What to watch on jobs day: Hoping for stronger nominal wage growth as the economy continues to inch toward full employment
This week, I wrote two blog posts about wages in the first half (FH) of 2017. First, I analyzed up-to-date real (inflation-adjusted) hourly wage series from the Current Population Survey (CPS) across the wage distribution and compared it to FH2016, FH2007, and FH2000. Preliminary findings from 2017 suggest more broadly based wage growth—with significant gains at the 10th percentile—associated with an economy approaching full employment as well as state-level increases in the minimum wage. However, that good news is tempered by the fact that the vast majority of workers are, in reality, only beginning to make up for lost ground, rather than getting ahead, and wage inequality is still far greater today than in 2007 or 2000.
Second, I analyzed wages in FH2017 by education level. I found that wages for workers with less than a high school degree or just a high school degree rose faster over the last year than any other group at 1.9 percent and 1.7 percent, respectively. This phenomenon is likely related to the disproportionate increases among lower wage workers, due to some states raising their minimum wage. Somewhat surprisingly, given their unemployment rate of 2.9 percent over the last year, I also found that college wages actually fell slightly between FH2016 and FH2017. This is evidence against the claim that the U.S. economy is experiencing a work shortage, particularly among credentialed workers. If employers had to work harder to attract or retain workers with a college degree, we would surely see it in the wage data.
In January, Montgomery County, Maryland County Executive Isiah Leggett vetoed an ordinance passed by the county council that would match the minimum wage in the District of Columbia, raising the county minimum to $15 by 2020. Leggett then commissioned the consulting firm PFM to analyze the likely economic effects. The firm just released their study and their findings are so implausible that they border on the absurd. The study essentially concludes that raising the minimum wage in Montgomery County—even a small amount—would be the most devastating economic shock the county has experienced in a generation, more damaging than the Great Recession. To say that the study has methodological problems would be a gross understatement. No county official, business owner, worker, or resident in Montgomery County—and certainly not editorial boards of local newspapers—should give any credence to this report.
The report posits that the proposed $3.50 minimum wage hike over 5 years will lead to massive losses in jobs, income, and county revenues. Ostensibly wanting to present both the costs and benefits, the authors do also note that “increased wages are associated with improved mental health, reduced hunger, and decreased stress for workers and their families.” Admittedly, I have only skimmed the full 145 page report, but one only needs to read the initial section on job impacts to see how flawed this “study” is. The alleged large negative outcomes for incomes and county revenues all stem from the jobs findings, so there really isn’t need to read much further.
The report’s methodology for how they calculate expected impacts on employment is completely divorced from any actual research. First, the authors go through a long discussion of other localities that have enacted higher minimum wages—such as the District of Columbia, Los Angeles, and San Jose, among others— which they refer to as “comparison jurisdictions,” implying that the impacts of minimum wage hikes in these locations might provide guidance for how a higher minimum wages might affect Montgomery County. Ironically, they note that in virtually all these “comparison jurisdictions,” studies that analyzed the resulting or likely employment effects of the local minimum wage showed that any impact on jobs was negligible. Nevertheless, the authors assert that Montgomery County is not a “twin” of any of these places, thus none of these chosen comparisons should serve as a guide.
Yesterday, I took an in-depth look at the latest wage data for select percentiles. Today, I’m going to provide a brief look at the latest wage data by educational group for the first half (FH) of 2017 compared to FH2016 and FH2007, before the Great Recession began. While FH data are, by definition, more volatile than full year data, data for this year so far indicate a mild reversal of trend from what I found in The State of American Wages 2016.
The table below shows real average hourly wages in FH2017 dollars for the five main educational groupings and annualized changes over the last year and since FH2007. It is particularly striking that the wages for workers with less than a high school degree or just a high school degree rose faster over the last year than any other group at 1.9 percent and 1.7 percent, respectively. This phenomenon is likely related to the disproportionate increases among lower wage workers. I pointed out earlier this week the likely relationship between strong wage growth at the 10th percentile and the significant number of state-level minimum wage increases that took effect at the beginning of the year.
Average hourly wages by education, FH2007–FH2017 (FH2017 dollars)
|Less than high school||High school||Some college||College||Advanced degree|
|Annualized percent change|
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata
From the latest wage data, we also see that average wages for workers with some college or a bachelor’s degree fell over the last year. Because of the opposing trends in high school and college wages, the gap between those two groups fell, mildly offsetting the increases we saw between 2015 and 2016. The slight decline in average wages for college graduates is particularly striking as the unemployment rate for that group averaged 2.9 percent over the last year. While not definitive, this is a sign that there is no shortage of credentialed workers in the economy today. If there were, employers would have to offer higher wages to attract and retain the workers they want. It remains to be seen whether this trend will continue through the remainder of the year.
Agriculture has long been the poster child for an industry dependent on low-wage migrant workers. Today, about two-thirds of the hired workers employed on crop farms were born in Mexico, and most of these Mexican-born workers are not authorized to be employed in the United States. The total number of unauthorized migrants has fallen, while the number of unauthorized migrants who are employed in the U.S. labor market has been stable at about eight million, and the share of Mexican-born farm workers has also been stable. The lack of unauthorized newcomers makes agriculture a bellwether of how industries that rely on newcomers from abroad are adjusting to the slowdown in unauthorized migration. In agriculture, employers are responding in a number of ways. One of their main strategies has been to increase the use of the H-2A guestworker program to hire farm workers from abroad for seasonal jobs; this poses key challenges that have yet to be fully explored.
