Today the Federal Reserve Open Market Committee (FOMC) will almost surely announce it is continuing on its path of steady interest rate hikes. These hikes are meant to start slowing the growth of the U.S. economy in the name of getting ahead of the curve on any potential outbreak of inflation. It’s important to be really clear on this point. The Fed is trying to keep economic growth slower than it would have otherwise been, and unemployment higher than it would otherwise have been, if they had not raised rates.

Intentionally keeping unemployment higher than it would have been will strike many as hard to believe—why would the Fed ever do this? The reason is that they see their job as balancing the obvious (but still underappreciated) benefits of low unemployment against the risk that unemployment will get so low that workers are empowered to achieve wage increases so large that they threaten to push up inflation. They’re not wrong that falling unemployment would eventually lead to faster wage growth. A primary way that workers (especially nonunionized workers) get raises is by either leaving their current job for a better one, or threatening to leave if their bosses don’t give them a raise. When unemployment is higher, fewer better-paying jobs are out there for workers to move to, and bosses know this and don’t find threats to leave all that credible. This intuition is confirmed by data—lower unemployment is clearly associated with faster wage growth, and this effect is most pronounced for low- and moderate-wage workers with few other sources of leverage in the labor market to get raises.

Defenders of the Fed’s current path would say that it makes sense when judged by the past history of the Fed—unemployment today sits below 4 percent, well below conventional estimates of the “natural” rate of unemployment that is meant to define the lowest sustainable rate of non-inflationary unemployment.

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With the great majority of states choosing some measurement of school attendance as their so-called “fifth metric” required by the Every School Succeeds Act,1 researchers, policymakers, and advocates are questioning how useful these metrics are at informing us about student achievement and education equity, as well as guiding policy. Indeed, while research has linked missing school to elevated risk of dropping out and poorer graduation rates, policymakers and researchers should further explore the importance of missing school, and about factors driving student absenteeism, and how to reduce it.

Our recently released report, Student absenteeism:Who misses school and how missing school matters for performance, examines how much school students are missing, which groups of students are missing the most school, and how bad missing school is for performance. We learned that about one in five students—19.2 percent—missed three or more days of school in the month before they took the 2015 National Assessment of Educational Progress (NAEP) assessment. Students who have been diagnosed with a disability, Hispanic-English language learners, Native Americans, and students who are eligible for free lunch, were the most likely to miss school, while Asian students were rarely absent. Our findings also confirmed that missing school negatively effects performance, even after accounting for student and school characteristics (including gender, race/ethnicity, language status, disability status, income, and school socioeconomic characteristics). Even students with only occasional absences were negatively affected. For these students, relative to those who did not miss school, absenteeism makes a moderate dent in their performance (a tenth of a standard deviation), but the decline in performance becomes more troubling as the number of missed days increases (up to about two-thirds of a standard deviation for those missing more than 10 school days).

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In December, when Republicans passed the Tax Cuts and Jobs Act (TCJA) they chose to make tax cuts for corporations permanent, while making the individual provisions temporary to satisfy the requirements of budget reconciliation. Republicans sold these corporate tax cuts as being beneficial to everyday working people, despite the fact that previous experience gives us no reason to believe that corporate rate cuts will trickle down to anyone.

Some willing allies in the corporate world, eager to bolster the case for tax cuts, tried to hoodwink workers into believing that any bonus a worker received in 2017 was due to the TCJA. But the economic theory behind the idea that corporate rate cuts lead to higher pay for typical workers does not say that those wage increases would occur immediately (and certainly not before the tax cuts came into effect). Instead, wage bumps for workers, if they come at all, would come only after a long chain of economic events were triggered by the cut. One of the first of these events should be increased investment. We’ve long pointed out that there was reason to believe that nearly every link in this chain would break down, and that the theory itself is inconsistent with the reality of the larger deficits caused by the TCJA.

Now that the tax cuts have passed and enough time has gone by to allow some data to trickle in, is there any reason for us to change this judgement? Not really. There’s still no indication in the data that the TCJA has spurred investment—the necessary but by no means sufficient precursor to wage gains. Sure, owners of corporate shares have made out like bandits. The most recent release from the Bureau of Economic Analysis (BEA) shows that domestic after-tax corporate profits remain high, 7.5 percent of GDP in the second quarter of 2018 compared to 7.4 percent in the first quarter of 2018 and up substantially from already-high levels (6.7 percent) in 2017. Revenue collected from domestic corporate taxes remains low, 1.2 percent of GDP in the second quarter of 2018 compared to 1.1 percent in the first quarter of 2018 and 1.8 percent in 2017. Finally, undistributed domestic corporate profits – corporate profits kept internal to the firm and not distributed back to shareholders as dividends—remain historically high. This is due to the windfall the TCJA contained for multinational corporations on the profits they booked offshore. These undistributed profits (available to finance share buybacks) constituted 8.9 percent of domestic corporate gross value added in the second quarter of 2018 compared to 13.7 percent in the first quarter of 2018 and 2.6 percent in 2017. In short, the direct effects of the TCJA are here and totally visible in the data: swollen corporate profits.

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One of the leading arguments for the GOP’s Tax Cuts and Jobs Act of 2017 has been that it will raise the wages of rank-and-file workers, with congressional Republicans and members of the Trump administration promising raises of many thousands of dollars within ten years. The Trump administration’s chair of the Council of Economic Advisers argued in April that we are already seeing the positive wage impact of the tax cuts:

A flurry of corporate announcements provide further evidence of tax reform’s positive impact on wages. As of April 8, nearly 500 American employers have announced bonuses or pay increases, affecting more than 5.5 million American workers.

Following the bill’s passage, a number of corporations made conveniently-timed announcements that their workers would be getting raises or bonuses (some of which were in the works well before the tax cuts passed). But as Josh Bivens and Hunter Blair have shown there are many reasons to be skeptical of the claim that the TCJA, particularly corporate tax cuts, will produce significant wage gains.

Newly released Bureau of Labor Statistics’ Employer Costs for Employee Compensation data allow us to examine nonproduction bonuses in the first two quarters of 2018 to assess the trends in bonuses in absolute dollars and as a share of compensation. The bottom line is that there has been very little increase in private sector compensation or W-2 wages since the end of 2017. The $0.03 per hour (inflation-adjusted) bump in bonuses between the fourth quarter of 2017 and the second quarter of 2018 is very small and not necessarily attributable to the tax cuts rather than employer efforts to recruit workers in a continued low unemployment environment.

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