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EconomicPolicyInstitute November 10, 2011

EPI at 25: Celebrating a
Quarter
Century of Success

EPI was among the first to highlight the long-term consequences of the extended unemployment that arose during the economic downturn and continues throughout the recovery.

In 2009, EPI continued to call attention to this issue with a series of reports that explained the scarring effects of long-term unemployment. Today, EPI continues to argue for additional policies to combat high unemployment.

Meager improvement in job-finding prospects

Last Friday’s Job Openings and Labor Turnover data release from the Bureau of Labor Statistics offered further proof that there are not enough jobs for the nation’s unemployed workers. With a meager increase of 225,000 job openings in September, the latest job openings numbers did little to reduce the imbalance between job openings and unemployment. At 4.2-to-1, September job-seeker’s ratio (the ratio of unemployed to job openings) means that for more than three out of four unemployed workers, there are no jobs to be found.

Compounding this somber report is the Congressional Budget Office’s projection that the unemployment rate will hover around 8.5 percent through the end of next year.

“With the Congressional Budget Office projecting an unemployment rate of 8.5 percent at the end of next year, the extension of federally funded unemployment insurance benefit extensions through 2012 would extend a lifeline to the families of millions of long-term unemployed workers,” noted EPI economist Elise Gould in her analysis of the job openings release.

Likewise, in Labor market will lose over half a million jobs if UI extensions expire in 2012, EPI President Lawrence Mishel and labor economist Heidi Shierholz explain how extending unemployment insurance benefits through 2012 will create or save 560,000 jobs as well as provide necessary assistance to millions of families. The authors show that UI benefits expansion is one of the most effective responses to economic downturns because long-term unemployed workers are extremely likely to spend unemployment benefits immediately, providing a jolt to spending throughout the economy that creates jobs.

“When we remember that these expenditures would assist millions of families of the long-term unemployed during the worst downturn in seven decades, the case for continuing the benefits could not be more clear,” the authors write.

Mishel expounded on the importance of extending UI benefits during last week’s event, “Making the case to renew Unemployment Insurance.” With presentations by Ross Eisenbrey, EPI vice president; Jesse Rothstein, associate professor of public policy and economics, University of California, Berkeley; and Carl E. Van Horn, professor of public policy and director of the John J. Heldrich Center for Workforce Development; the forum addressed the impact of unemployment insurance on job creation, the motivation of the unemployed to seek work, and the economic consequences of funding unemployment insurance. Van Horn and Rothstein each presented research that shows that UI increases the amount of work search done by workers who receive benefits. To the extent that UI benefits lengthen spells of unemployment, it is mostly because workers stay in the labor force and continue searching for work, rather than dropping out. In any event, the job-creating stimulus effect of UI overwhelms any increase in individual spells of unemployment. Watch footage from the event.

CEOs distance themselves from the average worker

CEOs have always earned higher salaries than the workers they manage, but the gap between CEO and worker pay has soared in recent decades.

This week’s Economic Snapshot illustrates the ratio of average annual CEO compensation to compensation of the average worker from 1965–2010. In 1978, compensation of CEOs was 35 times greater than compensation of average workers. Since then, this ratio has skyrocketed, peaking at 299-to-1 in 2000.

EPI in the News

In the past week, EPI’s experts have been cited by more than 400 television, radio, and print media outlets. Here are some of the highlights:

  • The New York Times editorial, “Bad Theory, Bad Legislation,” cited EPI macroeconomist Josh Bivens’ research disproving the claim that the Environmental Protection Agency’s proposed new standards on toxic air pollution would kill jobs.
  • “Earlier this year, the Economic Policy Institute conducted a study of a proposed rule that would require power plants to reduce emissions of mercury and other airborne toxics. It said that investment in new controls would actually create 92,000 jobs beyond those that might be lost through plant closings and higher electricity prices. Other studies of clean air laws have come to similar conclusions: These rules are job creators, not killers.”
  • EPI’s analysis of the most recent unemployment data from the Bureau of Labor Statistics was quoted by a number of media outlets, including the Los Angeles Times, McClatchy, Huffington Post, New Hampshire Public Radio, and WYNC.
  • EPI’s research and analysis on worker wages and income-growth disparity in the United States continues to be cited by major media outlets, including the Atlantic, CBS News, Christian Science Monitor, and the Huffington Post.
  • From CBS News: “The Economic Policy Institute reports that the typical working-age household, which had already seen a decline of roughly $2,300 in income between 2000 and 2006, lost another $2,700 between 2007 and 2009. And when “recovery” arrived, however uncertainly, it was mainly in low-wage industries, which accounted for nearly half of what growth there was.
  • John Irons, EPI research and policy director, explained the lasting impact of the recession and stuttering labor market on young workers to The Christian Science Monitor’sChristianna McCausland. “People who graduate into a recession can be on a permanently different career track than someone just like them who had the fortune of graduating in a boom,” said Irons.
  • EPI economic analyst David Cooper discussed the significance of the latest poverty data and the need to increase federal assistance with Reuters’ reporter David Morgan. “The programs we have right now are, if anything, inadequate,” said Cooper.
From the EPI Blog
Joshua Smith
Extending Bad Fiscal Policy with Tax Extenders
Josh Bivens
Another Holiday Tradition: Arguing Economics at the Dinner Table
Elise Gould
CPI Shows Real Wages Continue to be Flat
David Cooper
Amazing Black Friday Deals, Brought to You by the American Taxpayer
Alyce Anderson
The President’s Actions on Immigration Will Make America Better
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