The New York Times supports the use of standardized tests (like the ACT and SAT) in undergraduate admissions

See A Great University Undermines Its Mission. Excerpts:

"The committee concluded that scores on the SAT and ACT, the main standardized tests for college admissions, did a better job measuring student readiness for college than high school grades. High test scores were particularly good at finding talented students from low-income families and underrepresented minority groups. For these reasons, the committee recommended the system continue to require applicants to submit SAT or ACT scores.

The university’s leaders disregarded the report."

"the University of California began refusing to accept SAT or ACT scores, even from students who wanted to submit them"

"University leaders wrongly claimed that it would make admissions fairer and more equitable."

"The results have been terrible. At the University of California, San Diego, a faculty group last year reported “a steep decline in the academic preparation” among entering students. Last fall, for example, nearly 12 percent of first-year U.C.S.D. undergraduates were not qualified to take precalculus, a low-level class — up from only 0.5 percent in 2020." 

"Reading and writing skills have also deteriorated, and professors say they must spend time teaching elementary skills."

"the declines in preparedness among University of California students are larger than the regression elsewhere"

"[they] have essentially randomized aspects of the admissions process, admitting unprepared students while rejecting many who could thrive there."

"Even Janet Napolitano, who was the university president in 2020 and recommended a test-blind policy then, now favors its reversal."

"The critics claim that the two tests are biased and therefore a cause of inequities. The evidence indicates otherwise. Raj Chetty, a Harvard University economist, points out that other tests show similarly large economic and racial gaps. One example is the NAEP, a test of elementary and middle-school students for which almost nobody studies. This pattern suggests that SAT tutoring, which critics often blame for score gaps, plays only a limited role, perhaps because free tutoring is available from Khan Academy and elsewhere."

"The SAT and ACT . . . do appear to measure preparedness for highly selective colleges better than almost any other indicator, research shows." 

"Some other parts of applications — like student essays, extracurricular activities and teacher recommendations — are, in fact, biased toward affluent students."

"In 1970 only 7 percent of college freshmen nationwide had a high-school grade average of A or higher; today the share is roughly 40 percent."

"Any fair, reliable test would have results resembling those of the SAT and ACT."

"the test scores are especially useful at identifying strong students from low-income communities. When such a student receives even a pretty good score, it can be a sign of high potential." 

Lifting the SS payroll tax cap would close only about 30% of the long-term cash-flow deficit while raising some top marginal labor income tax rates to over 60%

Letter to The New York Times.

"Senators Bernie Moreno and Elizabeth Warren present lifting the payroll tax cap as a “common-sense” solution to Social Security’s financing challenges. But eliminating the cap would close only about 30 percent of the program’s long-term cash-flow deficit.

It would also sharply raise top marginal labor income tax rates to punitive levels, pushing top rates across many states over 60 percent (58 percent in Ohio and 62 percent in Massachusetts, the senators’ home states). Social Security was created to prevent poverty in old age, not to guarantee affluent retiree households six-figure annual benefits.

Rather than continually raising taxes to sustain ever-larger promises, policymakers should rethink the program’s purpose. A flatter benefit focused on basic retirement security, combined with greater reliance on private savings, would be more cost-effective and sustainable.

Romina Boccia
Washington
The writer is the director of budget and entitlement policy at the Cato Institute."

Fewer employers are screening job candidates for marijuana because it would make it tougher to find qualified candidates

See More U.S. Workers Are Testing Positive for Marijuana. Fewer Employers Are Concerned. As cannabis use grows, employers are rethinking pre-hire screens to avoid recruiting challenges by Celia Bernhardt of The WSJ. Excerpts:

"And fewer employers are screening job candidates for marijuana use at all, in part because it would make it tougher to find enough qualified candidates, said Todd Logsdon, a partner at employment law firm Fisher Phillips. 

“I’ve had other employers tell me, ‘If I test for that, I’m not gonna have any applicants,’” Logsdon said. “They’re being very choosy about which role they test for.”

