Powerful government policy segregated us; the same can desegregate us, says Color of Law author Richard Rothstein
I am the author of a book, The Color of Law, that disproves the myth of de facto segregation. In truth, we are residentially segregated, not naturally or from private bigotry, but primarily by racially explicit policies of federal, state, and local governments designed to prevent African Americans and whites from living as neighbors; these 20th-century policies were so powerful that they determine much of today’s residential, social, and economic inequality.
Because powerful government policy segregated us, racial boundaries violate the fifth, 13th, and 14th amendments. Our nation thus has a positive constitutional obligation to redress segregation with policies as intentional as those that segregated us.
The federal government made housing and homeownership critical to families’ economic stability and upward mobility. But we routinely excluded African Americans from government benefits that propelled whites into the middle class.
Today’s inflation data show zero sign of sustained economic overheating
Correction: The first paragraph of this blog post has been updated with the correct overall consumer price index (CPI) in March 2021 of 2.6% and “core” measure of the CPI of 1.6%. The initial analysis had accidentally switched the two numbers. The numbers in Figure 1 remain the same.
Today, the Bureau of Labor Statistics (BLS) reported that the overall consumer price index (CPI) in March 2021 was 2.6% higher than in March 2020, while the “core” measure of the CPI (which excludes volatile food and energy prices) was 1.6% higher than a year ago. Given that these are noticeable (if modest) increases over recent months’ year-over-year inflation rates, some might be tempted to argue that this data should make policymakers worry about economic “overheating” stemming from “too much” fiscal support provided in recent recovery legislation. This is clearly wrong, for a number of reasons:
- The data released today do not show that prices have risen rapidly since recovery legislation passed—instead they just show that prices plummeted during the near-total shutdown of large swaths of the economy a year ago in response to the COVID-19 shock.
- Measured on an annualized basis from February 2020—before the COVID-19 economic shock—inflation in March 2021 was running at just 1.5%.
- Measured since October—shortly before the $2.8 trillion in additional relief spending provided by legislation in December 2020 and the American Rescue Plan (ARP) in March—inflation is running at an annualized rate of 1.3%.
The American Jobs Plan’s tax provisions are valuable but not the limit on possible spending
The spending in the American Jobs Plan (AJP) is well targeted to meet several (but obviously not all) pressing social needs. Because so much of the spending is temporary and provides needed investments, there is no pressing economic need to “pay” for it with tax increases. Yet the tax provisions in the AJP are also smart and valuable. This post discusses some of the economics of the AJP, with a special focus on these tax provisions. Its main findings are:
- The bulk of these tax provisions undo some of the worst parts of the Tax Cuts and Jobs Act (TCJA) passed in the first year of the Trump administration. Given this, to make the case that rolling back these parts of the TCJA will harm the U.S. economy, one has to believe that the passage of the TCJA benefited the U.S. economy. There is no evidence this is the case.
- The entire case for corporate tax cuts benefiting the U.S. economy hinges on the effects on business investment. But business investment growth in the two years following the TCJA’s passage (even before the COVID-19 shock) was cratering, not rising.
- The vast majority of new revenue that will be raised from the AJP tax provisions will come from taxing “excess profits”—profits accrued by virtue of monopoly or other privileged market positions. As such, this extra revenue will have little to no effect on economic decision-making and hence will not reduce business investment or economic growth more generally.
- Two “model-based” analyses of the AJP find very different things: Moody’s Analytics forecasts strong positive effects on economic growth over the next 10 years, while the Penn Wharton Budget Model forecasts very slight negative growth effects by 2030. The finding that the AJP might reduce economic growth rests on a number of bad assumptions: that the corporate tax changes will significantly affect economic decision-making and reduce investment; that the productivity gains stemming from public investment are small; that budget deficits will crowd out large amounts of private capital formation over the next decade; and that AJP’s care investments will reduce labor supply. None of these assumptions are likely to be correct.
Lower unionization over the last 40 years decreased wages by 7.9%
In 1979, 27.0% of workers were covered by union contracts. By 2019, that number had dropped to 11.6%. New research finds that this single factor dragged down the typical full-time workers’ wages by over $3,000/year.
Read the report:
The enormous impact of eroded collective bargaining on wages
Job openings and hires ticked up in February
Today’s Job Openings and Labor Turnover Survey (JOLTS) reports a promising pickup in both job openings and hires in February 2021, a sign that the recovery is finally moving ahead. The increase in hires was notable in accommodation and food services, but decreases in state and local government education are particularly troubling (though we know from March jobs data that state and local government hiring began to pick up in March). Overall, hires remain below its level before the recession hit, but job openings have now edged above its pre-recession levels. Once public health experts indicate it is safe to reopen and the American Rescue Plan (which was passed after today’s JOLTS data were collected) takes effect, I’m confident those openings will grow and translate into hires. Layoffs have held steady over the last couple of months.
One of the most striking indicators from today’s report from the Bureau of Labor Statistics (BLS) is the job seekers ratio—the ratio of unemployed workers (averaged for mid-February and mid-March) to job openings (at the end of February). On average, there were 9.8 million unemployed workers compared with only 7.4 million job openings. This translates into a job seekers ratio of about 1.3 unemployed workers to every job opening. Put another way, for every 13 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 2.5 million unemployed workers.
As with job losses, workers in certain industries are facing a steeper uphill battle. In the construction industry as well as arts, entertainment, and recreation, there were more than three unemployed workers per job opening. In educational services, accommodation and food services, other services, and transportation and utilities, there were more than two unemployed workers per job opening. As bad as these numbers are, they miss the fact that many more weren’t counted among the unemployed: The economic pain remains widespread with 23.6 million workers hurt by the coronavirus downturn.
