Social Security trustees report shows why we should expand the program—not look for excuses to cut it
There’s no real news in the Social Security trustees report released this afternoon. We’re now a year closer to the date the trust fund will be exhausted, 2034 (same as last year’s projection), at which point current revenues will still be sufficient to cover 77 percent of benefits even if nothing is done to shore up the system’s finances. Each year, the release of the trustees report provides an occasion for Social Security scaremongering by those wanting to shrink our social insurance system. But not only can we afford current benefits, we can afford to expand them.
The average retired worker beneficiary receives an annual benefit of $16,933. Disability and survivor benefits are even more modest. Social Security benefits are replacing a declining share of income at retirement, thanks to a rising normal retirement age and increased taxation of benefits—cuts passed in 1983 that are gradually taking effect (an increase in the retirement age is really just an across-the-board benefit cut that can be offset by retiring later). Rising Medicare premiums, which are deducted from Social Security, also reduce net benefits.
Despite these trends, recent Census research has found that retirees are somewhat better off than previously thought, thanks to income from traditional defined benefit pensions that is underreported in household surveys. Nevertheless, Social Security remains by far the most important source of income for most seniors. It constitutes most of the income of seniors in the bottom half of the income distribution and is the single biggest source of income for all but those in the ninth and tenth income deciles, for whom defined benefit pensions and earned income loom larger.
Seven facts about tipped workers and the tipped minimum wage
As debate continues on a referendum to raise the tipped minimum wage in Washington, D.C., to the minimum wage for nearly all other workers, we wanted to take a few minutes to set the record straight on the facts about tipped worker wages and incomes. Currently, eight states do not have differential treatments of the tipped workforce in terms of the minimum wage.1 Throughout this post, these will be referred to as “equal treatment” states. To be clear, tipped workers in these equal treatment states receive the full, regular state minimum wage plus tips.
Over the last several years, there has been a great deal of research about the minimum wage and tipped restaurant workers, in particular, and we are going to draw on some of that research to make several key points: 1. In the District of Columbia, women, African American, and Hispanic workers are disproportionately minimum wage workers, including tipped minimum wage workers; 2. Maintaining a separate, lower minimum wage for tipped workers perpetuates racial and gender inequities; 3. In states that have a lower tipped minimum wage, tipped workers have worse economic outcomes and higher poverty rates than their counterparts in equal treatment states; 4. Tipped work is overwhelmingly low-wage work, even in D.C.; 5. Wage theft is particularly acute in food and drink service, and restaurants across the country have been found to be in violation of wage and hour laws; 6. Waitstaff have higher take-home pay in equal treatment states than in D.C.; and 7. The restaurant industry thrives in equal treatment states.
Here, we take a closer look at each point:
1. Women, African Americans, and Hispanic workers have disproportionately benefited from minimum wage increases in Washington, D.C. Furthermore, contrary to popular opinion, the vast majority of minimum-wage earners are not teenagers or college students working part-time jobs.
2. Research indicates that having a separate, lower minimum wage for tipped workers perpetuates racial and gender inequities, and results in worse economic outcomes for tipped workers. Forcing service workers to rely on tips for their wages creates tremendous instability in income flows, making it more difficult to budget or absorb financial shocks. Furthermore, research has also shown that the practice of tipping is often discriminatory, with white service workers receiving larger tips than black service workers for the same quality of service.
What to Watch on Jobs Day: Signs of stronger wage growth that will eventually improve Americans’ livings standards
Although in last month’s jobs report we saw a fall in the unemployment rate accompanied by a drop in labor force participation—which showed the unemployment rate dropping for the wrong reasons—the longer-term trends suggest that displaced workers continue to return to the labor market. This is to be expected as the labor market improves, and what we’ve been expecting for years. The unemployment rate of 3.9 percent seems to be overstating the strength of the labor market given how many sidelined workers appear to want jobs. Furthermore, upwards of 70 percent of the newly employed are coming from out of the labor force as opposed to those “actively” looking for work, that is, among those officially counted in the U3 unemployment rate. We only need to look as far as nominal wage growth to know that we are not yet unambiguously at full employment. Employers and workers alike seem to recognize the slack out there and workers still do not have sufficient leverage to bid up their wages. Year-over-year nominal wage growth has averaged 2.6 percent over the last couple of years, consistently below target levels.