In a 2024 survey of nearly 1,000 employers, the law firm found about half didn’t test for cannabis in the pre-hire process, often for that reason. Among those that did test, 44% said they faced recruiting challenges and nearly a quarter said they were considering loosening the policy.     

Citigroup and many of its Wall Street peers dropped the pre-hire test over the past decade. Retailers like AutoNation and Home Depot have done away with it for most positions as well. Amazon stopped testing for marijuana for most applicants in 2021." 

This article shows how competitive labor markets are. If employers had the power they could keep screening for marijuana use. 

Food Stamps Don’t Help National Wellbeing

No matter how much the government might give poor families, the official measure of poverty would remain unchanged

Letter to The WSJ. 

"Crystal FitzSimons’s letter “Fewer People on Food Stamps Isn’t Good News” (June 23) claims that SNAP lifts 3.6 million out of poverty. That is impossible because the Census Bureau refuses to count $1.6 trillion in government subsidies, including SNAP, as income. No matter how much the government might give poor families, the official measure of poverty would remain unchanged.

Ms. FitzSimons’s claim uses an experimental poverty measure that counts SNAP as income while omitting $1 trillion in other welfare, arbitrarily subtracts some spending, and capriciously raises the income defining poverty thresholds.

The $100 billion spent on SNAP in 2024 added nothing to national well-being. It merely redistributed it. If left with the original earners, it would either be consumed with the same effects, or it would be saved and invested, creating additional well-being, which it wouldn’t with SNAP.

While decrying the minimal adjustments to SNAP to prevent abuse, Ms. FitzSimons ignores the 60% of food stamp recipients who aren’t poor, even by the overstated Census metric.

John Early

Adjunct scholar, Cato Institute" 

Who Should Control Education?

By Alex Tokarev, Kristin Tokarev, Mitchell Ashley. From The Independent Institute.

"President Jimmy Carter wanted the support of the government teachers’ unions. So, during his reelection campaign, he created the U.S. Department of Education, promising it would improve America’s schools.

Has it?

After more than 45 years, billions of taxpayer dollars, and endless regulations under a bloated and ever-growing education bureaucracy, American students are falling behind many of their peers around the world. Reading scores have declined. Math scores are down. Parents are frustrated. Teachers complain they’re drowning in paperwork.

If the Department of Education hasn’t solved these problems after nearly half a century, why assume giving it more power will?

President Donald Trump says it won’t. His proposal to eliminate the department and return authority to states and ultimately to parents triggered predictable outrage. Critics warn it would “destroy public education.”

That’s nonsense.

The Department of Education doesn’t run America’s schools. States and local districts already do. Closing the department wouldn’t close schools. It would simply reduce Washington’s role. Education Secretary Linda McMahon recently spoke on the necessity to return control to parents and local public servants so that they can better serve the children. And that’s how it should be. Parents know their children better than bureaucrats in Washington ever will. Local communities understand their own needs. A rural district in Wyoming faces different challenges than schools in Chicago. Yet federal rules often treat them as if they’re the same. One-size-fits-all rarely fits anyone well.

Supporters of federal oversight say Washington provides accountability. Accountability to whom? Parents can vote out ineffective school board members. They can attend meetings. They can confront local officials. They can’t fire federal bureaucrats. The farther decisions move from families, the less influence families have.

Then there’s competition. Economist Milton Friedman argued that taxpayers can fund education without having the government manage it. Instead of subsidizing school systems, fund students. Let parents choose among public, charter, private, or other options. Competition changes behavior.

Restaurants compete for patrons. Stores try their best to satisfy shoppers. Businesses that disappoint customers lose them. Most public schools don’t face that pressure. Students are assigned largely by ZIP code. If the local school performs poorly, many parents have only two options: pay private tuition or move.

That’s not much of a choice.

