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EconomicPolicyInstitute February 22, 2008

Sometimes we would rather be wrong, but the numbers continue to reinforce our dour take on current economic conditions. The latest evidence comes in a set of numbers released by the Bureau of Labor Statistics on Wednesday. Some quick calculations by senior economist Jared Bernstein showed that paychecks for typical workers are shrinking at an accelerating rate. January saw a loss of 1.4% in buying power, compared to steady real growth of 2.0% last year. The dive was caused by a combination of three factors: wage growth slowed, employers cut back on weekly hours, and inflation ticked up (boosted by high energy prices). Our prognosis is that wages will continue to stagnate or shrink through the year. As EPI President Larry Mishel said in a piece for The Nation by Nancy Cleeland, “For workers, this is as good as it’s going to get for a while.”

There are also abundant signs of growing insecurity. Anxiety about health care is particularly high among minorities. According to an analysis by Elise Gould and Algernon Austin, one in five African Americans and more than one-fourth of Hispanics don’t seek medical treatment because of the expense, and equal numbers are “very worried” about losing all health insurance coverage. For non-Hispanic whites, the numbers are 17% and 13%, respectively. Meanwhile, policy analyst Monique Morrissey, whose current focus is on retirement, spotted an Associated Press story showing more people tapping into retirement accounts to pay for living expenses.

To counter those trends, and as part of its Agenda for Shared Prosperity, EPI has released two comprehensive plans that would restore security to health care and retirement without breaking the U.S. treasury. A recent cost analysis of the Health Care for America plan, developed by Yale political scientist Jacob Hacker, shows that it is possible to provide quality coverage for all U.S. residents while reducing national health care spending. Hacker explains how it works in this EPI video release. Separately, Teresa Ghilarducci, an economist at the New School for Social Research, has developed a Guaranteed Retirement Account plan that builds on Social Security with portable, guaranteed accounts.

EPI also continues to monitor the government’s response to the immediate economic crisis, the looming recession. EPI Vice President Ross Eisenbrey, who was involved in negotiations for the stimulus package passed by Congress and signed by President Bush last week, is featured in this explanatory video by Senate Democrats—who are already talking about a second package that addresses unemployment benefits and infrastructure.

Looking ahead
Trade agreements will figure prominently in EPI’s next news bulletin. We will include a discussion with Luciano Vasquez, a union activist from Colombia who will speak at the Global Policy Network event held at EPI’s Washington, D.C. offices on Wednesday, February 27, about the continuing wave of assassinations of trade unionists in his country. His appearance is in the context of renewed efforts by the Bush administration to seal a trade agreement with Colombia. To attend the event, RSVP here.

From the EPI Blog
Ross Eisenbrey
Republicans (and two Democrats) in Congress want to derail commonsense protections for workers
Ross Eisenbrey
Workers, and honest employers, need a strong OSHA
Josh Bivens
The Fed shouldn’t accept the “new normal” without a fight
Elise Gould
When quitting is a good thing
Robert E. Scott
Despite seemingly stable U.S. trade balance, rapidly growing trade deficits in non-oil goods could lead to American job losses 
Working for people who work for a living.
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