On the whole, the U.S. economy is seeing a significantly slower hiring pace than we experienced in May or June. While the pickup in job openings is a promising sign, hiring in February was below where it was before the recession. There was an increase in jobs in the mid-March employment report, but we still have a long way to go before recovering the large job shortfall—11.0 million when using a reasonable counterfactual of job growth if the recession hadn’t occurred—that remains.
Calls to establish a regionally adjusted federal minimum wage are dangerously misguided
We need to raise the federal minimum wage. Its deterioration in value over the past five decades has exacerbated poverty, widened inequality, and lowered wages for the bottom third of wage earners1—despite the fact that these workers typically are older and have more education than their counterparts a generation ago.
One misguided critique of the effort to raise the federal minimum to $15 in 2025 is that there is a need to establish a regionally adjusted federal minimum wage set to local conditions. In fact, federal minimum wage policy has always provided for tailored standards, by coupling a strong national wage floor with the ability for cities and states to adopt higher standards. Our ability to set a national wage floor is much easier now than it was decades ago when lawmakers last raised the federal minimum wage to new heights. In 1968, when the federal minimum wage was lifted to its highest value in U.S. history and coverage of the law was vastly expanded, there were much larger differences in wage levels throughout the country. Yet, we now have empirical evidence that establishing this unprecedented, nationwide minimum wage did not have adverse employment impacts.
Today, the wage levels of lower-wage states, primarily Southern ones, are much closer to overall national wage levels, so there is even less validity to claims that the federal minimum wage must be lowered to accommodate certain areas. Moreover, the ‘bite’ of a $15 minimum wage in 2025—i.e., the share of workers and businesses impacted, and the magnitude of resulting wage increases—will be well within the range of recent experiences of minimum wage increases in states and localities that studies have shown had little, if any, impact on employment. The proposed increase to $15 by 2025 will lead to improved annual earnings for nearly all low-wage workers.
Strong job growth in March as vaccine distribution expands and the American Rescue Plan ramps up
A solid 916,000 jobs were added in March, the strongest job growth we’ve seen since the initial bounceback faded last summer. Even with these gains, the labor market is still down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession. If we count how many jobs may have been created if the recession hadn’t hit—consider average job growth (202,000) over the 12 months before the recession—we are now short 11.0 million jobs since February.
Even at this pace, it could take more than a year to dig out of the total jobs shortfall. However, today’s number is certainly a promising sign for the recovery, especially as vaccinations increase and vital provisions in the American Rescue Plan (ARP) have continued to ramp up since the March reference period to today’s data. The benefits of the ARP will continue to be captured in coming months.
What to watch on jobs day: Signs of an improving labor market
Pursuing public health initiatives—including the production and distribution of the vaccine—is the most important priority for our health and economic well-being. Further, investments in state and local governments as well as direct assistance to workers and their families have been essential to their financial security and the economic recovery itself. Given advancements on both fronts in recent weeks and months, I expect the labor market recovery to finally pick up steam.
A year into the recession, the labor market is still down 9.5 million jobs from where it stood immediately before the COVID-19 shock. If we add in jobs that should have been created over that time to absorb new workers, we’re facing a jobs shortfall today of nearly 12 million jobs.
As the labor market finally picks up, the key indicators to watch are where the jobs are returning and for whom. The biggest deficit remains in leisure and hospitality, with 3.5 million fewer jobs relative to its February 2020 level. The economic pain caused by losses in this lowest-paying sector was enormous.
Meanwhile, public-sector employment—primarily education employment at the state and local level—remains 1.4 million jobs below pre-pandemic levels. I’m optimistic that the state and local relief that was part of the American Rescue Plan will provide tremendous support to this sector in terms of employment and the vital public services they provide.
Businesses can thrive with a higher minimum wage, and government can help
A great deal of research shows that higher minimum wages benefit workers by adding to their income while causing little unemployment, as this report and this report show. Employers can adjust to paying higher wages in three ways: (1) increasing prices, (2) accepting reduced profits, or (3) offsetting higher-wage costs with increased ability by adopting “high-road” practices.
In this blog post, I argue that insufficient attention has been paid to this third channel, and that government efforts to help firms “take the high road” could ease firms’ transition to higher wages in a way that also benefits workers and consumers.
Much research documents the ways that firms can utilize high-road policies or good-jobs strategies to tap the knowledge of all their workers to create innovative products and processes. In retail, for example, firms such as Costco and Trader Joe’s pay far above minimum wage, yet remain profitable, as MIT’s Zeynep Ton has shown. The key to their success is a mix of complementary practices in marketing (reducing the number of products and promotion so that stores can manage inventory efficiently), human resources (cross-training workers so they can respond to a variety of demands), and operations (avoiding unneeded steps, in part by soliciting feedback from employees).
The H-1B visa program remains the “outsourcing visa”: More than half of the top 30 H-1B employers were outsourcing firms
Key takeaways:
- Most of the biggest users of the H-1B visas—the U.S.’s largest temporary work visa program—are companies that have an outsourcing business model.
- These companies exploit the H-1B program’s weaknesses to facilitate the transfer of U.S. jobs offshore as a lower cost alternative to hiring U.S. workers, and sometimes to replace incumbent U.S. workers with H-1B workers who are paid wages that are far below market wage rates.
