Everyone wins if the GOP health plan fails, even Republicans

OK, maybe it’s a slight exaggeration, but almost everyone—99 percent of Americans and all members of Congress—will win if the GOP health plan fails.

Let’s start with Congress. Democrats win if they vote against a bad, unpopular plan. Republicans, meanwhile, minimize their losses if they vote it down—even for the wrong reasons. Basically, incumbents in both parties are better off if it goes away, though Republicans have to go through the motions since they’ve bluffed that they had a better plan than “Obamacare” since day one.

Win or lose, it’s obvious that Republicans don’t want to drag out the process of deliberating the American Health Care Act (which Case Western Reserve University Professor Joseph White has aptly dubbed the “Unaffordable Care Act”). That’s why they rushed committee votes ahead of a Congressional Budget Office review while web traffic to analyses of the plan has been so heavy that it crashed the Center on Budget and Policy Priorities’ website.

Until recently, railing against Obamacare played well politically, and Democrats lacked the party discipline to defend the Affordable Care Act (ACA) against attacks, especially after a botched rollout. The ACA slowed—but did not stop or reverse—excess health cost growth in the United States, and also did a good job of spreading these costs among sick and healthy and poor and rich to make health care affordable for most Americans, if not quite the fundamental right enshrined in the World Health Organization’s constitution. (House GOP leader Paul Ryan seems unaware that risk pooling is the whole purpose of insurance.) The CBO report, released this afternoon, confirms that the GOP plan will cause millions to lose coverage—an estimated 14 million next year and a whopping 24 million by 2026.

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The economy will continue to improve, as long as policymakers don’t thwart its progress

President Trump has recently claimed that he inherited an economic “mess,” calling the American economy a “disaster.” From a broad macroeconomic perspective, this is simply untrue. The overall unemployment rate has been steadily falling and is essentially back to where it was immediately before the Great Recession started. Recent years have even seen improvements in labor force participation as the labor market continues to firm up. And while other measures, such as the prime-age employment-to-population ratio and nominal wage growth, continue to lag, they have still shown continued improvement over the last several years. To be clear, the economy is still weak and still hasn’t reached genuine full employment like it did in the late 1990s and early 2000s. Many workers and their families are still struggling, and the lower unemployment rate is only now beginning to translate into broad-based wage growth. But the economy is on track to recover, and there are no obvious signs of any underlying weakness that would lead to a recession in the near term. Inheriting a “mess” would accurately describe what President Obama was handed in January 2009—with the economy having lost 3.4 million jobs just in the previous six months and with unemployment having risen 3.4 percentage points over the previous 18 months. President Trump has clearly inherited something quite different—a stable albeit too-slow recovery that is on extremely firm ground.

It’s important to keep this steady improvement in mind as we assess economic progress moving forward. No policymaker should be allowed to claim credit for improvements that are simply a continuation of a trend. To that point, I’m going to lay out some key labor market indicators, discuss their recent trends, and assess their likely progress over the next two years.

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What to Watch on Jobs Day: Policymakers can’t claim credit for the continuation of a trend

Tomorrow’s jobs report is notable, because it will cover the first full month that President Trump has been in office. While the president has recently claimed that he inherited a “mess” of an economy, the fact is that the economy has been recovering slowly but steadily, and I expect the February jobs numbers to reflect that. The unemployment rate has been ticking down, the prime-age employment-to-population ratio has been improving, and wages grew across the board in 2016.

To be clear, there is still room for improvement. While we are on the road to full employment, we are not there yet. But the economy is on track and there are no obvious signs of any underlying weakness that would lead to a recession. It’s important to keep this steady improvement in mind as we assess economic progress moving forward. No policymaker should be allowed to claim credit for improvements that are simply a continuation of a trend. Conversely, failure to deliver still lower unemployment in the coming years should be seen as a policy mistake—either by the Federal Reserve or by fiscal policymakers.

The average unemployment rate over the last three months was 4.7 percent, a fall of 0.3 percentage points from the average rate from the same three months last year (5.0 percent). At that rate, the unemployment rate will hit 4.0 percent sometime in 2019. This is not an unrealistic aspiration. The U.S. economy sat at roughly 4.0 percent for two solid years in 1999 and 2000, and policymakers should be aiming for that level today. Only when the labor market is tight enough to deliver sustained rising wages for all workers—regardless of gender, race, or educational attainment—should we say our work is done. Simply put, we want an economy where worker wages are rising, and in order to get there employers need to be competing for workers rather than workers competing for jobs.

Janet Yellen, not Donald Trump, is far more likely to decide whether or not we reach genuine full employment in 2017

In recent weeks, a number of stories have been written about the Trump administration’s excessively rosy projections for economic growth in coming years. And three weeks ago, Federal Reserve Board Chair Janet Yellen testified before Congress about the likely path of monetary policy over the next year. The Trump administration forecasts and Fed decisions are deeply intertwined. While the Trump administration’s precise forecasts are clearly unrealistic in the long-run, we should be clear in noting that the next couple of years could easily see a substantial pickup in economic growth. If this happens, however, we will have Janet Yellen and her colleagues at the Fed to thank, not Donald Trump.