Unfortunately, nominal wage growth for private-sector workers found in the monthly jobs report’s payroll survey offers only a limited view on wage growth in the economy today. One of the major benefits of a full employment economy is that wage growth isn’t simply strong for workers at the top of the wage distribution or for workers with more educational attainment, but that it allows low-wage workers to make gains as well. To get finer-grained estimates of what’s happening to wage growth for particular groups of workers, we have to turn to the Current Population Survey Outgoing Rotation Group (ORG). The ORG is a household-based survey, not an employer-based one like the payroll survey, which each month provides widely reported estimates of job growth and wage growth for private-sector workers. This is important because this means the ORG can not only ask questions of wages, but also make comparisons of wages across the wage distribution. Adding to that information gleaned from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) allows for comparisons about incomes, notably information on poverty rates.
Over the last couple of weeks, EPI has been highlighting some important statistics in commemoration of the 50th anniversary of the Poor People’s Campaign. We’ve pointed out the changes in the poverty rate over the last 50 years, where gains have been made, particularly among the elderly, and where disparities remain. We also discussed how poverty reduction can be improved with a stronger safety net and a better labor market. The truth is that full employment that makes more hours available to lower-wage workers and broad-based wage growth are key tools in the fight against poverty, and many people who live below the poverty line rely on a stronger economy to make ends meet.
Ending individual mandatory arbitration alone fails most workers: For real worker power, end the ban on class and collective action lawsuits
Uber made news yesterday when the company announced that it will end mandatory arbitration for sexual harassment and assault complaints. Lyft quickly followed suit and said that it would also do away with mandatory arbitration agreements for sexual misconduct claims. These companies are the latest in a growing number of corporations that have moved to eliminate mandatory arbitration agreements for sexual harassment claims. There is no doubt that these companies are being driven to action by the power of #MeToo and #TimesUp. And, while a move away from mandatory arbitration by firms like Uber and Microsoft should be celebrated as a victory for these movements, it is important to recognize that for women in low-wage jobs, challenging workplace sexual harassment and assault remains largely impossible, unless companies also end bans on class and collective action.
Workers depend on class and collective actions to enforce many workplace rights. Employment class action cases have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards. Without the ability to aggregate claims, it would be very difficult, if not impossible, for workers to find legal representation in these matters. This is particularly true for low-wage workers, whose cases are unlikely to involve large enough awards to attract attorneys to invest time in the case. That is the power of class and collective action suits: they let workers pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing.
Banning mandatory arbitration in sexual harassment and sexual assault claims but continuing to restrict class and collective action will do little to help women in low-and middle-wage jobs access justice when they face sexual harassment or assault. These women will still face challenges finding legal representation and find the cost of litigation prohibitive. And it will do nothing to help women facing other kinds of workplace violations. This is especially concerning considering the majority of low-wage workers in the United States are women. And research shows that low-wage workers in the United States lose more than $50 billion annually as a result of wage theft by their employers. Workers have the right to a workplace free of sexual harassment as well as their right to be paid fairly, and creating a hierarchy of worker protection laws by privileging certain types of claims over others is fundamentally unjust—particularly for low-wage workers. Companies should not be applauded for such a minimal response to workplace misconduct and advocates should not be fooled into seeing this as a solution.
Our nation’s labor and employment laws need reform. A key element of reform must be to end employers’ ability to require workers to sign away their rights as a condition of employment. The Supreme Court will soon decide National Labor Relations Board v. Murphy Oil USA, which will determine whether employers can lawfully require workers to sign arbitration agreements that include class and collective action waivers. If the Court denies workers this fundamental right, Congress must act to protect it. If policymakers leave the solution to corporations, we will end up with a system that privileges some claims and fails most workers.