- The latest data show that over 33,000 new H-1Bs were issued to the top 30 H-1B employers, accounting for nearly 40% of all new H-1Bs in 2020 that are subject to the annual limit of 85,000.
- Of the top 30 H-1B employers, 17 of them were outsourcing firms. Those 17 outsourcing firms alone were issued 20,000 H-1B visas, nearly one-quarter of the total 85,000 annual limit.
- President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.
The U.S.’s largest temporary work visa program is the H-1B—an important program that allows U.S. employers to hire college-educated migrant workers. However, the H-1B program is not operating as intended and needs to be fixed: Instead of being used to fill genuine labor shortages in skilled occupations without negatively impacting U.S. labor standards, the latest data show that the H-1B’s biggest users are companies that have an outsourcing business model. President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.
Outsourcing companies exploit the H-1B program’s weaknesses to build and expand a business model based on outsourcing jobs from other companies. In this arrangement, rather than being employed directly by the outsourcing company that hired them, the outsourcer sends its H-1B workers to work for third-party clients, either on- or off-site. The aim of the outsourcing company is ultimately to move as much work as possible abroad to countries where labor costs are lower and profit margins are higher. The H-1B workers serve three purposes in this business model: to facilitate the transfer of jobs and tasks offshore; to coordinate offshore teams; and to serve as a lower cost alternative to hiring U.S. workers for on-site jobs. H-1B outsourcing companies also replace incumbent U.S. workers with H-1B workers and typically pay their H-1B workers the lowest wages permitted by law, far below market wage rates.
Next round of recovery spending is about meeting social needs, not filling macroeconomic gaps
Today, President Biden will give a speech laying the groundwork for a new legislative package his administration bills as “building back better.” Much of the debate around this new package has swirled around its headline cost, and we have frequently gotten questions about what is the “right” number for this upcoming proposal.
There is no one right answer to this question. The “right” number for this upcoming proposal depends on what particular set of social problems you think can and should be fixed through public investment and fiscal redistribution. For this reason, any headline cost number needs to be derived from a “bottom-up” assessment that figures out the “right” cost of a rescue package by deciding which specific proposals would be good things to do and scoring them based on that.
This focus on identifying some “right” number that is derived instead from some top-down macroeconomic analysis is understandable. Since the COVID-19 shock first hit the U.S. economy, there has been an obvious and measurable “output gap” that will eventually need to be filled in to restore the labor market to pre-COVID health (or even better). This output gap is the difference between what the economy could produce if most resources (most importantly, workers) were fully utilized and what is actually being produced. The gap between this potential and actual gross domestic product (GDP) is generally driven by a shortfall of demand (spending by households, businesses, and governments) relative to the economy’s productive capacity. This gap can be reasonably measured (not with real precision, but at least in rough magnitude). Once the gap is identified, policies that pump up spending—either by direct federal government expenditures or by transferring resources to households and state and local governments to spend—can quickly close the gap. It was this sort of rough gap analysis that informed debates about the proper size of the American Rescue Plan (ARP).
Justice for Asian Americans requires greater understanding and addressing economic realities beyond stereotypes
In the wake of the mass shootings in Atlanta on March 16, we must unite to decry the unacceptable hate and discrimination directed toward Asian Americans. But beyond immediate support and a commitment to justice, the Asian American and Pacific Islander (AAPI) community requires understanding and visibility. And this understanding—particularly with regard to their economic suffering from the pandemic—must be followed by policy, advocacy, and action.
The mass shootings that killed six women of Asian descent and two other people at Atlanta area spas have left the AAPI community in Atlanta and across the country in mourning and on high alert. While the man arrested for the murders has not yet been charged with a hate crime, the hate and discrimination being directed toward Asian Americans is an inescapable fact. According to Stop AAPI Hate, nearly 3,800 incidents targeting Asian-Americans were reported to the organization between mid-March 2020 and the end of February 2021. AAPI women were more than twice as likely to report hate incidents as men. And these incidents, which range from verbal harassment to civil rights violations to physical assault, “represent only a fraction of the number of hate incidents that actually occur,” a Stop AAPI Hate report said.
Advocates attribute the rise of hate and harassment of Asian Americans to the increasingly xenophobic language connecting the COVID-19 pandemic with Asian Americans. In reality, AAPI individuals are suffering under the pandemic, especially Asian American women.
One year later, unemployment insurance claims remain sky-high
One year ago this week, when the first sky-high unemployment insurance (UI) claims data of the pandemic were released, I said “I have been a labor economist for a very long time and have never seen anything like this.” But in the weeks that followed, things got worse before they got better—and we are not out of the woods yet. Last week—the week ending March 20, 2021—another 926,000 people applied for UI. This included 684,000 people who applied for regular state UI and 242,000 who applied for Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.
Last week was the 53rd straight week total initial claims were greater than the second-worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims are still greater than the 14th worst week of the Great Recession.)
Figure A shows continuing claims in all programs over time (the latest data for this are for March 6). Continuing claims are currently nearly 17 million above where they were a year ago, just before the virus hit.