The reason is straightforward: 2017 is the year when the Fed will finally decide whether or not to guarantee genuine full employment by giving the economy “room to run” by not raising rates aggressively. While Fed policy largely sputters when trying to spur growth with lower short-term interest rates, raising rates does reliably slow growth. So for all the chatter about the importance of Fed policy in recent years, their attempts to spur growth with low short-term rates were often futile. But once they firmly decide to start reining in growth with higher rates their policy choices will have real bite.

The metaphor used to describe the problem with using low rates to boost growth was that you can’t “push on a string”. Essentially, the Fed can lower rates to try to induce businesses and households (and even governments) to borrow and spend more, but they cannot force this spending to actually happen. If governments ignore low rates and indulge in spending austerity for ideological reasons, or if households do not respond to low rates because their housing wealth had been torpedoed and hence home refinancing is impossible, or if businesses do not take advantage of low rates to build new factories because they do not have customers for what their current factories are producing, then the Fed cannot do much about any of this.

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It’s time we acknowledge women’s contributions to the economy—and how much bigger a role they would play in a more inclusive economy

Women hold 49.5 percent of payroll jobs. The health of the female workforce is hugely important to the health of the overall labor force. And yet—in crucial ways—lawmakers in the United States have avoided commonsense policy changes that have been shown to make it easier for women to balance paid work and their still disproportionate share of responsibilities at home.

Policies like paid parental leave and subsidized child care increase parental labor force participation, which would boost the economy. Many of our peer nations have such policies, and, not surprisingly, their employment rates are much higher than ours. The figure below shows just how far U.S. women have fallen behind some of our international peers. The graph shows the share of women age 25–54 with a job between 1995 and 2015 in Germany, Canada, Japan, and the United States. While women’s prime-age employment-to-population ratio (EPOP) rose over that 20-year period in those peer nations, it actually fell in the United States.

Figure A

The share of prime-age women with a job has fared worse in the U.S. than in peer countries: Employment-to-population ratio of women workers age 25–54, select countries, 1995–2015

Canada Germany Japan United States
1995 69.434551%  66.360158%  63.233624%  72.189196% 
1996 69.577146% 67.220440% 63.701741% 72.770073%
1997 70.971110% 67.399584% 64.566038% 73.541046%
1998 72.183646% 68.944387% 64.036077% 73.642970%
1999 73.245982% 70.253128% 63.551051% 74.147991%
2000 73.944309% 71.210539% 63.582090% 74.213847%
2001 74.297867% 71.607431% 64.124398% 73.421299%
2002 75.348504% 71.845950% 63.863976% 72.259684%
2003 76.000458% 71.981067% 64.407421% 72.006189%
2004 76.720415% 72.129055% 65.028791% 71.848458%
2005 76.488663% 70.969949% 65.733178% 71.963537%
2006 76.984912% 72.647765% 66.614235% 72.504467%
2007 78.190906% 74.045933% 67.370518% 72.501768%
2008 78.008148% 74.744854% 67.495987% 72.301570%
2009 77.114622% 75.420875% 67.595960% 70.208609%
2010 77.075022% 76.320711% 68.157788% 69.343654%
2011 77.207691% 77.892216% 68.459240% 68.967922%
2012 77.710148% 78.235789% 69.161920% 69.196894%
2013 78.090883% 78.625264% 70.773639% 69.253713%
2014 77.444969% 78.839200% 71.835052% 69.997790%
2015 77.541653% 79.212303%  72.704612%  70.323786% 
ChartData Download data

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Source: EPI analysis of OECD Labour Force Statistics

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Federal contract workers need the protection of the Fair Pay and Safe Workplaces rule

Last week, Senator Warren, joined by her colleagues Senator Murray and Senator Sanders, asked Attorney General Sessions to open a criminal investigation into the deaths and serious injuries of workers employed by VT Halter Marine, Inc., a shipbuilder with United States Navy contracts. Senators argue that, while the Occupational Safety and Health Administration (OSHA) has assessed penalties against VT Halter, the fines “are clearly not a sufficient deterrent for VT Halter.” The senators’ request follows a report from the Center for Investigative Reporting documenting VT Halter’s history of violating workplace safety regulations. Despite the company’s track record, it has continued to receive hundreds of millions of dollars in federal contracts.

Today, the Senate is voting on a resolution of disapproval to block the Obama administration’s Fair Pay and Safe Workplaces rule that would help ensure that law-breaking employers, like VT Halter, do not receive federal contracts. The rule requires contractors to disclose violations of federal labor and employment laws, including the Occupational Safety and Health Act, and directs agency contracting officials to consider a company’s record of violations in awarding federal contracts. President Trump has already stated that he will sign the resolution and block the rule. This, as he announced his intention to increase military spending, leading to hundreds of millions in taxpayer dollars going to federal contractors for the development of new ships, planes, and technology in support of our military. By blocking the rule designed to reform federal contracting, the president and congressional Republicans have essentially ensured that taxpayers will continue to support contractors with a history of violating worker protection laws and regulations.

