In a series of sketches for Saturday Night Live, Billy Crystal played a fictionalized version of actor and director Fernando Lamas as host of the talk show “Fernando’s Hideaway.” Crystal’s character would often say that it is better to look good than to feel good.

This was on my mind as I reviewed recent evaluations of St. Louis’s guaranteed basic income pilot by Washington University’s Center for Social Development. The review’s claims will sound familiar to anyone who has followed these pilot programs around the country. Participants reported feeling more financially secure. They were better able to pay bills and cover everyday expenses like rent, utilities, and groceries.

In many ways, the findings are exactly what one would expect. St. Louis distributed $500 per month for 18 months to several hundred households using federal pandemic relief funds. If someone suddenly receives an additional $500 each month, it should not surprise anyone that paying bills becomes easier in the short run.

The St. Louis program is also not unique. Over the past several years, cities across the country have launched similar guaranteed income pilot programs. Their evaluations tend to report the same kinds of outcomes: reduced financial stress, improved food security, and higher levels of self-reported well-being.

But as economists Hilary Hoynes and Jesse Rothstein of the University of California, Berkeley note in a review of the universal basic income literature, the new wave of guaranteed-income pilots is “not well suited” to answer the most important questions about the policy. (My colleague David Stokes wrote about this same study in 2024.) The pilot program evaluations tend to measure short-run responses that economists have already examined for decades in earlier experiments.

These evaluations often measure something quite narrow—how recipients say they feel about their financial situation. But feeling good about one’s finances is not the same thing as actually being better off.

More comprehensive research on guaranteed income programs paints a more complicated picture. A recent randomized study published by the National Bureau of Economic Research examined the effects of unconditional cash transfers using a large experimental design. In that study, 1,000 individuals were randomly selected to receive $1,000 per month for three years, while a control group received only a nominal payment.

The researchers tracked employment, income, and time use using administrative data and detailed surveys. Their findings suggest that while the payments increased consumption and temporarily improved subjective well-being, participants also worked fewer hours and saw declines in income earned from work. The transfers reduced labor-force participation and led participants to shift some of their time away from paid work and toward leisure.

In other words, the transfers made recipients feel more financially secure—but they also changed work behavior in ways that reduced earned income.

This should not come as a surprise. Economists have been studying guaranteed income–style policies for decades. Earlier negative income tax experiments and other research on income transfers have consistently found that unconditional income tends to reduce work effort modestly. Those effects may be small, but they are real and have important implications for the long-term economic impact of such policies.

None of this is to say that guaranteed income programs provide no benefit to recipients, or that the research from Washington University is flawed. Reducing financial stress and helping families weather unexpected expenses is not nothing. But policymakers should be careful not to confuse the short-term financial relief detailed in the St. Louis pilot program evaluation with long-term economic improvement.

There are also broader societal concerns that pilot evaluations like this one cannot address. One of the Show-Me Institute’s objectives is to build a state where “all Missourians are free from dependence on government.” Large unconditional cash-transfer programs, such as the program tested in St. Louis, could expand long-term dependency on government support and weaken incentives for work and self-sufficiency. That risk remains a significant policy concern.

Feeling better about your finances is not the same thing as improving the underlying economics—regardless of what Billy Crystal might advise.

Local leaders must be careful not to confuse the two, lest we commit to an expensive program that does more harm than good.

The post Economically, Feeling Better Isn’t the Same as Being Better appeared first on Show-Me Institute.

Regarding the courts, a coalition of Missouri business groups, including the Missouri Chamber of Commerce, has filed a lawsuit challenging Proposition A.

The plaintiffs argue that combining wage increases with sick leave provisions violates the state constitution’s single-subject rule for ballot initiatives. Proposition A, which passed with 58% of the vote, would incrementally increase the minimum wage from $12.30 to $15 by 2026 and provide workers up to seven paid sick days annually starting in May 2025. Supporters contend that wages and benefits are integral to overall compensation and thus constitute a single subject. The Missouri Supreme Court has yet to schedule hearings for the case.

As for the legislature, because the proposition was a statute, the legislature may act to overturn it. One Missouri legislator introduced the Entrepreneur Rights Act, which would exempt some small and seasonal businesses from minimum wage increases.

Supporters may point to California’s recent mandate elevating the minimum wage for fast-food workers to $20 per hour as a triumph for labor rights. However, a closer examination reveals that the anticipated benefits, particularly in job creation, have not materialized. A study from the University of California, Berkeley, initially suggested that the wage hike did not adversely affect employment levels. Yet, upon scrutinizing the data, it becomes evident that fast-food employment in California has grown at a slower pace compared to the national average. In fact, since the law’s implementation, California’s fast-food employment increased by only 1.85%, while the national rate rose by 3.22%. This discrepancy indicates that the wage increase may have hindered job growth within the state. Such outcomes underscore the complexities of implementing blanket wage policies without fully accounting for market dynamics and the potential unintended consequences on employment opportunities.

