The wizard of the White House roared last week, and markets quaked from Shanghai to London. In the face of Beijing’s refusal to meet U.S. demands on intellectual property theft and forced technology transfer, President Donald Trump is ramping up tariffs on Chinese imports.

This may prove to be another ploy to coerce a trade deal from China’s negotiating team. But while president can indeed impose draconian tariffs on imports from China, it still won’t solve the most fundamental trade problem for America: chronic trade deficits.

To be sure, China is a growing problem for the U.S. economy. Last year, the United States racked up a $419 billion goods trade deficit with China—almost half of the nation’s entire international goods deficit.

And the U.S. has lost at least 3.4 million good-paying jobs, including 136,100 jobs in Pennsylvania, mostly in manufacturing, due to growing trade deficits with China since it entered the WTO in 2001.

For a long time, the fundamental cause of this growing trade chasm with China was Beijing’s deliberate currency undervaluation. Between 2000 and 2013, China invested more than $4 trillion—nearly 40 percent of its current GDP—in foreign currency assets, primarily U.S. Treasury securities.

And it paid off, since it drove down the value of the Chinese yuan relative to the U.S. dollar. This served as a massive subsidy for Chinese exports and a tax on U.S. products shipped to China.

Read more

A key dividing line between competing proposals to address climate change is the role of publicly financed and directed investments.

A recent open letter about policies that should be enacted to slow climate change from a group of prominent economists mentioned only carbon pricing, and, at least implicitly argued against publicly financed and directed investments by asserting that a carbon tax “should …be revenue neutral to avoid debates over the size of government.”

Alternatively, the central organizing principle around the “Green New Deal”—both the congressional resolution as well as the looser collection of ideas associated with the phrase–is that pricing carbon alone is not enough, and that a substantial degree of public planning and investment will be necessary to stop catastrophic climate change.

Here at EPI, we are firmly of the view that a robust package of publicly financed and directed investments should be part of a large portfolio of policies (which includes carbon pricing) for stopping climate change. Not every impediment to undertaking green investments is rooted simply in the too-low price of carbon. Public investments offer a way to cut through the Gordian knot of incentives and inertia that would slow green investments even in the presence of carbon pricing.Read more

Proof that teaching is increasingly becoming a profession under siege is mounting.

Many of us have relatives or friends who were dismissed from their schools during the recession or kept their jobs but faced cuts in school funding and other challenges affecting their work lives. News reports are replete with stories of teachers who quit or who are thinking about quitting. And the most recent PDK poll of American’s views of public education found that more than half of the parents surveyed said they do not want their children to become public school teachers—the largest share since the question was introduced in 1969 and the first time a majority of parents answered this way.

The U.S Department of Education closes the school year with the publication of the Teacher Shortage Areas. Researchers point to a lack of available individuals to fill teaching positions as a factor in the teacher shortage, which we explore in a series of reports being released this spring and summer. The shortage is estimated to exceed 110,000 teachers missing in the current school year, according to our colleagues at the Learning Policy Institute.

Why is the role of educating our children becoming so unpopular?

The explanations people would provide for the declining popularity of teaching are many and may vary depending on the respondent and her or his connection to the profession. Still, it is pretty likely that low teacher pay would be a common response, either as a single cause or as an important feature in a constellation of causes that includes disrespect from policymakers, underfunding (which leaves teachers without the supports to handle their day-to-day needs), and disinvestment in the professional supports that help teachers adapt to changing conditions, continue their professional education, and collaborate with one another—key elements of any professional occupation. It’s likely that explanations from teachers themselves would emphasize both the lack of professional supports that reflect a lack of appreciation for teaching as a professional like any other profession and the pay penalty they live with.

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Federal law is supposed to be the backstop that protects the vulnerable when lower levels of government fail to act. But a recent proposal to establish a regionally-adjusted federal minimum wage would undermine this principle, codifying disparities into federal law that in many cases are not the result of benign economic forces.

