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Michael D. Farren

Articles by Michael D. Farren

Expanded Unemployment Benefits May Have Discouraged a Faster Recovery | Discourse

12 days ago

In March 2020, in an effort to help workers who had lost their jobs because of the COVID-19 pandemic, the federal government offered to expand the generosity and coverage of states’ unemployment insurance (UI) programs. Since then, vaccines and other mitigating factors have reduced the pandemic’s economic disruptions. In response, 26 governors unexpectedly announced that they would suspend participation in the federal expansion of UI benefits by late June or early July 2021—more than two months before the federally scheduled end date of Sept. 6.
In August, when the July jobs report from the Bureau of Labor Statistics (BLS) was released, some journalists and economists were quick to point out that “states that ended enhanced federal

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Proposed New Mexico United Stadium | Tipping Point New Mexico Podcast

17 days ago

Podcast: Play in new window | DownloadSubscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | RSSOn this week’s interview Paul talks to Michael Farren, he is a Research Fellow with the free-market Mercatus Center a think tank based in the Washington, DC area. Michael and Paul discuss the proposed New Mexico United Stadium and what makes this particular deal especially egregious even among stadium deals.
Here is an article Michael wrote about a similar soccer stadium deal in Iowa that is referenced in the conversation.
Farren has done a great deal of research on public financing of stadiums and broader issues of “corporate welfare.” Michael has recommended an “interstate compact” model for reducing such subsidies.

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Did the End of Unemployment Insurance Come Too Late for Some Workers?

September 14, 2021

The federal expansion to unemployment insurance (UI) just ended, giving hope that a swifter economic recovery will follow. While UI was a lifeline for many workers during the worst phases of the pandemic, the introduction of effective vaccines against COVID-19 last spring shifted the economy from “neutral” to “recover” mode — at least it should have. Employers have had persistent problems finding workers to fill jobs, even in the face of rising wages, better benefits and hiring bonuses. New evidence suggests that maintaining the expanded UI benefits for too long may partially be to blame.The public debate over expanding UI benefits started even before the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in March 2020. That legislation created several new programs that

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The Billions Being Wasted in the Economic Development Subsidy Wars

August 24, 2021

Seeking to create jobs and help their local economies climb out of the pandemic recession, state and local officials are raising the ante on subsidies to big corporations. But if history is any guide, ever-increasing tax breaks and other economic development incentives will likely lead to slower — not faster — growth. Given that state and local governments have already been wasting $95 billion every year in an economic race to the bottom, more subsidies will just dig the hole deeper.Take New Jersey, for example. It made national headlines when its previous state subsidy program collapsed in corruption and scandal, but the state recently replaced it with an even larger $14 billion program. And this spring North Carolina

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Producing Gold-Standard Statistics: How the Bureau of Labor Statistics Should Adapt Its Unemployment Rate Metrics in Response to the COVID-19 Pandemic

August 6, 2021

Comment on the Draft Department of Labor (DOL) FY 2022–2026 Strategic Plan and Evidence-Building Plan
Agency: US Department of Labor, Bureau of Labor Statistics
Comment Period Opens: July 16, 2021
Comment Period Closes: August 6, 2021
Comment Submitted: August 6, 2021
Request for Comments:
The US Department of Labor (DOL) has requested input on the drafts of its strategic plan and its evidence-building plan. I am a research fellow at the Mercatus Center at George Mason University, which is dedicated to advancing knowledge about the effects of government policy on society, including policies and programs regarding government-collected data. Accordingly, my comment seeks to aid

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Wisconsin Testimony on TEDIs and TIFs

March 16, 2021

Good afternoon Chair Stroebel, Vice-Chair Kapenga, and members of the Wisconsin Senate Committee on Government Operations, Technology and Consumer Protection:
I am grateful for the invitation to discuss Tax Increment Financing (TIF) and the economic effects of using Tax Increment Districts (TIDs) to foster local economic development. The evaluation of government efforts to create economic development is a primary area of inquiry for my research team, and I’m happy to contribute toward the conversation regarding Senate Bill 560.
My testimony today has three main points:
Wisconsin introduced TIF 45 years ago, in an effort to solve a potential problem of underinvestment by municipalities, but the solution created conditions that may have led to a host of additional problems.
The typical

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An Interstate Compact to Phase Out Corporate Giveaways