Continuing unemployment claims in all programs, March 23, 2019–March 6, 2021: *Use caution interpreting trends over time because of reporting issues (see below)*
| Date | Regular state UI | PEUC | PUA | Other programs (mostly EB and STC) |
|---|---|---|---|---|
| 2019-03-23 | 1,905,627 | 31,510 | ||
| 2019-03-30 | 1,858,954 | 31,446 | ||
| 2019-04-06 | 1,727,261 | 30,454 | ||
| 2019-04-13 | 1,700,689 | 30,404 | ||
| 2019-04-20 | 1,645,387 | 28,281 | ||
| 2019-04-27 | 1,630,382 | 29,795 | ||
| 2019-05-04 | 1,536,652 | 27,937 | ||
| 2019-05-11 | 1,540,486 | 28,727 | ||
| 2019-05-18 | 1,506,501 | 27,949 | ||
| 2019-05-25 | 1,519,345 | 26,263 | ||
| 2019-06-01 | 1,535,572 | 26,905 | ||
| 2019-06-08 | 1,520,520 | 25,694 | ||
| 2019-06-15 | 1,556,252 | 26,057 | ||
| 2019-06-22 | 1,586,714 | 25,409 | ||
| 2019-06-29 | 1,608,769 | 23,926 | ||
| 2019-07-06 | 1,700,329 | 25,630 | ||
| 2019-07-13 | 1,694,876 | 27,169 | ||
| 2019-07-20 | 1,676,883 | 30,390 | ||
| 2019-07-27 | 1,662,427 | 28,319 | ||
| 2019-08-03 | 1,676,979 | 27,403 | ||
| 2019-08-10 | 1,616,985 | 27,330 | ||
| 2019-08-17 | 1,613,394 | 26,234 | ||
| 2019-08-24 | 1,564,203 | 27,253 | ||
| 2019-08-31 | 1,473,997 | 25,003 | ||
| 2019-09-07 | 1,462,776 | 25,909 | ||
| 2019-09-14 | 1,397,267 | 26,699 | ||
| 2019-09-21 | 1,380,668 | 26,641 | ||
| 2019-09-28 | 1,390,061 | 25,460 | ||
| 2019-10-05 | 1,366,978 | 26,977 | ||
| 2019-10-12 | 1,384,208 | 27,501 | ||
| 2019-10-19 | 1,416,816 | 28,088 | ||
| 2019-10-26 | 1,420,918 | 28,576 | ||
| 2019-11-02 | 1,447,411 | 29,080 | ||
| 2019-11-09 | 1,457,789 | 30,024 | ||
| 2019-11-16 | 1,541,860 | 31,593 | ||
| 2019-11-23 | 1,505,742 | 29,499 | ||
| 2019-11-30 | 1,752,141 | 30,315 | ||
| 2019-12-07 | 1,725,237 | 32,895 | ||
| 2019-12-14 | 1,796,247 | 31,893 | ||
| 2019-12-21 | 1,773,949 | 29,888 | ||
| 2019-12-28 | 2,143,802 | 32,517 | ||
| 2020-01-04 | 2,245,684 | 32,520 | ||
| 2020-01-11 | 2,137,910 | 33,882 | ||
| 2020-01-18 | 2,075,857 | 32,625 | ||
| 2020-01-25 | 2,148,764 | 35,828 | ||
| 2020-02-01 | 2,084,204 | 33,884 | ||
| 2020-02-08 | 2,095,001 | 35,605 | ||
| 2020-02-15 | 2,057,774 | 34,683 | ||
| 2020-02-22 | 2,101,301 | 35,440 | ||
| 2020-02-29 | 2,054,129 | 33,053 | ||
| 2020-03-07 | 1,973,560 | 32,803 | ||
| 2020-03-14 | 2,071,070 | 34,149 | ||
| 2020-03-21 | 3,410,969 | 36,758 | ||
| 2020-03-28 | 8,158,043 | 0 | 52,494 | 48,963 |
| 2020-04-04 | 12,444,309 | 3,802 | 69,537 | 64,201 |
| 2020-04-11 | 16,249,334 | 31,426 | 216,481 | 89,915 |
| 2020-04-18 | 17,756,054 | 63,720 | 1,172,238 | 116,162 |
| 2020-04-25 | 21,723,230 | 91,724 | 3,629,986 | 158,031 |
| 2020-05-02 | 20,823,294 | 173,760 | 6,361,532 | 175,289 |
| 2020-05-09 | 22,725,217 | 252,257 | 8,120,137 | 216,576 |
| 2020-05-16 | 18,791,926 | 252,952 | 11,281,930 | 226,164 |
| 2020-05-23 | 19,022,578 | 546,065 | 10,010,509 | 247,595 |
| 2020-05-30 | 18,548,442 | 1,121,306 | 9,597,884 | 259,499 |
| 2020-06-06 | 18,330,293 | 885,802 | 11,359,389 | 325,282 |
| 2020-06-13 | 17,552,371 | 783,999 | 13,093,382 | 336,537 |
| 2020-06-20 | 17,316,689 | 867,675 | 14,203,555 | 392,042 |
| 2020-06-27 | 16,410,059 | 956,849 | 12,308,450 | 373,841 |
| 2020-07-04 | 17,188,908 | 964,744 | 13,549,797 | 495,296 |
| 2020-07-11 | 16,221,070 | 1,016,882 | 13,326,206 | 513,141 |
| 2020-07-18 | 16,691,210 | 1,122,677 | 13,259,954 | 518,584 |
| 2020-07-25 | 15,700,971 | 1,193,198 | 10,984,864 | 609,328 |
| 2020-08-01 | 15,112,240 | 1,262,021 | 11,504,089 | 433,416 |
| 2020-08-08 | 14,098,536 | 1,376,738 | 11,221,790 | 549,603 |
| 2020-08-15 | 13,792,016 | 1,381,317 | 13,841,939 | 469,028 |
| 2020-08-22 | 13,067,660 | 1,434,638 | 15,164,498 | 523,430 |
| 2020-08-29 | 13,283,721 | 1,547,611 | 14,786,785 | 490,514 |
| 2020-09-05 | 12,373,201 | 1,630,711 | 11,808,368 | 529,220 |
| 2020-09-12 | 12,363,489 | 1,832,754 | 12,153,925 | 510,610 |
| 2020-09-19 | 11,561,158 | 1,989,499 | 10,686,922 | 589,652 |
| 2020-09-26 | 10,172,332 | 2,824,685 | 10,978,217 | 579,582 |
| 2020-10-03 | 8,952,580 | 3,334,878 | 10,450,384 | 668,691 |
| 2020-10-10 | 8,038,175 | 3,711,089 | 10,622,725 | 615,066 |
| 2020-10-17 | 7,436,321 | 3,983,613 | 9,332,610 | 778,746 |
| 2020-10-24 | 6,837,941 | 4,143,389 | 9,433,127 | 746,403 |