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Trump administration wants to delay rule protecting savers from conflicted investment advice

Following a directive from President Trump, the Labor Department has proposed a two-month delay in implementing an Obama administration rule requiring financial professionals to act in clients’ best interests when recommending investment products or strategies to people saving for retirement (known as the “fiduciary rule”). Under the proposed extension, the rule would take effect June 9 rather than April 10. The public has 15 days to submit comments on the delay.

The rule was six years in the making and has survived three court challenges backed by the financial services industry, which stands to lose an estimated $17 billion a year from ending predatory practices by brokers and other financial professionals passing themselves off as disinterested advisors. It incorporates input from four days of public hearings, over 3000 public comment letters, and more than 100 stakeholder meetings.

Unbeknownst to most people, it is currently legal for financial professionals to recommend higher-cost investment products or rollovers from 401(k)s to higher-cost IRAs when similar but lower-cost options are available, without disclosing that they are working on commission rather than making recommendations that are in their clients’ interest.

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Chamber of Commerce’s recommendations to the NLRB would roll back workers’ rights to the Stone Age

Yesterday, the Chamber of Commerce released ten recommendations to “fix” the National Labor Relations Board (NLRB). The Chamber’s policy suggestions are recycled positions that have been the subject of the nearly two dozen hearings on the agency since Republicans assumed control of the House in 2011. Arguing that President Obama’s board “overturned over 4,500 years of precedent,” the Chamber advances a platform that would roll back workers’ rights to the Stone Age.

Since the NLRB issued its decision in Specialty Healthcare, clarifying the standard for determining an appropriate bargaining unit, corporate special interests have assailed it as inviting the proliferation of “micro” units that will allow unions to gerrymander workforces. The Chamber echoes this argument in advocating for the NLRB or Congress to overturn the decision. However, the NLRB’s standard for determining an appropriate bargaining unit in Specialty Healthcare has been upheld in all seven U.S. Courts of Appeals in which it has been challenged. Data on the median size of bargaining units disproves the argument that the standard would lead to the proliferation of so-called “micro-units.” Why then are the Chamber and other corporate interest groups committed to doing away with the Specialty Healthcare standard? They want employers that are committed to defeating an organizing campaign to be able to manipulate who is in a bargaining unit to make it harder for workers to organize. The National Labor Relations Act (NLRA) directs the NLRB to allow employees to organize into units that assure employees “the fullest freedom in exercising the rights guaranteed by this Act.” The standard in Specialty Healthcare does just that.

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Congress is laser-focused on rolling back protections for workers, consumers, and the environment

This week, the House of Representatives will consider three bills that further advance a deregulatory agenda that jeopardizes worker safety, consumer protections, and our environment. The House has already passed several bills this session that limit agencies’ ability to regulate. The trio of bills on the House floor this week includes the Regulatory Integrity Act of 2017, the OIRA Insight, Reform, and Accountability Act, and the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act. The House will also vote on additional Congressional Review Act resolutions to block existing rules, including an Occupational Safety and Health Administration (OSHA) regulation that enables OSHA to hold employers accountable for failing to keep accurate records of workplace injuries and illnesses. It is clear that Congress is laser-focused on rolling back regulatory protections and making it as hard as possible for agencies tasked with safeguarding our nation’s workers to do their job.

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Trump’s Plan for Trade: The last thing we need is more trade deals

President Trump is expected to outline plans for trade policy development in his speech to a joint session of Congress. He outlined some of those plans in remarks to the Conservative Political Action Conference, where he said “We’re going to make trade deals, but we’re going to do one-on-one, one-on-one, and if they misbehave, we terminate the deal.”

The United States had a global current account deficit (the broadest measure of all trade in goods, services and income) of $470 billion (2.5 percent of GDP) and a goods trade deficit of $750 billion (4 percent of GDP) in 2016. Meanwhile, a handful of countries have developed large, structural trade surpluses that reached $1.2 trillion, which have effectively transferred millions of manufacturing jobs from the United States and other countries to these surplus countries—have hampered economic recovery in much of the globe—and now threaten to destabilize the global economy again in coming years if not reduced.

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The Affordable and Safe Prescription Drug Importation Act is what real health reform looks like

The battle over the future of the Affordable Care Act (ACA) has clearly begun in earnest. A striking feature of this debate is the disconnect between commonly cited complaints about the ACA and prescriptions offered by Republican lawmakers. For example, the most common complaint about the ACA’s exchange-based insurance policies is that they are too “thin”—deductibles, co-pays, and other cost-sharing burdens are too high. This complaint is understandable. For people used to getting employer-sponsored insurance (ESI) who find themselves now buying in the exchange, it is true that these plans are thinner than most ESI plans. But we should remember that the pre-ACA individual market for insurance offered much less comprehensive plans that required much larger out-of-pocket costs. For example, fully half of the plans offered on the individual market before the ACA would not be allowed today precisely because they demanded too-costly out-of-pocket exposure.