For one thing, it is impossible to separate the prevalence of low wages in the South from the persistent racial hierarchies there. Fortunately, the historical record shows that federal lawmakers do not need to accept this legacy. Establishing a federal $15 minimum wage in 2024, as over 200 Congressional Democrats have proposed, is economically achievable nationwide.

For decades, lawmakers—particularly in southern states—have refused to raise minimum wages and have prohibited cities and counties from doing so. The proposed regionally-adjusted federal minimum would simply accept this outcome, locking in these areas’ low-wage status, and leaving behind millions of workers—particularly workers of color—in the process. The Economic Policy Institute estimates 15.6 million fewer workers would get a raise under the regional proposal compared with a universal $15 minimum wage, and over 40 percent of these excluded workers are people of color.

It is true that states and sub-state areas have varying wage and price levels and there are times when policies should take those differences into account. The good news is regional wage differences are far smaller today than in past decades. This means implementing a more livable national minimum wage is easier now than for previous generations.

Doing so will generate a universal federal minimum wage that states and cities can exceed if needed, so that no worker fails to receive a livable wage and policy gradually shifts upward those at the bottom of the wage scale. A uniform federal minimum wage would help combat inequality across both racial and gender lines.Read more

Our economy is out of balance. Corporations and CEOs hold too much power and wealth, and working people know it. Workers are mobilizing, organizing, protesting, and striking at a level not seen in decades, and they are winning pay raises and other real change by using their collective voices.

But, the fact is, it is still too difficult for working people to form a union at their workplace when they want to. The law gives employers too much power and puts too many roadblocks in the way of workers trying to organize with their co-workers. That’s why the Protecting the Right to Organize (PRO) Act—introduced today by Senator Murray and Representative Scott—is such an important piece of legislation.

The PRO Act addresses several major problems with the current law and tries to give working people a fair shot when they try to join together with their coworkers to form a union and bargain for better wages, benefits, and conditions at their workplaces. Here’s how:Read more

Over the last several years, the economy has continued on a slow-but-steady march to full employment. Along with improvements in nominal wage growth, we’ve seen evidence that more and more sidelined workers continue to pour into the labor market, seeking work and getting jobs. This growing labor force participation rate (LFPR), which has beaten many experts’ more pessimistic projections, is the subject of this jobs day preview post.

Projections of labor force participation changed dramatically once the Great Recession hit and many experts quickly decided that cyclical drop-offs in participation were actually structural trends. Think of cyclical changes as being short term, driven by the aggregate demand shortfall that caused the Great Recession and its aftermath. Structural changes are due to long-run trends, such as the aging of the workforce or the retirement of baby boomers. In and immediately following the Great Recession, there was a steady and deep decline in labor force participation. Even after the unemployment rate began to recover after a sharp spike, the participation rate continued to decline. That relationship is clearest when you look at the prime-age population, as I’ve pointed out before, but is true when you look at overall labor force participation and unemployment as well.

The figure below shows the relationship between the unemployment rate and the labor force participation rate between 1989 and 2019. It’s clear that the labor force participation rate continued to decline even as the unemployment rate started to recover in the aftermath of the Great Recession. Remember that to be counted as unemployed, you must be actively looking for work in the four weeks prior. With so many would-be workers falling off the official count of the unemployed, because the weak economy meant they did not believe there were job opportunities for them, many analysts began to question whether they would ever return.

Figure A

The labor force participation rate continued to decline long after the unemployment rate began recovering in the aftermath of the Great Recession: Labor force participation and unemployment rates, ages 16 and older, 1989–2019

