The Bureau of Economic Analysis reported today that the economy grew at a 1.5 percent annualized rate in the second quarter of 2012, which means that it has grown at an annualized pace well under 2 percent for the first six months of the year. EPI Research and Policy Director Josh Bivens said that “this is the sign of an economy stuck in neutral, as well as a sign that policymakers must act to provide more support to the economy if they want it to grow fast enough to start putting sustained downward pressure on today’s still-too-high unemployment rate.” Click here to read his full analysis and his additional blog post, in which he explains what today’s report could mean for the nation’s long-run economic health.
U.S. poverty rates higher, safety net weaker than in peer countries
In the new report U.S. poverty rates higher, safety net weaker than in peer countries, a preview of The State of Working America, 12th Edition, EPI economist Elise Gould and research assistant Hilary Wething put the U.S. experience with poverty in an international context. They find that the United States has higher poverty rates than its peer countries. In addition, at 16.2 percent of GDP, the United States has one of the lowest levels of social spending (which includes, for example, government expenditures on Medicare and Social Security). This is well below the peer-country average of 21.3 percent.
“The relatively low social expenditure in the United States partially explains the high poverty rate,” said Gould. “When it comes to alleviating the effects of poverty, the United States could learn from its peers.”
The report also reveals the sobering statistic that more than 1 in 5 children in the United States live in poverty (as measured by the share of children living in households with income below half the national median). This is more than twice the peer-country average of 9.8 percent. Click here to read more of the report’s findings.
Gould explained these striking findings to Associated Press reporter Hope Yen. “Estimates suggest that some 47 million people in the U.S., or 1 in 6, were poor last year. An increase of one-tenth of a percentage point to 15.2 percent would tie the 1983 rate, the highest since 1965. The highest level on record was 22.4 percent in 1959, when the government began calculating poverty figures,” wrote Yen using Gould’s analysis.
Workers 20 years of age and older would benefit most from proposed hike to federal minimum wage
Lawmakers in both the House and Senate have proposed increasing the federal minimum wage, including Rep. George Miller’s (D-Calif.) recent Fair Minimum Wage Act of 2012 (H.R. 6211) that seeks to raise it to $9.80 by July 1, 2014. Nationally, 87.9 percent of those who would be affected by increasing the federal minimum wage are at least 20 years old. This week’s Economic Snapshot illustrates that this share varies from a low of 77.1 percent in Massachusetts to a high of 92.4 percent in Florida (and 93.9 percent in the District of Columbia).
Economists ask president and congressional leaders to raise minimum wage
Noting the three years that have passed since the federal minimum wage was last raised, EPI organized a group of prominent economists, including a Nobel Laureate and a former Secretary of Labor, to appeal to the president and lawmakers to raise both the minimum wage and the tipped minimum wage, and to index the wage to protect against inflation. “Pursuing a higher minimum wage at this juncture will not only provide raises for low-wage workers but would provide some help on the jobs front as well,” the letter explained. Click here to read the full letter.
Media outlets, including U.S. News and World Report, Pittsburgh Post-Gazette, and McClatchy, have cited EPI’s research to explain how raising the minimum wage helps working families while lifting the economy.
- U.S. News and World Report: “Since low-wage workers tend to plow any extra wages right back into their local communities—whether that means getting their cars or homes fixed, going out for a meal with their families, or buying clothes for their growing kids—raising the minimum wage to $9.80 per hour over three years would boost economic activity by over $25 billion over those years. This would create about 100,000 jobs, according to the Economic Policy Institute.”
- McClatchy: “Democrats in Congress also are weighing in. Rep. George Miller, D-Calif., soon will introduce legislation to raise the federal minimum wage by 85 cents an hour for three straight years—taking it from $7.25 to $9.80 per hour—and then index it annually for inflation thereafter. Sen. Tom Harkin, D-Iowa, and Rep. Jesse Jackson Jr., D-Ill., already have introduced similar bills. The proposals would provide raises for about 28 million people, according to estimates by the nonprofit Economic Policy Institute.”
What’s at stake in the Social Security debate
In his new book, The People’s Pension: The Struggle to Defend Social Security Since Reagan, journalist Eric Laursen provides an in-depth history of the political and ideological clashes over Social Security, details the political threats to America’s national retirement system, and explains the steps policymakers should take to keep it healthy for future generations.
Laursen will be on hand to discuss and sign copies of his book at Washington’s Busboys and Poets (2021 14th Street, NW, Washington, D.C.) on Tuesday, July 31, at 6:30 p.m.
And from the EPI blog, Working Economics:
EPI Immigration Policy Analyst Daniel Costa explained how Congress holds the keys to fixing many of the labor policy issues presented by the H-2B visa guest worker program.