How farmers are adjusting to fewer new unauthorized migrant workers: 4-S strategies
Farmers are adjusting to the lack of new unauthorized migrant workers and higher labor costs with some or all of what are called “4-S” strategies: satisfy, stretch, substitute, and supplement. First, by satisfying current workers with new incentives, employers may be able to retain them longer. The second strategy is to stretch the current workforce with mechanical aids that increase worker productivity, which can include using conveyor belts that reduce the need to carry harvested produce as far, making them more productive and harvesting jobs more appealing to older workers and women. The third strategy is substitution or replacing workers with machines. Five of the most important field crops covered by government support programs—corn, soybeans, wheat, cotton, and rice—have largely been mechanized. Fresh fruits and vegetables, on the other hand, have defied mechanization because many are fragile and require gentler human hands, and machines that shake apples or pears from trees damage a higher share of the fruit than hand harvesters.
Approximately 4,000 workers at a Nissan manufacturing plant in Mississippi will be voting on August 3 and 4 whether to join the United Autoworkers (UAW). The Nissan plant in Canton is located in a suburb of Jackson, the Mississippi state capital. For decades, the working poor in and around Jackson have faced significant problems stemming from systematic, persistent poverty. Over 30 percent of the people living in Jackson, and 26 percent of the people living in Canton, are living in poverty. But the struggles that many Mississippians face are not insurmountable, unchangeable problems. Rather, they are the result of deliberate policy choices made just down the road from the Nissan plant at the state’s capitol, on issues such as health, education, and jobs.
When it comes to health, Mississippi has the highest death rates in the country from preventable causes such as heart disease, diabetes, and stroke, but has one of the lowest rates in the country of residents who receive health insurance through their jobs. There is an immense need for better access to health care in Mississippi, and the Medicaid expansion available to Mississippi under the Affordable Care Act would give an additional 300,000 people coverage. But Governor Phil Bryant (R) deliberately chose not to expand Medicaid access for his citizens.
When it comes to education, many workers at the Nissan plant send their children to the Jackson and Canton public school districts, which were both graded as failing by the state’s Department of Education. To address underperforming schools, the state legislature established the Mississippi Adequate Education Program (MAEP), which requires the state to determine the amount of funding necessary to ensure schools districts have the basic funds needed to equip students to perform at least a “C” level. But each year, the state legislature has deliberately chosen to underfund the MAEP, totaling over $1.7 billion in education underfunding since 2008.
And when it comes to jobs, Governor Bryant is making another deliberate policy choice that will harm working people in Mississippi: he opposes the Nissan workers’ drive to form a union. The governor has taken this position even though unions have consistently been shown to raise wages and benefits for workers, which would be a much-needed boost for communities with high poverty rates like Jackson and Canton.
Earlier this year, I wrote about the state of American wages through 2016. Now, we have a chance to see what’s been happening to wages in 2017 by examining wages in the first half (FH) of the year. In the table below, I present EPI’s most up-to-date real (inflation-adjusted) hourly wage series from the Current Population Survey (CPS) across the wage distribution. I compare the most recent six months of wage data with FH2016, FH2007, and FH2000. My conclusions about FH2017 data are fairly consistent with what I found when I analyzed the 2016 data compared to previous years. Preliminary findings from 2017 suggest more broadly based wage growth—with significant gains at the 10th percentile—associated with an economy approaching full employment as well as state-level increases in the minimum wage. That good news is tempered by the fact that the vast majority of workers are, in reality, only beginning to make up for lost ground, rather than getting ahead, and wage inequality is still far greater today than in 2007 or 2000.
Hourly wages by wage percentile, FH2000–FH2017 (FH2017 dollars)
|Wage by percentile|
Note: The xth-percentile wage is the wage at which x% of wage earners earn less and (100-x)% earn more.
Source: EPI analysis of Current Population Survey microdata
Real wage growth over the last year is broadly based and stronger than the wage growth we’ve seen for much of the economic recovery from the Great Recession. This type of growth is expected as we continue to inch towards full employment. When the unemployment rate falls even as more workers are drawn into the labor market, available workers of all types become scarcer and employers have to increase wages to attract and retain the workers they want. Lowered unemployment has, in the past, benefited low-wage workers more than middle-wage workers and middle-wage more than higher-wage workers. Though we’ve seen slow but steady improvement over the last several years, today’s labor market still exhibits a fair amount of slack with a weaker prime-age employment-to-population ratio that we’ve seen at other times of similar unemployment rates and nominal wage growth slower than target levels.
Monday, July 24 marked eight years since the federal minimum wage was raised from $6.55 to $7.25. While the anniversary passed with little fanfare, the Trump administration chose Monday to issue a Request for Information (RFI) in an effort to weaken or kill the Department of Labor’s (DOL) 2016 update to the overtime rule. On Wednesday, the Trump Department of Justice (DOJ) filed a brief arguing that Title VII does not protect employees from discrimination based on sexual orientation. On Thursday, Members of Congress introduced a bill to weaken the joint employer standard under both the Fair Labor Standards Act and the National Labor Relations Act. And throughout the week, Senate Republicans continued their never-ending attempt to repeal the Affordable Care Act, with the effort ultimately failing early this morning.
Minimum wage anniversary
It has now been more than eight years since the federal minimum wage was last raised. Over this time, the purchasing power of the federal minimum wage has fallen by over 12 percent. Had the minimum wage kept pace with productivity since the late 1960s, it would be over $19 per hour today. With action on the federal level stalled, many states and municipalities have raised their minimum wages, but there are still 21 states where the minimum wage is stuck at $7.25. If policymakers raised the federal minimum wage to $15 by 2024, 41 million American workers would benefit.