	Labor Force Participation Rate	Unemployment Rate
Jan-1989	66.5%	5.4%
Feb-1989	66.3%	5.2%
Mar-1989	66.3%	5.0%
Apr-1989	66.4%	5.2%
May-1989	66.3%	5.2%
Jun-1989	66.5%	5.3%
Jul-1989	66.5%	5.2%
Aug-1989	66.5%	5.2%
Sep-1989	66.4%	5.3%
Oct-1989	66.5%	5.3%
Nov-1989	66.6%	5.4%
Dec-1989	66.5%	5.4%
Jan-1990	66.8%	5.4%
Feb-1990	66.7%	5.3%
Mar-1990	66.7%	5.2%
Apr-1990	66.6%	5.4%
May-1990	66.6%	5.4%
Jun-1990	66.4%	5.2%
Jul-1990	66.5%	5.5%
Aug-1990	66.5%	5.7%
Sep-1990	66.4%	5.9%
Oct-1990	66.4%	5.9%
Nov-1990	66.4%	6.2%
Dec-1990	66.4%	6.3%
Jan-1991	66.2%	6.4%
Feb-1991	66.2%	6.6%
Mar-1991	66.3%	6.8%
Apr-1991	66.4%	6.7%
May-1991	66.2%	6.9%
Jun-1991	66.2%	6.9%
Jul-1991	66.1%	6.8%
Aug-1991	66.0%	6.9%
Sep-1991	66.2%	6.9%
Oct-1991	66.1%	7.0%
Nov-1991	66.1%	7.0%
Dec-1991	66.0%	7.3%
Jan-1992	66.3%	7.3%
Feb-1992	66.2%	7.4%
Mar-1992	66.4%	7.4%
Apr-1992	66.5%	7.4%
May-1992	66.6%	7.6%
Jun-1992	66.7%	7.8%
Jul-1992	66.7%	7.7%
Aug-1992	66.6%	7.6%
Sep-1992	66.5%	7.6%
Oct-1992	66.2%	7.3%
Nov-1992	66.3%	7.4%
Dec-1992	66.3%	7.4%
Jan-1993	66.2%	7.3%
Feb-1993	66.2%	7.1%
Mar-1993	66.2%	7.0%
Apr-1993	66.1%	7.1%
May-1993	66.4%	7.1%
Jun-1993	66.5%	7.0%
Jul-1993	66.4%	6.9%
Aug-1993	66.4%	6.8%
Sep-1993	66.2%	6.7%
Oct-1993	66.3%	6.8%
Nov-1993	66.3%	6.6%
Dec-1993	66.4%	6.5%
Jan-1994	66.6%	6.6%
Feb-1994	66.6%	6.6%
Mar-1994	66.5%	6.5%
Apr-1994	66.5%	6.4%
May-1994	66.6%	6.1%
Jun-1994	66.4%	6.1%
Jul-1994	66.4%	6.1%
Aug-1994	66.6%	6.0%
Sep-1994	66.6%	5.9%
Oct-1994	66.7%	5.8%
Nov-1994	66.7%	5.6%
Dec-1994	66.7%	5.5%
Jan-1995	66.8%	5.6%
Feb-1995	66.8%	5.4%
Mar-1995	66.7%	5.4%
Apr-1995	66.9%	5.8%
May-1995	66.5%	5.6%
Jun-1995	66.5%	5.6%
Jul-1995	66.6%	5.7%
Aug-1995	66.6%	5.7%
Sep-1995	66.6%	5.6%
Oct-1995	66.6%	5.5%
Nov-1995	66.5%	5.6%
Dec-1995	66.4%	5.6%
Jan-1996	66.4%	5.6%
Feb-1996	66.6%	5.5%
Mar-1996	66.6%	5.5%
Apr-1996	66.7%	5.6%
May-1996	66.7%	5.6%
