U.S.-Korea trade deal resulted in growing trade deficits and more than 95,000 lost U.S. jobs
(This blog post is an update to a post from March 30, 2015).
When the U.S.-Korea Free Trade Agreement (KORUS) was passed just over four years ago, President Obama said that the agreement would support 70,000 U.S. jobs. This claim was supported by a White House fact sheet that claimed that the KORUS agreement would “increase exports of American goods by $10 to $11 billion…” and that they would “support 70,000 American jobs from increased goods exports alone.” Things are not turning out as predicted. Far from supporting jobs, growing goods trade deficits with Korea have eliminated more than 95,000 jobs between 2011 and 2015.
Expanding exports alone is not enough to ensure that trade adds jobs to the economy. Increases in U.S. exports tend to create jobs in the United States, but increases in imports lead to job loss—by destroying existing jobs and preventing new job creation—as imports displace goods that otherwise would have been made in the United States by domestic workers. Thus, it is changes in trade balances—the net of exports and imports—that determine the number of jobs created or displaced by trade and investment deals like KORUS.
In the first four years after KORUS took effect, there was absolutely no growth in total U.S. exports to Korea, as shown in the figure below. Imports from Korea increased $15.2 billion, an increase of 26.8 percent. As a result, the U.S. trade deficit with Korea increased $15.1 billion between 2011 and 2015, an increase of 114.6 percent, more than doubling in just four years.
U.S.-Korea trade, 2011–2015 (billions of dollars)
| Exports | Imports | Trade balance | |
|---|---|---|---|
| 2011 | $43.5 | 56.7 | -13.2 |
| 2012 | 42.3 | 58.9 | -16.6 |
| 2013 | 41.7 | 62.4 | -20.7 |
| 2014 | 44.5 | 69.5 | -25.0 |
| 2015 | 43.5 | 71.8 | -28.3 |
Change, billions of dollars, and percent from 2011-2015
Imports: +$15.2 (26.8%)
Exports: $0 (0.0%)
Trade Bal.: -$15.1 (114.6%)
Source: Author's analysis of U.S. International Trade Commission Trade DataWeb
What to watch on Jobs Day: Wages, wages, and more wages
Last week, the Federal Open Market Committee rightfully decided against another interest rate increase. Raising rates serves to slow the economy down and, at this point in the recovery, the economy still needs all the help it can get to keep growing. Gross domestic product (GDP) showed a slow rate of growth of 0.5 percent annualized in the first quarter of 2016, following just 1.4 percent growth in the last quarter of 2015. As my colleague Josh Bivens wrote, “if such slow growth continues into 2016, there will be significant upward pressure on unemployment and recent gains in labor force participation will likely fade away.” While we all hope that GDP growth for the first quarter gets revised significantly upwards, and that the last 6 months are more of a blip than a new trend, it is certainly the case that the Fed’s decision to not raise rates looks justified by the data.
Private sector nominal wage growth is one of the top indicators to watch on Friday, and one of the indicators the Fed tracks most closely in making their decisions. Last week, however, we got another useful measure of labor compensation growth. The Bureau of Labor Statistics (BLS) released its latest compensation data from the Employment Cost Index (ECI) for March 2016. The data on wages and salaries from the ECI very much confirm the monthly nominal wage growth numbers that appear every month in the Employment Report (with data from the Current Employment Statistics (CES)). Over the year, private industry wages and salaries as measured by the ECI increased 2.0 percent, while overall compensation costs increased 1.8 percent. Turning to the monthly CES data, wages grew 2.3 percent for the year ending in March 2016.
ANCOR vastly overstates the impact of the overtime rule on community service providers
The Department of Labor (DOL) is about to release a final rule that will require overtime pay for millions of salaried employees who currently can be required to work long hours for no more pay than they receive for a 40-hour week. This will give them either more money or more time with their families or for themselves.
But the overtime rule naturally makes some employers unhappy, since they can currently get 60 hours of work from many employees for only 40 hours of pay. Even some non-profit human service providers, many of which are not even covered by the Fair Labor Standards Act (FLSA), oppose DOL’s updated rule.
An association of community providers serving people with intellectual and developmental disabilities (the American Network of Community Options and Resources, or ANCOR) commissioned a “Cost Impact Scoring Memo” by a company called Avalere to estimate the impact of the proposed overtime rule on its member agencies. Neither the survey questions, the actual responses, nor the response rate were included in Avalere’s report. But it is clear that the cost estimates are deeply flawed.