School choice creates incentives that bureaucracy can’t. When families can leave, schools have stronger reasons to improve. Charter schools, education savings accounts, tax-credit scholarships, and vouchers all give parents leverage they otherwise lack.

None of this guarantees success. Eliminating the Department of Education won’t magically improve schools, and states are perfectly capable of making bad decisions. The real reform isn’t simply moving power from Washington to state capitals. It’s moving power to families. Critics raise a fair concern: poorer states and communities may struggle to fund education at the same level as wealthier ones.

But Washington hasn’t solved that problem either. Despite decades of federal involvement, achievement gaps remain stubbornly wide. More bureaucracy has not produced equal outcomes. A better approach is to expand opportunity. Wealthy families already exercise school choice by buying homes in better districts or paying private tuition. Friedman’s ideas and Trump’s policies extend that freedom to families with fewer resources.

The real question isn’t whether we’re “for” or “against” public education. It’s who education is supposed to serve. If a public school offers the best service, parents will choose it. If another institution better meets a child’s needs, parents should be free to choose that instead. Students should not be assigned to schools. Schools should compete for students.

For decades, Washington promised better results. The results are in. It’s time to trust the American parents."

The Hidden Problem With Democrats' $25 Minimum Wage Bill

The legislation would eliminate the tip credit for restaurant workers and other tipped employees—which has not worked out well in the past

By C. Jarrett Dieterle and Kurt Huffman in Reason.

"Across the country, progressive politicians continue to push for an ever-higher minimum wage. Whether it's New York City's Mamdani-led pursuit of $30 by '30, L.A.'s $30 "Olympic wage" for hotel workers, or Seattle's minimum wage for the gig economy, it's clear that the fight to raise the minimum is only escalating. Now, congressional Democrats have waded into the debate with the introduction of the Living Wage for All Act, spearheaded by Sen. Chris Murphy (D–Conn.).

Sen. Murphy's bill has garnered attention for seeking to increase the federal minimum wage from its current level at $7.25 per hour all the way up to a $25 per hour minimum in the coming years. (This would act as a wage floor, applying in any state that had a lower wage than the feds). But overlooked in the reporting so far is another key feature of the bill: its elimination of the tip credit for restaurant workers and other tipped employees.

The tip credit is what allows waiters and others in the hospitality industry to be paid below the statutory minimum wage on a per-hour basis, so long as their tips make up the difference. This legal structure has been a staple of the restaurant industry for over 60 years, and it often allows waiters to make far more than the minimum wage. (The national median wage for waiters is $27 per hour, according to the National Restaurant Association.)

Scrapping the tip credit could hurt both restaurants and tipped workers, especially when considering how customer behavior, tax law, and restaurant payroll decisions interact. First, phasing out the credit has the potential effect of reducing the amount that customers tip in the long term, as our culture could move away from the expectation of diners leaving voluntary gratuities.

Census Bureau research has found that when the tipped minimum wage rises, the employer-paid portion of server compensation rises, but tip income declines by a similar percentage, ultimately offsetting the increase. Tipping has become a cultural norm, which may make it a sticky habit that endures for a time, but in our era of tipping fatigue, it's also possible diners may welcome the opportunity to ditch tips.

A second consideration is how restaurants will likely respond to the tip credit's elimination. In our state-level "laboratories of democracy," we already can find a clue. Kurt Huffman, a co-author of this piece, owns and operates numerous restaurants in Portland, Oregon. Oregon has prohibited a tip credit for years, which has given Huffman firsthand experience with how restaurateurs often react to the tip credit's elimination.

Many restaurants in environments without the tip credit add mandatory service fees to checks or implement what are known as auto-gratuity policies. For instance, the restaurant may automatically tack on an 18–20 percent charge to a customer's bill. While this "auto-grat" ensures that a tip is paid by the customer, the catch is that the tip is no longer the property of the waiter but of the restaurant. The restaurant then usually keeps a portion of that tip (often anywhere from 25–40 percent) before distributing the balance to the employee.