Jun-1996	66.7%	5.3%
Jul-1996	66.9%	5.5%
Aug-1996	66.7%	5.1%
Sep-1996	66.9%	5.2%
Oct-1996	67.0%	5.2%
Nov-1996	67.0%	5.4%
Dec-1996	67.0%	5.4%
Jan-1997	67.0%	5.3%
Feb-1997	66.9%	5.2%
Mar-1997	67.1%	5.2%
Apr-1997	67.1%	5.1%
May-1997	67.1%	4.9%
Jun-1997	67.1%	5.0%
Jul-1997	67.2%	4.9%
Aug-1997	67.2%	4.8%
Sep-1997	67.1%	4.9%
Oct-1997	67.1%	4.7%
Nov-1997	67.2%	4.6%
Dec-1997	67.2%	4.7%
Jan-1998	67.1%	4.6%
Feb-1998	67.1%	4.6%
Mar-1998	67.1%	4.7%
Apr-1998	67.0%	4.3%
May-1998	67.0%	4.4%
Jun-1998	67.0%	4.5%
Jul-1998	67.0%	4.5%
Aug-1998	67.0%	4.5%
Sep-1998	67.2%	4.6%
Oct-1998	67.2%	4.5%
Nov-1998	67.1%	4.4%
Dec-1998	67.2%	4.4%
Jan-1999	67.2%	4.3%
Feb-1999	67.2%	4.4%
Mar-1999	67.0%	4.2%
Apr-1999	67.1%	4.3%
May-1999	67.1%	4.2%
Jun-1999	67.1%	4.3%
Jul-1999	67.1%	4.3%
Aug-1999	67.0%	4.2%
Sep-1999	67.0%	4.2%
Oct-1999	67.0%	4.1%
Nov-1999	67.1%	4.1%
Dec-1999	67.1%	4.0%
Jan-2000	67.3%	4.0%
Feb-2000	67.3%	4.1%
Mar-2000	67.3%	4.0%
Apr-2000	67.3%	3.8%
May-2000	67.1%	4.0%
Jun-2000	67.1%	4.0%
Jul-2000	66.9%	4.0%
Aug-2000	66.9%	4.1%
Sep-2000	66.9%	3.9%
Oct-2000	66.8%	3.9%
Nov-2000	66.9%	3.9%
Dec-2000	67.0%	3.9%
Jan-2001	67.2%	4.2%
Feb-2001	67.1%	4.2%
Mar-2001	67.2%	4.3%
Apr-2001	66.9%	4.4%
May-2001	66.7%	4.3%
Jun-2001	66.7%	4.5%
Jul-2001	66.8%	4.6%
Aug-2001	66.5%	4.9%
Sep-2001	66.8%	5.0%
Oct-2001	66.7%	5.3%
Nov-2001	66.7%	5.5%
Dec-2001	66.7%	5.7%
Jan-2002	66.5%	5.7%
Feb-2002	66.8%	5.7%
Mar-2002	66.6%	5.7%
Apr-2002	66.7%	5.9%
May-2002	66.7%	5.8%
Jun-2002	66.6%	5.8%
Jul-2002	66.5%	5.8%
Aug-2002	66.6%	5.7%
Sep-2002	66.7%	5.7%
Oct-2002	66.6%	5.7%
Nov-2002	66.4%	5.9%
Dec-2002	66.3%	6.0%
Jan-2003	66.4%	5.8%
Feb-2003	66.4%	5.9%
Mar-2003	66.3%	5.9%
Apr-2003	66.4%	6.0%
May-2003	66.4%	6.1%
Jun-2003	66.5%	6.3%
Jul-2003	66.2%	6.2%
Aug-2003	66.1%	6.1%
Sep-2003	66.1%	6.1%
Oct-2003	66.1%	6.0%
Nov-2003	66.1%	5.8%
Dec-2003	65.9%	5.7%
