The effects of deficits and debt on the broader economy are largely straightforward—with one big exception: They differ radically depending on whether the economy is operating near its productive potential or is instead operating well below it (which occurs most notably during recessions).Read more

Long-term interest rates have been rising steadily over the past six months and have now reached their highest levels since before the Great Recession of 2008. These higher rates, combined with inflation that remains above the Federal Reserve’s 2% target, are likely driven in part by unsustainably high federal budget deficits.Read more

Yesterday, the world lost Dolores Huerta, a pioneering labor leader, organizer, and activist who made her mark on the world by advocating for some of poorest and most exploited workers in the United States: the farmworkers who cultivate, pick, and package the food we all eat. She continued fighting for social change until her death at age 96.

Her lasting impact on the lives of farmworkers is almost impossible to overstate. Farmworkers are notoriously some of the most difficult workers to organize because of extreme poverty and language and immigration status barriers, and because farm jobs are seasonal and unstable. Nevertheless, Huerta set out to organize them by starting the Agricultural Workers Association in 1960 and two years later co-founding the United Farm Workers Association, which became the United Farm Workers (UFW) in 1972—one of the few farmworker unions in the country. She masterminded successful strikes and boycotts against wealthy farm owners and businesses and negotiated the first-ever collective bargaining agreement with an agricultural employer, which won farmworkers long-overdue raises and newfound benefits.

Her advocacy extended far beyond the fields and negotiating rooms, helping win major policies that reshaped the legal landscape for farmworkers in California and showed the rest of the country what was possible. Perhaps the most notable is the 1975 Agricultural Labor Relations Act (ALRA), which gave farmworkers in California the right to organize and bargain collectively. The ALRA also created the Agricultural Labor Relations Board, which operates similarly to the federal National Labor Relations Board (NLRB) by conducting union elections and adjudicating unfair labor practice charges—standing in for the NLRB because farmworkers are excluded from the federal law that governs labor rights. Throughout her life, Huerta also pushed for policies that would, for example, protect farmworkers from pesticide exposure, provide disability insurance for injured farmworkers, and expand voter and language access for Latinas and Latinos.

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This is a guest blog from Owen Herrnstadt, former Chief of Staff of the International Association of Machinists and Aerospace Workers and former member of the Board of Directors of the U.S. Export-Import Bank. 

International labor and human rights standards are widely recognized but rarely enforced. The Universal Declaration of Human Rights, the conventions and declarations of the International Labor Organization (ILO), the Organization for Economic Co-operation and Development (OECD) guidelines, and the performance standards of international financial institutions all set out expectations for how workers should be treated, yet each lacks a meaningful mechanism for compelling compliance. Trade law has emerged as a possible exception. Renegotiation of the United States-Mexico-Canada Agreement (USMCA) offers an opportunity to significantly strengthen efforts to effectively enforce labor and human rights in a regional trade agreement. 

While USMCA’s labor chapter and its annexes—including the Rapid Response Labor Mechanism (RRM)—represent the most ambitious labor enforcement architecture in any U.S. trade agreement, serious criticism remains over its impact on improving labor and human rights. Mexico’s reforms have not gone far enough, implementation has raised serious questions, the RRM—while representing a significant step forward—is narrow, slow, and procedurally burdensome, and the wage and trade balance outcomes the agreement was meant to improve have not moved in the right direction.

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Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning. Read the full thread here. 

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Around this time last year, we wrote about the remarkable resilience Hispanic workers were showing in the labor market. Despite weaker job growth, the share of Hispanic workers with a job remained high, largely driven by a record-high employment rate among Latina workers.  

Today, despite the ongoing economic and social toll of Trump’s draconian mass deportation policy, prime-age Latina workers continue to drive much of the strength in the employment rates of Hispanic workers. But we also see signs of weakness for younger workers between the ages of 16 and 24. New data released this year also show that Hispanic adults and their families share growing concerns about their employment security. We highlight each of these dynamics below.

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Reporting in The New York Times describes an upcoming proposal from the Trump administration to use funds from the Child Care and Development Fund to provide “parent-based child care” in which a married parent could receive financial assistance to stay home to care for their children, while the other parent works. Providing additional income to support economically struggling families, including support for family members who want to be full-time caregivers for children, is a great idea. Pulling the funds to do so from the Child Care and Development Fund is not. 

The CCDF was created in the 1990s to provide child care subsidies for low-income families, so parents, primarily mothers, could work or go to school. The program is severely underfunded, however. It serves just 16% of all eligible children and just 17% of eligible children, age 5 and younger. That leaves hundreds of thousands of eligible children sitting on waitlists. Worse, some states don’t maintain a waitlist or have simply implemented an “enrollment freeze,” turning eligible applicants away rather than adding them to a waitlist. 

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This piece was originally published in American Educator, the professional journal of the American Federation of Teachers. Read it here. 

Outside of a crisis or recession, Americans’ perceptions of how the country and economy are being managed have never been so negative. Many have attributed this voter unhappiness to a crisis of “affordability.”

It is objectively true that it is too hard for most American families to afford a secure and dignified life. But the word “affordability” leads too many people—including policymakers—to fixate on prices. Affordability is not just about prices; instead, it’s the outcome of a race between incomes and prices.

This is not just economists quibbling. Focusing on prices will lead policymakers to ignore far too much of the useful playing field when thinking about what changes could make life better for working families.

In this article, we make the following arguments:

• Far too many families are unable to afford a decent economic life.
• The primary cause is a large increase in income and wage inequality, with incomes and wages for the vast majority of families lagging far behind what they could and should be.
• This rise in inequality was caused by increasingly unequal “market” incomes (e.g., wages and salaries, returns on investments), while changes in taxes or transfers (e.g., Social Security, Medicare, unemployment insurance) slightly dampened the rise of income inequality.
• The large rise in income inequality was driven by intentional policy changes that affected typical workers’ leverage and bargaining power in the labor market—and that means they can be reversed.
• In capitalist economies (like ours), labor markets are inherently tilted toward employers—but historically and globally, broadly shared prosperity has only been achieved when policies that intentionally support workers (like strong unions, adequate minimum wages, and full employment mandates) have provided a countervailing force against employers’ power in labor markets. 
• Much of the post-1979 period in the United States saw an assault on worker-friendly policies, and this led directly to the rise in inequality and to weak income growth for working families.

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Historically, the U.S. has been a leader in providing reliable and timely statistical information to support business strategy and policymaking. The value of information provided publicly and free of charge to businesses, households, and governments is immense. Yet underinvestment over the past 15 years is a key reason why the U.S. lost its position on the cutting-edge of public statistical services worldwide.

Since the beginning of the second Trump administration, this underinvestment has accelerated, and the administration has made intentional efforts to degrade the effectiveness and independence of the federal statistical agencies (FSAs). This accumulation of threats to the effectiveness of the FSAs will rapidly degrade the value of the key public good they provide, unless policy changes course sharply.

This blog post provides just one example of how cumulative underinvestment has blocked the ability of a key FSA to respond to developments, making its data less reliable over time. The Bureau of Labor Statistics collects a range of necessary data tracking the performance of the U.S. labor market. This BLS data are a key input into high-stakes decisions across the U.S. economy—including for both public and private actors. For example, the Federal Reserve relies on BLS data about unemployment rates, payroll job growth, wage growth, and price indexes to set monetary policy. The more volatile the BLS data are from month to month, the worse the information that guides Federal Reserve decisions.

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