Policy Watch: Amid a busy week, Congress and the president find time to roll back protections for working people
Congress will begin a two-week recess when the Senate concludes its business today. Leading up to today’s adjournment, the Senate spent much of the week focused on Supreme Court nominee Neil Gorsuch’s confirmation. Meanwhile, congressional Republicans found time to hold a legislative hearing on a bill that would provide employers a new right to avoid paying workers for overtime hours when the overtime is worked—letting them hold onto those wages for as long as an entire year. On Tuesday, President Trump’s Department of Labor announced that it will delay implementation of the fiduciary rule until at least June 9, costing retirement savers $181 million this year. And, on Thursday, the administration announced that it would delay enforcement of an Occupational Safety and Health Administration rule limiting workers’ exposure to silica dust, which has been linked to lung cancer. Roughly 2.3 million workers are exposed to silica dust in their workplaces. The rule, which was to be enforced beginning June 23, was projected to provide net benefits of $7.7 billion, annually and would have saved more than 600 lives and prevented more than 900 new cases of silicosis a year.
This week also marked the seventh anniversary of an explosion at the Upper Big Branch Mine in West Virginia killed twenty-nine miners. The Mine Safety and Health Administration concluded that the conditions that led to the explosion were the result of a series of basic safety violations that were entirely preventable. While President Trump offered no official statement commemorating the largest coal mine disaster in 40 years, his actions make clear that, for all of his rhetoric about bringing back lost jobs in the coal mining industry, he is not concerned with something he could actually deliver for miners and their families: making mining jobs safe jobs. Last Friday, his administration announced a proposed delay of a rule aimed at improving the health and safety of miners.
When Congress returns from recess they will deal with the confirmation of President Trump’s nominee to serve as secretary of labor. The position will have a significant impact on this nation’s workers and our economy. Congress will also have to quickly pass a funding measure to keep the government running. Currently, the government is being funded through a temporary spending bill that expires on April 28, 2017. If Congress is unable to pass an additional funding measure, President Trump’s 100th day in office may be the first day of a government shutdown. The Perkins Project Policy Watch will continue to track all of this and provide information on the impact on our nation’s workers.
What to Watch on Jobs Day: The Fed should keep their foot off the brake and let the economy reach genuine full employment
As we eagerly await the March employment numbers from the Bureau of Labor Statistics, I’m going to take a few minutes to set the context from the last month and reiterate why it’s so important to let the economy get to full employment. Although President Trump claimed to have inherited a “mess” of an economy, the fact is that the economy has been slowly but steadily headed ever-closer to full employment for years. Simultaneously, the president has claimed he will enact policies that will see us add 25 million new jobs over the next 10 years. This pace of job growth over a decade is pretty much impossible to envision. But we could in theory see 2-3 years of significantly faster job growth than what has characterized the recent past. Unfortunately, no sign of this theoretical possibility has shown up in the data yet.
As shown in the figure below, payroll employment growth in February came in at 235,000. This is very much in line with what we saw in January (238,000) or in February of 2016 (237,000). While sustained growth at this level is welcome, it is hardly a break with very recent past trends and cannot be rightly attributed to any new policy. EPI’s new autopilot economy tracker examines key labor market indicators to see where our performance going forward either diverges or doesn’t diverge from the trends inherited from recent years. We track payroll employment growth along with the unemployment rate, prime-age employment-to-population ratio, and nominal wage growth.
Stop looking to the federal government on early childhood education
For decades, early childhood education advocates and the scientists, economists, and philanthropists who back them have been waiting for the federal government to step up to the plate and do what’s responsible, moral, and economically wise: make high-quality early childhood education a reality for everyone. With no indication that this is happening, even less so now, we need to focus on more promising pathways.
A smart path forward might combine adapting high-quality state-level strategies across more states and bubbling up lessons from pioneering districts. The latter help ensure a targeted focus on community-level needs and assets, and some offer timely lessons on how to link early childhood to the elementary years and beyond.
Recent presidents have all expressed support for investments in early childhood education. Still, even the strongest advocate, President Obama, left a legacy that includes higher standards and more funding but far too little of either to ensure all children a strong start. President Trump’s early childhood agenda consists so far of his daughter’s proposal to use tax deductions for the costs of child care to boost resources for the middle-class and wealthy families that can already afford it, while neglecting working-class and poor parents who can’t and expanding the budget deficit. Other policies he has advanced would compound problems for disadvantaged students. His “skinny budget” would strip public schools of key resources and, had the repeal-and-replace of Obamacare passed, it would have deprived millions of children of the physical and mental health care needed to succeed in them.