As cities and states pass bold increases in the minimum wage, we need to update our thinking about its costs
The last few years has seen a major shift in minimum wage policies as states like California and New York and cities like Seattle and Washington, DC, have passed laws phasing in a $15 minimum wage, targeting bolder increases than had been the pattern over the last two decades. Federal proposals such as the Raise the Wage Act of 2017, which would bring the minimum wage to $15 by 2024, are consistent with these bolder local approaches. This is bold, as it mandates a 71.9 percent real increase in the minimum wage. But even this bold increase only brings the minimum wage to 29 percent above its 1968 purchasing power, despite productivity nearly doubling over the same timeframe. Many policymakers have concluded, in effect, that years of modest or no change in the minimum wage have created a situation where bold increases are required just to move the minimum wage closer to being a living wage.
This shift in policy now necessitates a rethinking of the flawed way we have evaluated minimum wage increases over the last few decades. There have been, in particular, two flaws. One was first highlighted by economists Fiedler, Howell, and Luce, who noted that public discussion of various minimum wage proposals, including among economists, tends to center solely on whether there will be any job loss. In effect, minimum wage proposals are being evaluated according to a “no job loss” criterion, which specifies that the “right” wage floor is the one that previous research has demonstrated will pose little or no risk of future job loss, anywhere.” A no job loss criterion implies that if a minimum wage increase has any costs (whether loss of employment or work hours), regardless of benefits, then it is inappropriate.
Minnesota and Wisconsin had similar job growth trajectories leading up to the Great Recession, but not after it
Earlier this week, EPI released an analysis of economic performance in Wisconsin and Minnesota since 2010, which showed that by virtually every available measure, Minnesota has outperformed Wisconsin. This is notable because lawmakers in the two states adopted vastly different policy agendas coming out of the recession. Wisconsin adopted a highly conservative agenda of cutting taxes, shrinking government, and weakening unions. Minnesota, in contrast, enacted many key progressive priorities: raising the minimum wage, strengthening safety net programs and labor standards, and boosting public investment in infrastructure and education, financed by raising taxes, primarily on the wealthy.
Skeptical readers might argue that as much as the two states are similar, they are sufficiently different such that the diverging economic outcomes observed in our report are the result of fundamental differences in the two states’ economies and that state policy decisions were largely irrelevant. I think there’s ample evidence to indicate that such readers are wrong. In the paper, I discuss some of the policy decisions—such as those around Medicaid expansion, investment in infrastructure, and worker organizing—where one can draw a fairly straight line from the policy decision to the observed economic result. I also note that wage growth was actually stronger in Wisconsin than Minnesota in the seven years prior to Great Recession.
