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EconomicPolicyInstitute March 4, 2011

EPI this week expanded its large and influential body of research on the wages and compensation of public employees with two new papers focused on workers in Minnesota and Missouri. As the prior research on other states has established, public sector workers in these states are not overpaid, the two papers find. At a time when lawmakers in Wisconsin and other states are attempting to reduce these workers’ wages and benefits and take away their collective bargaining rights, these papers underscore how the attacks on public workers are misplaced.

Low compensation, forced furloughs, pay freezes, and benefit cuts

The latest papers show that, when controlling for factors such as differences in education and hours worked, state and local government workers in Minnesota are undercompensated by 7.9% relative to their private sector counterparts. Public sector workers in Missouri are undercompensated by 15.6%. The new research also points out that tens of thousands of public sector employees have been laid off in the Great Recession and its aftermath and thousands more have been subject to forced furloughs, pay freezes, and benefit cuts: Far from being the cause of the economic distress that so many state governments are facing, the teachers, police officers, and other workers serving their communities have often suffered economic hardship as a result of it.

EPI’s research on this topic has been widely cited in the media and has helped to change the nature of the debate over public sector pay and compensation.Bloomberg BusinessWeek quoted the research in a story that stated, “Wisconsin Governor Scott Walker is wrong. The way to fix his state’s fiscal crisis isn’t by destroying public-sector unions and the half-century tradition of collective bargaining among teachers and state employees.” The research was also cited in many other outlets including The AtlanticForbesMSNBC, and The Fort Worth Star-Telegram.

Another threat to unions: right-to-work

Unionized workers in both the public and the private sector are facing another threat as more states consider passing right-to-work legislation, which purports to help workers but actually hurts them. EPI this week published two papers showing the problems with right-to-work. What’s wrong with “right-to-work” pokes holes in a recent report from the Indiana Chamber of Commerce in support of RTW legislation and highlights the faulty methodology used in the report.Does “right-to-work” create jobs? looks at Oklahoma, which in 2001 became the most recent state to pass right-to-work legislation. The paper shows that Oklahoma is no better off than neighboring states. “Since the law passed in 2001, manufacturing employment and relocations into the state reversed their climb and began to fall, precisely the opposite of what right-to-work advocates promised,” the paper states.

Letter to Obama: Austerity is short-sighted

In a March 1 letter to President Obama, EPI President Lawrence Mishel joined more than 300 other economists in warning about the danger of budget cuts that would threaten the country’s long-term competitiveness. “Investment is the cornerstone of economic growth and the key to our long-run national prosperity,” the letter states. “It creates jobs now and lays the foundation for long-term economic growth and a strong middle class. As Congress begins to debate the federal budget, it must be careful to sustain critical investments in the productive capacity of the United States.”

Why do black men earn less?

EPI’s new paper, Whiter jobs, higher wages, shows that in 2008 black men earned only 71% of what white men earned. On February 28, EPI hosted a discussion of the wage discrepancy in an attempt to untangle all of the factors that may contribute to it. According to the research presented, educational and other differences between black and white male workers can explain some, but not nearly all, of the difference. The Whiter jobs paper shows that close to 90% of all occupations in the U.S. are racially segregated and that black men are overrepresented in lower-paying fields and underrepresented in the higher-paying fields. This trend persisted at all levels of the job market. Among jobs with lower educational requirements, for example, black men were underrepresented in relatively high-paying construction jobs and overrepresented in the lower-paying service sector.  “At the end of the day, it turns out that being black matters,” said Algernon Austin, director of EPI’s program on Race, Ethnicity, and the Economy.  A fuller discussion of the research presented is available on EPI.org.

Air Force tanker decision will support tens of thousands of U.S. jobs

Last month, the U.S. Air Force announced that it will award a $35 billion contract to Boeing Co. to supply 179 air refueling tankers. International Economist Robert Scott published an analysis of the deal, showing that it will support tens of thousands of U.S. jobs. Scott has long worked on this issue and highlighted the large number of U.S. jobs that were at stake over Air Force contracts.

New EPI board members

EPI recently elected six new board members, including UAW President Bob King (pictured). King played a major role in negotiating both the UAW’s national agreement with Ford in 2007 and the 2009 modifications to that agreement. He also has a long history of promoting social and economic justice and solidarity among workers, and has led delegations to Mexico and El Salvador to support trade union members there. King has a bachelor’s degree from the University of Michigan and a law degree from the University of Detroit. Watch for announcements of other new board members in upcoming newsletters.

Also in the news

Investor’s Business Daily cited EPI data showing there remain far more job seekers than job openings.

The Buffalo News cited data on economic inequality from EPI’s new State of Working America website.

The New York Times quoted EPI economist Monique Morrissey explaining why traditional pensions are more cost-effective than 401(k)s.

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