Fixing the problem of too-high exposure to out-of-pocket costs is straightforward: the exchange subsidies for premiums and cost-sharing could be increased. There would be plenty of members of Congress—mostly (or exclusively) Democratic—who would sign onto this. The obvious objection to this is that it costs taxpayer money. This, in turn, begs the question of are there any policy changes that could both lower the cost of health care to consumers and also the tax bills of households?

Luckily, there are such policies. Senator Bernie Sanders and co-sponsors are introducing the Affordable and Safe Prescription Drug Importation Act. This would instruct the HHS Secretary to put forward regulations allowing the importation of qualifying prescription drugs from Canadian sellers. In two years, importation from other advanced countries would also be allowed. The bill sets high standards to insure that only safe and effective prescription drugs could be imported, and there would be strict controls following the drugs into the United States to insure their proper dispensing.

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Why records matter to worker safety

Another week and Congressional and White House attacks on worker rights and safety continue. Here’s another proposed Congressional action guaranteed not to make headlines, but which will nevertheless have a damaging impact on worker safety.

Last week, Rep. Bradley Byrne (R-Ala.) introduced a “resolution of disapproval” under the Congressional Review Act (CRA) to overturn the “Volks Rule,” which allows the agency to continue prosecuting recordkeeping violations as it had done in the first 40 years of its existence.

Overturning the Volks Rule will result in more workers being injured, and it will penalize responsible employers.

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Trump is right to criticize NAFTA—but he’s totally wrong about why it’s bad for America

This article was originally published in Quartz.

Donald Trump’s promise to renegotiate or tear-up the 1994 North American Free Trade Agreement was a major reason why he won the support of working class voters in the Midwestern states that were crucial to his election. It’s also a trap.

As US president-elect, Trump quickly scored some points with his Rust Belt constituency after claiming to get the Carrier and Ford corporations to reduce the number of jobs they are sending to Mexico. He also clearly exaggerated the effect of his personal persuasiveness: Carrier was moved by a $7 million tax break from the state of Indiana and Ford might well have made its decision before Trump intervened. In any event, as the Wall Street Journal reports, other companies, such as Rexnord, Caterpillar, and Nucor continue to send jobs south of the border. Renegotiating NAFTA is therefore the first real test of Trump’s pledge to create good new jobs by negotiating better trade deals.

Will he deliver on this pledge? No. But the reason is not, as the conventional economic wisdom has it, because outsourcing work to low-wage countries is the inevitable result of immutable global forces that no president can reverse. The problem for American workers is not international trade, per se. America has been a trading nation since its beginning. The problem is, rather, the radical new rules for trade imposed by NAFTA—and copied in the myriad trade deals signed by the US ever since—that shifted the benefits of expanding trade to investors and the costs to workers.

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Move over, Congress: Let states do the right thing to help working families save for retirement

78 percent of baby boomers are more afraid of retirement than of death. Sound extreme? Not really. The median retirement savings for near-retirement households is $14,500. At least half of households are at risk of having insufficient resources to maintain themselves into retirement. And four in 10 people age 56–61 have nothing at all saved for retirement.

How can this be? There are a number of reasons, including the demise of private and public pensions and growing income inequality, which has shrunk the capacity of workers to save. But one cause is fairly easy to fix: millions of people do not have access to 401(k) plans or other savings options at their workplace.

What if people who wait tables, wash cars, take care of children, or perform other low-wage jobs for small businesses—which often don’t offer 401(k) savings plans—could have money taken out of every paycheck and deposited into a low-cost retirement savings account operated through the state government? Five states have enacted plans that are making this possible, and 28 states are at various stages of considering such plans. If all of these states did enact these laws, 63 million people could have access to retirement savings options.

This was the goal of the Obama administration, which put in place regulations to help states that wanted to provide retirement savings options. Though some states had set out on this path before, this new policy that made it easier and safer for states to offer these plans, paved the way for this positive development in the states.

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Paul Booth: A tireless advocate for working people

EPI executive board member Paul Booth has been and continues to be a tireless advocate for American working people, and, in fact, for working people all over the world. Even though he is stepping down from his day job at AFSCME, we trust that Paul’s long career of union organizing and advocating for workers and social justice is far from over.

As a trusted advisor to EPI, Paul has served an important role—often encouraging us to take risks and see the long-game. He never stops pushing to make us more effective, to work harder, to make a bigger difference in the world and in the lives of the America’s working families.

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Heads up—the GOP is helping Wall Street pick your pocket

While the headlines are dominated by White House leaks and personnel scandals, the Trump administration and Republicans in Congress have been quietly helping the financial industry siphon off your retirement savings. First, the administration announced that it was reviewing a rule scheduled to take effect in April requiring financial advisors to work in their clients’ best interests. Yes, you read that correctly. Some people presenting themselves as financial advisors can now legally steer you to rip-off investments, a glaring problem the Obama administration addressed in a commonsense rule six long years in the making.