Show-Me analysts have consistently been critical of the arguments for, and the claimed benefits of, increases in the minimum wage. Minimum wage hikes just don’t deliver on their promises—even if academic studies twist themselves into knots trying to demonstrate otherwise.

The post No, California’s Minimum Wage Hike Did Not Create Jobs appeared first on Show-Me Institute.

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Mind you, a new baseball stadium funded by taxpayers might be great for the owners of the Royals. But what evidence is there for any benefit to taxpayers?

The St. Louis Federal Reserve pointed out that stadiums fail to drive economic development in a 2017 report, concluding:

Building sports stadiums has an impact on local economies. For that reason, many people support the use of government subsidies to help pay for stadiums. However, economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs. Consumers who spend money on sporting events would likely spend the money on other forms of entertainment, which has a similar economic impact. Rather than subsidizing sports stadiums, governments could finance other projects such as infrastructure or education that have the potential to increase productivity and promote economic growth.

A 2019 piece in The Berkeley Economic Review, a publication of the University of California–Berkeley economic program, also failed to find any economic benefit from sports stadiums:

Over the last thirty years, building sports stadiums has served as a profitable undertaking for large sports teams, at the expense of the general public. While there are some short-term benefits, the inescapable truth is that the economic impact of these projects on their communities is minimal, while they can be an obstacle to real development in local neighborhoods.

The owners of the Royals are welcome to build a stadium wherever they like. But if they want to take tax dollars away from schools, public safety, and infrastructure to help build the stadium, they should share any evidence they have that such a plan presents a good return on investment for taxpayers—not just themselves.

The post Downtown Baseball? Show Us the Research appeared first on Show-Me Institute.

As this pithily-titled piece from the Brookings Institution argues, moving elections on-cycle will both drive up turnout and minimize the effect of organized interest groups. As the author writes:

By exploiting the occasional episode in which a change in state law forced localities to move their elections “on cycle,” [UC Berkeley Political Scientist Sarah] Anzia is able to provide some pretty rigorous causal evidence that off-cycle elections decrease voter turnout and equip organized interests (e.g. teachers unions) to obtain more favorable policy outcomes. Anzia’s findings mesh nicely with other work done by University of Pennsylvania Political Scientist, Marc Meredith, who found that when school boards are given the authority to choose election dates for raising revenue (e.g. bond elections) boards will “manipulate” the timing of elections in predictable ways to ensure an electorate that is most favorable to increased school spending.

That is why I was so surprised when the Missouri School Boards Association announced that it “strongly opposed” the bill. Why would that be? Why would the organization that represents school boards want to drive down turnout in the elections that elect them? I guess they’ll have to answer that one.

A common argument for keeping elections off-cycle is that it somehow keeps politics out of education. That is simply wrong. Schools are a huge state and municipal expenditure and are tasked with imparting skills and knowledge onto the next generation of citizens. Every day, we hand over our state’s most precious resource, its children, to schools. We live in a diverse state where different people have different views about what that education should look like. Any system that we devise to try and manage that will be political.

If education is going to be political, the best thing that we can do is try and make sure that as many of our fellow citizens as possible have the opportunity to make their views known. Moving elections on-cycle allows that to happen.

The post Moving School Board Elections On-Cycle is Good for Democracy appeared first on Show-Me Institute.

The San Francisco Chronicle revealed last week that the University of California–Berkeley paid consultants $200,000 to shape public opinion of Chancellor Nicolas Dirks as a “key thought leader” in order to “increase exposure and awareness” of his “vision for higher education.” This appeared to be done as a sop to potential donors, who might be more likely to give to a university with a visionary at the helm. But given the fact that Dirks decided to step down this week, it’s left the university with egg on its face.

All schadenfreude aside, this incident does raise a bigger question: Who do we want at the helm of our flagship public universities?  Do we want noted academics who might have particular insight on how to best educate students or conduct research? Do we want politicians who can navigate the complex web of state and federal government and their often-conflicting mandates for the university? Do we want businesspeople who have experience running the multi-billion-dollar organizations that these institutions have become? Do we want visionary thought leaders (whatever that is) who can chart a new course for higher education in the state?

To be totally honest, I don’t have a good answer to these questions. However, as the state takes the next several months to review how the University of Missouri system is functioning and the essential role that leadership plays in the four campuses that comprise it, deciding who we want at the helm will be important and necessary step.

The post Do Our Universities Need “Thought Leaders” at the Helm? appeared first on Show-Me Institute.

Kansas is not alone. At the end of its session this year, the Texas Supreme Court came down with a decision on the constitutionality of its school finance system. Not long ago, the Missouri Supreme Court was asked the same question, and given the changes to the school funding formula this legislative session, it is entirely possible that the state might be taken to court again.