College degrees are not the solution to stagnating wages or inequality
Our recent report on the class of 2016 showed that young high school and college graduates still face high levels of unemployment and stagnant wages, even though the labor market has improved since the Great Recession. Between these two groups, however, young high school graduates face a far less forgiving economic reality: the unemployment rate for young high school graduates is over three times higher than their college-educated peers (17.9 percent versus 5.6 percent), nearly one in seven is stuck in a part-time job when they really want full-time work, and the wages of entry-level jobs have barely budged since 2000.
Despite improvement in recent years, young high school graduates' unemployment rate remains high: Unemployment rate of young high school graduates, by gender, 1989–2016*
| Date | All | Men | Women |
|---|---|---|---|
| 1989-12-01 | 13.0% | 12.6% | 13.5% |
| 1990-01-01 | 12.8% | 12.3% | 13.4% |
| 1990-02-01 | 12.8% | 12.2% | 13.5% |
| 1990-03-01 | 12.7% | 12.1% | 13.4% |
| 1990-04-01 | 12.7% | 12.4% | 13.2% |
| 1990-05-01 | 12.7% | 12.4% | 13.0% |
| 1990-06-01 | 12.3% | 12.2% | 12.4% |
| 1990-07-01 | 12.4% | 12.5% | 12.3% |
| 1990-08-01 | 12.4% | 12.6% | 12.1% |
| 1990-09-01 | 12.4% | 12.8% | 12.1% |
| 1990-10-01 | 12.7% | 13.0% | 12.3% |
| 1990-11-01 | 12.8% | 13.0% | 12.5% |
| 1990-12-01 | 13.0% | 13.2% | 12.9% |
| 1991-01-01 | 13.4% | 13.5% | 13.2% |
| 1991-02-01 | 13.9% | 14.0% | 13.8% |
| 1991-03-01 | 14.2% | 14.3% | 14.0% |
| 1991-04-01 | 14.4% | 14.6% | 14.3% |
| 1991-05-01 | 14.8% | 14.9% | 14.6% |
| 1991-06-01 | 15.4% | 15.5% | 15.2% |
| 1991-07-01 | 15.6% | 15.8% | 15.5% |
| 1991-08-01 | 15.9% | 16.0% | 15.8% |
| 1991-09-01 | 16.1% | 16.2% | 16.0% |
| 1991-10-01 | 16.2% | 16.4% | 16.1% |
| 1991-11-01 | 16.3% | 16.6% | 16.1% |
| 1991-12-01 | 16.5% | 16.9% | 16.1% |
| 1992-01-01 | 16.4% | 17.0% | 15.8% |
| 1992-02-01 | 16.5% | 17.2% | 15.7% |
| 1992-03-01 | 16.7% | 17.5% | 15.8% |
| 1992-04-01 | 16.8% | 17.6% | 15.8% |
| 1992-05-01 | 17.0% | 17.8% | 16.1% |
| 1992-06-01 | 17.1% | 18.0% | 16.2% |
| 1992-07-01 | 17.2% | 17.9% | 16.5% |
| 1992-08-01 | 17.2% | 18.1% | 16.2% |
| 1992-09-01 | 17.3% | 18.2% | 16.2% |
| 1992-10-01 | 17.3% | 18.2% | 16.2% |
| 1992-11-01 | 17.4% | 18.3% | 16.3% |
| 1992-12-01 | 17.4% | 18.3% | 16.4% |
| 1993-01-01 | 17.4% | 18.2% | 16.5% |
| 1993-02-01 | 17.2% | 17.8% | 16.5% |
| 1993-03-01 | 17.2% | 17.7% | 16.7% |
| 1993-04-01 | 17.3% | 17.7% | 16.9% |
| 1993-05-01 | 17.2% | 17.4% | 16.9% |
| 1993-06-01 | 16.9% | 17.1% | 16.7% |
| 1993-07-01 | 16.7% | 17.2% | 16.1% |
| 1993-08-01 | 16.6% | 17.0% | 16.1% |