Trump Department of Labor begins the process of weakening the overtime rule
In 1975, DOL set the salary level at which workers could be exempt from overtime to the equivalent of around $58,000 in today’s dollars. At that level, more than 50 percent of full-time salaried workers were covered. However, the salary threshold was not raised enough to keep up with wage growth or inflation, leaving millions of workers without protections by 2016.
The Obama administration issued a rule to raise the salary threshold, setting it at $47,476—high enough to cover about 34 percent of full-time salaried workers. The Trump administration has refused to fully implement and enforce the updated rule, first by deciding not to defend against a lawsuit attacking the rule and now by opening up a wasteful RFI. The RFI asks for input on a number of factors, such as whether there should be multiple standards based on geography or job duties. National wage standards ensure decent basic standards for all workers, and the updated rule had already set a salary threshold linked to the lowest-wage Census region. Workers’ wages should not be undercut even further by weakening the salary threshold.
July 31st is Black Women’s Equal Pay Day, the day that marks how long into 2017 an African American woman would have to work in order to be paid the same wages as her white male counterpart was paid last year. Black women are uniquely positioned to be subjected to both a racial pay gap and a gender pay gap. In fact, on average, black women workers are paid only 67 cents on the dollar relative to white non-Hispanic men, even after controlling for education, years of experience, and location.
Why does this wage gap exist for black women?
Pay inequity directly touches the lives of black women in at least three distinct ways. Since few black women are among the top 5 percent of earners in this country, they have experienced the relatively slow wage growth that characterizes growing class inequality along with the vast majority of other Americans. But in addition to this class inequality, they also experience lower pay due to gender and race bias.
In the last 37 years, gender wage gaps have unquestionably narrowed—due in part to men’s wages decreasing—while racial wage gaps have gotten worse. Despite the large gender disadvantage faced by all women, black women were near parity with white women in 1979. However in 2016, white women’s wages grew to 76 percent of white men’s, compared to 67 percent for black women relative to white men—a racial difference of 9 percentage points. The trend is going the wrong way—progress is slowing for black women.
Myth #1: If black women worked harder, they’d get the pay they deserve.
The truth: Black women work more hours than white women. They have increased work hours 18.4 percent since 1979, yet the wage gap relative to white men has grown.
Over the last several decades, both black and white workers have increased their number of annual hours in response to slow wage growth. While men typically work more hours than women, the data reveal that growth in work hours, for both whites and blacks, was heavily driven by the growth of work hours among women. The increase in annual hours is particularly striking for workers in the bottom 40 percent of the wage distribution, where it has been driven almost entirely by women.
President Trump’s spring regulatory agenda throws out hard-fought protections for workers
The administration released its spring regulatory agenda this week. Its proposals to rescind regulations that protect workers’ safety, paychecks, and retirement savings reflect an ambitious agenda that consistently puts corporate interests first. The administration’s proposals to reopen rules protecting workers from exposure to beryllium, making it easier for OSHA to track injury and illness on the job, as well as the overtime and conflict of interest (fiduciary) rules, put workers’ pay, retirement security, and safety at the bottom of their list of priorities.
The administration’s proposal also includes changes to the current regulations on “tip pooling. The National Restaurant Association, who praised this move, has lobbied for years to loosen these restrictions and give employers more control over workers’ tips. While there are few details in this proposal at the moment, it’s worth noting that the restaurant industry, where tipping is prevalent, is rife with labor violations. In a recent EPI study on wage theft, more than 14 percent of food and drink service workers reported being paid less than the minimum wage, while 6 percent of other leisure and hospitality workers reported the same. And nearly half of workers reporting wage theft in the ten most populous states worked in service occupations. Under these circumstances, a policy action that could hand even more authority over a worker’s tips to their bosses would not be a step in the right direction.
Over the last several years, the economy has moved steadily (if more slowly than we would have wanted) towards full employment. Payroll employment growth in excess of working-age population growth is a positive sign of a growing economy, but unrecovered labor force participation and below-target wage growth are clear signs of remaining economic slack—signaling that we haven’t yet reached genuine full employment.
Last week, Valerie Wilson and I put the black unemployment rate in perspective. Today, I want to talk about the plight of young workers in our economy. The overall unemployment rate between July 2016 and June 2017 (we look at data over a full calendar year to allow large enough sample sizes to compare subgroups within the labor force) was 4.7 percent. But this rate masks important differences within the population. Young workers, ages 16-24 years old, had an unemployment rate more than twice as high as prime-age (25-54 year old) workers (9.8 percent versus 4.0 percent) and nearly three times as high as older (55-64 year old) workers (3.3 percent). While young workers typically have much higher unemployment rates, tight labor markets could induce employers to turn to younger workers and push their unemployment rate down disproportionately in coming years. And like all workers, young workers need tighter overall labor markets to see their wages grow.
The Global Compact on Migration (GCM) is an agreement that is being negotiated through the United Nations (UN) by its Member States to establish a new regime for cooperation on international migration. One of the major goals of the GCM is to expand labor migration and labor mobility channels for migrants seeking work in countries other than their own. But what could that look like in practice?
Migrant workers and international labor migration
There are approximately 244 million international migrants around the globe, accounting for approximately 3 percent of the world’s population. The UN’s International Labour Organization (ILO) estimated that 150 million or two-thirds of all international migrants were in the labor forces of the countries to which they moved in 2013, suggesting that many, if not most, migrants cross national borders for economic reasons.
