.

kolko_fixed

Jordan Weissmann, adapted from Fivethirtyeight.com

Kolko's definition of "urban" requires a little bit of explaining. He isn't looking at the fraction of young adults living inside city borders and outside. Instead, he uses census data to find neighborhoods where most of the housing is either made of apartment buildings or attached town homes. Some of those areas might technically be located in suburbs, even if they fit our classic concept of an urban environment (think Hoboken, New Jersey, right across the river from Manhattan). Meanwhile, city neighborhoods full of detached, single-family houses are technically considered suburban in his definition. If you live in the fancier parts of Northwest Washington, D.C., or the wealthiest enclaves of Austin, Texas, my guess is that Kolko's data would label you a suburbanite.

Nonetheless, his findings are useful in that they tell us about the kinds of physical neighborhoods young adults are really gravitating toward—whether they're happy to live in an apartment if it means they get to walk or take the subway to work, or whether they want a house with a garage, just like Mom and Dad. And it seems that dense, truly urban spaces are only becoming more attractive to bachelor's holders. By bringing higher rents downtown, meanwhile, they're probably pushing working-class young adults out to cheaper, less dense spaces. That's a problem, given that it probably means longer, more expensive commutes for people who can afford it least. 

This also helps explain why major American cities are starting to feel like playgrounds for twentysomethings with disposable income. Millennials may not be more urban overall, Kolko notes. But they're a much larger group than Gen X, and more likely to have a college degree. So small changes in the living patterns of young, educated adults have helped completely remake the faces of places like Brooklyn, Los Angeles, and Washington, D.C. As he puts it: “The composition of cities is changing more than the behaviors of college-educated young adults are.”

April 8 2015 8:11 AM

Southwest Airlines Knows How to Make Your Flight Even More Fun: Book Readings at 35,000 Feet!

Where many American airlines are shrinking your legroom to squeeze out a few extra pennies, Southwest is hosting concerts in the skies. Over the past several years, the quirky carrier has surprised passengers with unannounced in-flight musical sets by middle-of-the-road rock bands, an unannounced in-flight fashion show, and even an unannounced in-flight wedding. Now comes the latest volley in Southwest’s campaign to inflict glee on your customer experience, whether you want it or not: book readings.

I know this because on Monday, my wife and I lurched onto an 8:40 a.m. Southwest flight from Lambert-St. Louis International Airport to Ronald Reagan Washington National Airport, hoping to catch up on a few hours of sleep or get a little work done. Just before takeoff, a man in a suit at the front of the plane picked up the intercom, introduced himself as Eric Greitens, and announced that our flight would contain a little surprise. We both sighed.

Greitens is a nonprofit founder, best-selling author, former Navy SEAL, and possible Republican candidate for governor of Missouri. Perhaps an hour into the flight, Greitens, an aide, and two Southwest staffers began unpacking a microphone, a mic stand, and a small PA from overhead storage. Once again amplified, Greitens described his latest book—a series of letters about resilience and self-reliance that he wrote to a fellow veteran who suffered from PTSD—and read a chapter, which included guidance on how to “make small adjustments with great conviction” and “build purpose in the face of pain.” While this was the rare book reading in which a chunk of the audience was either sleeping or wearing headphones or both, much of Greitens’ captive crowd did seem to be engaged, though that may have been partially thanks to the Southwest employee who announced that submitting a question for Greitens to answer would qualify you for a special gift. (It turned out to be a $100 Southwest gift card. And even if you didn’t have any questions for Greitens, you still walked away with a nine-CD audio version of his book.) “I hope we made your flight down to D.C. a little more fun and interesting,” Greitens said.

I’m generally of the opinion that there are no good surprises on an airplane. But Southwest hopes that these “in-flight activations” will make their customers’ days a little brighter. Greitens is the first author to hold a “reading in the sky” on the airline (this was his second); the partnership came together because Southwest had already worked with his veterans nonprofit, The Mission Continues. In general, says Southwest community engagement coordinator Kim Boller, the airline wants to work with artists who fit into the “Southwest culture,” people who are “fun-loving, carefree, have a smile on their face.” Makes sense. The only thing offensive about an author like Eric Greitens (earnest, patriotic) or a band like one-time Southwest in-flight entertainment Imagine Dragons (anthemic, vanilla) is the sheer fact of their presence on a cramped and inescapable flight.

