The coming year will bring significant change to Washington, and create opportunities to rebuild the economy in ways that are more sustainable and broadly shared. One of the fresh voices inside the administration will be that of Jared Bernstein, an EPI labor economist for 16 years, who was named to the new position of Chief Economic Advisor to the Vice President. We will miss Bernstein’s sharp and quick analysis, but are thrilled he will be part of the Obama-Biden economic team.
This new era, unfortunately, was made possible by a historic economic crisis that has exposed the flaws of free market fundamentalism. EPI was early in sounding the alarm over growing inequality, the collapse of industries providing good jobs, and the increasing risk and responsibility being shouldered by typical workers–all of which are now widely recognized as factors in the unfolding collapse. EPI has also put forward solutions, several of which are gaining traction in Congress and the administration.
Infrastructure funding, finally
A year ago, EPI proposed government investment in infrastructure maintenance and repair as a way to help create jobs and blunt the coming recession. Had those projects been started then, the unemployment picture might not look as bleak as it does today. EPI researchers have consistently argued for stimulus spending that creates good jobs, improves infrastructure, and helps meet our energy needs, outlining such proposals in EPI reports, conferences, and in Congressional testimony. As EPI President Lawrence Mishel argued in a new piece on the Huffington Post, it is even more urgent to start today. Mishel spoke to the Obama transition team on the subject this week, and submitted an updated policy memo on stimulus strategies by EPI Policy and Research Director John Irons and Policy Analyst Ethan Pollack. It appears likely that such a package, including repairs and maintenance for transportation and schools, will be passed by the new Congress in January.
Safe, secure retirement
Another EPI initiative in the news lately is the Guaranteed Retirement Account (GRA) plan, developed by Professor Teresa Ghilarducci for EPI’s Agenda for Shared Prosperity. The alternative to 401(k)s has been featured in outlets ranging from National Public Radio to Time magazine. In his review of Ghilarducci’s book, When I’m Sixty-Four, Clive Crook called it “excellent” and said the GRA plan was “a bold and workable proposal” (Chronicle of Higher Education, October 24, 2008). Financial columnist Martha Hamilton devoted her last days at the Washington Post to listing the failures of the 401(k) system and urging the need for GRA-like reforms: “What I like about Ghilarducci’s proposal is its boldness,” Hamilton wrote. “The idea that it is better to create a new model than to keep retrofitting a system that presents unacceptable risk for so many workers. Even though defined-contribution plans are being improved, the changes will come too late for some and will be of no use to the vast universe of workers who do not participate in retirement savings plans, many of whom work for small businesses or for themselves” (June 15, 2008). Read more about the attention this proposal generated.
EPI also contributed to the revived debate on globalization with a new book by economist Josh Bivens, Everybody Wins, Except for Most of Us, which shows that increased trade may have a net benefit for the U.S. economy, but that it also shifts incomes from the majority to a minority of highly skilled workers. The outcome is that a typical worker has lost $1,400 a year, on average, in wages because of slack demand in the labor market. These outcomes could be predicted by basic economic theory, and yet the downsides of global trade are rarely mentioned in the mainstream press, as evinced in a startling new study by Media Matters.
EPI research also played a role in the high-stakes debate over providing a bridge loan to the major U.S. automakers to prevent bankruptcy and collapse. Economist Robert Scott evaluated the options, and found that bankruptcy would cost up to 3.3 million jobs nationwide. This week’s Snapshot converted the information into a map showing the losses state-by-state. Within an hour of the announcement of a deal by the White House, EPI Vice President Ross Eisenbrey praised the deal and said, “failure to provide the bridge loan would have cratered the economy, which is already in a deep hole. The Big 3 automakers and the United Auto Workers have a tough road ahead, but with support from the Obama administration, they–and the communities they operate in–can survive and prosper.”