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EconomicPolicyInstitute May 11, 2012

With the Bush tax cuts scheduled to expire on Jan. 1, 2013, tax fairness is likely to be a prominent topic throughout the Presidential campaign. This week’s Economic Snapshot shows that since 1995, average effective federal tax rates have declined more for very high-income households, falling more than 9 percentage points for the top 0.01 percent of households and more than 6 percentage points for the remaining households in the top 1 percent. Effective tax rates have also fallen for households between the 20th and 99th percentile, but by less than 3 percentage points.

The odds of finding a job are improving, but are still stacked against job seekers

Tuesday’s release of the March Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics showed that despite modest improvement, there are still not enough jobs for job seekers. The job-seekers ratio, the ratio of unemployed workers to job openings, declined moderately to 3.4-to-1. In her analysis of the data, EPI labor economist Heidi Shierholz noted that the number of unemployed workers outnumbered job openings in all major sectors, demonstrating that the labor market’s main issue is a broad-based lack of demand for workers, not workers being in the wrong sectors or having the wrong skills.

Informing the dialogue

This week, reporters have turned to EPI’s research on graduates, CEO pay, and J-1 visas to help make sense of the nation’s economic landscape.

With recent data indicating the labor market is slowly improving, media outlets—including the Wall Street Journal, Los Angeles Times, New York Times, USA Today, Huffington Post, Philadelphia Tribune, and AARP’s blog—have turned to EPI to examine what the data mean for working Americans.

  • In the article “For Most Graduates, Grueling Job Hunt Awaits,” the Wall Street Journal’s Lauren Weber and Melissa Korn wrote, “According to the Economic Policy Institute, a left-leaning think tank, entry-level, college-educated men age 23-29 earned an average $21.68 an hour in 2011, a 7.6% decline from 2000. For women, the corresponding figure fell 6%, to $18.80. Men and women both now earn just a bit more than they did in 1989, when measured in 2011 dollars.”
  • Heidi Shierholz told Don Lee of the Los Angeles Times that the job prospects for students graduating this year “are better than for the class of 2011, but not by much.”
  • Speaking to the New York TimesHannah Seligson, Shierholz explained why the labor market’s gradual return to health will not spell a complete return to normal for many, with the recession having long-term consequences on young workers’ wages. “Every way you cut it — by race or gender, with or without a college degree — young people are just not getting the job opportunities they need, and it will have a lasting impact on their careers,” said Shierholz.
  • And New York Times business reporter Steven Greenhouse spoke to EPI Vice President Ross Eisenbrey about the trend of unemployed college graduates taking unpaid internships. “A few years ago you hardly heard about college graduates taking unpaid internships, but now I’ve even heard of people taking unpaid internships after graduating from Ivy League schools,” said Eisenbrey. Eisenbrey went on to explain how companies are “taking advantage of the weak labor market to use unpaid interns to handle chores like photocopying or running errands once done by regular employees, which can raise sticky legal questions.”

The divergences between CEO pay and typical worker pay—and between productivity and median compensation—continue to draw media attention. News outlets including The Economist, International Business Times, Reuters, and AlterNet have turned to EPI President Lawrence Mishel’s latest reports on these topics.

  • From The Economist’s Graphic detail blog: “In a new paper the Economic Policy Institute, a think-tank, calculates that chief executives at America’s 350 biggest companies were paid 231 times as much as the average private-sector worker in 2011. This ratio, which includes the value of share options, has begun to rise again after falling during the recession.”
  • International Business Times: “Chief executive pay jumped by more than 725 percent between 1978 and 2011, according to a new report from the non-partisan Economic Policy Institute, compared to just 5.7 percent growth in worker compensation during the same period. The pattern contributes to the widening wage gap between the nation’s highest earners and other earners — something the report says is a driving factor of income inequality in the U.S.”
  • And Reuters: “Who benefits from productivity increases matters as much as the efficiency gains themselves, according to two reports from the liberal Economic Policy Institute in Washington. The first finds that rising income inequality in the United States means that the benefits of better productivity are accruing mainly to the very wealthy. The EPI offers this startling nugget of data as basic food for thought: U.S. productivity grew 80.4 percent from 1973 to 2011, while average hourly compensation rose just 39.2 percent in the same period, and median compensation, which excludes outliers, gained a paltry 10.7 percent.”

Speaking to Holbrook Mohr of the Associated Press, EPI immigration policy analyst Daniel Costa applauded the State Department’s recent steps to regulate the J-1 visa program, and detailed additional steps the department should take.  “I think it would have been better to use stronger language and explicitly state that sponsors should be prohibited from forcing a J-1 worker to remain on a job if they have legitimate complaints, or from threatening the J-1 with program termination if they don’t remain on the job,” said Costa.  “Just hoping that employers will ‘cooperate’ and having no sanctions available if they don’t, allows employers to act with impunity and to hop from sponsor to sponsor if they act illegally. This keeps in place the incentive for sponsors to cover-up the bad acts of employers because the sponsor is the only one that will actually get in trouble by sanctions,” he continued.

A good read by Washington Post columnist E.J. Dionne

Renowned Washington Post columnist and best-selling author E.J. Dionne is poised to release his newest book, Our Divided Political Heart: The Battle for the American Idea in an Age of Discontent, on May 22. In this timely and important book, Dionne provides an incisive analysis of America’s philosophical and spiritual history and finds that the American tradition is a hybrid of a love of individualism and the quest for community—not one of hyper-individualism, as is often posited. Blending political analysis with a trenchant examination of history, Dionne shows the true American story describes a government acting as a constructive partner with society to work toward the common good and achieve broad prosperity. He goes on to challenge progressives to correct the country’s course by embracing the nation’s progressive history and weaving it into today’s political narrative.

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Right Thing for Wrong Reason? Why Recent Stock Declines Should Not Motivate Fed Interest Rate Moves
Robert E. Scott
Jack Lew Sees No Evil: Treasury Fails To Name China as a Currency Manipulator for the 12th Time
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