There is no starker metric for our unequal age than the stagnation of American wages over the last generation. Since 1973, productivity has grown about 75 percent, while the compensation of the typical worker has grown only about 12 percent. Since 1979, the hourly median wage has grown less than 10 percent in real dollars, or an average annual raise of barely 4 cents. While wages grew for many workers in 2017, wage growth is still far slower—and more unequal—than where it needs to be.

The interactive graphic below shows the change in real (inflation-adjusted) wages by wage decile, with drop-down filters for gender, race, educational attainment, and time period. This affords comparison of the wage gains (or losses) experienced by particular workers, and comparison across the full 1979–2017 span, or its constituent business cycles. The choice of “African-American” and “1979–1989,” for example, charts how black workers fared during the dismal 1980s; the choice of “BA or higher” and “2009–2017” charts how well-educated workers fared during the long recovery from the Great Recession.

There are a lot of moving pieces here—including shifting economic opportunities, changes in educational attainment, policy drifts and shifts, and five recessions that swallow up almost 6 of the 39 years since 1979. But here are four key takeaways:

Read more

Ron Blackwell, a friend to EPI since its early days, died on February 25.

Ron had a long career in the labor movement, starting with the Amalgamated Clothing and Textile Workers Union in New York, moving to the AFL-CIO in Washington, D.C. until he retired in 2012.

Raised in Alabama, he was a steadfast defender of the rights of working people and a life-long enemy of economic injustice in its many forms.

He pioneered in the design and management of campaigns to use the financial and pension assets of labor unions as a tool of organizing and collective bargaining.

Having studied economics and political economy at the New School, he understood how elite decisions hidden from the public can destroy efforts by ordinary people to better their lives. His was a relentless voice urging the labor movement to demand a seat at the table of economic policy. He also played an important role in efforts to create international labor solidarity in a world of globalizing capital.

Above all, Ron Blackwell was the rare man of principle who actually had the courage of his convictions. As a young man, he chose to go to prison rather than submit to those who were waging the unjust and terrible war in Vietnam. In his years as a labor advocate, he was quick to spot hypocrisy among political leaders, who—as the late mineworkers’ leader John L. Lewis once put it—“supped at labor’s table and sheltered in labor’s house” but then, “cursed with equal impartiality both labor and its adversaries.”

Ron told it like it was.

EPI, the labor movement, and the country have lost a valiant warrior in the struggle for justice.

Anniversaries of major events are nearly irresistible opportunities to reflect on the past, often with the hope that there has been some progress. So it is this year, 50 years after the Kerner Commission Report on Civil Disorders found systemic inequality and racial discrimination to be at the root of riots across America.

In a new report, Janelle Jones, John Schmitt and I present statistics showing what life was like for African Americans in this country 50 years ago compared to now. That document is a straightforward, unfiltered presentation of the facts, covering a wide range of economic, social, and health outcomes. In the spirit of reflection, I want to use this blog post to focus on racial economic inequality in the labor market, which directly affects approximately 20 million African Americans who get up every day and either go to work or go to find work.

The bottom line is simple. Despite decades of policies, programs, protests and outstanding achievements by African American men and women in many aspects of American life, race far too often remains a deciding factor in the economic status of African Americans relative to whites.

Great strides have been made toward raising educational attainment among African Americans and closing the education gap relative to whites, especially with regard to completing high school. In 1968, just over half (54.4 percent) of African American adults age 25-29 were high school graduates, compared to nearly three-quarters (75.0 percent) of whites. In 2016, 92.3 percent of African American adults age 25-29 were high school graduates with 22.8 percent having gone on to complete a bachelor’s degree or higher (up from 9.1 percent in 1968). Among whites, 95.6 percent are high school graduates and 42.1 percent have a bachelor’s degree or higher (up from 16.2 percent in 1968).

Read more

In the context of this week’s immigration debate in the Senate, Republican Senators will push for the reforms in the Secure and Succeed Act of 2018, which reflect the White House’s policy priorities for immigration. It’s likely, however, that one or more Senators will try to attach legislation to increase the number of temporary migrant workers who lack adequate wage and worker protections onto any bill that emerges. The thrust of any guestworker proposals that may arise will be to widen the essentially lawless zone in the labor market that has been carved out by the proliferation of temporary work visa programs, which put American and permanent immigrant workers into competition with temporary migrants who are denied all opportunity to bargain meaningfully for higher wages. This week’s debate in the Senate should prioritize providing a path to citizenship for DREAMers, not opportunistically expanding the share of workers in America who are not protected by labor standards.

As the Los Angeles Times recently suggested, there may be an attempt to include a bill from Sen. Orrin Hatch (R-Utah) that would triple the number of college-educated temporary migrant workers who are employed in the H-1B visa program—a flawed guestworker program used mainly to outsource jobs in information technology and send high-tech jobs offshore. Hatch’s bill is known as I-Squared, and although Hatch is trying to sell it as an increase in “merit-based” immigration, it is primarily an attempt to increase the number of temporary migrant workers the tech industry can hire at low wages.

