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EconomicPolicyInstitute May 27, 2011

Claims that ‘we’ are broke have taken enough space in recent public discourse to seem beyond question, although the facts prove the opposite.  In his briefing paper, We’re Not Broke Nor Will We Be, EPI President Lawrence Mishel debunks the assertion that our nation is going broke.  In contrast, his paper shows the economy has seen steady growth in income and wealth over the past 30 years and will see similar growth in the next 30.  Nevertheless, while these claims have little in the way of truth, politicians and pundits have successfully used them to promote budget cutbacks and the notion that employers cannot afford decent pay and benefits.

“These claims are meant to justify efforts to scale back government programs and public-sector and private-sector workers’ wages and benefits,” said Mishel.

The paper also points out how wealth and wage disparities have widened significantly during this period.  The middle class as a whole has not gained wealth or received much of the income gains of the past 30 years.  Between 1980 and 2009 the typical or median worker saw hourly wages grow by just 11.2% while income per worker grew by 59%. Since 1979, the top 10% of households have received almost two-third of all the income gains, with the top 1% claiming 38.7% of all the gains.  If these cries to lower public investments and halt employee wage increases are heeded, the middle and working class will surely be left further behind even as our nations enjoys substantial income growth in the years ahead.

“Whether the broad middle class prospers in the next 30 years does not hinge on whether there will be substantial income growth; there most definitely will be,” Mishel concludes. “The future prosperity of the broad middle class hinges on the economic policies and structures that determine how that income is generated and shared.”

Little to no pay for real work

“If college graduates are willing to work for free, why should the government force employers to pay the minimum wage to people who only have a high school degree or who never even finished high school?”  This was the question EPI Vice President Ross Eisenbrey posed upon introducing the topic of unpaid interns at the event “Unpaid and Exploited? Interns in the U.S. Labor Market. On Wednesday, May 18, EPI welcomed author Ross Perlin to discuss his recent book Intern Nation, examining the topic with the Department of Labor’s Michael Hancock and EPI’s Eisenbrey.

In his presentation, Perlin emphasized the ambiguity behind the term “intern” and how the lack of a commonly accepted definition has led to a lack of standards—both in regards to intern pay and duties. “Internship is less a job description than it is a signal or buzzword that has helped to convince young people to offer up their labor for free and normalized the culture of working for free,” Perlin explained.  The practice has pervaded our culture so much that now an estimated half of all college students will work as interns before graduation. Overall, between 1 and 2 million people will work as interns this year in the United States alone.

As a result of the proliferation of the unpaid internship, “the connection between an honest day’s work and a fair wage is eroding in many peoples’ minds,” Perlin posited.

Investing in the future

On Wednesday, May 25, EPI Research and Policy Director John Irons represented the Economic Policy Institute and the progressive agenda at the Peter G. Peterson Foundation’s Solutions Initiative.  At the event, Irons presented an update to Investing in America’s Economy, a budget blueprint EPI originally created in partnership with Demos and The Century Foundation.  This budget plan not onlystabilizes debt at safe levels (around 80% of the economy) over the next 25 years, but does so while prioritizing recovery and putting the country on a sustainable budget path.

“Recognizing that our nation faces an ongoing crisis, with unemployment near nine percent and widespread economic insecurity, we believe a comprehensive approach to America’s future must focus on immediate job creation while also setting a sustainable debt path,” stated Irons.

EPI in the News

Economist Heidi Sheirholz discussed her paper on job prospects for new grauates, The Class of 2011: Young workers face a dire labor market without a safety net, in a CNN Health article.  Arianna Huffington also cited Sheirholz’ research in a Huffington Post article, and Ezra Klein referenced it in his Wonkbook blog. The paper was also cited in the Washington Post.

Policy Analyst Rebecca Thiess’ Economic Snapshot, What goes into a budget deficit, was included in Ezra Klein’s Wonkbook blog.

EPI’s analysis of The Great Recession found on our web edition of the State of Working America was cited by the Atlantic Wire.

From the EPI Blog
Lawrence Mishel and Will Kimball
The Top 1 Percent of Wage Earners Falters in 2013—Was it a Temporary Event?
Joshua Smith
Myths and Facts About Corporate Taxes, Part 2: Will Congress’s Idea of “Base-Broadening, Rate-Lowering Tax Reform” Fix What’s Wrong With Our Corporate Tax Code?
Ross Eisenbrey
Corporations Are Stealing Your Constitutional Rights: Forced Arbitration Clauses
Lawrence Mishel
Chair Yellen Is Right: Income and Wealth Inequality Hurts Economic Mobility
Ross Eisenbrey
Businesses Agree—It’s Time To Raise the Minimum Wage
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