| 1993-09-01 | 16.4% | 16.6% | 16.1% |
| 1993-10-01 | 16.4% | 16.7% | 16.0% |
| 1993-11-01 | 16.3% | 16.6% | 15.9% |
| 1993-12-01 | 16.2% | 16.6% | 15.7% |
| 1994-01-01 | 16.1% | 16.5% | 15.5% |
| 1994-02-01 | 16.0% | 16.6% | 15.4% |
| 1994-03-01 | 16.1% | 16.8% | 15.2% |
| 1994-04-01 | 15.8% | 16.5% | 14.9% |
| 1994-05-01 | 15.6% | 16.3% | 14.7% |
| 1994-06-01 | 15.4% | 16.0% | 14.8% |
| 1994-07-01 | 15.4% | 15.8% | 14.9% |
| 1994-08-01 | 15.2% | 15.5% | 14.9% |
| 1994-09-01 | 15.2% | 15.6% | 14.8% |
| 1994-10-01 | 15.0% | 15.2% | 14.8% |
| 1994-11-01 | 14.8% | 14.9% | 14.7% |
| 1994-12-01 | 14.6% | 14.6% | 14.6% |
| 1995-01-01 | 14.5% | 14.4% | 14.7% |
| 1995-02-01 | 14.1% | 13.8% | 14.5% |
| 1995-03-01 | 13.9% | 13.3% | 14.5% |
| 1995-04-01 | 14.0% | 13.4% | 14.6% |
| 1995-05-01 | 14.0% | 13.8% | 14.3% |
| 1995-06-01 | 14.2% | 14.3% | 14.1% |
| 1995-07-01 | 14.3% | 14.2% | 14.3% |
| 1995-08-01 | 14.4% | 14.4% | 14.3% |
| 1995-09-01 | 14.6% | 14.5% | 14.9% |
| 1995-10-01 | 14.7% | 14.6% | 14.8% |
| 1995-11-01 | 14.9% | 14.9% | 14.8% |
| 1995-12-01 | 15.0% | 15.2% | 14.8% |
| 1996-01-01 | 15.4% | 15.7% | 15.0% |
| 1996-02-01 | 15.5% | 15.8% | 15.1% |
| 1996-03-01 | 15.6% | 16.0% | 15.1% |
| 1996-04-01 | 15.5% | 15.8% | 15.0% |
| 1996-05-01 | 15.5% | 15.6% | 15.4% |
| 1996-06-01 | 15.2% | 15.0% | 15.5% |
| 1996-07-01 | 15.1% | 15.1% | 15.2% |
| 1996-08-01 | 15.1% | 15.0% | 15.1% |
| 1996-09-01 | 15.1% | 15.3% | 14.8% |
| 1996-10-01 | 15.4% | 15.6% | 15.2% |
| 1996-11-01 | 15.4% | 15.5% | 15.3% |
| 1996-12-01 | 15.4% | 15.5% | 15.4% |
| 1997-01-01 | 15.4% | 15.3% | 15.6% |
| 1997-02-01 | 15.5% | 15.2% | 15.8% |
| 1997-03-01 | 15.3% | 15.0% | 15.7% |
| 1997-04-01 | 15.4% | 14.8% | 16.0% |
| 1997-05-01 | 15.1% | 14.4% | 15.9% |
| 1997-06-01 | 15.2% | 14.7% | 15.8% |
| 1997-07-01 | 15.0% | 14.2% | 15.9% |
| 1997-08-01 | 15.0% | 14.3% | 15.8% |
| 1997-09-01 | 14.7% | 13.9% | 15.7% |
| 1997-10-01 | 14.4% | 13.6% | 15.4% |
| 1997-11-01 | 14.3% | 13.4% | 15.4% |
| 1997-12-01 | 14.0% | 13.0% | 15.2% |
| 1998-01-01 | 13.7% | 12.9% | 14.7% |
| 1998-02-01 | 13.6% | 12.9% | 14.4% |
| 1998-03-01 | 13.5% | 13.0% | 14.1% |
| 1998-04-01 | 13.2% | 13.1% | 13.4% |
| 1998-05-01 | 13.3% | 13.5% | 13.0% |
| 1998-06-01 | 13.1% | 13.2% | 12.9% |
| 1998-07-01 | 12.9% | 13.3% | 12.5% |
| 1998-08-01 | 12.9% | 13.3% | 12.5% |
| 1998-09-01 | 13.0% | 13.4% | 12.6% |
| 1998-10-01 | 12.9% | 13.4% | 12.4% |
| 1998-11-01 | 12.8% | 13.2% | 12.2% |
| 1998-12-01 | 12.6% | 13.1% | 12.1% |
| 1999-01-01 | 12.6% | 13.3% | 11.9% |
| 1999-02-01 | 12.6% | 13.1% | 12.0% |
| 1999-03-01 | 12.5% | 12.7% | 12.2% |
| 1999-04-01 | 12.6% | 12.5% | 12.6% |