There is no question in anyone’s mind that the United States will always need to attract the best and brightest workers from abroad, and many employers claim the H-1B visas is a tool to achieve that. But any migrant workers who enter the U.S. labor market must do so with equal rights, fair pay, and a quick path to permanent residence and citizenship that the worker controls—not the employer. Unfortunately, the H-1B guestworker program fails to meet any of those requirements. Hatch’s I-Squared bill would exacerbate the problems the H-1B program creates by vastly increasing the number of H-1B workers while failing to fix the three main problems with the H-1B program: first, employers are allowed to legally underpay H-1B workers compared to similarly situated U.S. workers; second, employers do not have to recruit U.S. workers before hiring H-1B workers, allowing them to ignore the U.S. workforce altogether; and third, the H-1B program allows employers to replace U.S. workers with much lower-paid H-1B workers—a deplorable practice that has occurred far too many times—and the laid-off workers are often forced to train their own H-1B replacements as a condition of their severance pay.

Read more

Spurred on by President Trump’s ending of the Deferred Action for Childhood Arrivals (DACA) initiative in September 2017, on Monday the Senate began an “open-ended” debate on immigration, which is set to only last for this week. The debate is centered around possible legislation to legalize and provide a path to citizenship for the up to 1.8 million unauthorized immigrants who entered the United States as minors, known as DREAMers, including the 700,000 current recipients of DACA. Without the protection of DACA or new legislation, DACA recipients will be left without the ability to attend college or work legally, leaving them unable to access labor and employment law protections because they’ll fear deportation. Passing a bill that legalizes DACA recipients and DREAMers is an urgent priority that Congress should focus on, but the debate will unfortunately spend far too much time this week on adding new immigration enforcement measures and cutting the number of permanent immigrant visas (also known as “green cards”).

The White House and some Republican senators have made it clear that in return for DREAMer legalization, they’d like a large expansion in immigration enforcement and cuts to the number of immigrants that can become permanent residents and American citizens in the future. It is obvious to any rational observer that President Trump intentionally created a crisis for DREAMers by ending DACA as a way to achieve these immigration policy goals—which reflect the misguided and draconian priorities of his administration and Republicans on the hard-right—in exchange for ending the crisis Trump created. Both Republican Senators Tom Cotton (R-Ariz.) and Majority Leader Mitch McConnell (R-Ky.) have expressed their support for Iowa Senator Chuck Grassley’s Secure and Succeed Act of 2018—which is based on the White House’s proposed framework for an immigration deal that includes DREAMer legalization—and both believe it’s the only piece of legislation that can become law. Other Republican Senators who have co-sponsored the Secure and Succeed legislation include Joni Ernst (R-Iowa), John Cornyn (R-Texas), Thom Tillis (R-N.C.), David Perdue (R-Ga.), and James Lankford (R-Okla.).

Read more

The Trump administration has released another variation of their long-dormant infrastructure plan. Just like the previous version, the plan amounts to empty talk. To understand why, one must examine the fiscal year 2019 budget proposal, released alongside their infrastructure proposal. While the administration trumpets an infrastructure plan, their budget radically cuts federal investments.

Even their trumpeting of the stand-alone infrastructure plan is hugely misleading. Instead of the $1 trillion being claimed by the administration (already pared back from the $1.5 trillion they claimed they’d be investing in infrastructure in earlier discussions), the plan only calls for $200 billion in federal funds. Finding the rest of the $1 trillion will be left overwhelmingly to states and localities, despite the fact that they already bear the brunt of paying for public infrastructure spending. In total, state and local governments account for 77 percent of public infrastructure spending in the United States. They account for 62 percent of capital investment and 88 percent of operations and maintenance. It is odd to argue that the United States needs a substantial infrastructure push to deal with past underinvestment, and then to propose that the same system that yielded this underinvestment—relying too much on state and local governments—should just be continued. If we want a real investment in infrastructure, continuing to kick the problem to state and local governments won’t solve anything.

The Trump administration will claim that their plans are different because they will leverage the private sector. This claim doesn’t change anything. Private entities will not build infrastructure for free, but will expect a return on investment. That means state and local governments will have to pay for the infrastructure with taxes, tolls, or other user fees. And if state and local governments predictably dodge the task of financing and funding projects directly, public-private partnerships come with their own set of problems, as natural monopoly characteristics can leave the private partner in a position to hike tolls and degrade service quality.

Read more

Conventional wisdom is firming up quickly around the story that recent stock price declines are a result of the market realizing (in proper Wile E. Coyote fashion) that the economy has overheated. This conclusion is far too premature and ignores plenty of contrary evidence.