It’s also instructive to compare job growth in the two states in the economic expansion prior to the Great Recession. The data suggest that whatever their differences, prior to the recession, Wisconsin and Minnesota followed a very similar trajectory for employment growth.
Minnesota and Wisconsin had similar job growth trends leading up to the Great Recession, but not after it: Employment levels relative to the start of Governor Walker and Governor Dayton’s terms (Jan 2011)
| UNITED STATES | Minnesota | Wisconsin | |
|---|---|---|---|
| Nov-2001 | 100.2% | 100.5% | 101.6% |
| Dec-2001 | 100.1% | 100.2% | 101.3% |
| Jan-2002 | 100.0% | 100.2% | 101.5% |
| Feb-2002 | 99.9% | 100.2% | 101.5% |
| Mar-2002 | 99.9% | 100.0% | 101.5% |
| Apr-2002 | 99.8% | 100.0% | 101.4% |
| May-2002 | 99.8% | 100.0% | 101.4% |
| Jun-2002 | 99.9% | 100.1% | 101.4% |
| Jul-2002 | 99.8% | 100.3% | 101.3% |
| Aug-2002 | 99.8% | 100.1% | 101.4% |
| Sep-2002 | 99.7% | 100.3% | 101.2% |
| Oct-2002 | 99.8% | 100.0% | 101.6% |
| Nov-2002 | 99.8% | 100.2% | 101.8% |
| Dec-2002 | 99.7% | 100.0% | 101.5% |
| Jan-2003 | 99.8% | 100.1% | 101.2% |
| Feb-2003 | 99.7% | 100.1% | 101.3% |
| Mar-2003 | 99.5% | 100.0% | 101.1% |
| Apr-2003 | 99.5% | 100.1% | 101.2% |
| May-2003 | 99.5% | 100.1% | 101.2% |
| Jun-2003 | 99.5% | 99.9% | 101.1% |
| Jul-2003 | 99.5% | 99.9% | 100.7% |
| Aug-2003 | 99.5% | 100.0% | 100.7% |
| Sep-2003 | 99.5% | 100.0% | 100.9% |
| Oct-2003 | 99.7% | 99.8% | 101.3% |
| Nov-2003 | 99.7% | 99.7% | 101.3% |
| Dec-2003 | 99.8% | 99.9% | 101.4% |
| Jan-2004 | 99.9% | 99.8% | 101.5% |
| Feb-2004 | 100.0% | 99.9% | 101.6% |
| Mar-2004 | 100.2% | 100.0% | 101.7% |
| Apr-2004 | 100.4% | 100.6% | 101.8% |
| May-2004 | 100.6% | 100.8% | 102.0% |
| Jun-2004 | 100.7% | 100.8% | 102.1% |
| Jul-2004 | 100.7% | 100.8% | 102.5% |
| Aug-2004 | 100.8% | 100.9% | 102.8% |
| Sep-2004 | 100.9% | 101.0% | 102.4% |
| Oct-2004 | 101.2% | 101.3% | 102.8% |
| Nov-2004 | 101.3% | 101.3% | 102.8% |
| Dec-2004 | 101.4% | 101.4% | 102.8% |
| Jan-2005 | 101.5% | 100.9% | 102.8% |
| Feb-2005 | 101.7% | 101.2% | 103.1% |
| Mar-2005 | 101.8% | 101.3% | 103.2% |
| Apr-2005 | 102.0% | 102.0% | 103.5% |
| May-2005 | 102.2% | 102.3% | 103.3% |
| Jun-2005 | 102.4% | 102.1% | 103.2% |
| Jul-2005 | 102.6% | 102.6% | 103.5% |
| Aug-2005 | 102.8% | 102.7% | 103.6% |
| Sep-2005 | 102.8% | 102.9% | 103.9% |
| Oct-2005 | 102.9% | 103.0% | 103.7% |
| Nov-2005 | 103.2% | 103.1% | 103.8% |
| Dec-2005 | 103.3% | 103.2% | 104.0% |
| Jan-2006 | 103.5% | 103.6% | 104.0% |
| Feb-2006 | 103.7% | 103.7% | 104.1% |
| Mar-2006 | 104.0% | 103.9% | 104.2% |
| Apr-2006 | 104.1% | 103.7% | 104.4% |
| May-2006 | 104.1% | 103.4% | 104.2% |
| Jun-2006 | 104.2% | 103.7% | 104.5% |
| Jul-2006 | 104.3% | 103.6% | 104.4% |
| Aug-2006 | 104.5% | 103.6% | 104.4% |
| Sep-2006 | 104.6% | 103.6% | 104.5% |
| Oct-2006 | 104.6% | 103.4% | 104.4% |
| Nov-2006 | 104.7% | 103.5% | 104.5% |
| Dec-2006 | 104.9% | 103.8% | 104.6% |
| Jan-2007 | 105.1% | 104.0% | 104.7% |