| 1999-05-01 | 12.4% | 12.2% | 12.7% |
| 1999-06-01 | 12.2% | 12.1% | 12.4% |
| 1999-07-01 | 12.2% | 12.0% | 12.4% |
| 1999-08-01 | 12.1% | 11.8% | 12.6% |
| 1999-09-01 | 12.0% | 11.6% | 12.5% |
| 1999-10-01 | 12.0% | 11.5% | 12.7% |
| 1999-11-01 | 12.1% | 11.6% | 12.7% |
| 1999-12-01 | 12.3% | 11.9% | 12.7% |
| 2000-01-01 | 12.2% | 11.7% | 12.8% |
| 2000-02-01 | 12.1% | 11.8% | 12.5% |
| 2000-03-01 | 12.3% | 12.0% | 12.6% |
| 2000-04-01 | 12.3% | 12.0% | 12.7% |
| 2000-05-01 | 12.3% | 12.0% | 12.7% |
| 2000-06-01 | 12.4% | 12.2% | 12.6% |
| 2000-07-01 | 12.3% | 12.1% | 12.6% |
| 2000-08-01 | 12.4% | 12.5% | 12.4% |
| 2000-09-01 | 12.2% | 12.4% | 11.9% |
| 2000-10-01 | 12.0% | 12.4% | 11.7% |
| 2000-11-01 | 12.1% | 12.4% | 11.7% |
| 2000-12-01 | 12.1% | 12.4% | 11.8% |
| 2001-01-01 | 12.2% | 12.3% | 11.9% |
| 2001-02-01 | 12.2% | 12.5% | 11.8% |
| 2001-03-01 | 12.1% | 12.6% | 11.5% |
| 2001-04-01 | 12.2% | 12.8% | 11.4% |
| 2001-05-01 | 11.9% | 12.6% | 11.1% |
| 2001-06-01 | 12.0% | 12.6% | 11.3% |
| 2001-07-01 | 12.3% | 12.9% | 11.5% |
| 2001-08-01 | 12.5% | 12.9% | 11.9% |
| 2001-09-01 | 12.9% | 13.4% | 12.5% |
| 2001-10-01 | 13.3% | 13.7% | 12.9% |
| 2001-11-01 | 13.6% | 13.9% | 13.2% |
| 2001-12-01 | 13.9% | 14.2% | 13.5% |
| 2002-01-01 | 14.2% | 14.5% | 13.7% |
| 2002-02-01 | 14.5% | 15.0% | 13.9% |
| 2002-03-01 | 14.9% | 15.4% | 14.3% |
| 2002-04-01 | 15.2% | 15.8% | 14.5% |
| 2002-05-01 | 15.6% | 16.1% | 15.1% |
| 2002-06-01 | 16.0% | 16.4% | 15.4% |
| 2002-07-01 | 16.3% | 16.7% | 15.8% |
| 2002-08-01 | 16.6% | 17.1% | 16.0% |
| 2002-09-01 | 16.5% | 17.1% | 15.9% |
| 2002-10-01 | 16.5% | 16.9% | 16.0% |
| 2002-11-01 | 16.6% | 17.0% | 16.0% |
| 2002-12-01 | 16.4% | 16.9% | 15.8% |
| 2003-01-01 | 16.6% | 17.0% | 16.0% |
| 2003-02-01 | 16.6% | 17.1% | 16.0% |
| 2003-03-01 | 16.6% | 17.0% | 16.0% |
| 2003-04-01 | 16.6% | 17.1% | 15.8% |
| 2003-05-01 | 16.8% | 17.4% | 16.0% |
| 2003-06-01 | 17.0% | 17.4% | 16.5% |
| 2003-07-01 | 17.1% | 17.6% | 16.5% |
| 2003-08-01 | 17.1% | 17.3% | 16.7% |
| 2003-09-01 | 17.2% | 17.5% | 16.8% |
| 2003-10-01 | 17.4% | 17.8% | 16.8% |
| 2003-11-01 | 17.6% | 18.2% | 16.7% |
| 2003-12-01 | 17.6% | 18.5% | 16.4% |
| 2004-01-01 | 17.5% | 18.4% | 16.2% |
| 2004-02-01 | 17.3% | 18.1% | 16.3% |
| 2004-03-01 | 17.4% | 18.3% | 16.4% |
| 2004-04-01 | 17.4% | 18.1% | 16.5% |
| 2004-05-01 | 17.3% | 18.0% | 16.4% |
| 2004-06-01 | 17.0% | 17.9% | 15.9% |
| 2004-07-01 | 16.8% | 17.5% | 15.9% |
| 2004-08-01 | 16.6% | 17.5% | 15.5% |
| 2004-09-01 | 16.6% | 17.4% | 15.5% |
| 2004-10-01 | 16.4% | 17.1% | 15.5% |
| 2004-11-01 | 16.1% | 16.6% | 15.5% |
| 2004-12-01 | 16.0% | 16.3% | 15.6% |