| 2020-10-31 | 6,452,002 | 4,376,847 | 8,681,647 | 806,430 |
| 2020-11-07 | 6,037,690 | 4,509,284 | 9,147,753 | 757,496 |
| 2020-11-14 | 5,890,220 | 4,569,016 | 8,869,502 | 834,740 |
| 2020-11-21 | 5,213,781 | 4,532,876 | 8,555,763 | 741,078 |
| 2020-11-28 | 5,766,130 | 4,801,408 | 9,244,556 | 834,685 |
| 2020-12-05 | 5,457,941 | 4,793,230 | 9,271,112 | 841,463 |
| 2020-12-12 | 5,393,839 | 4,810,334 | 8,453,940 | 937,972 |
| 2020-12-19 | 5,205,841 | 4,491,413 | 8,383,387 | 1,070,810 |
| 2020-12-26 | 5,347,440 | 4,166,261 | 7,442,888 | 1,450,438 |
| 2021-01-02 | 5,727,359 | 3,026,952 | 5,707,397 | 1,526,887 |
| 2021-01-09 | 5,446,993 | 3,863,008 | 7,334,682 | 1,638,247 |
| 2021-01-16 | 5,188,211 | 3,604,894 | 7,218,801 | 1,826,573 |
| 2021-01-23 | 5,156,985 | 4,779,341 | 7,943,448 | 1,785,954 |
| 2021-01-30 | 5,003,178 | 4,062,189 | 7,685,857 | 1,590,360 |
| 2021-02-06 | 4,934,269 | 5,067,523 | 7,520,114 | 1,523,394 |
| 2021-02-13 | 4,794,195 | 4,468,389 | 7,329,172 | 1,437,170 |
| 2021-02-20 | 4,808,623 | 5,456,080 | 8,387,696 | 1,465,769 |
| 2021-02-27 | 4,457,888 | 4,816,523 | 7,616,593 | 1,237,929 |
| 2021-03-06 | 4,458,888 | 5,551,215 | 7,735,491 | 1,207,201 |
Click here for notes.
Data are not seasonally adjusted. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.
Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), https://oui.doleta.gov/unemploy/docs/persons.xls and https://www.dol.gov/ui/data.pdf, March 25, 2021.
The good news in all of this is Congress’s passage of the sweeping $1.9 trillion relief and recovery package. It is both providing crucial support to millions of working families and setting the stage for a robust recovery. One big concern, however, is that the bill’s UI provisions are set to expire the first week in September, when, even in the best–case scenario, they will still be needed. By then, Congress needs to have put in place long-run UI reforms that include automatic triggers based on economic conditions.
Wages are still too low in H-2B occupations: Updated wage rules could ensure labor standards are protected and migrants are paid fairly
Key takeaways:
- The H-2B program’s wage regulations are allowing employers to legally undercut U.S. wage standards and underpay migrant workers.
- In all but one of the top 15 H-2B occupations in 2019, the average hourly wage certified nationwide for H-2B workers was lower than the average hourly wage for all workers in the occupation nationwide.
- One way to fix this would be to require that employers pay H-2B workers at least the highest of the local, state, or national average wage for the occupation. The Biden administration has the legal authority to make these changes, and they should consider doing it quickly in order to protect migrant workers and U.S. wage standards.
Last week, I wrote about how the U.S. Department of Homeland Security (DHS) and the U.S. Department of Labor (DOL) are now considering increasing the number of H-2B visas in response to businesses claiming that there are labor shortages in H-2B industries—a claim that unemployment data reveal is false. A related and essential issue to this discussion is the prevailing wage rules that undergird the H-2B program, which exist for the purpose of establishing a minimum, legally required wage that jobs must be advertised at in the United States when recruiting U.S. workers—a requirement before employers can access the H-2B program—in order to determine if there’s a labor shortage. The purpose of the H-2B prevailing wage requirement is also to safeguard U.S. wage standards in H-2B occupations and protect migrant workers from being legally underpaid through visa regulations.
In most cases, since 2015, the DOL’s H-2B wage methodology has required that employers advertise H-2B jobs to U.S. workers at the local average wage for the specific occupation and pay their H-2B employees that wage—according to data from the DOL’s Occupational Employment Statistics (OES) survey. While at first glance this appears to be a reasonable wage rule, in practice, the available evidence makes clear that the H-2B wage rule is undercutting wage standards at the national level in H-2B occupations and is therefore not consistent with the law establishing the H-2B program.