Years of lawsuits and millions of dollars in legal fees have been devoted to 15 words in Article Six of the Kansas constitution “The legislature shall make suitable provision for finance of the educational interests of the state.” In Texas, it’s a few more, but conveys the same message. In Missouri, our Constitution at least gives some benchmark, saying that we can spend no less than 25% of state revenue on our public schools, but even that has been challenged over the years.

These cases have well-compensated lawyers, expert witnesses, and consultants trying to force courts to read minute detail into constitutional language. Complicated studies are conducted to place an exact dollar amount on what constitutes “suitable provision,” so that a penny less is seen as violating the constitution.

This is not how we should determine what to spend on our schools, for two reasons.

First, no one really knows exactly how much we should be spending on education. Costing out the precise dollar value of a quality education is beyond the knowledge base of social science today. We simply do not know that spending X amount of money will yield Y level of achievement. What’s more, we have a belief that low-income students, students with special needs, and students who have to learn the English language cost more to educate—but how much more? We simply don’t know.

Second, for all of its faults, the legislature is better qualified to make funding decisions than the courts are. Courts are not in a good position to weigh the complicated tradeoffs that legislatures must make when they appropriate state tax dollars. We don’t live in a world of unlimited resources. As a result, legislators have to weigh the needs of schools against other needs, like roads, healthcare, and everything else that the state supports. Courts are rarely, if ever, asked to determine how their decisions might affect these other priorities. And depending on whether judges are appointed or elected, they may be harder to hold accountable than legislators, who must run for re-election.

Not everyone is going to agree with the decisions that the legislature makes, and their complaints will be justified in some cases. But that is why we have elections. Calling on the courts should be an absolute last resort, reserved for the most egregious cases. In most instances, the only thing that will be accomplished by including the courts will be to make lawyers and consultants richer, not improve educational outcomes for children.

The post The Never-Ending School Finance Wars appeared first on Show-Me Institute.

Why is his opinion important?  Because he is the author of one of the most influential studies touted by those promoting an increase in the minimum wage.

Together with David Card of the University of California–Berkeley, Krueger analyzed the impact of an increase in the minimum wage on employment in fast-food restaurants. In 1992 New Jersey raised its minimum wage from $4.25 to $5.05 while Pennsylvania did not.  Their analysis found that fast-food restaurant employment growth in New Jersey was not adversely affected by the change.  This isolated case study from several decades ago has become, even though it is much criticized, the go-to piece of research touted by minimum wage advocates ever since. 

A proponent of raising the minimum wage, even Krueger recognizes that increasing it to $15 would likely do more damage to workers than good.  Especially to those workers at the low end of the pay scale.  Especially to those workers who live in a city like St. Louis, which is not a high-wage/high-cost city.  Increasing the minimum wage to $15 in St. Louis, as some have proposed, would devastate low-income workers in two ways.  First, some businesses would decamp to surrounding areas with lower minimum wages. And of the businesses that stayed in Saint Louis city, many would cut employees or reduce hours in order to control their labor costs. The trade-off for increasing the minimum wage to $15 is just too great to be sensible.

Krueger recognizes that there is a viable alternative to a minimum wage hike: the earned-income tax credit.  This tonic to the plight of the low-income family has been recommended by those on the left and the right as a better solution to the poverty problem than the use of a blunt tool like the minimum wage.  Christina Romer, another University of California–Berkeley professor and one-time chair of president Obama’s Council of Economic Advisors wrote in The New York Times in 2013 that the earned-income income tax credit “is very well targeted—the subsidy goes only to poor families—and could easily be made more generous.”

Krueger warns that the possibility of negatively affecting employment for low-income workers by raising the minimum wage to $15 “is likely to become more severe, and the risk greater.”  If proponents will not listen to the warnings of free-market economists, will they at least consider Krueger’s counsel before acting rashly?

The post Even Krueger Agrees: $15 Minimum Wage Too High appeared first on Show-Me Institute.

Recently, Matt Ladner wrote a series of blog posts about Baumol’s disease in public education. Ladner is certainly not the first to point out this problem. Jay Greene even touched on the topic this week in The Wall Street Journal.

I have seen the numbers nationally, but I wanted to bring it home for Missourians. So I constructed my own graph that demonstrates the Baumol phenomenon in Missouri’s public schools.

The graph was constructed using the Digest of Education Statistics Table 194 and results from the National Assessment of Educational Progress (NAEP). NAEP data are only available after 1992 and the tests are typically taken every other year.  The Digest of Education Statistics data stop in 2008-09. Thus, the graph presents the results from 1992 to 2008. When there were gaps between years, I linearly imported the figures.