The rule, backed by the Consumer Federation of America, Senator Elizabeth Warren, Vanguard founder John Bogle, and others, applies to brokers, plan consultants, and others advising participants in 401(k)-style plans and IRAs who don’t already adhere to a fiduciary standard. Among other things, it prohibits financial professionals from pretending to offer disinterested retirement advice while working on commission and from steering retirement savers to higher-cost investments when similar but lower-cost options are available. Importantly, the rule protects job-leavers from being lured into rolling over their pensions and 401(k)s into higher-cost IRAs, at a time in their life when many people are vulnerable to bad advice.

How can anyone argue against the fiduciary rule with a straight face? The financial services industry counters that if some clients don’t get bad advice, they may not be able to afford advice at all. This is like dietitians arguing that clients may not be able to afford nutritional advice if it’s not paid for by Coca Cola. The industry also says the rule could put some people out of business, which isn’t reason to oppose it—it goes without saying that we shouldn’t prop up a business model where survival is dependent on fleecing savers.

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Brad DeLong is far too lenient on trade policy’s role in generating economic distress for American workers

Brad DeLong posted a widely-read piece on Vox a couple of weeks ago effectively exonerating globalization and trade policy from accusations that it has contributed to economic distress for low- and moderate-wage American workers. He doubled-down on specific claims this week in a piece at Project Syndicate. Below I’ll assess some of his claims in a bit of detail, but here’s a “too-long; didn’t read” checklist of how I grade the accuracy of some of his main claims:

  • Putting pen-to-paper on trade agreements contributed nothing to aggregate job loss in American manufacturing. This is almost certainly true.
  • The aggregate job loss we have seen in manufacturing is due to automation plus declining domestic demand for manufactured goods, period. This is mostly false. Trade deficits, especially with China in the last 15-20 years, have contributed significantly to overall manufacturing job-loss..
  • The source of these rising trade deficits is mostly an overvalued U.S. dollar, which has nothing to do with trade policy. It’s true that an overvalued dollar is what’s behind rising trade deficits, but saying that has nothing to do with trade policy is semantics. Call it macroeconomic policy if you want, but the way an overvalued dollar hurts Americans is through its impact on trade flows.
  • The trade agreements we have signed are mostly good policy and have had only very modest regressive downsides for American workers. This is false.
  • Globalization writ large has been tough on some American workers and policymakers have failed to compensate losers. This is true, but I think DeLong underestimates the number of losers and the size of their losses.

So, let me dive deeper into each one of these arguments:

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The racial wealth gap: How African-Americans have been shortchanged out of the materials to build wealth

Wealth is a crucially important measure of economic health. Wealth allows families to transfer income earned in the past to meet spending demands in the future, such as by building up savings to finance a child’s college education. Wealth also provides a buffer of economic security against periods of unemployment, or risk-taking, like starting a business. And wealth is needed to finance a comfortable retirement or provide an inheritance to children. In order to construct wealth, a number of building blocks are required. Steady well-paid employment during one’s working life is important, as it allows for a decent standard of living plus the ability to save. Also, access to well-functioning financial markets that provide a healthy rate of return on savings without undue risks is crucial.

Failures in the provision of these building blocks to the African-American population have led to an enormous racial wealth gap. The racial wealth gap is much larger than the wage or income gap by race. Average wealth for white families is seven times higher than average wealth for black families. Worse still, median white wealth (wealth for the family in the exact middle of the overall distribution—wealthier than half of all families and less-wealthy than half) is twelve times higher than median black wealth. More than one in four black households have zero or negative net worth, compared to less than one in ten white families without wealth, which explains the large differences in the racial wealth gap at the mean and median.  These raw differences persist, and are growing, even after taking age, household structure, education level, income, or occupation into account.

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If Trump follows Walker’s model, he will betray his base

Wisconsin Governor Scott Walker recently visited the White House, prompting speculation that the Trump administration might be looking to follow Walker’s model of anti-unionism. But following Walker’s model means betraying the very people who put President Trump in office: frustrated working-class Americans.

In 2011, at the urging of the billionaire Koch brothers, Walker pushed through a law that effectively eliminated the right to collective bargaining for state and local government employees. School teachers and custodians, child case workers, and road repair crews all lost the right to bargain for decent wages and benefits. Walker portrayed his action as standing up for hard-working nonunion taxpayers in the private sector who were being bled dry by the Cadillac pensions of fat and lazy public employees. In fact, however, Walker’s bill was just one more part of a playbook written by corporate lobbyists to make the rich even richer and our economy even more unequal.

Public employees are working- and middle-class, and all of them suffered dramatic health insurance cutbacks. But when the state cut people’s benefits, what did they do with the savings? They certainly didn’t give it to hard-working families struggling to make ends meet in the private sector. Instead, more than half the savings were doled out in tax cuts to the richest 20 percent of the population. While Walker gave the rich— those who needed the least help— an extra $680 per year per person, those struggling to get by in the poorest fifth of Wisconsin families got less than $50 each. Walker’s model is not taking from the haves and giving to the have-nots: it’s taking from working people and giving to the elite.