Jan-2004	66.1%	5.7%
Feb-2004	66.0%	5.6%
Mar-2004	66.0%	5.8%
Apr-2004	65.9%	5.6%
May-2004	66.0%	5.6%
Jun-2004	66.1%	5.6%
Jul-2004	66.1%	5.5%
Aug-2004	66.0%	5.4%
Sep-2004	65.8%	5.4%
Oct-2004	65.9%	5.5%
Nov-2004	66.0%	5.4%
Dec-2004	65.9%	5.4%
Jan-2005	65.8%	5.3%
Feb-2005	65.9%	5.4%
Mar-2005	65.9%	5.2%
Apr-2005	66.1%	5.2%
May-2005	66.1%	5.1%
Jun-2005	66.1%	5.0%
Jul-2005	66.1%	5.0%
Aug-2005	66.2%	4.9%
Sep-2005	66.1%	5.0%
Oct-2005	66.1%	5.0%
Nov-2005	66.0%	5.0%
Dec-2005	66.0%	4.9%
Jan-2006	66.0%	4.7%
Feb-2006	66.1%	4.8%
Mar-2006	66.2%	4.7%
Apr-2006	66.1%	4.7%
May-2006	66.1%	4.6%
Jun-2006	66.2%	4.6%
Jul-2006	66.1%	4.7%
Aug-2006	66.2%	4.7%
Sep-2006	66.1%	4.5%
Oct-2006	66.2%	4.4%
Nov-2006	66.3%	4.5%
Dec-2006	66.4%	4.4%
Jan-2007	66.4%	4.6%
Feb-2007	66.3%	4.5%
Mar-2007	66.2%	4.4%
Apr-2007	65.9%	4.5%
May-2007	66.0%	4.4%
Jun-2007	66.0%	4.6%
Jul-2007	66.0%	4.7%
Aug-2007	65.8%	4.6%
Sep-2007	66.0%	4.7%
Oct-2007	65.8%	4.7%
Nov-2007	66.0%	4.7%
Dec-2007	66.0%	5.0%
Jan-2008	66.2%	5.0%
Feb-2008	66.0%	4.9%
Mar-2008	66.1%	5.1%
Apr-2008	65.9%	5.0%
May-2008	66.1%	5.4%
Jun-2008	66.1%	5.6%
Jul-2008	66.1%	5.8%
Aug-2008	66.1%	6.1%
Sep-2008	66.0%	6.1%
Oct-2008	66.0%	6.5%
Nov-2008	65.9%	6.8%
Dec-2008	65.8%	7.3%
Jan-2009	65.7%	7.8%
Feb-2009	65.8%	8.3%
Mar-2009	65.6%	8.7%
Apr-2009	65.7%	9.0%
May-2009	65.7%	9.4%
Jun-2009	65.7%	9.5%
Jul-2009	65.5%	9.5%
Aug-2009	65.4%	9.6%
Sep-2009	65.1%	9.8%
Oct-2009	65.0%	10.0%
Nov-2009	65.0%	9.9%
Dec-2009	64.6%	9.9%
Jan-2010	64.8%	9.8%
Feb-2010	64.9%	9.8%
Mar-2010	64.9%	9.9%
Apr-2010	65.2%	9.9%
May-2010	64.9%	9.6%
Jun-2010	64.6%	9.4%
Jul-2010	64.6%	9.4%
Aug-2010	64.7%	9.5%
Sep-2010	64.6%	9.5%
Oct-2010	64.4%	9.4%
Nov-2010	64.6%	9.8%
Dec-2010	64.3%	9.3%
Jan-2011	64.2%	9.1%
Feb-2011	64.1%	9.0%
Mar-2011	64.2%	9.0%
Apr-2011	64.2%	9.1%
May-2011	64.1%	9.0%
Jun-2011	64.0%	9.1%
Jul-2011	64.0%	9.0%
Aug-2011	64.1%	9.0%