Since 1992, Missouri has seen nearly a 40 percent increase in per-pupil spending. Yet we have seen little in terms of increases in academic achievement. This is the very picture of Baumol’s disease: increasing cost with very little improvement in output.

Is there a cure for Baumol’s disease? I think so and I will highlight a few in my next blog post. For now, I will leave you with a thought. If a real disease was running rampant in our schools, there would be immediate action. Yet we have a real economic disease that is plaguing our schools and little is being done. We cannot continue operating an educational system that is plagued with Baumol’s disease.

The post Disease* Runs Rampant In Missouri Public Schools appeared first on Show-Me Institute.

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Bruce Fuller, a professor of education and public policy at the University of California-Berkeley, said he feared focusing on universal prekindergarten?making preschool a middle-class entitlement?could divert help from low-income families that need it most.

"Why would we use scarce public dollars to subsidize all families if we know the biggest impact is with poor kids?" he said.

The article quotes James Heckman, too; Heckman is a Nobel laureate in economics who’s found that early childhood education has a large positive effect on social and academic outcomes when kids get older. I was disappointed that the article doesn’t mention Heckman’s support for voucher programs that would allow parents to choose between competing preschools. Just because the state subsidizes preschool for low-income children, that doesn’t mean it needs to reinvent the wheel and actually operate preschools, too.

The post Early Childhood Education appeared first on Show-Me Institute.

The article amazed me, not for its blatant disregard of economic logic, but rather for its presupposition of controversial facts about what universal health care coverage would be like. Reich accepts (without justification) that national health care will be affordable, universal, and comprehensive, offering excellent service for which every American will be free to choose the doctor of his or her choice without an automatic opt-in mandate. Well, by golly, if it isn’t Uncle Sam Santa. How crazy we’ve been to bicker about this.

I’m surprised the Journal let this go to print, particularly without a rebuttal. But for argument’s sake, let’s accept what Reich imagines and focus on what the article says instead. Reich argues that the Democrats should “think bigger” about national health care and ignore the petty issue of mandates (that is, whether or not uninsured Americans will be forced to participate). Reich recognizes correctly that mandates (and their big government connotations) are the most sensitive part of the health care debate, so he argues that they’re just a smoke screen. But mandates are the most important part of any universal health care plan.

Ostensibly, national health care would rely on younger, healthier participants’ contributions to subsidize the high costs of older, sicker Americans. That’s a non-partisan fact, as it’s the same rationale for Social Security and Medicare. How else can a system that offers universal coverage without distinguishing premiums remain solvent? Uninsured older Americans are the most expensive segment of the population to insure, yet we are supposed to believe that this wouldn’t pose a problem without a mandated influx of healthy Americans who contribute to the plan without utilizing its benefits?

Reich ignores this fact, and — presumably to appease the naysayers — argues instead that high-cost participants would be subsidized by the general revenue obtained from allowing the Bush tax cuts to expire. Please. Even if we were to assume that allowing the tax cuts to expire would increase revenues (it might not), address the alternative minimum tax problem (it won’t), and not push the country into recession (it probably would), there’s still the issue of how the additional revenue can even hope to offset the enormous cost of health care for millions of high-risk Americans — particularly when fixed premiums encourage health care abuses. Ironically, Reich provides his own counterargument to the importance of mandates when he cites Republican Mitt Romney’s Massachusetts health care plan (a plan which currently exempts about 20 percent of the state’s uninsured population and has left policymakers contemplating either universal coverage or insolvency). Oh, but “big government” mandates aren’t important.

Reich’s article is purely propaganda, ignoring the real argument by dismissing the bureaucratic mess of “big government” mandated coverage as the “least important aspect of what [the Democrats] are offering,” in order to appease Americans who want to believe that universal health care can be achieved without cost or government intrusiveness.

But it’s not “The Road to Universal Coverage” that Mr. Reich is offering; it’s the “The Road to Serfdom.”

The post Berkeley Bob on Health Care appeared first on Show-Me Institute.

The University of Missouri?Columbia has won approval to drop the hyphen from its name, in all but its most official communications.

This name change follows a series of identity crises suffered among Missouri universities. The University of Missouri?Rolla recently changed its name to Missouri University of Science and Technology; Southwest Missouri State University is now Missouri State University; and Central Missouri State University is now the University of Central Missouri.

OK, good — I’m glad that we’ve got that all cleared up now.

This name change bothers me. Yes, Mizzou, we all realize that you’re the flagship school of the University of Missouri system, but do you really have to change your name to prove it? UM?Columbia fears that the hyphen gives it the appearance of being a “regional” school.

Yes, in the same way the University of California?Berkeley is a “regional” school. Or how about that regional school, the University of Michigan?Ann Arbor. And UNC?Chapel Hill?

Maybe now that the “University of Missouri” has solved its name issue, it can concetrate on competing with those other “regional” schools in the most recent U.S. News and World Report rankings.

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