Programs like Southwest’s “Artists on the Fly” series don’t require an especially large investment, Boller says. The airline compensates bands, models, and now authors only with airfare; many of the events are filmed and uploaded to YouTube, the better to market both parties. Boller says there’s no pay-to-play going on, even in an era when some airlines sell their tray surfaces to advertisers.

For artists, the only irritating thing about the Southwest deal might be the lack of first-class—certainly a downgrade for chart-toppers like Imagine Dragons. But surely Southwest is worried about annoying passengers? “There’s always the opportunity for that,” Boller says, but she maintains it hasn’t happened yet. Besides, the airline tries to choose flights that aren’t too early or late. We’ll have to agree to disagree on how early 8:40 a.m. is.

April 7 2015 5:14 PM

Starbucks Is Investing Millions of Dollars in College Tuition for Its Employees

Last June, Starbucks made headlines with a plan to help its employees get an affordable college degree. At the time, the company said it would make its U.S. workers eligible for significant tuition reimbursements if they enrolled in classes through the online bachelor’s degree program at Arizona State University. (Disclosure: Slate partners with ASU and New America on Future Tense.)

A little less than a year down the line, Starbucks is seriously expanding that initiative. The so-called Starbucks College Achievement Plan will now offer full tuition coverage for ASU’s online degree programs to more than 140,000 eligible full- and part-time workers. Starbucks anticipates spending up to $250 million on the college initiative over the next 10 years, and plans to have at least 25,000 graduates of it by 2025. “Everyone deserves a chance at the American dream,” Starbucks chairman and CEO Howard Schultz said in a press release.* “By giving our partners access to four years of full tuition coverage, we will provide them a critical tool for lifelong opportunity.”

The really remarkable thing about the expanded program, as was true of the initial version, is that it comes with no strings attached. Any benefits-eligible Starbucks employee who doesn’t already have a college degree can enroll in one of ASU’s 49 online bachelor’s degree programs through the company, but will have no commitment to Starbucks upon graduation. On average, four years of tuition at ASU Online costs $60,000, and roughly 2,000 Starbucks employees have enrolled in the offering since it first launched. So far, the reaction to this news is looking pretty positive. After the disastrous #RaceTogether flop, Starbucks could use it.

*Correction, April 7, 2015: This post originally misspelled Starbucks CEO Howard Schultz’s last name.

April 6 2015 6:26 PM

American Apparel Wants to Keep Out Its Sleazy Former CEO. Tanking Sales Aren’t Helping.

American Apparel has become the subject of a fierce power struggle between its founder and former CEO, Dov Charney, and its current management. Charney—the man who built American Apparel’s fashion-forward, made-in-the-USA, somewhat sleazy image—was fired last summer after his exploits led to multiple sexual harassment allegations from employees (and as the company’s stock tumbled into penny territory). But true to character, Charney hasn’t gone quietly, and lately he’s spent a good amount of time attempting to stir up a worker revolt against American Apparel and its new leadership.

Now, BuzzFeed has obtained and published new internal documents showing that amid the managerial drama, American Apparel’s sales are tumbling. Sales were down nearly 11 percent as of March 31 versus the same period a year earlier. And in some of the retailer’s biggest markets—Chicago, Los Angeles, and New York—the drop-offs were greater than 15 percent. From BuzzFeed:

The dire figures are fueling the already bitter feud between founder Dov Charney, who was fired last year, and the hedge-fund-backed management which now runs the company. The collapsing sales are also spreading fear among the company’s garment workers who, almost uniquely in the fashion business, still work in the United States, in its downtown Los Angeles factory.

Alienating workers is not something American Apparel can really afford right now. Just last week, American Apparel CEO Paula Schneider said the company would lay off about 180 employees in an “ongoing process” to streamline operations and reduce costs. Schneider’s handling of the news drew flack from some employees, as she reportedly alerted the New York Times to the cuts before telling all affected staff. Charney, for his part, has seized upon apparent flaws in Schneider’s stewardship to rile up his former workers. He plans to file a lawsuit seeking $40 million in damages and is encouraging American Apparel workers to organize. The company’s weak sales figures will just add more fuel to that fire.