That distinction matters. A mandatory service charge is not a tip under IRS rules. It is employer revenue; if the restaurant later distributes some or all of it to employees, the distributed amount is treated as wages.

This can, and often does, reduce the employee's take-home pay. If a restaurant keeps part of the mandatory service charge, as is customary, the worker may receive less than he or she would have received from a voluntary tip on the same check. The math gets worse under the new qualified-tips deduction, popularly known as "No Taxes on Tips." Qualified voluntary tips may be deductible from federal taxable income up to $25,000, but mandatory service charges and auto-gratuities are not eligible for such treatment.

Restaurants often adopt these service charges because they are afraid to raise menu prices. That is understandable, but it misses how guests process restaurant prices. As Huffman has observed from over thirty years in the restaurant business, customers do not treat all dollars on a check the same.

There are "menu dollars" and "manners dollars." A $20 salad plus a voluntary $4 tip does not feel like a $24 salad. The $20 is the price of the product; the $4 is a customary social payment. But a $20 salad with a mandatory 20 percent service charge collapses those categories. The restaurant has not avoided a price increase. It has moved the price increase to the bottom of the check, where it can feel like a surprise or a confiscated choice.

A final reality is that the locales that have recently moved to ax the tip credit have quickly come to regret the decision. Washington, D.C., prominently scrapped its tip credit in a 2022 ballot initiative. Under the new rules, the statutory minimum wage for waiters would rise from $5.35 per hour to the District's full minimum wage—a seemingly clear win for servers at first blush.

But on cue, D.C. experienced a nearly 5 percent decline in full-service restaurant and bar jobs in the wake of the tip credit's elimination. Tipped worker earnings reportedly dropped by $11.8 million, as many restaurants cut hours and waiters saw reduced tips. The results were so grim that the progressive D.C. Council voted to backtrack on the tip credit's full elimination.

In Chicago, which abolished the tip credit in 2023, 89 percent of restaurants have raised menu prices as a result of the higher labor costs, while 79 percent have cut worker hours, according to the Illinois Restaurant Association. As a result, Chicago's liberal city council also attempted to partially reverse course from its tip credit repeal. The effort was ultimately vetoed by Mayor Brandon Johnson.

The Living Wage for All Act purports to help workers by eliminating the tip credit. But real-world experience shows that the idea is undercooked. Higher mandated wages can look good on a pay stub while still leaving workers worse off if they lose tips, lose hours, or receive service-charge wages instead of qualified voluntary gratuities.

Policymakers should not weaken a compensation model that can deliver more after-tax dollars to workers. And restaurants that face higher wage mandates should not answer with mandatory fees that irritate customers and tax employees more heavily. The goal should be simple: Maximize the share of each guest dollar that reaches workers as after-tax take-home pay.

The best way to do that is to preserve the tip credit system and send the Living Wage for All Act back to the kitchen."

The Macroeconomic Effects of Tariffs

From Jeffrey Miron. 

"A recent study points out the dearth of historical research on the macroeconomic effects of tariffs, especially as a tool to analyze modern-day tariffs. The study

addressed this challenge by analyzing all major US tariff rate changes from 1840 to 2024. Drawing on historical research, congressional records, and statutes, we identified … 21 tariff rate changes, which we used to examine the macroeconomic effects of tariffs.

These examples

reveal that increasing tariff rates contracted the US economy. … tariff increases did not shield domestic industry despite their protective intent. Additionally, trade contracted markedly.

While tariffs might be expected to cause large price increases,

[o]verall prices increased [only] by around 0.5 percent at their peak. … [T]he simultaneous presence of supply-side inflationary pressures and demand-side pressures that slowed price growth could explain the muted overall change in aggregate prices.

To sum up, the

research indicates that tariff increases reduce domestic output and trade. While tariffs may protect some domestic industries, they ultimately reduce aggregate output, manufacturing activity, and the global competitiveness of US goods."