Sep-2011	64.2%	9.0%
Oct-2011	64.1%	8.8%
Nov-2011	64.1%	8.6%
Dec-2011	64.0%	8.5%
Jan-2012	63.7%	8.3%
Feb-2012	63.8%	8.3%
Mar-2012	63.8%	8.2%
Apr-2012	63.7%	8.2%
May-2012	63.7%	8.2%
Jun-2012	63.8%	8.2%
Jul-2012	63.7%	8.2%
Aug-2012	63.5%	8.1%
Sep-2012	63.6%	7.8%
Oct-2012	63.8%	7.8%
Nov-2012	63.6%	7.7%
Dec-2012	63.7%	7.9%
Jan-2013	63.7%	8.0%
Feb-2013	63.4%	7.7%
Mar-2013	63.3%	7.5%
Apr-2013	63.4%	7.6%
May-2013	63.4%	7.5%
Jun-2013	63.4%	7.5%
Jul-2013	63.3%	7.3%
Aug-2013	63.3%	7.2%
Sep-2013	63.2%	7.2%
Oct-2013	62.8%	7.2%
Nov-2013	63.0%	6.9%
Dec-2013	62.9%	6.7%
Jan-2014	62.9%	6.6%
Feb-2014	62.9%	6.7%
Mar-2014	63.1%	6.7%
Apr-2014	62.8%	6.2%
May-2014	62.9%	6.3%
Jun-2014	62.8%	6.1%
Jul-2014	62.9%	6.2%
Aug-2014	62.9%	6.1%
Sep-2014	62.8%	5.9%
Oct-2014	62.9%	5.7%
Nov-2014	62.9%	5.8%
Dec-2014	62.8%	5.6%
Jan-2015	62.9%	5.7%
Feb-2015	62.7%	5.5%
Mar-2015	62.6%	5.4%
Apr-2015	62.7%	5.4%
May-2015	62.9%	5.6%
Jun-2015	62.6%	5.3%
Jul-2015	62.6%	5.2%
Aug-2015	62.6%	5.1%
Sep-2015	62.4%	5.0%
Oct-2015	62.5%	5.0%
Nov-2015	62.6%	5.1%
Dec-2015	62.7%	5.0%
Jan-2016	62.7%	4.9%
Feb-2016	62.8%	4.9%
Mar-2016	62.9%	5.0%
Apr-2016	62.8%	5.0%
May-2016	62.7%	4.8%
Jun-2016	62.7%	4.9%
Jul-2016	62.8%	4.8%
Aug-2016	62.9%	4.9%
Sep-2016	62.9%	5.0%
Oct-2016	62.8%	4.9%
Nov-2016	62.7%	4.7%
Dec-2016	62.7%	4.7%
Jan-2017	62.9%	4.7%
Feb-2017	62.9%	4.7%
Mar-2017	62.9%	4.4%
Apr-2017	62.9%	4.4%
May-2017	62.8%	4.4%
Jun-2017	62.8%	4.3%
Jul-2017	62.9%	4.3%
Aug-2017	62.9%	4.4%
Sep-2017	63.1%	4.2%
Oct-2017	62.7%	4.1%
Nov-2017	62.8%	4.2%
Dec-2017	62.7%	4.1%
Jan-2018	62.7%	4.1%
Feb-2018	63.0%	4.1%
Mar-2018	62.9%	4.0%
Apr-2018	62.8%	3.9%
May-2018	62.8%	3.8%
Jun-2018	62.9%	4.0%
Jul-2018	62.9%	3.9%
Aug-2018	62.7%	3.8%
Sep-2018	62.7%	3.7%
Oct-2018	62.9%	3.8%
Nov-2018	62.9%	3.7%
Dec-2018	63.1%	3.9%
Jan-2019	63.2%	4.0%
Feb-2019	63.2%	3.8%
Mar-2019	63.0%	3.8%