The American Rescue Plan clears a path to recovery for state and local governments and the communities they serve
The passage of the American Rescue Plan (ARP) is a watershed moment for state and local governments. It is an opportunity to undo much of the damage caused by the COVID-19 pandemic and begin to address some of the long-standing inadequacies and inequities caused by decades of disinvestment in public services. As our colleague Josh Bivens notes, the bill’s $350 billion in aid to state and local governments will critically help many localities fill in for revenue losses, stem budget cuts, and respond—with important flexibility over the next few years—to massively increased fiscal demands caused by the pandemic.
Although revenue losses in some states were not as dire as predicted early in the pandemic, state and local governments across the country have, nevertheless, already made massive cuts to their budgets and staffs. These cuts have serious implications for the health of local economies and the quality of life in those communities. In this piece, we document the losses that have already occurred in state and local government workforces and take a closer look at who these workers are and what they do. We also discuss the opportunity that policymakers now have to truly “build back better” and what that could mean for communities throughout the country that were struggling long before the coronavirus appeared. In particular, we show that:
- State and local job cuts during the COVID-19 pandemic have been unprecedented and widespread.
- Most state and local government employees work in education (50.4%). This workforce also provides public services that keep communities healthy and safe.
- Women and Black workers are disproportionately represented in state and local government jobs. Women make up 59.6% of this workforce, compared with 46.6% of the private sector. Black women account for 8.7% of state and local government workers, compared with 6.4% of private-sector workers.
- The American Rescue Plan provides an opportunity for state and local governments to work toward addressing racial inequities and expanding public supports in their communities.
Hires continue to slow in the Job Openings and Labor Turnover Survey for January
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of February, the economy was still 9.5 million jobs below where it was in February 2020. This translates into a 11.9 million job shortfall when using a reasonable counterfactual of job growth if the recession hadn’t occurred.
Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports little change in January 2021, a clear sign that the recovery is not charging ahead. In fact, hiring and job openings are below where they were before the recession hit, which makes it impossible to recover anytime soon when we have such a massive hole to fill in the labor market. In January, job openings mildly increased from 6.8 million to 6.9 million while hires softened for two months in a row. Hires declined from 6.1 million in November to 5.4 million in December, then down to 5.3 million in January.
One of the most striking indicators from today’s report is the job-seekers ratio—the ratio of unemployed workers (averaged for mid-January and mid-February) to job openings (at the end of January). On average, there were 10.1 million unemployed workers compared with only 6.9 million job openings. This translates into a job-seekers ratio of about 1.5 unemployed workers to every job opening. Put another way, for every 15 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means that, no matter what they did, there were no jobs for 3.1 million unemployed workers.
Unemployment insurance claims are still about 18 million more than they were a year ago: The new relief and recovery bill will help millions of families
One year ago last week—the week ending March 7, 2020—was the final week of normal unemployment insurance (UI) claims before the COVID recession. That week, there were 211,000 initial UI claims. The week after that, it jumped to 282,000. From there, it skyrocketed into the millions.
Last week—the week ending March 6, 2021—another 1.2 million people applied for UI. This included 712,000 people who applied for regular state UI and 478,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The 1.2 million who applied for UI last week was unchanged from the prior week. The four-week moving average of total initial claims was also unchanged.
Last week was the 51st straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were greater than the 10th-worst week of the Great Recession.)
Claims of labor shortages in H-2B industries don’t hold up to scrutiny: President Biden should not expand a flawed temporary work visa program
Key takeaways:
- The Biden administration is now considering whether to increase the number of visas in the H-2B program—a temporary work visa program for lower-wage jobs intended for use when there are labor shortages—and is under significant pressure from business groups to roughly double the size of the program.
- The economy, however, is showing no signs of labor shortages in H-2B jobs. In fact, the opposite is true: The latest labor market data show very high unemployment rates in major H-2B industries as well as nearly 5 million unemployed workers in a host of occupations for which H-2B jobs are commonly approved.
- The H-2B program’s current rules make it easy for employers to game the system when it comes to recruiting unemployed workers. And the program is flawed, rife with abuse, and in desperate need of reform, as numerous reports and investigations have proven, calling into question the credibility of the program.
- President Biden has the authority to direct the leadership at the Departments of Homeland Security and Labor to reject an increase the H-2B program in 2021, based on the fact that there are no labor shortages in H-2B industries that would justify such an increase. He should instead push for major reforms of the H-2B program that would ensure domestic recruitment efforts become legitimate and that migrant workers will be treated and paid fairly and have a path to citizenship.
Strengthening workers’ right to organize is 50 years overdue
The union election underway at an Amazon fulfillment center in Bessemer, Alabama, has caught national attention because of how significant a win would be for workers in the South and across the country. Even President Biden has weighed in on the importance of unions, proclaiming in a new video that workers should have a free choice to organize without interference or threats from their employer—a presidential endorsement that is without precedent in our lifetimes. This week, the House of Representatives is scheduled to debate and presumably pass comprehensive legislation—the Protecting the Right to Organize (PRO) Act—to strengthen workers’ ability to join together and form unions to negotiate for better pay, safety protections, and fairness on the job.
This newfound attention to the importance of workers having collective power to bargain with their employers is welcome, but it is long overdue—more than 50 years overdue.
The fact is, Amazon is using tactics to fight its workers in Bessemer, Alabama—thinly veiled threats, mandatory meetings in which management rails against the union, hiring third-party professional union busters—that are standard fare in the employer playbook, and have been for decades. Employers fully realize and take advantage of fundamental, structural weaknesses in our federal labor law that is supposed to protect and promote workers’ freedom to organize unions.