Congress returned from the July 4th recess this week, and Senate Republicans debuted yet another proposal in the ongoing attempt to repeal and replace the Affordable Care Act. The latest proposal still includes the severe cuts to Medicaid found in earlier drafts, so millions of Americans will lose health care coverage if this week’s version of the Republican plan becomes law. Meanwhile, the House Appropriations Committee released a fiscal year 2018 Labor, Health and Human Services, Education (LHHS) funding bill that would cut funding for the Department of Labor (DOL) by $1.3 billion. This measure also includes several non-funding-related requirements (often called “riders”) that would block or weaken labor protections. The House Committee on Education and the Workforce held a hearing attacking the concept of joint employer liability under various worker protection laws. And, the Senate Committee on Health, Education, Labor and Pensions (HELP) held a consolidated hearing on President Trump’s nominees to the National Labor Relations Board (NLRB) and to DOL.
Draining worker protection and training resources from the FY18 DOL and NLRB budgets
The LHHS funding bill from Appropriations Subcommittee Republicans would further reduce funding for agencies that are already stretched thin. Occupational Safety and Health Administration funding would be nearly $12 million less than even President Trump’s draconian budget request earlier this year (and about 4 percent less than the current budget). The Wage and Hour Division would face a roughly 6 percent cut. In other areas, the bill takes a hatchet to job training programs and other services, particularly the Workforce Innovation and Opportunity Act programs at the Employment and Training Administration. There’s also a whopping 9 percent cut ($25 million) to the National Labor Relations Board. The Bureau of Labor Statistics, crucial for providing much-needed data on the workforce, would suffer a 5 percent cut.
Minimum wage workers in St. Louis just had a taste of what life might be like with a raise, only to have it taken back by the Missouri state legislature. St. Louis is part of a growing number of cities across the country seeking to raise their own minimum wage by city ordinance.
In 2015, the City of St. Louis passed an ordinance establishing a minimum wage for the city that was higher than Missouri’s minimum wage. In the bill’s preamble, the City’s leaders explained the need for a wage increase for the its poorest workers:
WHEREAS, the defining issues of our time include the increase in income inequality, the growing gap between rich and poor, and the obstacles preventing people from rising into the middle class; and . . .
WHEREAS, low-wage workers in the St. Louis region struggle to meet their most basic needs and to provide their children a stable foundation, a safe dwelling, and an opportunity to obtain a high-quality education; and . . .
WHEREAS, minimum wage laws promote the general welfare, health, and prosperity of the City of St. Louis by ensuring that workers can better support and care for their families and fully participate in the community[.]
In 2015, Missouri’s state minimum wage was pegged at $7.65 per hour, and by passing its local ordinance, St. Louis raised it to $8.25 for employees working within the city limits. Because of that ordinance, St. Louis’ minimum wage rose to $9.00 in 2016, and $10.00 on January 1, 2017. Meanwhile, the state’s minimum wage barely budged to $7.70 during that same time period.
Last week, Missouri’s governor announced that he will let a preemption law take effect, prohibiting cities from requiring a minimum wage higher than the state’s—nullifying the city of St. Louis’s minimum wage ordinance and effectively lowering the city’s minimum wage from $10 down to $7.70. With this law, lawmakers have potentially undone raises for roughly 31,000 workers in St. Louis who received a raise when the city’s ordinance took effect in May, and likely stopped scheduled raises for those same 31,000 workers plus another 7,000 workers, for a total of 38,000 workers who would have gotten a pay increase when the city’s minimum wage was scheduled to rise to $11 an hour in January. (Minimum wage increases typically also lead to raises for workers slightly above the new minimum wage. The estimates here do not include these “spillover” effects.)
In 2015, the St. Louis city council and mayor approved a minimum wage ordinance, which would have gradually raise the city’s minimum wage to $11 per hour by January 2018. A protracted legal dispute delayed implementation of the ordinance until this past spring, but on May 5th, the ordinance finally took effect, raising the city minimum wage to $10 per hour. Now the city’s minimum wage will lose effect on August 28th, and the wage floor for workers in the city will fall back to the state minimum wage of $7.70.
It is impossible to know how many of the 31,000 St. Louis workers who were directly affected when the city’s minimum wage rose from to $10.00 will now see their pay cut, but some may. Workers can only hope that their employers will not roll back their raises. For some, that raise may have been the key difference in affording a new apartment rental, car payment, or similar long-term financial commitment. In any case, anyone starting out in the St. Louis workforce, or any low-wage worker considering changing jobs, is likely to find that most opportunities pay less than they would have had the ordinance remained in effect.
Healthcare’s biggest losers, part two: How the Senate’s TrumpCare bill can increase your state taxes
This blog post references the version of the Better Care Reconciliation Act introduced in June 2017. EPI will update the analysis if newer versions of the bill are significantly different.
In anticipation of cuts in federal spending, we often fail to consider the extent to which state governments will be obliged to pick up the slack when the cuts include grants-in-aid to the states. This concern applies with particular intensity to the largest item in most state government budgets: the Medicaid program. The Republican Senate initiative to “repeal-and-replace ObamaCare” with the so-called “Better Care Reconciliation Act (BCRA)” makes significant reductions in federal grants to state governments for Medicaid.