| Feb-2007 | 105.1% | 104.1% | 104.7% |
| Mar-2007 | 105.3% | 104.2% | 104.8% |
| Apr-2007 | 105.3% | 104.1% | 104.8% |
| May-2007 | 105.4% | 104.0% | 105.0% |
| Jun-2007 | 105.5% | 104.2% | 105.4% |
| Jul-2007 | 105.5% | 104.2% | 105.1% |
| Aug-2007 | 105.5% | 104.1% | 105.1% |
| Sep-2007 | 105.5% | 104.0% | 105.1% |
| Oct-2007 | 105.6% | 104.0% | 104.8% |
| Nov-2007 | 105.7% | 104.1% | 104.8% |
| Dec-2007 | 105.8% | 104.1% | 105.0% |
| Jan-2008 | 105.8% | 104.3% | 105.2% |
| Feb-2008 | 105.7% | 104.5% | 105.2% |
| Mar-2008 | 105.7% | 104.4% | 105.0% |
| Apr-2008 | 105.5% | 104.1% | 104.9% |
| May-2008 | 105.3% | 104.1% | 105.0% |
| Jun-2008 | 105.2% | 104.0% | 104.9% |
| Jul-2008 | 105.1% | 103.9% | 104.8% |
| Aug-2008 | 104.9% | 103.8% | 104.6% |
| Sep-2008 | 104.5% | 103.6% | 104.7% |
| Oct-2008 | 104.1% | 103.4% | 104.3% |
| Nov-2008 | 103.6% | 103.0% | 104.0% |
| Dec-2008 | 103.0% | 102.5% | 103.4% |
| Jan-2009 | 102.4% | 101.8% | 102.5% |
| Feb-2009 | 101.9% | 101.2% | 101.9% |
| Mar-2009 | 101.3% | 100.6% | 101.1% |
| Apr-2009 | 100.7% | 100.0% | 100.3% |
| May-2009 | 100.5% | 100.0% | 100.3% |
| Jun-2009 | 100.1% | 99.4% | 99.8% |
| Jul-2009 | 99.8% | 99.3% | 99.4% |
| Aug-2009 | 99.7% | 99.0% | 99.1% |
| Sep-2009 | 99.5% | 98.4% | 99.1% |
| Oct-2009 | 99.4% | 98.8% | 99.1% |
| Nov-2009 | 99.4% | 98.8% | 98.9% |
| Dec-2009 | 99.2% | 98.9% | 98.9% |
| Jan-2010 | 99.2% | 98.7% | 98.9% |
| Feb-2010 | 99.1% | 98.6% | 98.9% |
| Mar-2010 | 99.3% | 98.7% | 99.0% |
| Apr-2010 | 99.4% | 99.0% | 99.4% |
| May-2010 | 99.8% | 99.2% | 99.5% |
| Jun-2010 | 99.7% | 99.2% | 99.4% |
| Jul-2010 | 99.7% | 99.1% | 99.5% |
| Aug-2010 | 99.7% | 99.3% | 99.6% |
| Sep-2010 | 99.6% | 98.9% | 99.6% |
| Oct-2010 | 99.8% | 99.6% | 99.9% |
| Nov-2010 | 99.9% | 99.7% | 99.9% |
| Dec-2010 | 100.0% | 99.7% | 99.9% |
| Jan-2011 | 100.0% | 100.0% | 100.0% |
| Feb-2011 | 100.1% | 100.1% | 100.1% |
| Mar-2011 | 100.3% | 100.3% | 100.2% |
| Apr-2011 | 100.6% | 100.5% | 100.3% |
| May-2011 | 100.6% | 100.8% | 100.3% |
| Jun-2011 | 100.8% | 100.8% | 100.2% |
| Jul-2011 | 100.9% | 100.2% | 100.7% |
| Aug-2011 | 101.0% | 101.1% | 100.6% |
| Sep-2011 | 101.1% | 101.6% | 100.7% |
| Oct-2011 | 101.3% | 101.4% | 100.5% |
| Nov-2011 | 101.4% | 101.5% | 100.5% |
| Dec-2011 | 101.6% | 101.6% | 100.8% |
| Jan-2012 | 101.8% | 101.7% | 100.6% |
| Feb-2012 | 102.0% | 101.8% | 100.8% |
| Mar-2012 | 102.2% | 102.2% | 101.4% |
| Apr-2012 | 102.3% | 102.5% | 101.7% |
| May-2012 | 102.4% | 102.1% | 101.6% |
| Jun-2012 | 102.4% | 102.3% | 101.6% |
| Jul-2012 | 102.5% | 102.0% | 101.2% |
| Aug-2012 | 102.7% | 102.4% | 101.4% |
| Sep-2012 | 102.8% | 103.0% | 101.6% |
| Oct-2012 | 102.9% | 103.0% | 101.8% |
| Nov-2012 | 103.0% | 103.2% | 102.1% |
| Dec-2012 | 103.2% | 103.3% | 101.9% |
| Jan-2013 | 103.4% | 103.7% | 101.6% |
| Feb-2013 | 103.6% | 104.0% | 102.2% |
| Mar-2013 | 103.7% | 104.1% | 102.3% |
| Apr-2013 | 103.8% | 103.4% | 101.9% |
| May-2013 | 104.0% | 104.0% | 102.3% |
| Jun-2013 | 104.1% | 104.2% | 102.5% |
| Jul-2013 | 104.2% | 103.7% | 102.5% |
| Aug-2013 | 104.4% | 104.2% | 102.7% |
| Sep-2013 | 104.6% | 104.7% | 102.9% |
| Oct-2013 | 104.7% | 104.8% | 103.0% |