We recently co-authored a paper that shows, by the late 1960s and early 1970s, employers had learned how to exploit the weaknesses in the National Labor Relations Act to block union organizing. Employers realized the law has no teeth—it literally has no monetary penalties against employers who illegally fire union activists or otherwise interfere with workers’ rights. Under the guise of “free speech,” employers are allowed to hold one-sided “captive audience” meetings, where management criticizes and lobbies against forming a union, often predicting layoffs and strikes if workers unionize. Yet the union isn’t allowed in the room, and companies frequently forbid workers from speaking up or exclude pro-union workers from the meeting. Employers routinely bend and break the law. A recent Economic Policy Institute report found that in four out of 10 organizing efforts, workers have to file charges to try to stop their bosses’ illegal activity. In up to a third of elections, employers are charged with illegally firing union supporters.
The ‘$15 minimum wage is too expensive for Peoria’ argument doesn’t hold water: Five reasons why
The one argument made often in the debate over raising the minimum wage to $15 an hour nationwide by 2025, is that you can’t expect to pay the same wages in Chicago as you do in Peoria.
Such an increase, critics contend, will bankrupt small businesses, will impact payroll decisions for corporations with operations nationally, will raise wages beyond what folks outside of big cities need to make ends meet—and will ultimately hurt local economies.
Turns out, these arguments are bogus.
Here are five reasons why:
1. $15 anywhere in this country makes cost-of-living sense.
Today, in all areas across the United States, a single adult without children needs at least $31,200—what a full-time worker making $15 an hour earns annually—to achieve a modest but adequate standard of living. By 2025, workers in these areas and those with children will need even more, according to projections based on the Economic Policy Institute’s Family Budget Calculator.
AAPI Equal Pay Day: Essential AAPI women workers continue to be underpaid during the COVID-19 pandemic
Asian American/Pacific Islander (AAPI) Equal Pay Day is March 9, marking the number of days into 2021 that AAPI women must work to make the same amount as their white male counterparts were paid in 2020. AAPI women are paid 94 cents on the dollar on an average hourly basis, relative to non-Hispanic white men with the same level of education, age, and geographic location. Further disaggregating this data reveals that Pacific Islander women earn 61 cents on the dollar relative to their non-Hispanic white male peers.
During this pandemic, members of the AAPI community have been victims of a horrific rise in discrimination, violence, and hate crimes—which we must call attention to and urgently address. In addition, AAPI women who are essential workers have continued to face an alarming and unacceptable pay gap. The infographics below take a closer look at average hourly wages of AAPI women and non-Hispanic white men employed as elementary and middle school teachers, registered nurses, cashiers, and wait staff. We find that AAPI women make between 11% and 21% less than non-Hispanic white men in these occupations.
The pay disparities are largest among elementary and middle school teachers, with AAPI women being paid just 79% of what non-Hispanic white men are paid. AAPI women registered nurses are paid 82% of what non-Hispanic white men are paid. Lastly, AAPI women cashiers and wait staff make 84% and 89%, respectively, as much as non-Hispanic white men in those occupations. It is long past time to ensure equal pay for AAPI women.
The Senate must pass the $1.9 trillion relief and recovery plan with the UI provisions extended to October 3
Another 1.2 million people applied for unemployment insurance (UI) benefits last week, the last week of February. This included 745,000 people who applied for regular state UI and 437,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.
The 1.2 million who applied for UI last week was roughly the same as the prior week (an increase of 18,000). The four-week moving average of total initial claims was unchanged.
Last week was the 50th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week would have been higher than the sixth-worst week of the Great Recession.)
What to watch on jobs day: Who has been hurt by the pandemic recession—and why we should ignore wage growth for now
On Friday, the Bureau of Labor Statistics (BLS) will release its latest jobs report on the state of the labor market for February 2021, exactly one year since the labor market peak before the pandemic recession hit. Overall, the labor market is down 9.9 million jobs since February 2020. And if we count how many jobs might have been created if the recession had not hit—a more appropriate counterfactual for the current hole we are in might be average job growth over the 12 months before the recession (202,000)—we are now short 12.1 million jobs since February 2020.
In this jobs day preview post, I remind readers which sectors are still experiencing the greatest shortfalls in jobs, which demographic groups have been hardest hit, and which metrics we should continue to ignore in this unusual recession.
Leisure and hospitality workers remain the hardest hit in the pandemic recession, with a 3.9 million job shortfall since February 2020 (as shown in Figure A). These losses are particularly devastating for leisure and hospitality workers and their families because they are among the lowest-paid workers in the U.S. economy.
What we learned from the UK case rendering Uber drivers employees
The recent United Kingdom Supreme Court ruling that Uber drivers are employees, and not entrepreneurs or independent contractors, is noteworthy for many reasons. One is that the underlying Employment Tribunal judgment that it affirmed provides a deep dive into the realities of Uber driving that obliterates the many myths Uber tells about its employment arrangements—and does so in a joyful, humorous way. It is a must read.
A second reason is that the ruling points to the need for two critical items that Tanya Goldman and David Weil proposed to combat misclassification of workers as independent contractors. First, judging whether a worker is an employee or not should not be limited to the issue of who “controls” the work, an analysis that is too easily manipulated in order to get a wrong result. Rather, one should include an analysis of whether the worker has a true opportunity to be an entrepreneur—actually build a business and not just the limited freedom of choosing their hours and work location.