| 2005-01-01 | 16.0% | 16.3% | 15.6% |
| 2005-02-01 | 16.2% | 16.7% | 15.5% |
| 2005-03-01 | 16.1% | 16.7% | 15.3% |
| 2005-04-01 | 16.1% | 16.8% | 15.2% |
| 2005-05-01 | 16.1% | 16.8% | 15.2% |
| 2005-06-01 | 16.2% | 17.1% | 15.1% |
| 2005-07-01 | 16.1% | 17.2% | 14.8% |
| 2005-08-01 | 16.4% | 17.4% | 15.2% |
| 2005-09-01 | 16.4% | 17.3% | 15.2% |
| 2005-10-01 | 16.3% | 17.3% | 15.0% |
| 2005-11-01 | 16.2% | 17.2% | 14.8% |
| 2005-12-01 | 15.9% | 16.8% | 14.7% |
| 2006-01-01 | 16.0% | 16.7% | 15.1% |
| 2006-02-01 | 15.9% | 16.3% | 15.3% |
| 2006-03-01 | 15.7% | 16.0% | 15.3% |
| 2006-04-01 | 15.8% | 16.0% | 15.5% |
| 2006-05-01 | 15.7% | 16.1% | 15.2% |
| 2006-06-01 | 15.4% | 15.8% | 15.0% |
| 2006-07-01 | 15.5% | 15.8% | 15.1% |
| 2006-08-01 | 15.4% | 15.9% | 14.8% |
| 2006-09-01 | 15.5% | 16.0% | 14.7% |
| 2006-10-01 | 15.5% | 16.1% | 14.8% |
| 2006-11-01 | 15.5% | 16.0% | 14.9% |
| 2006-12-01 | 15.8% | 16.2% | 15.1% |
| 2007-01-01 | 15.6% | 16.3% | 14.7% |
| 2007-02-01 | 15.4% | 16.1% | 14.4% |
| 2007-03-01 | 15.3% | 16.0% | 14.3% |
| 2007-04-01 | 15.2% | 15.9% | 14.3% |
| 2007-05-01 | 15.2% | 15.8% | 14.3% |
| 2007-06-01 | 15.5% | 16.3% | 14.4% |
| 2007-07-01 | 15.5% | 16.5% | 14.1% |
| 2007-08-01 | 15.6% | 16.4% | 14.6% |
| 2007-09-01 | 15.5% | 16.3% | 14.4% |
| 2007-10-01 | 15.5% | 16.5% | 14.1% |
| 2007-11-01 | 15.5% | 16.6% | 14.0% |
| 2007-12-01 | 15.9% | 17.1% | 14.2% |
| 2008-01-01 | 16.1% | 17.2% | 14.6% |
| 2008-02-01 | 16.4% | 17.5% | 14.8% |
| 2008-03-01 | 16.9% | 17.8% | 15.5% |
| 2008-04-01 | 16.9% | 17.9% | 15.5% |
| 2008-05-01 | 17.2% | 18.3% | 15.7% |
| 2008-06-01 | 17.4% | 18.6% | 15.8% |
| 2008-07-01 | 18.0% | 19.1% | 16.5% |
| 2008-08-01 | 18.2% | 19.5% | 16.4% |
| 2008-09-01 | 18.6% | 19.9% | 16.7% |
| 2008-10-01 | 19.0% | 20.4% | 17.0% |
| 2008-11-01 | 19.5% | 21.0% | 17.4% |
| 2008-12-01 | 19.7% | 21.3% | 17.5% |
| 2009-01-01 | 20.2% | 22.0% | 17.5% |
| 2009-02-01 | 20.9% | 22.9% | 18.0% |
| 2009-03-01 | 21.3% | 23.5% | 18.1% |
| 2009-04-01 | 21.9% | 24.2% | 18.6% |
| 2009-05-01 | 22.4% | 24.8% | 19.1% |
| 2009-06-01 | 22.9% | 24.9% | 20.1% |
| 2009-07-01 | 23.5% | 25.5% | 20.6% |
| 2009-08-01 | 24.4% | 26.4% | 21.6% |
| 2009-09-01 | 25.1% | 27.1% | 22.1% |
| 2009-10-01 | 25.9% | 27.9% | 23.2% |
| 2009-11-01 | 26.6% | 28.3% | 24.1% |
| 2009-12-01 | 27.1% | 28.9% | 24.5% |
| 2010-01-01 | 27.6% | 29.6% | 24.6% |
| 2010-02-01 | 27.8% | 29.9% | 24.8% |
| 2010-03-01 | 27.8% | 29.9% | 24.8% |
| 2010-04-01 | 28.0% | 30.2% | 25.0% |
| 2010-05-01 | 28.1% | 30.1% | 25.3% |
| 2010-06-01 | 28.1% | 30.4% | 24.9% |
| 2010-07-01 | 28.0% | 30.2% | 24.9% |
| 2010-08-01 | 27.8% | 30.2% | 24.4% |
| 2010-09-01 | 27.7% | 30.1% | 24.4% |