| Nov-2013 | 104.9% | 104.9% | 103.0% |
| Dec-2013 | 105.0% | 105.0% | 103.1% |
| Jan-2014 | 105.1% | 104.9% | 103.3% |
| Feb-2014 | 105.2% | 105.0% | 103.3% |
| Mar-2014 | 105.4% | 105.0% | 103.4% |
| Apr-2014 | 105.7% | 105.0% | 103.6% |
| May-2014 | 105.9% | 105.6% | 103.8% |
| Jun-2014 | 106.1% | 105.8% | 104.0% |
| Jul-2014 | 106.3% | 105.9% | 104.1% |
| Aug-2014 | 106.4% | 106.0% | 104.5% |
| Sep-2014 | 106.6% | 105.9% | 104.5% |
| Oct-2014 | 106.8% | 106.1% | 104.5% |
| Nov-2014 | 107.1% | 106.3% | 104.9% |
| Dec-2014 | 107.3% | 106.4% | 104.8% |
| Jan-2015 | 107.4% | 106.4% | 104.9% |
| Feb-2015 | 107.6% | 106.6% | 105.0% |
| Mar-2015 | 107.7% | 106.7% | 105.1% |
| Apr-2015 | 107.9% | 106.9% | 105.2% |
| May-2015 | 108.2% | 107.3% | 105.4% |
| Jun-2015 | 108.3% | 107.4% | 105.5% |
| Jul-2015 | 108.5% | 107.6% | 105.7% |
| Aug-2015 | 108.6% | 107.5% | 105.7% |
| Sep-2015 | 108.7% | 107.4% | 105.8% |
| Oct-2015 | 109.0% | 107.8% | 105.9% |
| Nov-2015 | 109.2% | 108.0% | 105.9% |
| Dec-2015 | 109.3% | 108.0% | 106.2% |
| Jan-2016 | 109.4% | 108.1% | 106.5% |
| Feb-2016 | 109.6% | 108.3% | 106.6% |
| Mar-2016 | 109.8% | 108.3% | 106.6% |
| Apr-2016 | 109.9% | 108.5% | 106.8% |
| May-2016 | 109.9% | 108.5% | 106.6% |
| Jun-2016 | 110.2% | 108.2% | 106.5% |
| Jul-2016 | 110.4% | 109.0% | 106.9% |
| Aug-2016 | 110.5% | 109.2% | 107.1% |
| Sep-2016 | 110.7% | 109.2% | 107.0% |
| Oct-2016 | 110.9% | 109.1% | 106.9% |
| Nov-2016 | 111.0% | 109.3% | 107.2% |
| Dec-2016 | 111.1% | 109.2% | 107.0% |
| Jan-2017 | 111.3% | 109.9% | 107.3% |
| Feb-2017 | 111.5% | 110.0% | 107.4% |
| Mar-2017 | 111.5% | 110.2% | 107.4% |
| Apr-2017 | 111.7% | 109.9% | 107.4% |
| May-2017 | 111.8% | 110.0% | 107.4% |
| Jun-2017 | 112.0% | 110.1% | 107.5% |
| Jul-2017 | 112.1% | 110.3% | 107.5% |
| Aug-2017 | 112.3% | 110.2% | 107.4% |
| Sep-2017 | 112.3% | 110.3% | 107.4% |
| Oct-2017 | 112.5% | 110.6% | 107.5% |
| Nov-2017 | 112.7% | 110.6% | 107.5% |
| Dec-2017 | 112.8% | 110.7% | 107.8% |

Source: EPI analysis of Current Employment Statistics data from the Bureau of Labor Statistics
Figure A shows the number of jobs in Wisconsin, Minnesota, and the United States from November 2001 to December 2017, relative to the number of jobs in each geography in January 2011, the month that Governors Walker and Dayton took office. As you can see from the figure, changes in the level of jobs throughout the business cycle leading up to the Great Recession were remarkably similar between the two states. Both Minnesota and Wisconsin had modest job losses in the beginning of the period in the wake of the early 2000s recession, followed by modest job growth that tracked the U.S. average for a while and then flattened out for roughly the last two years prior to the onset of the Great Recession. In that earlier business cycle from November 2001 to December 2007, cumulative job growth was 3.7 percent in Minnesota and 3.3 percent in Wisconsin. Subsequently, the two states suffered losses in the recession that were similar, albeit slightly more severe in Wisconsin—with losses of 4.3 percent and 4.9 percent in Minnesota and Wisconsin, respectively, from December 2007 to December 2010.