A recent study that I presented at the 2017 Federal Reserve Community Development Research Conference found that gaps in kindergarten readiness between high- and low-income children are enormous, and that they haven’t budged in the past 10-15 years—highlighting the need for more intensive policy responses. Other, more hopeful findings may point the way. Data from the same study indicate that parents are increasingly doing their part—reading to their children, singing with them, and playing games—regardless of their social class. So even though today’s low-social class parents are poorer and working odd hours at low-wage jobs, they are devoting the time and resources that science indicates are critical for child development.
Workers are never better off under comp time than overtime—and they are typically worse off
Once again, a bill promoting comp time is being paraded out by congressional Republicans and will be the subject of a hearing in the House this morning. The bill would allow private sector employers to offer comp time at time-and-a-half in lieu of overtime pay when an employee works more than 40 hours in a week. It is being touted by congressional Republicans as a boon to worker flexibility, but do not be fooled—everything the comp time bill purports to provide for workers is actually already available under the overtime provisions of the Fair Labor Standards Act. The bill only provides a new employer right to avoid paying workers the overtime they have earned.
Here are a couple scenarios to show workers are never better off under the comp time bill.
First, the easy example: consider the very common case of the low- or moderate-wage workers whose paycheck is not enough for them to make ends meet, and who would always prefer to work extra hours to get extra pay. Under comp time, these workers give up their right to overtime earnings in exchange for future time off. This is not what they need or want and they are unambiguously worse off under comp time than overtime.
But what about a worker who doesn’t need or want the overtime pay and prefers the time—are they better off under the comp time bill than under current law which provides overtime pay for working more than 40 hours a week? Nope! At best they are back at neutral.
Trump administration trade policy review misses the big picture
The Trump administration announced last week that it would sign two executive actions to launch a review of U.S. trade policy. A review of trade policy and its potential to harm U.S. workers is welcome and long overdue. However, the specifics of the review offered by President Trump mean that it is likely to fail to provide any help to American workers, in part because it asks the wrong questions.
The president’s first order requires Secretary of Commerce Wilbur Ross and White House Trade Council to “identify every form of trade abuse and every nonreciprocal practice that contributes to the U.S. trade deficit,” according to the commerce secretary. The report is to be completed within 90 days, with an analysis of the detailed cause of the deficit “by country and major product.” But the trade deficit is not a “product by product” or a “country by country” problem. We know what it is caused by and what should be done about it.
The trade deficit is not a bilateral problem between the United States and individual countries. The U.S. trade deficit is a result of global trade imbalances. There are ten to twenty countries that have developed large, persistent, structural trade surpluses that are distorting trade flows worldwide. The top ten surplus countries are shown in Figure A below. In 2015, these countries, led by China, Germany, Japan, Korea, and Taiwan, had a collective trade surplus of approximately $1.5 trillion. (The figures reported are current account balances, the broadest measure of trade in goods, services and income.)[1] The United States’ current account deficit of $463 billion in 2015 accounted for less than one third of the total surplus accumulated by the big surplus traders. Other countries have also suffered from persistent, structural trade deficits, job losses, and downward pressure on wages, including Great Britain, Brazil, Australia, and Mexico. Attacking the root causes of global trade imbalances will benefit all deficit countries, and not just the United States.
Unions help narrow the gender wage gap
Tuesday, April 4th is Equal Pay Day— the day that marks when a typical woman’s earnings catch up to what a man earned in the previous year. The gender wage gap is a measure of pay disparity between men and women. The research is conclusive: gender wage gaps exist across the wage distribution and among workers of every education level. The median woman worker (that worker in the exact middle of the distribution of women’s wages) is paid 83 cents for every dollar that the median man is paid. Among workers who have a college degree or advanced degree, the gap is even larger, with women being paid only 73 cents on the male dollar. Women of color face dual penalties of racial and gender-based pay gaps; black and Hispanic women are paid only 65 cents and 59 cents on the white male dollar.
Closing the gender wage gap is essential to helping women achieve economic security. We should use all the tools available to combat the factors contributing to pay disparities. Some of these tools include establishing standardized rates of pay, requiring more transparency in compensation data, strongly enforcing antidiscrimination laws, and allowing workers to earn additional benefits such as paid sick and family leave, which help enable workers to balance demands at home and at work.
For the vast majority of women, true economic security and a fair share of the economy’s growth will require combining progress in closing gender-based pay disparities with progress in linking their wage growth to economy-wide productivity growth, a linkage that has been severed in recent decades. The levers that will allow the wages of the vast majority of both men and women’s wages to benefit from overall economic growth include allowing the economy to reach and stay at genuine full employment, and raising labor standards such as updating the minimum wage and the overtime threshold.