| 2010-10-01 | 27.4% | 29.7% | 24.1% |
| 2010-11-01 | 27.2% | 29.6% | 23.8% |
| 2010-12-01 | 27.1% | 29.4% | 23.8% |
| 2011-01-01 | 26.9% | 28.8% | 24.2% |
| 2011-02-01 | 26.6% | 28.5% | 24.0% |
| 2011-03-01 | 26.8% | 28.6% | 24.3% |
| 2011-04-01 | 26.7% | 28.5% | 24.1% |
| 2011-05-01 | 26.5% | 28.3% | 23.9% |
| 2011-06-01 | 26.4% | 28.2% | 23.9% |
| 2011-07-01 | 26.7% | 28.3% | 24.4% |
| 2011-08-01 | 26.6% | 28.0% | 24.6% |
| 2011-09-01 | 26.4% | 27.9% | 24.4% |
| 2011-10-01 | 26.2% | 27.9% | 23.9% |
| 2011-11-01 | 26.3% | 27.9% | 24.0% |
| 2011-12-01 | 26.2% | 28.0% | 23.7% |
| 2012-01-01 | 26.1% | 27.9% | 23.5% |
| 2012-02-01 | 26.1% | 27.8% | 23.5% |
| 2012-03-01 | 25.8% | 27.7% | 23.1% |
| 2012-04-01 | 25.7% | 27.5% | 23.3% |
| 2012-05-01 | 26.0% | 27.7% | 23.6% |
| 2012-06-01 | 26.2% | 27.8% | 23.8% |
| 2012-07-01 | 25.9% | 27.6% | 23.5% |
| 2012-08-01 | 25.9% | 27.7% | 23.3% |
| 2012-09-01 | 26.0% | 27.8% | 23.4% |
| 2012-10-01 | 26.1% | 27.6% | 24.0% |
| 2012-11-01 | 25.9% | 27.3% | 23.8% |
| 2012-12-01 | 25.7% | 26.8% | 24.3% |
| 2013-01-01 | 25.4% | 26.3% | 24.0% |
| 2013-02-01 | 25.2% | 25.9% | 24.2% |
| 2013-03-01 | 25.2% | 25.7% | 24.5% |
| 2013-04-01 | 25.1% | 25.4% | 24.7% |
| 2013-05-01 | 24.8% | 25.1% | 24.5% |
| 2013-06-01 | 25.0% | 25.3% | 24.5% |
| 2013-07-01 | 24.6% | 25.2% | 23.9% |
| 2013-08-01 | 24.8% | 25.3% | 24.2% |
| 2013-09-01 | 24.6% | 25.1% | 23.8% |
| 2013-10-01 | 24.3% | 25.1% | 23.3% |
| 2013-11-01 | 24.0% | 24.9% | 22.8% |
| 2013-12-01 | 23.4% | 24.3% | 22.2% |
| 2014-01-01 | 23.1% | 24.0% | 22.0% |
| 2014-02-01 | 23.0% | 24.1% | 21.4% |
| 2014-03-01 | 22.9% | 24.1% | 21.2% |
| 2014-04-01 | 22.5% | 23.9% | 20.5% |
| 2014-05-01 | 22.0% | 23.3% | 20.2% |
| 2014-06-01 | 21.4% | 22.5% | 19.8% |
| 2014-07-01 | 21.3% | 22.4% | 19.7% |
| 2014-08-01 | 20.6% | 21.7% | 19.0% |
| 2014-09-01 | 20.3% | 21.3% | 18.9% |
| 2014-10-01 | 20.1% | 20.8% | 19.0% |
| 2014-11-01 | 20.0% | 20.5% | 19.2% |
| 2014-12-01 | 19.9% | 20.6% | 19.0% |
| 2015-01-01 | 19.9% | 20.5% | 19.0% |
| 2015-02-01 | 19.8% | 20.1% | 19.3% |
| 2015-03-01 | 19.5% | 19.6% | 19.4% |
| 2015-04-01 | 19.3% | 19.3% | 19.3% |
| 2015-05-01 | 19.2% | 19.6% | 18.5% |
| 2015-06-01 | 19.0% | 19.6% | 18.2% |
| 2015-07-01 | 18.6% | 19.1% | 17.9% |
| 2015-08-01 | 18.5% | 18.8% | 17.9% |
| 2015-09-01 | 18.2% | 18.5% | 17.7% |
| 2015-10-01 | 17.9% | 18.1% | 17.6% |
| 2015-11-01 | 17.7% | 17.9% | 17.4% |
| 2015-12-01 | 18.0% | 18.1% | 18.0% |
| 2016-01-01 | 18.0% | 18.1% | 18.0% |
| 2016-02-01 | 17.9% | 18.0% | 17.8% |
* Data reflect 12-month moving averages; data for 2016 represent 12-month average from March 2015 to February 2016.