The story goes that the 2.9 percent year-over-year wage growth in last Friday’s jobs report is a signal that a tsunami of inflation is heading our way. This would force the Fed to step in and stop the inflationary wave by sharply hiking interest rates. Higher interest rates, in turn, can depress stock prices both by restraining overall growth and by attracting people towards buying bonds rather than stocks. The fiscal stimulus provided by the Tax Cuts and Jobs Act (TCJA) and new higher spending caps is thought to add fuel to an already raging economic fire (side note: the TCJA is expensive in budgetary terms, but is so inefficient as fiscal stimulus that its effect is very easy to overstate).

People have gotten way ahead of the facts on this. Yes, the unemployment rate is low, but it’s certainly been this low or lower for a longer span of time without the economy overheating. In 1999 and 2000, the unemployment rate averaged 4.1 percent for two years (and sat below 4 percent for five months), and core inflation nudged up for sure but never broke 2 percent (and the Fed had not even specified a 2 percent target in those years).

Read more

The U.S. Census Bureau reported that the annual U.S. trade deficit in goods and services increased from $504.8 billion to $566.1 billion from 2016 to 2017, an increase of $61.2 billion (12.1 percent). The rapid growth of the overall U.S. trade deficit reflects the failure of Trump administration trade policies to materially affect trade flows in its first year, and its failure to address currency misalignment and prolonged overvaluation of the U.S. dollar.

The U.S. goods trade deficit increased from $752.5 billion in 2016 to $810.0 billion in 2017, an increase of $57.5 billion (7.6 percent). The U.S. goods trade deficit is dominated by the trade deficit in manufactured products (including re-exports), which increased from $648.7 billion in 2016 to $699.8 in 2017, an increase of $51.1 billion (7.9 percent). Rapidly growing trade deficits in manufactured goods are a threat to future employment in this sector, which remains a large employer despite decades of policy-inflicted decline.

The U.S. trade deficit with China reached a new record of $375.2 billion in 2017, up from $347 billion in 2016, an increase of $28.2 billion (8.1 percent). China is a particular source of concern in trade in steel and aluminum, industries in which that country has accumulated massive amounts of subsidized, and often state-owned excess production capacity, over the past two decades. The president needs to promptly take trade action in pending national security investigations in these sectors.

The remainder of the goods trade deficit is composed of trade in petroleum and other energy products, and miscellaneous transactions. The United States also had a small trade surplus in agricultural commodities, which reached $22.1 billion (including re-exports) in 2017. The U.S. surplus in services trade declined from $247.7 billion in 2016 to $244.0 billion in 2017, a decline of $3.7 billion (1.5 percent).

Read more

Last week, Janelle Jones and I released a new study showing that opening an Amazon fulfillment center does not actually boost overall employment in the county where it opens. Analyzing data for counties in 19 states containing Amazon fulfillment centers, we found that within two years, the opening of such a facility leads to a 30 percent increase in warehouse and storage employment in the surrounding county. However, this does not lead to an increase in overall employment in the county.

In response to our study, Amazon circulated a comment arguing that “Amazon’s investments led to the creation of 200,000 additional non-Amazon jobs” and “counties that have received Amazon investment have seen the unemployment rate drop by 4.8 percentage points on average.”

Both of these claims are misleading. First, although it’s true that unemployment fell during the economic recovery in places that Amazon opened fulfillment centers, unemployment also fell substantially in places without an Amazon presence at all. Nationally, over 2010–2016, unemployment fell by 4.7 percentage points—essentially the same as the 4.8 percentage point fall Amazon touts—even though most areas of the country did not have an Amazon warehouse. Amazon is simply riding the tide of the national economic recovery. Unlike the analysis that Amazon presented, our study actually accounts for employment changes that are happening regardless of Amazon during the recession and recovery, by controlling for national, regional, and state-specific employment shocks.

Read more

If you follow the news, it’s hard to avoid the constant claims that President Trump has made, taking credit for a strong economy. This claim raises a bunch of questions, but a tl;dr assessment of the Trump economy in 2018 is pretty simple: It’s good, but not great. The Trump administration deserves zero credit for its pockets of strength. And everything they’ve done on economic policy indicates that they will be terrible macroeconomic managers, and will bungle any challenge that comes their way in the next few years.

The longer version of this is below.

The economy going into 2018: Good, but not great

By almost any measure, the economy today is stronger than it has been in a decade. But that’s a really low bar! This decade began with the worst economic crisis since the Great Depression, and the economy’s growth has been severely hamstrung ever since. After eight-and-a-half years of steady recovery, the unemployment rate today sits at 4.1 percent, lower even than its pre-Great Recession level. This is unambiguously good news. But other measures of health in the job market tell a bit less-rosy story.

For example, the share of “prime-age” adults (between the ages of 25 and 54) with a job remains below its pre-Great Recession peak even after years of improvement. We would need to add millions more jobs to push it back to levels it reached in the not-so-distant past of the early 2000s. Wage growth also remains distressingly weak, and this wage weakness has blunted the incentive for employers to make productivity-enhancing investments. After all, there’s not much point in spending money to economize on labor costs when workers are cheap and easy to find.

Read more