The Congressional Budget Office estimates that by 2036, these cuts will rise to 35 percent of spending under current law. It should be noted that current-law spending levels in the future accommodate expected increases in health care costs. Under the BCRA, future Medicaid spending might be higher than current-year spending, but it would still fall well-short of what would be necessary to absorb those future increases in health care costs. That is why the BCRA is said to cut “current services” spending, a concept that reflects projected increases in health care costs and Medicaid beneficiaries.
People who became eligible for Medicaid after 2010 under President Obama’s stimulus bill and the Affordable Care Act (ACA)—over ten million people—will lose health insurance coverage, except insofar as state governments replace the lost funds with their own tax revenue, or with cuts to other programs. (A likely victim in the latter respect is the other large item in state government budgets: K-12 education, in the form of grants to local governments and school districts.)
An important analysis by Allison Valentine, Robin Rudowitz, Don Boyd, and Lucy Dadayan provides insight into the impact of the effort by Republicans in the House of Representatives’ effort to abolish ObamaCare.
When you hear politicians singing the virtues of deregulation, remember the Grenfell Tower fire. Last month, 80 people, including young mothers and children, died in an inferno that destroyed the 24-story Grenfell Tower apartment building in London. The undisputed cause of this completely avoidable tragedy can teach us important lessons about government regulation and deregulation.
The blaze that devastated the building occurred when a faulty refrigerator near a window ignited the apartment tower’s exterior cladding, a sheath of aluminum and flammable insulation that was recently added. The cladding panels used on Grenfell Tower, which sandwich a layer of polyethylene between two aluminum sheets, are combustible. In most countries, the company that manufactures the panels recommends that they not be used on buildings taller than about 33 feet, or two stories, the reach of a firetruck’s ladder.
In most countries, including the United States, combustible panels like those installed at Grenfell Towers would be illegal. U.S. fire codes require fire testing of the cladding, and as the New York Times reports, “no aluminum cladding made with pure polyethylene – the type used at Grenfell Tower—has ever passed the test.”
In response to the large movements of refugees and migrants around the world, including the dramatic movement of over one million Syrians, Afghans, and Africans from various countries to Europe in 2015, world leaders at a UN Summit for Refugees and Migrants in September 2016 proposed two “global compacts” to improve the governance of international migration: a Global Compact for Safe, Orderly, and Regular Migration and a Global Compact on Refugees. The Global Compact on Refugees already has a normative framework, the 1951 Geneva Convention, which has been ratified by almost every nation, and a lead UN agency in the UNHCR that can assist Member States to improve protections and more equitably share the burden of hosting refugees.
While the Global Compact on Refugees is expected to offer support to countries that host large numbers of refugees by developing a Comprehensive Refugee Response Framework and to develop a plan of action to address refugee issues, the Global Compact on Safe, Regular, and Orderly Migration (also referred to as the Global Compact on Migration or GCM) has a broader challenge. The GCM must offer a framework for protecting the human rights of migrants and integrating them in the places to which they move—often for the purposes of finding employment—while also helping combat xenophobia, racism, and discrimination toward migrants.
Tomorrow, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) is set to consider President Trump’s nominees to the National Labor Relations Board (NLRB), as well as Trump’s pick for Deputy Secretary of Labor. Both the NLRB and the Department of Labor are critically important agencies for this nation’s workers. Senate Republicans were so concerned about President Obama’s nominees to the NLRB that they refused to allow a vote, leading to a showdown that culminated in then-Senate Majority Leader Reid threatening to use the “nuclear option” to change the Senate rules for confirmations. What a difference a president makes. Now, Senate Republicans have decided to rush the confirmation hearings by consolidating consideration of the NLRB nominees with a nominee to a senior post at the Department of Labor.
As an independent agency, the NLRB members do not report to the president, but rather, serve as neutral arbiters of our nation’s labor law (“umpires rather than advocates,” as Senator Lamar Alexander, the chair of the committee, likes to say). DOL, meanwhile, is a cabinet-level agency—and its leaders report directly to the president. The Deputy Secretary of Labor is a political position whose main role is not neutral interpretation of the law but rather to advance the administration’s policies. Considering these nominees alongside each other, given the incongruous nature of the positions and agencies they will serve, is an abdication of the committee’s responsibility to thoroughly review these nominations.
Rushing this process and consolidating what should be separate hearings on important nominations deprives senators of the opportunity to examine these nominations. Most importantly, it shortchanges U.S. workers who depend on these agencies and the officials who lead them to enforce their rights and protect their freedoms. We deserve a process that enables our representatives to meaningfully consider the nominations. At the very least, the HELP Committee should hold separate hearings on nominees who, if confirmed, would serve vastly different roles in vastly different agencies.
Steel and aluminum trade restraints are good first steps, but not nearly enough to rebuild manufacturing
The Trump administration is poised to impose broad tariffs and/or quotas on imports of steel and aluminum products. As the issues are being pondered, battles are raging between metal-producing and consuming industries, and between the United States and its trading partners. Trade restriction in these sectors could relieve near-term pressure on thousands of jobs and, if done well, could buy valuable time that could lead to global solutions to chronic dumping and overcapacity problems centered in China and a few other countries. But tariffs and quotas in a few industries will never be sufficient to structurally rebalance U.S. trade or rebuild U.S. manufacturing, goals that have been clearly identified by the president and other members of his administration. In order to achieve these goals, the United States needs to realign the dollar to reverse the effects of more than two decades of unfair trade and currency manipulation on world trade and the global economy.