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Valentine’s Day is better on the west coast (at least for restaurant servers)

Valentine’s Day is next week, and with it one of their busiest days of the year for America’s restaurant workers. For the servers and bartenders who rely on tips for the bulk of their income, the influx of couples celebrating romance with extravagant meals and expensive bills holds the promise of a nice payout. Unfortunately, for restaurant staff in most states, their windfall may not be as big as it seems. In fact, by the end of the week, their Valentine’s Day pay may turn out to have been nothing more than minimum wage. This is because in 42 states and the District of Columbia, there is a separate lower minimum wage for tipped workers, allowing restaurants (and other employers of tipped workers) to subtract a portion of their employee’s tips from the base wage paid by the house. In 18 of these states, restaurants can pay tipped workers as little as $2.13 per hour so long as—over the course of the week—the combination of tips plus the base wage averages out to at least the regular minimum wage.

Setting aside the fact that in almost every state the regular minimum wage is far too low, consider the challenges this separate lower minimum wage creates for tipped workers. The bulk of their paycheck is up to the whims of the customer, and research has shown that quality of service often has little to do with what the customer chooses to tip. Weekly, let alone monthly, income is harder to anticipate, making planning and budgeting more difficult. (Imagine trying to evaluate a mortgage offer or a car loan payment schedule if you have little ability to forecast your monthly income.) Racial bias has been shown to affect tipping, and worker advocacy groups argue that the pressure to ensure customer satisfaction, particularly in a workplace where customers are consuming alcohol, forces restaurant workers to suffer high rates of sexual harassment. Furthermore, although the law requires that employers make up the difference so that tipped workers receive at least the minimum wage, this does not always happen in practice.

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Puzder hearing scheduled—now senators have an opportunity to show where they stand

President Trump’s nominee for Secretary of Labor, Andrew Puzder, has a new date for his confirmation hearing—February 16, a week from tomorrow. This marks the fifth time the Senate Committee on Health, Education, Labor, and Pensions (HELP) will attempt to consider Puzder’s nomination. While much speculation surrounds the repeated delays, today’s announcement makes one thing clear—President Trump and Senate Republicans are doubling down on a nominee whose policy positions are bad for U.S. workers. Now, senators will have an opportunity to show where they stand.

When HELP Committee members finally get a chance to question Puzder on his positions and plans for the Labor Department, they should demand that he explain his views on minimum wage. Puzder has claimed that increasing the minimum wage costs jobs; senators should ask him how he explains that California has a higher minimum wage than the federal minimum wage yet has seen faster economic growth—including in the restaurant industry—than the country as a whole. Senators should ask Puzder if he knows how many Americans were killed at work before the Occupational Safety and Health Act was enacted in 1970. Does he know how many workers are killed each year now, in an economy twice as big? Still far too many, but fewer than before—demonstrating the importance of meaningful workplace safety standards. Finally, senators should demand that he explain his own company’s record of wage and hour and OSHA violations.

President Trump’s insistence on advancing Puzder as his nominee for labor secretary reveals that his agenda is to pursue an economy that works great for corporate owners and those at top, but does not work for low-and middle- income families. After decades of wage stagnation and weakened worker protections, we need a labor secretary who will advocate for a strong minimum wage and meaningful worker protections. The Senate now has a chance to demand that workers get a secretary who will guard their rights and advance an agenda that works for them. We will see if they agree that America’s workers deserve better than Mr. Puzder.

Increased U.S. trade deficit in 2016 illustrates dangers of malign neglect of the dollar

The U.S. Census Bureau reports that the annual U.S. trade deficit in goods and services increased slightly from $500.4 billion in 2015 to $502.3 billion in 2016, an increase of $1.9 billion (0.4 percent). This reflects a $14.4 billion (5.5 percent) decline in the services trade surplus and a $12.5 billion (1.6 percent) decrease in the goods trade deficit. However, the small increase in the overall goods and services trade deficit, and its downward trend over the past decade, mask important structural shifts in U.S. trade.

Falling petroleum prices and rising domestic petroleum production and exports have obscured surging imports of nonpetroleum goods (NPGs) —the vast bulk of which are manufactured products—into the United States since 2013. The trade deficit in NPGs, which has the most impact on workers and communities, has increased sharply. The U.S. trade deficit in petroleum goods declined by $22.7 billion (32.8 percent) in 2016, while the trade deficit in NPGs increased by $16.4 billion (2.5 percent), continuing the sharp run-up in the NPG trade deficit since 2013.

The U.S. trade deficit in NPGs is now at an all-time high (shown with dark blue bars in the figure below) while the overall U.S. balance of trade in goods and services (shown with light blue bars) has fallen sharply from a peak of $761.7 billion in 2006 to $502.3 billion in 2016—obscuring the much larger (and more important) trade deficit in NPGs.