Note: Shaded areas denote recessions. Data are for high school graduates age 17–20 who are not enrolled in further schooling.
Source: EPI analysis of basic monthly Current Population Survey microdata
There are clear economic advantages for young people with a college degree relative to those who do not pursue and complete a college degree. This often leads pundits to suggest that more education is a solution to the low wages and high unemployment facing non-college educated workers. While this could be good advice at the individual level, encouraging more people to pursue higher education will do little to address the ongoing wage stagnation experienced by both high school and college graduates.
Weak productivity can be improved by full employment
Neil Irwin wrote a piece on productivity growth in the New York Times that’s making the rounds. It’s a good piece, definitely worth reading. But I think we need to focus a lot more on the portion of the productivity slowdown that is likely fixable quickly with policy: the depressing effect of chronic aggregate demand slack. While economics textbooks tend to shorthand the determinants of productivity growth as slow-moving, supply-side influences like the education of the workforce and the pace of technological advance, plenty of evidence shows that productivity growth is actually positively affected by the rate of demand-growth in the economy. If this is true, then the deceleration of productivity might be just the latest casualty from the too-long slog back to full recovery after the Great Recession. And this would in turn provide yet another reason why the Fed and other macro policymakers should err strongly on side of giving the economy too much rather than too little support going forward.
This theme—that productivity and potential output may be depressed by our failure to generate enough demand-growth to engineer a full recovery—is also a key point of my recent paper on the Congressional Progressive Caucus budget. If passed, this budget would do a lot for boosting productivity growth. People are absolutely right to be concerned about sluggish productivity growth, but we should at least try to pluck the low-hanging fruit in restoring a decent rate of growth by finally locking in full employment.
Restoring overtime will benefit millions of working people
For more than two years, the Obama administration has been working on restoring and strengthening working people’s right to receive overtime pay for working more than 40 hours per week. It’s been reported that the salary threshold under which all workers, regardless of their title or responsibilities, will be eligible for overtime will be set at $47,000 a year. While this is slightly lower than DOL’s original proposal, it represents a significant step forward in the effort to boost wages for working people.
If the salary threshold is indeed set at $47,000, it will directly benefit 12.5 million workers. 4.8 million workers will be newly eligible for overtime protections and another 7.6 million will be more easily able to prove their eligibility. All told, about 33 percent of the salaried workforce will be eligible for overtime, regardless of their duties on the job.
By restoring their right to be paid for the hours they work, President Obama and Secretary of Labor Perez are giving a raise to millions of working- and middle-class Americans. They deserve praise for their efforts.
Workers’ Memorial Day
On September 11, 2001, almost 3,000 people died in the attacks on the World Trade Center, the Pentagon, and the airliner crash in Pennsylvania. That tragedy is being compounded by the growing toll of cancer, lung disease and other illnesses related to the attack, particularly in the New York metro area, where first responders were exposed to a sickening mix of chemical and biological toxins. USA Today reported that “more than 9,000 claimants have been determined eligible for compensation of medical bills and other expenses,” and that 2,620 of the approved cases were cancer-related. This second wave of illness and death is taking place out of the public spotlight, but it is real and is causing suffering in thousands of families.
During the years since 9/11, a much larger wave of workplace deaths has been crashing down on American families without drawing much attention from the public or the media. Every year, more people are killed from injuries in the workplace than were killed on September 11, 2001. The number of fatal injuries has been as high as 5,840 but never lower than 4,551—this translates into roughly 65,000 unnecessary deaths resulting from negligence or the reckless indifference of employers who continue to send workers into unshored trenches, onto roofs without fall protection, into confined spaces filled with toxic gas, and into factories and mills with dangerous levels of explosive dust.