The conclusions in this post are based on the following key observations:
- U.S. steel and aluminum industries have been heavily injured by massive growth of excess capacity and overproduction in China and other countries. More than 13,000 U.S. jobs have been lost in aluminum since 2000—and 14,000 steel jobs disappeared in last two years alone.
- Surging imports of steel and aluminum and diminished domestic production capacity in these industries are a threat to national security because access to reliable sources of these metals is critical to supply of military equipment and critical infrastructure. If current trends persist, in time of war or other national emergency, the United States would find itself dependent on unstable import sources.
- Tariffs and quotas will save jobs in these industries from near-term threats and help domestic producers recover from unfair trade. In the best of cases, tariffs can be used to encourage other importers to develop common policy to address overcapacity and overproduction by China and other major exporters. But trade remedies can have negative consequences too. Increasing costs of steel and aluminum may reduce the competiveness of other domestic producers (both downstream producers of steel and aluminum products, as well as other users such as automakers and aircraft manufacturers), hurting consumers and reducing exports. Imposing trade restraints can also lead to retaliation by other countries, further reducing U.S. exports.
Yesterday, the Consumer Financial Protection Bureau (CFPB), an independent agency that serves as a watchdog for consumers, issued a rule that would ban companies from using mandatory arbitration clauses to deny Americans their day in court. The rule would restore consumers’ ability to band together in class-action suits. Without the ability to pool resources, many people are forced to abandon claims against financial institutions and other powerful companies. Consider that hundreds of millions of contracts for consumer financial products and services include mandatory arbitration clauses. Yet, the New York Times found that between 2010 and 2014, only 505 consumers went to arbitration over a dispute of $2,500 or less. By prohibiting class actions, companies have dramatically reduced consumer challenges to predatory practices.
Mandatory arbitration clauses are also used by employers. Employees are forced give up their right to sue in court and accept private arbitration as their only remedy for violations of their legal rights. Private arbitration clauses tilt the system in the business’s favor: the company is often allowed to choose the arbitrator, who will thus be inclined to side with the business; arbitration also cannot be appealed, leaving workers and consumers in much worse shape than if they had access to the courts. As such, employees who bring grievances against their employers are much less likely to win in arbitration than in federal court. Employees in arbitration win only about a fifth of the time (21.4 percent), whereas they win more than a third (36.4 percent) of the time in federal courts.
Today’s report from the Bureau of Labor Statistics showed the economy added 222,000 jobs in June. If this rate of growth keeps up, we should see the economy heading faster toward full employment over the next year. Meanwhile, the overall unemployment rate ticked up slightly to 4.4 percent. This slight increase happened for the “right” reasons as the labor force participation rate rose slightly to 62.8 percent percentage points and the employment-to-population ratio also rose slightly to 60.1 percentage points. As the economy continues to inch towards full employment, we should expect the recovery to reach all corners of the where workers including young and old, and workers of all races can fully benefit from the economy.
One particularly bright finding in today’s report is the noticeable drop in the black unemployment rate. While the unemployment rate for black workers remains far higher than for white workers (7.1 percent versus 3.8 percent), the black unemployment rate has been falling faster than overall unemployment over the last year. It’s important to not put too much attention on one month’s data because it can be misleading as the black unemployment rate displays a fair amount of measurement-driven volatility. Looking at the longer term trends, black unemployment has fallen 1.5 percentage points over the last year, compared to a 0.5 percentage point drop overall. Previous estimates indicate that the black unemployment rate tends to be more volatile with respect to aggregate labor market changes than the white rate. Still, this improvement is quite a bit stronger than the historical average of roughly a 2 percentage point change in the black unemployment rate for every 1 percentage point change in the overall rate.
Job growth has noticeably slowed, but slack remains
Over the last several months, the pace of job growth has noticeably slowed. May’s payroll job growth of 138,000 brought average monthly job growth down to just 121,000 jobs the past three months, and 162,000 this year so far. In comparison, payroll employment growth averaged 187,000 in 2016 and 226,000 in 2015. While the pace of job growth should be expected to slow as the economy approaches full employment, it’s not clear that we should rest easy that this is the explanation for any recent slowdown. After all, many indicators seem to be telling us that we have not yet reached full employment. For instance, the prime-age employment-to-population ratio remains significantly below its high points in previous recoveries, meaning there is likely still slack from the Great Recession and its aftermath as would-be workers sit on the sidelines and would likely get back in the game as jobs are created and wages increase.
Furthermore, gains in nominal wage growth have slowed in the past few months, with year-over-year wage growth averaging 2.5 percent over the last three months, down from 2.7 percent in the six months prior, which is still far-below the target growth rate of 3.5 percent. While the economy has been adding jobs for years now, a stronger economy would mean higher wages and faster wager growth. At the current rate of growth, it is clear that employers need to do little to attract and retain the workers they want and any significant signs of labor shortages are simply not showing up in the data.
First economic scenario: Treading water
For now, let’s return to the topline payroll numbers. With the publication of the latest CBO projections, we can assess how much job growth we need to not only keep up with population growth (which is the only job growth needed if the economy truly is at full employment), but to see lower rates of unemployment and greater participation in the labor force (assuming that we’re not yet at full employment). For those who just want the quick and dirty answer, please skip to the figure below. For those who want a bit more detail, keep reading.
DHS and DOL should focus on improving protections for H-2B and U.S. workers rather than expanding a flawed guestworker program
ProPublica recently reported that the Department of Labor (DOL) and the Department of Homeland Security (DHS) are being pressed to “find the data” to justify an interim final rule (IFR) to increase the number of visas in the H-2B guestworker program before the end of the fiscal year, as means of securing votes in the Senate for repealing the Affordable Care Act. Such an action would compromise the integrity of what should be an exhaustive and transparent rulemaking process.