March 8, 2021

Co-Chairs Fonfara and Scanlon, Representative Elliott, and members of the Finance, Revenue and Bonding Committee:
My name is Michael Farren, and my research at the Mercatus Center at George Mason University focuses on evaluating government efforts to foster economic development. I am grateful for the invitation to discuss the problems associated with economic development subsidies and the possible solutions available for Connecticut.
An estimated $95 billion is spent annually by state and local governments on economic development subsidies. These subsidies remain a tenacious problem, even as support grows for phasing them out. My research suggests that an interstate compact offers an opportunity for a cooperative solution.
Academic research consistently shows that economic development

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An Interstate Compact to Phase Out Corporate Giveaways

March 2, 2021

Chair Abney, Vice Chairs Slater and Marszalkowski, and members of the House Finance Committee:
My name is Michael Farren, and my research at the Mercatus Center at George Mason University focuses on evaluating government efforts to foster economic development. I am grateful for the invitation to discuss the problems associated with economic development subsidies and the possible solutions available for Rhode Island.
Today, I will illustrate why economic development subsidies remain a problem despite growing agreement that they should be phased out and how an interstate compact offers an opportunity for a cooperative solution.
Academic research shows that economic development subsidies generally fail to achieve their stated goals. That is, they do not result in broad improvements in local

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Chaos, Conflict and Coronavirus: How Will the Labor Market Respond?

January 11, 2021

Against the backdrop of a nation in turmoil, the Bureau of Labor Statistics on Jan. 8 reported the first decrease in jobs since the headlong plunge in employment at the beginning of the pandemic. The monthly report estimated that, on net, 140,000 payroll jobs were lost between mid-November and mid-December. While the job losses are discouraging, the news wasn’t unexpected.
By mid-December many potential consumers were already avoiding public places to reduce their exposure to the resurging coronavirus, and states and cities were reimposing business restrictions and stay-at-home orders. These restrictions are being tightened or extended as coronavirus infections continue to trend upward.
Last week’s political tumult overshadowed the news that the U.S. momentarily crossed the threshold of

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The Economic Recovery Is a Slowing Swoosh

October 5, 2020

The September jobs report released by the Bureau of Labor Statistics (BLS) on Oct. 2 shows that the economic recovery continues, but at a steadily decreasing rate. Ordinarily, 661,000 net new payroll jobs added month-over-month would be a cause for jubilation, but that increase is only half the number of long-term jobs added between July and August. Meanwhile, there are 10.7 million fewer payroll jobs than existed in February 2020, before the coronavirus pandemic reached the United States. In other words, although employment continues to increase as the economy adjusts to the new environment, many unemployed workers still face a grueling recovery.
One of the slightly unexpected items from September’s jobs report was another large decrease in the official unemployment rate

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The Economic Bottleneck is Upon Us

September 8, 2020

In biology, abrupt environmental changes can create evolutionary bottlenecks that force species to adapt or die. This dynamic has occurred many times during the history of life on earth, and genetic analysis suggests that humans nearly went extinct in our own bottleneck around 70,000 years ago.
Our economy is now at a similar crossroads. And, as in nature, economic bottlenecks are a regular part of business cycles. They occur each recession as businesses are forced to adjust to rapidly changing demand for goods and services. These shifts in the kind, quantity, and quality of products that customers desire spur businesses to adopt new production technologies (changing their inputs or processes) as they streamline their operations to survive. In general, businesses that are better able to

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The Remote Work Revolution Complicates the Fragile Economic Recovery

August 10, 2020

The labor market is poised, as if on a knife’s edge, between recovery and an even deeper hole. The recent jobs report showed that temporarily furloughed workers are returning to their jobs as businesses attempt to reopen. The recovery is fragile, however, with 9.2 million more workers still facing the possibility that their furloughs may become permanent.
The increasing embrace of remote work complicates matters, since it carries with it changes in office workers’ spending patterns. These changes will affect the demand for—and employment associated with—products and services ranging from office supplies, business lunches, and janitorial services to dry cleaning, vehicle repairs, and childcare.
The continued recovery is indeed good news, but many commentators seem to be missing the economic

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Employment Bounces Back in a Big Way

July 3, 2020

The labor market once again outperformed economists’ best expectations, with the Bureau of Labor Statistics (BLS) reporting on July 2 that payroll employment rose by 4.8 million jobs from May to June. Meanwhile, recent data classification problems, which have artificially lowered the unemployment rate by counting some furloughed workers as employed rather than unemployed, have been reduced, but there’s still more to the story:
After adjustments to account for the data misclassification problem, the unemployment rate dropped from 16.4 percent in May to 12.3 percent in June. It’s now only about 1 percentage point higher than the official rate (11.1 percent).
But the gap with the “pre-pandemic comparable unemployment rate” remains wider. This rate also fell, from 19.5 percent in May to 14.8

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