How bad are Trump’s policy instincts? He’s taking tax advice from Kansas governor Sam Brownback
In the last week, Donald Trump has backed away a bit from his ridiculous ideas to retire the federal debt by selling national assets and has noted his approval of the Federal Reserve’s low interest rate policies in recent years. This may have led some to question whether or not his policy instincts are really all that bad. They are.
To see why, one needs to dig into his plan for federal taxes. The regressiveness of this plan has been well-advertised: about 40 percent of the $9.5 trillion cut would eventually go to the top 1 percent. But look beyond this bullet point and you’ll see that Trump’s plan is so convoluted that a key loophole it contains has largely escaped analysis. This loophole is a piece of tax policy so bad that, at an Urban Institute panel on tax ideas from the campaign trail, Joe Rosenberg of the Tax Policy Center deemed it the worst tax idea from the campaign. To put it even more bluntly, this loophole is so bad that even the resolutely pro-tax cut Tax Foundation doesn’t like it.
Luckily, we already have evidence of just how bad this loophole is. This is because it has already helped blow a hole in the revenue of the only entity that has adopted it: the state of Kansas.
Tired of economists’ misdirection on globalization
An interesting story in the New York Times this morning looks at the effect that job losses from trade have had on people’s political views. It’s no surprise that voters on the losing end of globalization are disenchanted with the political mainstream, as the Times puts it. They have every right to be.
But I’m tired of hearing from economists about the failure to support workers dislocated by globalization as a cause of anger and the policy action the elite somehow mistakenly forgot. Ignoring the losers was deliberate. In 1981, our vigorous trade adjustment assistance (TAA) program was one of the first things Reagan attacked, cutting its weekly compensation payments from a 70 percent replacement rate down to 50 percent. Currently, in a dozen states, unemployment insurance—the most basic safety net for workers—is being unraveled by the elites. Only about one unemployed person in four receives unemployment compensation today.
I’m also getting tired of hearing that job losses from trade are the result of the U.S. economy “not adjusting to a shock.” Trade theory tells us that globalization’s impact is much greater on the wages of all non-college grads (who are between two-thirds and three-quarters of the workforce, depending on the year), not just a few dislocated manufacturing workers. The damage is widespread, not concentrated among a few. Trade theory says the result is a permanent, not temporary, lowering of wages of all “unskilled” workers. You can’t adjust a dislocated worker to an equivalent job if good jobs are not being created and wages for the majority are being suppressed. Let’s not pretend.
By failing to eliminate the tipped minimum wage, D.C. Mayor Bowser continues a legacy of inequality
This week, Washington, D.C. Mayor Muriel Bowser unveiled the details of her plan to raise the minimum wage in the District of Columbia to $15 an hour by 2020—unfortunately, the main difference between the Mayor’s plan and the ballot initiative is that her plan perpetuates the unjust subminimum wage for tipped workers.
Currently, tipped workers in the District are paid a minimum wage of just $2.77 an hour before tips and depend on diners to pay the bulk of their wages. Mayor Bowser’s proposal would raise the tipped minimum wage to $7.50 by 2024, where it would equal half the regular minimum wage. Having this separate, lower minimum wage for tipped works is unique to the United States; no other country has a separate minimum wage for tipped workers. This two-tiered system—which Mayor Bowser’s law will perpetuate—enshrines both gender and racial inequality directly into our labor law. The result is lower wages and higher levels of poverty for tipped workers, who are more often women and people of color.
When the first minimum wage was created in 1938 as part of the New Deal, it exempted many of the industries that commonly practiced tipping. The explicit subminimum wage for tipped workers was established in 1966 when the Fair Labor Standards Act was expanded, and restaurant owners and their lobbyists have defended the two-tier system ever since. The result is a subminimum wage for tipped workers that has been stuck at $2.13 at the federal level since 1991 and at $2.77 in DC since 1993.
This system has an obvious implication for working people who make their living in restaurants: they have lower wages and are much more likely to live in poverty. In states where tipped workers are paid a base wage of just $2.13 an hour, they are more than twice as likely to live in poverty than other workers. In these states, 18 percent of waitstaff and bartenders live in poverty, compared with 7 percent for other workers. In places like D.C., where tipped workers are paid a base wage somewhere between $2.13 and the full minimum wage, 14.4 percent of waitstaff and bartenders are in poverty.