There is no good reason for any increase in the H-2B annual numerical limit (also known as the “cap”), but if the administration is set on expanding a flawed guestworker program that leaves migrant workers exploitable while undercutting U.S. workers, it makes sense for DHS and DOL to promulgate an IFR. At present there is no established process or procedure set up for lifting the cap in the way it might play out in the coming weeks as a result of a legislative rider to a government spending bill that gave DHS discretion to raise the cap. Simply publishing a statement or policy directive might be questionably legal or be challenged in the courts, and an IFR will at least offer the public a more transparent process and methodology. DHS should also consider offering the public an opportunity to offer input on any published regulation or IFR on H-2B, even if it is provided after the rule goes into effect.
But first, it is important to remember that the long term labor market trends and indicators do not suggest the United States is experiencing national-level labor shortages in the top H-2B occupations. There is however, ample evidence that the H-2B program needs major reforms to protect migrant and American workers. At present, employers have an incentive to hire indentured and underpaid H-2B workers from abroad who have little power in the workplace, and who have no hope of a path to permanent residence and citizenship.
With federal inaction, states continue to step up in providing paid sick days to their workers and families
While inaction on paid sick days at the national level continues to erode families’ economic security, cities and states are stepping up for working people and serving as models for jurisdictions throughout the country. Rhode Island is the latest example—legislators there have been working to pass legislation to guarantee a minimum amount of paid time for eligible workers to care for themselves or their family when they are sick or need medical care. While there are important differences in the proposals, both the Rhode Island House and Senate have passed measures which would significantly expand the ability for workers there to earn paid sick time. If the governor signs a bill, it will be a big win for working people and their families in Rhode Island, as the state will join Connecticut, California, Massachusetts, Oregon, and Vermont in guaranteeing that working people have the ability to earn paid sick time.
In a paper released earlier this week, Jessica Schieder and I highlighted some of the costs to workers and their families when they are not given the opportunity to earn paid sick time. By examining estimated spending on essential items for families who lack paid sick days today, we quantified how this lack threatens the economic security of low- and moderate-income families.
OSHA has officially announced a proposal to delay the reporting requirements of its “Improve Tracking of Workplace Injuries and Illnesses” recordkeeping rule that was issued last July.
The recordkeeping rule simply requires employers already covered by OSHA’s recordkeeping requirements to send the form 300A (Summary of Work-Related Injuries and Illnesses) to OSHA and then OSHA would publicize the information on its website. The rule also prohibits employers from retaliating against workers for reporting injuries or illnesses.
Employers were originally required to send their information in to OSHA by July 1. OSHA announced its “intention” to delay reporting last month. The non-retaliation part of the standard, which generated intense industry opposition, may not fare as well. That part of the regulation is in effect, but OSHA states in this proposal that it “intends to issue a separate proposal to reconsider, revise, or remove other provisions of the prior final rule.” So stay tuned for that.
OSHA justifies the delay by stating that it “will allow OSHA an opportunity to further review and consider the rule” and that the delay “will allow OSHA to provide employers the same four-month window for submitting data that the original rule would have provided.” OSHA had originally planned to post a website last February so that employers would have four months to submit the data to meet the original July 1 deadline, but the new administration refused to put the website up.
Summer has officially arrived, and with it an influx of interns has come to the nation’s capital. Many of these young men and women will spend the summer working in congressional offices for no pay. While information on the use of unpaid interns is not available for every congressional office, EPI conducted an informal survey and found that at least three-quarters of all House offices use unpaid interns. More than half of all Senate offices, meanwhile, have unpaid interns, according to a survey by the advocacy group Pay Our Interns.
Congress is not alone in its practice of offering unpaid internships—in fact, far from it. Unpaid internships are common in every sector, and have come to be considered a necessary prerequisite for getting a job—despite the fact that most unpaid internships are actually against the law. The Fair Labor Standards Act (FLSA)—the foundation of modern labor law in the United States—requires that anyone doing work for an employer, including interns, be paid at least the minimum wage.
The Department of Labor (DOL) is tasked with enforcing the FLSA and has developed a six-point test to determine whether an internship must be paid as employment covered by the FLSA or is, instead, training or education. In recent years, in a number of high-profile cases courts have upheld and applied the DOL’s test, and determined that an employer had violated the FLSA when it failed to pay its interns for their work. While Congress is exempted from the laws protecting interns, it sets a powerful example by not paying its interns, and the practice has a far-reaching impact on society as well as public policy.
While the new administration in Washington appears to be in a rush to use its executive branch power to undo all the efforts of the previous administration to protect hourly paid employees, a more worker-friendly, forward-looking group in the U.S. Congress has decided it’s time to push back by offering a clearer, alternative approach—by re-introducing the Schedules That Work Act (SWT)—previously S. 1772 and H.R. 3071. The purpose is to address both the causes and consequences of the intensifying use of more unpredictable, last minute scheduling of work—well documented recently in an article in The New York Times.
The national bill attempts to create elements of what some other states and cities in the United States, and developed countries around the globe, have already proposed, legislated or implemented. The Schedules That Work Act entails three main features, with the overarching idea of setting a minimum floor standard that reduces any short-term cost advantage for employers who rely on scheduling practices that shift all the costs of uncertainty in their business on to hourly paid employees.