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No wage thief should be labor secretary

By now, anyone following Andrew Puzder’s nomination to be the secretary of labor knows that the restaurant chain he leads has a long history of cheating its workers out of wages they earned. Not just the franchisees that own the bulk of the Carl’s Jr. and Hardees restaurants, but CKE itself, the franchisor corporation, has been found guilty of wage theft and compelled to pay back tens of thousands of dollars of wages stolen from workers earning poverty level wages. The U.S. Department of Labor, which he seeks to head, is the agency that busted Puzder’s corporation.

Today, the New York Times reports that Puzder violated immigration laws, too, not in his role as CEO of the restaurant chain, but in his private life. For years, Puzder employed a housekeeper who was not authorized to work in the United States, and also failed to pay employment taxes.

Puzder wants to be the chief enforcer of the nation’s labor laws, but his history of flouting those laws makes it clear that he is unfit for the job. Puzder’s violations of immigration law make him a strange choice to be a cabinet officer in President Donald Trump’s administration, given the president’s near hysteria about the presence of undocumented immigrant workers in the United States.

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Don’t fix what isn’t broken: Why Betsy DeVos’ radical agenda for U.S. public education makes no sense

As the Senate prepares to vote on the nomination of Betsy DeVos, President Trump’s pick for secretary of education, it is critical to confront a key (but not always explicit) assumption. DeVos asserts that “U.S. schools are failing,” and many senators assume that to be the case. But is this true? And if so, in what ways? Answering these questions is very important, as strategies to fix failing schools should be very different from those designed to improve schools that are already doing well.

A new analysis of changes in U.S. student performance over the past decade strongly suggests that our nation’s schools are not failing. Rather, they have made real progress on two related issues we care deeply about: boosting student achievement and closing race-based achievement gaps. This analysis, by economists Martin Carnoy of Stanford University and EPI’s Emma Garcia, uses a reliable and valid gauge—reading and math scores on the National Assessment of Educational Progress (NAEP), commonly known as “the Nation’s Report Card.”

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My alma mater has its priorities all wrong

The University of Michigan and most of its alumni long for a national champion football team, or at least a team that can beat Ohio State. What the school and its publicly-elected Regents are willing to pay to get such a team is alarming, especially when compared with its willingness to pay for scholars and researchers.

Michigan is committed to paying head coach Jim Harbaugh’s top three assistants $1 million each per year. Harbaugh got an eye-popping $7 million contract to leave the NFL and restore glory to Michigan’s wolverines. But these are millionaire assistant coaches.

The Associated Press and the Detroit Free Press report that the defensive coordinator, Don Brown, and the offensive coordinator, Tim Drevno, have been retained with contracts worth more than $10 million combined over the next five years. The passing coordinator, Pep Hamilton, was lured from the Cleveland Browns with a four-year, $4.25 million deal.

Michigan is a state whose biggest city’s infrastructure is nightmarishly bad, whose school buildings are crumbling, and which only recently emerged from bankruptcy. Another large city, Flint, is in receivership and saved money by cutting corners on the safety of its water supply, leading to the poisoning of thousands of children and other residents.

But the state can afford to make its top school’s assistant coaches millionaires.

Why can’t it then pay overtime to its postdoctoral researchers or give them raises to $47,476 as it planned to before a federal judge blocked the Department of Labor’s overtime rule from taking effect? The University of Michigan was a leader in the campaign to fight the overtime rule, claiming it couldn’t afford to pay its PhD researchers for the 15-20 hours of overtime they work in an average week. University officials claimed U of M couldn’t even afford to give the postdocs raises of $3,000-$5,000 to put them above the threshold that permits exemption from overtime pay.

But it can afford to make millionaires of the assistant coaches.

This says something appalling about how far the University of Michigan and its current leaders have strayed from the mission of the university, which is one of the oldest public research universities in the nation. They value winning football games far more than they value the core research done by the university’s young scholars. They have little respect for either the researchers or the work they do.

As an alumnus of the University of Michigan Law School, it makes me sick.

Read more on this topic: Universities oppose paying their postdocs overtime, but pay coaches millions of dollars.

What to Watch on Jobs Day: President Trump inherits a slowly but steadily recovering economy

When the January jobs numbers come out on Friday, I expect we will see an economy that is continuing to slowly, but steadily recover from the Great Recession. By all measures, the labor market is on the road to (but not yet arrived at) full employment. Further, the economy the Trump administration has inherited shows no obvious risks like a wildly overvalued stock or housing market, as such there’s no particular reason to expect it to be thrown off track.

Regardless of which party is in power, we will continue to track the state of the labor market and what it means for people across demographic and educational and socioeconomic circumstances on these pages. Up-to-date and accurate reporting is only possible through the work of the Bureau of Labor Statistics (BLS). The latest BLS commissioner, Erica Groshen, has ended her four year term, during which she continued the proud tradition of both Republican and Democrat BLS commissioners in overseeing high-quality, transparent, and independent data collection and analysis. BLS data allow researchers, policymakers, the media, and consumers to better understand and interpret the goings on of the labor market. The statistics generated by the BLS allow us to form a clear picture of the economy.