The period from January 2011 to December 2017, after Governors Walker and Dayton assumed office, shows a starkly different picture. From early on in the recovery, Minnesota’s job growth accelerated noticeably more quickly than Wisconsin’s and the gap between the two states has increased fairly steadily ever since.
The Workplace Democracy Act restores workers’ bargaining power
Last Friday’s jobs report showed that the unemployment rate fell to 3.9 percent, the first time is has dipped below 4.0 percent since 2000. While many factors contribute to the overall unemployment rate—including labor force participation rates—policymakers should take note that a tightening labor market is not resulting in higher wages for working people. Nominal wage growth continues to fall short, rising only 2.6 percent over the year. One significant reason workers have been unable to insist on an increase in their paychecks is the uniquely low bargaining clout of U.S. workers.
While 60 percent of adults have a favorable view of labor unions, the most recent data available on union membership shows that, as of 2017, only 10.7 percent of wage and salary workers were union members. This disconnect is the result of decades of fierce opposition to unions and collective bargaining. These efforts have led to the enactment of state laws weakening—and even repealing—collective bargaining rights. At the federal level, corporate lobbyists have blocked attempts to reform outdated labor laws, enabling employers to exploit loopholes in the law and defeat workers’ organizing efforts. It is now standard practice for private employers to hire union avoidance consultants to quash workers’ efforts to unionize. Nearly ten years ago, a study found that roughly one-third of private sector employers fire workers during an organizing effort and over half of employers threaten to close the worksite if workers unionize. It is likely that employer opposition has intensified over the last decade, leaving more workers vulnerable to unlawful retaliation for exercising rights promised them over 80 years ago.
The Workplace Democracy Act, introduced today by Senator Bernie Sanders and several Democratic cosponsors, would begin to restore workers’ right to join together to improve their wages and working conditions. The legislation includes many critical reforms including closing loopholes in the law that enable employers to misclassify workers, denying them the right to organize. The bill also ensures that employers cannot subcontract their way out collective bargaining. And, the legislation ensures that working people have meaningful leverage in the workplace. These reforms would give U.S. workers more bargaining clout which is necessary to ensure a just economy.
The Supreme Court is poised to make forced arbitration nearly inescapable
The Supreme Court will soon decide whether employers can lawfully require workers to sign mandatory arbitration agreements that include class and collective action waivers. A ruling in NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris will have significant impacts on working people. If the Court sides with employers and the Trump administration, it is likely that the majority of workers in this country will be required, as a condition of employment, to sign away their right to pursue workplace disputes on a collective or class basis. In fact, available data suggest that it may take only six years for more than 80 percent of workplaces to adopt mandatory arbitration with class and collective action waivers.