One, it grants an employee the right to request that his or her employer modify the number of hours or times the employee is required to work or be on call, the location of work, and the amount of notification time he or she receives of work schedule assignments. The process would ensure that employers give due consideration to these requests, in a timely, good faith, and interactive manner. And it protects against employer retaliation for making such adjustment requests. It outlines the grounds for denying a change, if there is a bona fide business reason for denying it, particularly if the request is made because of the employee’s serious health condition, caregiver responsibilities, or enrollment in a career-related educational or training program, or if a part-time employee requests such a change for a reason related to a second job. Such a right to request has worked well in countries such as the U.K. and Australia, and is so successful and harmless for employers that it has been expanded to cover all employees, not just those with caregiving responsibilities. With a recent national survey showing that almost half of U.S. workers have no input into their work scheduling—and only 15 percent can set their own daily start and end times for work—this will help provide workers some voice, if not say, in the scheduling of their daily and weekly work schedules.
For millions of hourly workers, a predictable, stable work schedule is rare. Work hours can vary not just week to week, but even day to day for millions working in retail, restaurant, hospitality, and building cleaning jobs. Two scheduling techniques often used in these industries can wreak havoc on workers: just-in-time and on-call scheduling. Employers use just-in-time scheduling to account for predicted consumer demand, which often leaves workers with just a few days’ notice of their hours. On-call scheduling provides even less notice, as workers know the length of their schedule just hours before a shift starts. These methods make it impossible for people to balance their work with personal responsibilities like taking classes, maintaining another job, caring for a sick relative, or arranging child care. The Schedules That Work Act, which is being introduced today by Representative Rosa DeLauro provides hourly workers with protections they are not often given by their employers: advance notice of schedules and the right to request a schedule change.
Workers in retail and food services are less likely on average to be able to decide, or have any input into, their own schedules. Nearly half of low-wage and/or hourly workers have no input into their work hours, including the inability to make even minor adjustments. Nine-out-of-ten workers in retail and fast food service jobs report variable hours, and part-time workers are even more likely to have variable and unpredictable schedules. The lack of fair scheduling shifts the cost of uncertainty from employers to employees who already carry the burden of low wages and minimal benefits. At the same time, unpredictable schedules lead to higher turnover as workers leave to find a more stable work schedule or are fired due to the inability to meet on-call demands. This turnover is a significant cost to employers in terms of profitability, productivity, and service.
Everyone loves apprenticeships (including me) as a basic model for learning work-related skills, but for the most part, policymakers don’t think very hard about why there’s so little apprenticeship in the United States. For that reason, we’re likely to continue talking about how great apprenticeship is but not making significant investments in it. President Trump’s underwhelming plan to expand apprenticeship, unveiled this past week, won’t change that. His initiative will add $100 million (less than a dollar per U.S. worker) to the budget for apprenticeship and give employers more flexibility (i.e., unilateral control without objective oversight or minimum standards) in structuring new apprenticeships but does little to address the underlying reasons why the United States lags behind our peers when it comes to apprenticeships.
The president likes apprenticeship for some of the same reasons we do. People can “learn while they earn,” without taking on debt—unlike many college graduates. In high-quality apprenticeships, with strong connections to employers and/or unions, people learn skills that are really needed on the job. In a wide range of occupations, including professions, craft and technical work, and caring occupations, a high proportion of critical skills are acquired on-the-job through learning-by-doing and informal mentoring. For that reason, apprenticeship and other models (e.g., internships, coops) that integrate classroom and workplace learning are more effective than years of classroom education followed by work without structured support for learning. Although the president didn’t point this out, apprenticeship also carries with it an implicit message of respect for the occupation—the idea that experienced workers possess significant skills and you need a proven mechanism like apprenticeship to transmit that knowledge to new initiates.
Today, the Acting Solicitor General switched the government’s position in National Labor Relations Board v. Murphy Oil USA, Inc, from arguing in favor of working people to arguing in favor of big business. The move is deeply disappointing, and represents a stark departure from standard practice. It is the clearest indication yet of where the Trump administration stands: with corporate interests and against working people.
The Murphy Oil case is significant for workers. It will determine whether mandatory arbitration agreements with individual workers that prevent them from pursuing work-related claims collectively are prohibited by the National Labor Relations Act (NLRA). These agreements have become increasingly common.
The NLRA guarantees workers the right to join together to improve their terms and conditions of employment and prohibits employers from interfering with or restraining the exercise of these rights. In Murphy Oil, the National Labor Relations Board is arguing that agreements that force workers to waive their right to pursue work-related claims on a class or collective basis interfere with workers’ rights under the NLRA and are prohibited. The Solicitor General argued this position just last October, and there has been no change in the law since then. As a matter of fact, just last month the United States Court of Appeals for the Sixth Circuit held that these mandatory arbitration agreements and class action waivers are prohibited by the NLRA. The only thing that has changed is the administration.
It is worth noting how unprecedented this move is. The most recent example of the Solicitor General changing positions is a Reagan administration-era case, Bob Jones University v. United States. In that case, the government changed its position to advocate in favor of an institution’s right to adopt racially discriminatory policies while enjoying tax exempt status. It was a shameful switch. And, the Solicitor General lost. Today’s decision is also shameful. The Acting Solicitor General is arguing against workers’ rights to join together to advocate for better wages and working conditions. Like the Bob Jones University about-face, this switch, puts the Acting Solicitor General and the Trump administration on the wrong side of history and, hopefully, the wrong side of the Supreme Court in this important case.