What to Watch on Jobs Day: Policymakers can’t claim credit for the continuation of a trend
Tomorrow’s jobs report is notable, because it will cover the first full month that President Trump has been in office. While the president has recently claimed that he inherited a “mess” of an economy, the fact is that the economy has been recovering slowly but steadily, and I expect the February jobs numbers to reflect that. The unemployment rate has been ticking down, the prime-age employment-to-population ratio has been improving, and wages grew across the board in 2016.
To be clear, there is still room for improvement. While we are on the road to full employment, we are not there yet. But the economy is on track and there are no obvious signs of any underlying weakness that would lead to a recession. It’s important to keep this steady improvement in mind as we assess economic progress moving forward. No policymaker should be allowed to claim credit for improvements that are simply a continuation of a trend. Conversely, failure to deliver still lower unemployment in the coming years should be seen as a policy mistake—either by the Federal Reserve or by fiscal policymakers.
The average unemployment rate over the last three months was 4.7 percent, a fall of 0.3 percentage points from the average rate from the same three months last year (5.0 percent). At that rate, the unemployment rate will hit 4.0 percent sometime in 2019. This is not an unrealistic aspiration. The U.S. economy sat at roughly 4.0 percent for two solid years in 1999 and 2000, and policymakers should be aiming for that level today. Only when the labor market is tight enough to deliver sustained rising wages for all workers—regardless of gender, race, or educational attainment—should we say our work is done. Simply put, we want an economy where worker wages are rising, and in order to get there employers need to be competing for workers rather than workers competing for jobs.
Janet Yellen, not Donald Trump, is far more likely to decide whether or not we reach genuine full employment in 2017
In recent weeks, a number of stories have been written about the Trump administration’s excessively rosy projections for economic growth in coming years. And three weeks ago, Federal Reserve Board Chair Janet Yellen testified before Congress about the likely path of monetary policy over the next year. The Trump administration forecasts and Fed decisions are deeply intertwined. While the Trump administration’s precise forecasts are clearly unrealistic in the long-run, we should be clear in noting that the next couple of years could easily see a substantial pickup in economic growth. If this happens, however, we will have Janet Yellen and her colleagues at the Fed to thank, not Donald Trump.
The reason is straightforward: 2017 is the year when the Fed will finally decide whether or not to guarantee genuine full employment by giving the economy “room to run” by not raising rates aggressively. While Fed policy largely sputters when trying to spur growth with lower short-term interest rates, raising rates does reliably slow growth. So for all the chatter about the importance of Fed policy in recent years, their attempts to spur growth with low short-term rates were often futile. But once they firmly decide to start reining in growth with higher rates their policy choices will have real bite.
The metaphor used to describe the problem with using low rates to boost growth was that you can’t “push on a string”. Essentially, the Fed can lower rates to try to induce businesses and households (and even governments) to borrow and spend more, but they cannot force this spending to actually happen. If governments ignore low rates and indulge in spending austerity for ideological reasons, or if households do not respond to low rates because their housing wealth had been torpedoed and hence home refinancing is impossible, or if businesses do not take advantage of low rates to build new factories because they do not have customers for what their current factories are producing, then the Fed cannot do much about any of this.
It’s time we acknowledge women’s contributions to the economy—and how much bigger a role they would play in a more inclusive economy
Women hold 49.5 percent of payroll jobs. The health of the female workforce is hugely important to the health of the overall labor force. And yet—in crucial ways—lawmakers in the United States have avoided commonsense policy changes that have been shown to make it easier for women to balance paid work and their still disproportionate share of responsibilities at home.
Policies like paid parental leave and subsidized child care increase parental labor force participation, which would boost the economy. Many of our peer nations have such policies, and, not surprisingly, their employment rates are much higher than ours. The figure below shows just how far U.S. women have fallen behind some of our international peers. The graph shows the share of women age 25–54 with a job between 1995 and 2015 in Germany, Canada, Japan, and the United States. While women’s prime-age employment-to-population ratio (EPOP) rose over that 20-year period in those peer nations, it actually fell in the United States.