Over the recovery, we’ve continued to see confirming evidence from multiples data series that the economic recovery is widespread but incomplete. Recently, there has been talk about what the “true” unemployment rate is. The BLS has an “official” unemployment rate, which is the number of people classified as unemployed—if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work—divided by the number of people in the labor force (the sum of the employed and unemployed). If you want to get more details on this, see BLS’s very clear page of definitions. This “official” measure is also referred to as the U-3. But the BLS actually has six different measures of labor market underutilization, U-1 through U-6.

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Fed likely to stand pat today on interest rates: Right call, but important to understand why

The Federal Reserve is widely expected to keep the interest rates it controls unchanged today, after raising rates at its last meeting of the Federal Open Market Committee. This decision would be welcome. It’s important, however, to not just applaud the decision, but to explain why it was the right one: Much of the commentary in the run-up to today’s meeting stresses “uncertainty” as the reason for the Fed’s expected decision. This view implicitly takes the Fed’s main job as calming jittery financial markets.

In reality, the most compelling reason for the Fed to stand pat and give the economy “room to run” (in Chair Yellen’s phrase) is not found in financial markets, but in labor markets. In these labor markets there are no signs at all that wage growth is accelerating at a rate that would spur overall price inflation over the Fed’s 2 percent target. Some measures of wage growth have seen some good pick-up in recent months, but even these remain below what wage growth should be in a healthy economy. Meanwhile, some recent measures of wage growth show continued flatness, and are putting a substantial downward drag on overall price growth. Last week’s data on gross domestic product showed that on the Fed’s key price barometers—“core” prices for consumption goods (excluding volatile food and energy)—saw inflation decelerate rapidly, to 1.3 percent over the last three months.

This is inflation far below the Fed’s stated 2 percent long-run target. Consistently missing the inflation target from below is actually a more-damaging mistake than allowing inflation to exceed the target for a short spell. And until there are signs that labor market tightening has led to genuine full employment that is generating nominal wage growth of 3.5 percent consistently, it is not time to raise interest rates.

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Trump leaving LGBTQ nondiscrimination executive order in place signals approval of reasonable mandates for federal contractors

Last night, the White House said that President Trump would leave in place the Obama administration’s executive order that prohibits federal contractors and subcontractors from discriminating against employees on the basis of sexual orientation or gender identity in hiring, firing, pay, promotion, and other employment practices.

It goes without saying that not revoking workplace protections for LGBTQ workers is an extraordinarily low bar for supporting LGBTQ workers. A president who truly supported LGBTQ workers would be pushing for broader legislation that prohibits discrimination, like the 2015 Equality Act, which would provide clear, fully-inclusive non-discrimination protections for LGBTQ people.

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Trump’s jobs goals would require massive immigration or forcing elderly Americans to work at unprecedented rates

On the White House website, the Trump administration announced a new goal of adding 25 million new jobs over the next ten years, an extraordinarily audacious, or simply innumerate, target. If their plan were successful, it would require raising employment rates well above what we can realistically hope for given the aging of the population and historical evidence on these rates. Now I happen to love optimistic agendas, but to the extent that this goal is not fantasy based on “alternative facts,” it can mean only one of two things: either the United States needs an enormous influx of immigrants, or a much higher share of the elderly population needs to be put to work.

The addition of 25 million new jobs would bring the number of employed from 152 million to about 177 million workers, which the administration hopes to achieve in ten years. Note that this is a very generous interpretation of the administration’s target, because the Congressional Budget Office (CBO) already projects 2027 employment to be higher by about 8 million, largely due to population growth. In other words, CBO’s projections imply that business-as-usual management of the economy would accomplish one-third of the administration’s goal without any extra effort. Normally when evidence-based policymakers talk about potential new jobs they want to create, they frame this in terms of jobs above already-established baselines. But, let’s grade the Trump proposal on the generous curve I noted above.

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8 years of the Lilly Ledbetter Fair Pay Act

This Sunday, January 29th, marks the eighth anniversary of the Lilly Ledbetter Fair Pay Act, which helps to prevent pay discrimination. While there is no silver bullet to end gender and racial pay disparities (though we have some ideas here and here), ensuring that workers can use the legal system to receive equal pay for equal work is crucial. The Lilly Ledbetter Fair Pay Act lets workers do just that, by giving them the right to file suit 180 days after the last pay violation and not only 180 days after the initial pay disparity.

The research is conclusive: pay differentials exist and sometimes to a grave degree. Women of color face an extra penalty in the labor market and that shows up in their significantly lower wages. Typical black women are paid 65 cents on the typical white male dollar, while Hispanic women are paid a mere 58 cents on the dollar.

Furthermore, wage gaps are a problem across the wage distribution and among workers of every education level. As you can see in the chart below, women are paid less than men at every level of education. Among workers with a high school degree, women are paid 78 percent of what men are paid (or 78 cents on the dollar). Among workers who have a college degree, the share is 75 percent, and among workers who have an advanced degree, it is 73 percent.

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