April 6 2015 11:45 AM

The New York Times Offers One of the Worst Explanations You’ll Read of Why College Is So Expensive

Over the weekend, the New York Times managed to publish one of the most confused op-eds on the price of higher education that I've ever had the displeasure of reading. Paul Campos, a law professor at the University of Colorado, would like us all to believe that college deans who say they have to raise tuition because of government funding cuts are just fibbing. "In fact, public investment in higher education in America is vastly larger today, in inflation-adjusted dollars, than it was during the supposed golden age of public funding in the 1960s," he writes. According to Campos, the idea that a degree costs more because states have pulled back their help "flies directly in the face of the facts."

Not really. There are a great number of complicated, interlocking reasons that a bachelor's degree costs so much more today than it used to. And dwindling government subsidies are one of the key issues.

Overall, public spending on higher education has, as Campos argues, risen dramatically over the long term. But so have the number of Americans attending college. When administrators say that government support is shrinking, what they usually mean is that per student appropriations have fallen. This is a crucial point. Someone has to foot the bill for each and every undergraduate's education. If taxpayers don't do it, then families have to pick up the slack themselves.

Campos halfway understands this. "While state legislative appropriations for higher education have risen much faster than inflation, total state appropriations per student are somewhat lower than they were at their peak in 1990," the professor writes. But he attempts to scoot around that fact with a rather poorly constructed analogy.  

It is disingenuous to call a large increase in public spending a “cut,” as some university administrators do, because a huge programmatic expansion features somewhat lower per capita subsidies. Suppose that since 1990 the government had doubled the number of military bases, while spending slightly less per base. A claim that funding for military bases was down, even though in fact such funding had nearly doubled, would properly be met with derision.

The military base comparison is weak for a couple of reasons. First, it obscures more than it reveals. We worry about per-student funding in higher ed because students pay tuition. Service members, of course, do not pay tuition, though they do draw a salary and would probably be quite unhappy were their paychecks slashed. If that happened, some might reasonably be tempted to accuse the Pentagon of cutting service member compensation, even while defense spending rose overall. Likewise, it's fair to worry about declining student subsidies, even while total education spending heads higher. But Campos' point fails on a more basic level, too. If the U.S. government wanted to run its military bases using slightly fewer personnel to save money, it might be able to do so. Sadly, nobody has yet figured out a way to run a university using drastically fewer professors without sacrificing some educational quality (and no, the Internet has not changed that). While schools have managed to restrain their spending by paying masses of part-time adjunct faculty a pittance, the cost of instruction is still going up. Until someone comes up with a brilliant strategy for making teaching a more efficient endeavor, the fact that states provide colleges with a smaller sum of cash per student than they did 25 years ago will mean that, for all intents and purposes, education subsidies have been cut. Academia is simply not prepared to do more with less.*  

To his credit, Campos is at least gesturing towards an important point. Even in years when states increased their per-student education spending, public colleges still raised their prices faster than inflation. And while schools tend to up tuition when legislators cut their budgets, they don't usually lower it when the subsidies get restored (see the graph below1). Instead, they lock in the extra revenue so that they can spend more per undergrad. Where has that money gone? Here, Campos is more on point. As he writes, universities are spending an increasing share of their budgets on administration. In other words, the bloat really has grown in higher ed, and it's costing students. 

But that doesn't change the fact that government cutbacks have contributed to the problem. There have been moments when university profligacy has been the major driver of tuition increases. At others, contracting state support has played a critical role. This has especially been the case in these days of post-recession budget austerity. Depending on who's calculating, states are giving schools somewhere around 25 to 30 percent fewer dollars per student than they were 15 years ago. And someone has had to make up the difference. Namely, college kids.  

1You might notice that, contra Campos' article, the graph I've included shows per-student subsidies peaking in 2001, not 1990. I'm not really sure where he got that 1990 was the high point. I'm using a graph by Education Sector that adjusts for inflation using the Consumer Price Index. Some people rely on numbers from the State Higher Education Executive Officers, which use a idiosyncratic inflation index specifically designed for universities, but they also put the peak at 2001. The College Board reaches a little further back and puts the high point in the mid 1980s.

*Update, April 6, 2015, 12:42 p.m.: I updated this paragraph to better spell out why Campos' military analogy doesn't really work. Frankly, the original version was also too glib.

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