The share of prime-age women with a job has fared worse in the U.S. than in peer countries: Employment-to-population ratio of women workers age 25–54, select countries, 1995–2015
| Canada | Germany | Japan | United States | |
|---|---|---|---|---|
| 1995 | 69.434551% | 66.360158% | 63.233624% | 72.189196% |
| 1996 | 69.577146% | 67.220440% | 63.701741% | 72.770073% |
| 1997 | 70.971110% | 67.399584% | 64.566038% | 73.541046% |
| 1998 | 72.183646% | 68.944387% | 64.036077% | 73.642970% |
| 1999 | 73.245982% | 70.253128% | 63.551051% | 74.147991% |
| 2000 | 73.944309% | 71.210539% | 63.582090% | 74.213847% |
| 2001 | 74.297867% | 71.607431% | 64.124398% | 73.421299% |
| 2002 | 75.348504% | 71.845950% | 63.863976% | 72.259684% |
| 2003 | 76.000458% | 71.981067% | 64.407421% | 72.006189% |
| 2004 | 76.720415% | 72.129055% | 65.028791% | 71.848458% |
| 2005 | 76.488663% | 70.969949% | 65.733178% | 71.963537% |
| 2006 | 76.984912% | 72.647765% | 66.614235% | 72.504467% |
| 2007 | 78.190906% | 74.045933% | 67.370518% | 72.501768% |
| 2008 | 78.008148% | 74.744854% | 67.495987% | 72.301570% |
| 2009 | 77.114622% | 75.420875% | 67.595960% | 70.208609% |
| 2010 | 77.075022% | 76.320711% | 68.157788% | 69.343654% |
| 2011 | 77.207691% | 77.892216% | 68.459240% | 68.967922% |
| 2012 | 77.710148% | 78.235789% | 69.161920% | 69.196894% |
| 2013 | 78.090883% | 78.625264% | 70.773639% | 69.253713% |
| 2014 | 77.444969% | 78.839200% | 71.835052% | 69.997790% |
| 2015 | 77.541653% | 79.212303% | 72.704612% | 70.323786% |
Source: EPI analysis of OECD Labour Force Statistics
Federal contract workers need the protection of the Fair Pay and Safe Workplaces rule
Last week, Senator Warren, joined by her colleagues Senator Murray and Senator Sanders, asked Attorney General Sessions to open a criminal investigation into the deaths and serious injuries of workers employed by VT Halter Marine, Inc., a shipbuilder with United States Navy contracts. Senators argue that, while the Occupational Safety and Health Administration (OSHA) has assessed penalties against VT Halter, the fines “are clearly not a sufficient deterrent for VT Halter.” The senators’ request follows a report from the Center for Investigative Reporting documenting VT Halter’s history of violating workplace safety regulations. Despite the company’s track record, it has continued to receive hundreds of millions of dollars in federal contracts.
Today, the Senate is voting on a resolution of disapproval to block the Obama administration’s Fair Pay and Safe Workplaces rule that would help ensure that law-breaking employers, like VT Halter, do not receive federal contracts. The rule requires contractors to disclose violations of federal labor and employment laws, including the Occupational Safety and Health Act, and directs agency contracting officials to consider a company’s record of violations in awarding federal contracts. President Trump has already stated that he will sign the resolution and block the rule. This, as he announced his intention to increase military spending, leading to hundreds of millions in taxpayer dollars going to federal contractors for the development of new ships, planes, and technology in support of our military. By blocking the rule designed to reform federal contracting, the president and congressional Republicans have essentially ensured that taxpayers will continue to support contractors with a history of violating worker protection laws and regulations.
Trump administration wants to delay rule protecting savers from conflicted investment advice
Following a directive from President Trump, the Labor Department has proposed a two-month delay in implementing an Obama administration rule requiring financial professionals to act in clients’ best interests when recommending investment products or strategies to people saving for retirement (known as the “fiduciary rule”). Under the proposed extension, the rule would take effect June 9 rather than April 10. The public has 15 days to submit comments on the delay.
The rule was six years in the making and has survived three court challenges backed by the financial services industry, which stands to lose an estimated $17 billion a year from ending predatory practices by brokers and other financial professionals passing themselves off as disinterested advisors. It incorporates input from four days of public hearings, over 3000 public comment letters, and more than 100 stakeholder meetings.
Unbeknownst to most people, it is currently legal for financial professionals to recommend higher-cost investment products or rollovers from 401(k)s to higher-cost IRAs when similar but lower-cost options are available, without disclosing that they are working on commission rather than making recommendations that are in their clients’ interest.
Chamber of Commerce’s recommendations to the NLRB would roll back workers’ rights to the Stone Age
Yesterday, the Chamber of Commerce released ten recommendations to “fix” the National Labor Relations Board (NLRB). The Chamber’s policy suggestions are recycled positions that have been the subject of the nearly two dozen hearings on the agency since Republicans assumed control of the House in 2011. Arguing that President Obama’s board “overturned over 4,500 years of precedent,” the Chamber advances a platform that would roll back workers’ rights to the Stone Age.