Last year, EPI commissioned a survey that found that 53.9 percent of nonunion private-sector employers already have mandatory arbitration procedures. Prior to that study, the one major governmental effort to investigate the extent of mandatory arbitration was a 1995 GAO survey. That survey, conducted between April 1994 and April 1995, found that just 7.6 percent of employers had mandatory arbitration agreements. In other words, the use of mandatory arbitration agreements grew by more than 600 percent between 1994 and 2017. Using the growth rates between the two surveys to forecast future expansion suggests that by 2024, more than 80 percent of private sector, non-union establishments will adopt mandatory arbitration with class and collective action waiver of employment disputes, if the Court finds that such agreements are lawful.1 That will leave more than 85 million workers subject to mandatory arbitration agreements with class and collective action waivers. This means that the vast majority of workers will be forced to sign away their right to act with their colleagues to resolve workplace disputes—as well as their right to go to court for these matters. As a result, even if many workers face the same type of issue at work, each individual worker will be forced to hire their own lawyer, and resolve their dispute out of court, behind closed doors, with only their employer and a private arbitrator.
What to Watch on Jobs Day: Stronger wage growth as labor market slack continues to decline
While payroll employment growth was particularly weak in March, over the longer-term employment growth has been more than enough to keep up with growth in the working age population and even pull additional people off the sidelines and into the labor market. Labor force participation still has a way to go to reach full employment levels, but the trend continues to move in the right direction. And, make no mistake, we’ve never thought these displaced workers would be sitting on the sidelines forever. In fact, we’ve been expecting the workers to return to the labor force for years.
As those sidelined workers start dwindling in numbers, we should expect stronger and stronger wage growth. Continued slow wage growth tells us that employers still hold most of the cards, and don’t have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Therefore, wage growth remains one of the most important indicators to watch in Friday’s jobs report. The fact that nominal wage growth is still below target levels is a clear sign that the economy has yet to clearly reach full employment.
Alas, nominal wage growth for private-sector workers and even nominal wage growth for production/nonsupervisory workers offers only a limited view on wage growth in the economy today. One of the major benefits of a full employment economy is that wage growth isn’t simply strong for workers at the top of the wage distribution or for workers with more educational attainment. Younger workers, black workers, workers with lower levels of educational attainment, and workers at the middle and bottom of the wage distribution are disproportionately boosted in a stronger economy just as they are disproportionately harmed in a weaker one. Research has shown that for each percentage point decline in the unemployment rate, there is stronger wage growth in the lower part of the wage distribution than in the higher part (in particular, see Figure F here). Similarly, black workers saw disproportionately stronger opportunities for employment and wage growth in the latter part of the 1990s recovery than white workers did. Workers whose prospects fall farther in recessions see these prospects grow faster when times are good.
Let’s fight for working people on Workers’ Memorial Day
April 28 is Workers’ Memorial Day, an international remembrance day set aside to “mourn for the dead, and fight like hell for the living,” in the words of the immortal labor organizer Mother Jones.
In 2016, nearly 5,200 workers were killed on the job in the United States—14 workers every day—the highest number of workplace deaths in years. But that is only a part of the deadly toll: each year, more than 50,000 workers die from work-related disease. With this awful trend, any rational government would be proposing a significant increase in the budgets of our worker protection agencies and a rapid expansion of regulatory protections for workers.
Unless you’re just waking up from a 15-month nap, you know that workers’ rights—and especially worker safety and health—are under attack by the Trump administration like never before. And not only are workers under attack in their workplaces, but thanks to actions by the Environmental Protection Agency (EPA), the Interior Department, the Department of Agriculture and others, they’re also under attack where they live, where they eat, and where they vacation.
But these attacks didn’t originate in the fevered dreams of Donald Trump. What we’re seeing is the attempted wholesale implementation of the long-standing wish list of the conservative anti-worker Republicans, the Chamber of Commerce, and its anti-worker corporate allies.
And the attacks are not just aimed at the Occupational Safety and Health Administration (OSHA), but at a variety of other agencies— and even the scientific process underlying the ability of government agencies to legally protect workers from getting injured, killed, or sickened in the workplace.
It would take a long time to detail every attack on worker safety and the safety of the communities they live in, but I’ll list just a few here:
One of Donald Trump’s first actions as president was to issue an executive order requiring agencies to repeal two protections for every new one issued.