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Source: EPI analysis of Current Population Survey public data series

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The purported benefits of the U.S.-Mexico Canada Agreement (USMCA, or NAFTA-2) for American workers are so tiny, one can hardly see them.

The U.S. International Trade Commission’s recent study of the economic impacts of the USMCA finds that it will have small, but positive, effects on U.S. output (GDP up 0.35 percent over six years), employment (176,000 jobs or 0.12 percent) and wages (up 0.27 percent). However, these projections are based on a number of questionable assumptions about the impacts of the trade deal, “assuming” for example that Mexico will adopt new labor legislation that will improve labor rights in that country, and “that these provisions are enforced” and Mexican union wages increase by 17.2 percent as a result. Furthermore, the ITC claims that U.S. wages will rise as a direct result of improved labor rights enforcement in Mexico, although that conclusion is not supported by the results of their own model.

These findings illustrate a much larger problem with the outdated modeling approach used by the ITC, which assumes that the purpose of trade and investment deals, such as the USMCA, is to reduce tariffs. However, the most important provisions of modern international economic agreements, such as the USMCA and the World Trade Organization, lay down rules governing matters such as foreign investment, services trade, government procurement, data transmission and storage, food and product safety standards, as well as labor rights and environmental standards. These rules govern how countries trade and businesses invest and how our economies are governed and regulated. At the end of the day, they determine who wins and loses, how income is distributed, the tradeoffs between corporate power and control, and whether the rights of workers, the public and the environment will be protected from transnational abuses from big business and big government.

Chapter 8 of the ITC report on the USMCA (p. 215) makes the following erroneous claim: The Commission estimates that the collective bargaining legislation will likely increase unionization rates and wages in Mexico and also increase Mexican output. This, in turn, would be expected to increase U.S. output and employment also, resulting in a small (0.27 percent) increase in U.S. real wages to attract the new workers.

This claim is not supported by the model results. Appendix F of the ITC report (Modeling the Labor Provisions, Table F.5 (p 327)) reports the results of a sensitivity analysis showing the impacts of various assumptions about the size of the Mexican union wage premium (17.5 percent, 32.7 percent, and 37.5 percent) on US macroeconomic variables, including GDP, total employment and wages. The first of these is the base case for the ITC’s overall estimates. These simulations resulted in no significant changes between the base case and alternatives (despite much higher assumed union wage premiums in Mexico) in the estimated impact of the USMCA on GDP (0.35 percent), wages (0.27 percent), or employment (176,000 jobs) in the United States, despite roughly doubling the assumed impact of collective bargaining on wages in Mexico (GDP and total U.S. employment increased very slightly in these simulations, by between 1/10 to 3/10 of 1 percent, as the Mexican wage premium was doubled).

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Toxic Stress and Children’s Outcomes, a new report published jointly by the Economic Policy Institute and the Opportunity Institute, urges policymakers and educators to join health care researchers and clinicians in paying greater attention to the contribution of “toxic stress” to deterioration in children’s academic performance, behavior, and health.

The epidemiological research literature is rich with discussions of how toxic stress in children predicts depressed outcomes. And yet policymakers, educators, researchers, and clinicians have only recently begun to explore policies and interventions that might help to mitigate toxic stress and its effects on children.

“Stress” is a commonplace term for bodily chemical changes in response to frightening or threatening events or conditions. A normal response to a frightening or threatening situation is the production of hormones that can affect almost every tissue and organ in the body. Tolerable stress can contribute to better performance if individuals react by heightening their focus on the fright or threat without distraction.

But when frightening or threatening situations occur too frequently or are too intense, and when protective factors are insufficient to mitigate children’s stress to a tolerable level, these hormonal changes are deemed “toxic” and can impede children’s behavior, cognitive capacity, and emotional and physical health. Toxic stress produces not heightened focus but the opposite, a decrease in performance levels.

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Last week, the New York Times published an article in “The Upshot” by Ernie Tedeschi, which argues that after accounting for state and local minimum wages, the United States currently has its highest average effective minimum wage ever at $11.80 per hour. The article correctly underscores how after 10 years of inaction at the federal level, so much of the policy work being done to boost wages for low-wage workers is happening at the state and local level. Yet, it is important to recognize that even with state and local governments taking action in many places, there are still millions of workers being paid significantly lower wages than the “average” minimum wage as calculated in the Upshot piece. In fact, raising the federal minimum wage to $11.80 would directly lift wages for 18.6 million workers, or 12.8 percent of the wage-earning workforce. Moreover, calculating the average effective minimum wage is very sensitive to how one defines the workforce affected by the policy. One would arrive at a much lower average minimum wage if considering the broader low-wage workforce for whom minimum wage policy is relevant.