Since the NLRB issued its decision in Specialty Healthcare, clarifying the standard for determining an appropriate bargaining unit, corporate special interests have assailed it as inviting the proliferation of “micro” units that will allow unions to gerrymander workforces. The Chamber echoes this argument in advocating for the NLRB or Congress to overturn the decision. However, the NLRB’s standard for determining an appropriate bargaining unit in Specialty Healthcare has been upheld in all seven U.S. Courts of Appeals in which it has been challenged. Data on the median size of bargaining units disproves the argument that the standard would lead to the proliferation of so-called “micro-units.” Why then are the Chamber and other corporate interest groups committed to doing away with the Specialty Healthcare standard? They want employers that are committed to defeating an organizing campaign to be able to manipulate who is in a bargaining unit to make it harder for workers to organize. The National Labor Relations Act (NLRA) directs the NLRB to allow employees to organize into units that assure employees “the fullest freedom in exercising the rights guaranteed by this Act.” The standard in Specialty Healthcare does just that.
Congress is laser-focused on rolling back protections for workers, consumers, and the environment
This week, the House of Representatives will consider three bills that further advance a deregulatory agenda that jeopardizes worker safety, consumer protections, and our environment. The House has already passed several bills this session that limit agencies’ ability to regulate. The trio of bills on the House floor this week includes the Regulatory Integrity Act of 2017, the OIRA Insight, Reform, and Accountability Act, and the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act. The House will also vote on additional Congressional Review Act resolutions to block existing rules, including an Occupational Safety and Health Administration (OSHA) regulation that enables OSHA to hold employers accountable for failing to keep accurate records of workplace injuries and illnesses. It is clear that Congress is laser-focused on rolling back regulatory protections and making it as hard as possible for agencies tasked with safeguarding our nation’s workers to do their job.
Trump’s Plan for Trade: The last thing we need is more trade deals
President Trump is expected to outline plans for trade policy development in his speech to a joint session of Congress. He outlined some of those plans in remarks to the Conservative Political Action Conference, where he said “We’re going to make trade deals, but we’re going to do one-on-one, one-on-one, and if they misbehave, we terminate the deal.”
The United States had a global current account deficit (the broadest measure of all trade in goods, services and income) of $470 billion (2.5 percent of GDP) and a goods trade deficit of $750 billion (4 percent of GDP) in 2016. Meanwhile, a handful of countries have developed large, structural trade surpluses that reached $1.2 trillion, which have effectively transferred millions of manufacturing jobs from the United States and other countries to these surplus countries—have hampered economic recovery in much of the globe—and now threaten to destabilize the global economy again in coming years if not reduced.
The Affordable and Safe Prescription Drug Importation Act is what real health reform looks like
The battle over the future of the Affordable Care Act (ACA) has clearly begun in earnest. A striking feature of this debate is the disconnect between commonly cited complaints about the ACA and prescriptions offered by Republican lawmakers. For example, the most common complaint about the ACA’s exchange-based insurance policies is that they are too “thin”—deductibles, co-pays, and other cost-sharing burdens are too high. This complaint is understandable. For people used to getting employer-sponsored insurance (ESI) who find themselves now buying in the exchange, it is true that these plans are thinner than most ESI plans. But we should remember that the pre-ACA individual market for insurance offered much less comprehensive plans that required much larger out-of-pocket costs. For example, fully half of the plans offered on the individual market before the ACA would not be allowed today precisely because they demanded too-costly out-of-pocket exposure.
Fixing the problem of too-high exposure to out-of-pocket costs is straightforward: the exchange subsidies for premiums and cost-sharing could be increased. There would be plenty of members of Congress—mostly (or exclusively) Democratic—who would sign onto this. The obvious objection to this is that it costs taxpayer money. This, in turn, begs the question of are there any policy changes that could both lower the cost of health care to consumers and also the tax bills of households?
Luckily, there are such policies. Senator Bernie Sanders and co-sponsors are introducing the Affordable and Safe Prescription Drug Importation Act. This would instruct the HHS Secretary to put forward regulations allowing the importation of qualifying prescription drugs from Canadian sellers. In two years, importation from other advanced countries would also be allowed. The bill sets high standards to insure that only safe and effective prescription drugs could be imported, and there would be strict controls following the drugs into the United States to insure their proper dispensing.
Why records matter to worker safety
Another week and Congressional and White House attacks on worker rights and safety continue. Here’s another proposed Congressional action guaranteed not to make headlines, but which will nevertheless have a damaging impact on worker safety.
Last week, Rep. Bradley Byrne (R-Ala.) introduced a “resolution of disapproval” under the Congressional Review Act (CRA) to overturn the “Volks Rule,” which allows the agency to continue prosecuting recordkeeping violations as it had done in the first 40 years of its existence.
Overturning the Volks Rule will result in more workers being injured, and it will penalize responsible employers.