Policy Watch: Tracking Congress and the administration’s rollback of workers’ rights
Last week, the Perkins Project launched the Worker Rights and Wages Policy Watch, which tracks actions by the Trump administration, Congress, and federal agencies that affect working people and the economy. A review of Policy Watch posts to date shows President Trump and congressional Republicans’ commitment to advancing an agenda that favors corporate interests ahead of workers. Consider their actions just this week: on Monday, President Trump signed into law a measure blocking the Fair Pay and Safe Workplaces Rule which would have helped ensure that federal contracts were not awarded to companies with track records of labor and employment law violations. That same day, the Department of Labor announced a proposed delay of a rule aimed at improving the health and safety of miners.
Meanwhile, while most of the news coverage was focused on House Republicans’ inability to repeal and replace the Affordable Care Act, they have been quietly overturning important worker protections and in the first few months of this session, making it more difficult for federal agencies to enforce labor and employment laws. One of these measures mandates that agencies place compliance cost considerations above all else, relegating the benefits to workers and consumers to secondary status.
The administration has also repeatedly placed corporate interests ahead of workers. In addition to this week’s announcement of a proposed delay of a rule to enhance workplace safety standards for miners, the administration has proposed delaying the implementation of the “fiduciary rule,” which would require financial professionals to act in their clients’ best interests when recommending investment products or strategies to people saving for retirement. The Trump administration’s proposed delay of 60 days will cost workers saving for retirement $3.7 billion.
The Trump administration and congressional Republicans have already taken a number of actions that hurt workers and stack the deck for corporate interests. The Perkins Project Policy Watch will continue to track what they do and provide information on how their actions impact our nation’s workers.
Modern-day Braceros: The United States has 450,000 guestworkers in low-wage jobs and doesn’t need more
On César Chávez Day, lost in all the news about the Trump administration’s criminalization and scapegoating of immigrants and attempts to withhold federal funds from cities with policies that protect immigrants, are the 450,000 low-wage-earning migrant workers employed in the United States through the H-2A, H-2B, and J-1 visa temporary foreign worker programs. Many of the workers in these temporary visa programs are in a precarious situation and vulnerable to abuse and retaliation at the hands of employers and their agents.
These “guestworkers” often arrive in the United States in debt, and are tied to and controlled by their employers. Research shows guestworkers are often paid lower wages than similarly situated U.S. workers, and earn wages similar to those of undocumented immigrant workers. This is reminiscent of the Bracero Program—a large guestworker program in the 1940s, 50s, and 60s that admitted hundreds of thousands of Mexican workers to work temporarily on U.S. farms and in other low-wage occupations—and which César Chávez fought against. Chávez knew that exploited, indentured, and underpaid workers would degrade labor standards for all workers in the United States, including immigrants. After scandals and political pressure, and President John F. Kennedy campaigning against it, the program was terminated in 1964.
Sadly, America has not learned its lesson. The United States is repeating an historical mistake, once again admitting large numbers of guestworkers in low-wage occupations. With the possibility looming that the Trump administration will reduce enforcement and oversight in guestworker programs—which will be further exacerbated if Trump’s proposed 21 percent budget cuts to the Department of Labor (DOL) are enacted—the United States may once again face scandals like the one where the bodies of guestworkers who died in a traffic accident were not immediately claimed, because farm labor contractors and agricultural growers argued over who their employer was.
Low-wage African American workers have increased annual work hours most since 1979
Over the last several decades, black workers have been offering more to the economy and the labor market to incredibly disappointing results in pay and unemployment. Some have argued that the disparity in wages between blacks and white is the result of white workers working longer and harder than black workers. They blame black workers for racial wage gaps, saying that they should do anything from getting more education to simply working harder. Such explanations minimize the role of racial discrimination on labor market outcomes, while perpetuating racial bias and stereotypes of black workers as unmotivated and lazy.
And the data show they are simply false: hours and weeks worked have increased for both races, with a larger increase for black workers over the last several decades. 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.
Table 1 provides data on annual hours worked in 1979 and 2015 for workers ages 18–64 years old who report non-zero earnings during the year (so the averages are conditioned on working. In forthcoming research, we explicitly address trends in labor force participation). Work hours include paid vacations and time off, and therefore represent paid hours. The table also presents the percent change from 1979 to 2015 in annual hours, weeks worked, and weekly hours. These data are shown by race and wage fifth, or quintile.
Repealing prevailing wage laws hurts construction workers
For more than 40 years, big business and the Republican party have teamed up to drive down the wages of construction workers by attacking their unions, passing so-called “right-to-work laws”, and weakening or repealing prevailing wage laws— which protect construction wages from downward pressure. They have, unfortunately, been very successful. Construction wages are lower today than they were in 1970, despite 40 years of economic growth and a higher national income.
The real average hourly earnings of production/nonsupervisory construction workers were $26.17 in 1970, $26.00 in 1980, and $23.91 in 1990. Construction workers’ hourly earnings bottomed out at $22.97 in 1993 but have never fully recovered from their 1970 peak and were only $25.97 in 2016.