In addition, Uber’s response to the ruling was—predictably—that it has already changed its terms, so the ruling no longer applies. But with these changes, drivers are still denied employment status. As long as the employer-determined status quo remains—and until endless court cases and appeals are exhausted—then the workers will never really be able to secure their rights through court challenges. To change this, Goldman and Weil propose “there should be a presumption of an employment relationship the putative employer must rebut.” Let the employer prove someone is a contractor, and until the employer has done so the worker has full employment rights (right to a union, to be paid minimum wage, etc.) and access to social insurance (unemployment insurance, workers’ compensation, paid sick days, etc.).
Six ways the Protecting the Right to Organize (PRO) Act restores workers’ bargaining power
When it was passed in 1935, the National Labor Relations Act declared that its purpose was to promote the practice of collective bargaining, where workers and their union sit down with their employer to negotiate over wages, safety, fairness, and other important issues. But over time, this promise has become hollow because weaknesses in the law have been exploited by employers and the courts to undermine workers’ bargaining power. Here are six ways the Protecting the Right to Organize (PRO) Act helps to level the playing field and restore workers’ bargaining power:
- The PRO Act has a process for reaching a first collective bargaining agreement. When workers first form a union, too often employers drag out the bargaining process and avoid reaching an initial agreement, because there are no monetary penalties in the law for bad faith bargaining. A year after forming their union, more than half of all workers do not yet have an initial bargaining agreement with their employer. This leads to worker frustration, which employers exploit to undermine the new union. The PRO Act addresses this problem by establishing a mediation and arbitration process for reaching an initial agreement.
- The PRO Act requires employers to continue bargaining instead of taking unilateral action. Current law gives employers too much power to force its position on workers by unilaterally declaring that the parties have reached an impasse in bargaining and then either locking out workers—preventing them from working and getting paid—or implementing the employer’s proposals. This power, either alone or combined with the restrictions on workers’ ability to strike or put other economic pressure on the employer, puts employers in the driver’s seat in bargaining and greatly undermines workers’ bargaining power. To address this problem, the PRO Act prohibits employers from declaring impasse and locking out workers—a so-called “offensive lockout.” And the PRO Act requires employers to maintain the status quo on wages and benefits during bargaining—no more unilateral changes to put pressure on workers to cave in to the employer’s demands.
- The PRO Act gets the economic players to the bargaining table. Under current law, staffing firms, contractors, temporary agencies, and other employers try to evade their responsibility to bargain with workers and their union even when they have power over workers’ health and safety, schedules, wages, and other key issues. This leaves workers without the real economic players at the bargaining table. The PRO Act fixes this problem by adopting a strong joint-employer standard that will bring employers with power over wages or working conditions to the bargaining table.
- The PRO Act eliminates the ban on so-called “secondary” activity. In order to win a wage increase, a voice on new technology, safety improvements, or other bargaining priorities, workers need leverage to put economic pressure on their employer to accept their demands. But current law robs workers of their leverage in many ways, including a prohibition on so-called “secondary” activity that was enacted by Congress in 1947. In fact, current law instructs the National Labor Relations Board (NLRB) to give top priority to shutting down so-called “secondary” activity. These cases are given even higher priority than cases alleging that employers have illegally fired union activists, and statistics show this has in fact been the case. For example, in the first 12 years after the restriction on secondary activity was first implemented, the number of injunction proceedings against unions for engaging in illegal secondary activity skyrocketed by 1,188%, while virtually no injunction proceedings were brought against employers for violating workers’ rights. This restriction on secondary activity forbids workers from picketing or otherwise putting pressure on so-called “neutral” companies other than their employer, even if those companies could influence their employer’s practices by, for example, withholding purchases until workers and their employer reach a collective bargaining agreement. The restriction has been interpreted so broadly as to prohibit janitors from picketing a building management company over sexual harassment by its janitorial subcontractor. The Trump NLRB General Counsel unsuccessfully tried to argue that floating an inflatable Scabby the Rat balloon at a labor protest was illegal secondary activity, even though courts have consistently said such protests are protected by the First Amendment. Given the prevalence of subcontracting and the interrelated nature of business relationships, the ban on secondary activity does not reflect the realities of today’s business structures. It deprives workers of an important tool in the bargaining process and unfairly tips the power balance to employers. To correct this imbalance, the PRO Act repeals the ban on secondary activity.
- The PRO Act prohibits employers from permanently replacing strikers. Workers’ ultimate leverage in bargaining is to withhold their labor—in other words, to strike. The law technically protects workers from being fired when they go on a lawful strike, but this right has been gutted by a 1938 decision by the U.S. Supreme Court that stated that employers can permanently replace, i.e., terminate, workers who are on strike over economic issues. Despite a slight increase in strike activity last year, the number of strikes continues to be at a historic low in part because of this weakness in the law. The PRO Act restores the right to strike by prohibiting employers from permanently replacing economic strikers.
- The PRO Act overrides state “right-to-work” laws that weaken unions. So-called right-to-work laws have nothing to do with getting or keeping a job—they are about weakening workers’ collective voice on the job. Under the law, unions are required to represent all workers protected by the collective bargaining agreement, but so-called right-to-work laws prohibit unions and employers from voluntarily agreeing that all workers covered and protected by the agreement should share in the costs of union representation through union dues or fees. This creates a “free rider” problem, where workers get the benefits of unionization but do not contribute toward the costs, creating a financial drain on unions. The PRO Act overrides state right-to-work laws and allows unions and employers to negotiate fair share agreements whereby all workers covered by the collective bargaining agreement share in the cost of representation.
Read EPI’S fact sheet on why workers need the PRO Act.