The Upshot piece explores how the share of workers being paid exactly the federal minimum wage is relatively small. There are two reasons why this is the case. First, the article observes that 89 percent of minimum-wage workers are paid more than the federal $7.25, because 29 states and some 40+ cities and counties have set their own minimum wages above the federal floor. Higher state and local minimum wages—all of which can be found in EPI’s Minimum Wage Tracker—are the result of federal inaction and also due to the tremendous success of the Fight for 15 movement in raising awareness about low wages and pushing for minimum wage increases across the country.

Second, the share of workers being paid the federal minimum wage potentially overlooks millions of workers in states with low minimum wages who are earning only somewhat above the required federal minimum. For example, in Texas, a state stuck at the federal minimum wage, 2.7 percent of workers reported earning less than $7.50 per hour last year. But four times as many workers in Texas, or 11.0 percent, earned less than $10.00 per hour. This contrasts sharply with California, where there are higher state and local minimum wages: there, only 3.8 percent of the workforce reported earning less than $10.00 per hour last year. (These calculations use Current Population Survey data.)

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A bill introduced in the Nevada State Senate (SB135) would allow state workers to collectively bargain over wages and benefits, a right they have been denied since 1965.

Opponents of public sector unions have begun making the usual arguments against granting Nevada state employees these rights. In two recent reports the Las Vegas Metro Chamber of Commerce (COC) and the Nevada Policy Research Institute (NPRI) make two essential arguments: granting state employees the right to bargain collectively will increase state spending and hence the tax burden on Nevadans, and these state employees are already overpaid, and collective bargaining rights would just make this worse. This logic ranges from myopic to misleading to outright false.

Take the first argument—that collective bargaining rights will reliably lead to higher state spending and a higher tax burden on Nevadans. The opposition to SB135 is trying to invoke a knee-jerk response from Nevadans to see higher spending as a bad thing always and everywhere; but what’s the evidence that Nevada’s spending has become bloated instead of inefficiently low? Take higher education. In the decade between 2008 and 2018 inflation-adjusted higher education spending per student in Nevada fell by 22.2 percent, a much worse performance than the national average. These cuts led directly to a staggering 56 percent increase in tuition for public universities over this same time period—one of the ten steepest tuition increases across the 50 states. Given this track record, the real problem facing Nevadans doesn’t seem to be ever-growing spending, but savage austerity that is sacrificing the future.

But maybe granting collective bargaining rights will radically overcorrect this problem and lead to Nevada becoming a profligate spender? It hasn’t happened in the K-12 education sector, where local government employees (including all teachers) currently have the right to bargain collectively. Even in this sector the downward pressure leading to inefficiently low spending has been ferocious. In a recent report card on education in Nevada, the Children’s Advocacy Alliance (CAA) gave the state an ‘F’ on funding, with low funding leading to some of the highest student-to-teacher ratios in the nation (48th out of 50). As recent teacher strikes over starved resources (not just pay) have shown in states like Oklahoma and West Virginia, lack of collective bargaining rights can lead to inefficiently low educational investments in states.

In short, the claim that collective bargaining rights always lead to bloated spending levels is a caricature. Instead, sometimes these rights provide a check (often insufficient) against relentless downward pressure on spending that leads to destructive cuts. The best empirical research linking public sector collective bargaining and state and local government spending finds mixed results, with the causal effect of collective bargaining rights in pushing up state spending either weak or non-existent. Given this evidence, the empirical claims made by opponents of SB135 about the magnitude of state spending increases that would occur should it pass are frankly absurd—they would require state employees’ compensation to rise by over 30 percent, with no beneficial effects on the state budget stemming from higher productivity or lower turnover or fewer state workers drawing public assistance benefits—all offsets that we know often accompany wage increases. The Chamber of Commerce study forecasts an even more outlandish increase—with total state spending forecast to rise more than the total amount spent on state employee compensation in the latest year of data.

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