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.

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.

Read more

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.

Read more

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.

Read more

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.

Read more

The U.S. Department of Labor is about to issue a final rule that will increase the number of people entitled to overtime pay when they work more than 40 hours in a week. The rule will simply say, in effect, that if an employee earns less than $50,440 a year (or close to that—we won’t know the final number until the rule is released), she must be paid time and a half when she works more than 40 hours a week, even if she is a salaried employee, and even if her employer calls her a manager, professional, or supervisor.

This is a consequential move, which will improve the lives of many working people in a number of ways. Millions of employees who work long hours will get paid overtime for the first time. Millions of other workers who have been working long hours, at a cost to their health and their families, will have their hours reduced to 40 hours a week. Millions more will get a raise above the threshold, because their employer can continue to avoid paying overtime. And hundreds of thousands of people will get jobs because employers will reduce the hours of some employees to avoid paying overtime and hire additional people to do the work at straight time wages.

Many colleges and universities have complained that they cannot afford it. They don’t want to pay for overtime hours that have been free for years. At a congressional field hearing in March, the University of Michigan’s associate vice president for Human Resources said it would be “cost prohibitive” to raise salaries or pay overtime for post-doctoral researchers and others earning less than $50,000 a year. The coalition of universities and colleges lobbying to weaken the rule suggests a salary threshold “between $29,172 and $40,352” as the point where overtime pay could be denied. The U-M associate vice president went on to conclude that, “The climate for most colleges and universities in the U.S. is one of ongoing financial pressures that would curtail hiring new employees or increasing compensation as a result of these FLSA changes.”

Read more

It’s been pointed out to me that yesterday’s blog post about a story by NPR’s Chris Arnold targeted too much ire at Arnold himself rather than the phenomenon he was reporting about. I think that’s probably right, and so I apologize to him for that. I was using Arnold’s story as a jumping off point for a discussion of a larger issue, and should have made that more clear. I do think my larger points about the substance of the topic under debate hold. The damage done by trade to American workers is consistently underestimated and is often treated as a surprise when it shouldn’t be—it’s completely the prediction of standard trade theory. To the degree that Arnold’s story helps take this “surprise” excuse off the table for future debates over trade, it’s doing a service.

Some quick notes on why I think all of this is important, however. This is Arnold’s first paragraph:

Economists for decades have agreed that more open international trade is good for the U.S. economy. But recent research finds that while that’s still true, when it comes to China, the downside for American workers has been much more painful than the experts predicted.

I think Arnold reports this exactly right. Experts continue to portray the downside of expanded trade for American workers as having turned out to be unexpectedly large, but they are wrong to be surprised. Downward pressure on a large majority of American workers’ wages is completely predicted by mainstream economic theory. But I should have made clearer where my criticism here was aimed.

Read more

Every year, hundreds of thousands of workers from abroad come to the United States to temporarily fill jobs in a number of occupations, including farm labor, landscaping, hospitality and seafood processing, as well as information technology jobs or to teach at U.S. universities and grade schools. They come through a virtual alphabet soup of temporary foreign worker programs which are distinguished by different “nonimmigrant” visa classifications, each having their own distinct purpose and history. The most common nonimmigrant visas that authorize employment are the H-2A, H-2B, H-1B, J-1, L-1, A-3, G-5, F-1/Optional Practical Training (OPT), and B-1 visa classifications, but also important are H-1B1, O-1, O-2, E-2, E-3, P-1, P-2, Q-1, and TN visas. The workers themselves, who hold nonimmigrant visas, are commonly referred to as guestworkers and are allowed to remain and work in the country for a limited period of time, depending on the terms of their specific visa.

Over the years, countless cases of abuse and exploitation of guestworkers have come to light and been reported on by the media. The abuses are usually carried out by employers or the labor recruiters who connect guestworkers to their jobs and employers, for a fee. Some of the abuses are extreme and amount to human trafficking: they have been compared to slavery by Buzzfeed and the Southern Poverty Law Center and described as “creating an underground system of financial bondage” by the Center for Investigative Reporting. None of these labels are an exaggeration.

Unfortunately, little else is known about how these guestworker programs operate, despite the fact that hundreds of thousands of guestworker visas are issued every year. That makes it difficult to craft rational policy solutions to improve how the programs are managed and to ensure that the labor standards of guestworkers—and of Americans who work in major guestworker occupations—are protected. The dearth of information also results in an outsized role for corporate interest groups that spend millions lobbying to expand and deregulate guestworker programs, because it is difficult for lawmakers to verify claims about how guestworker programs impact the economy, businesses, and the labor market.

That’s why the Visa Transparency Anti-Trafficking Act, a new piece of legislation introduced today in the House by Reps. Lois Frankel (D-Fla.), David Schweikert (R-Ariz.), Ted Deutch (D-Fla.), and Jim Himes (D-Conn.), and in the Senate by Sen. Richard Blumenthal (D-Conn.), is so important. The Act would create a uniform system for reporting data that the government already collects on work visa programs and require making that information available to the the public, non-governmental organizations, researchers, and lawmakers. Because the government already possesses a vast amount of data on guestworker programs and temporary visas, the bill does not require the government to collect much more or to impose new burdens or requirements on employers. It would simply provide increased access to this information. That may seem like a small step, but it would go a long way to bringing a much-needed dose of transparency to our immigration system and drastically improve the quality of public debates surrounding temporary foreign worker programs.

Read more

Yesterday, NPR’s Chris Arnold wrote the latest in what has become a very long line of “explainer” pieces about economic globalization and the presidential campaigns. Nearly all of these pieces seek to resolve an alleged puzzle: nearly all reputable economists argue that policy efforts to boost trade are good for the U.S. economy, yet many (if not most) American workers strongly oppose trade agreements signed in recent decades.

Arnold puts forward a pretty common solution to this alleged puzzle: “trade’s benefits are diffuse, but the pain is concentrated.” In this view, the only losers from trade are those workers directly displaced by imports. Every other consumer in the economy benefits from lower prices. But because the losers are small and concentrated, they can organize to oppose trade agreements. And while the winners are numerous and widespread, the benefits (e.g., slightly more affordable clothing and DVD players) are hard to notice, so no one organizes to support these agreements.

This is a common way of describing the effects of using policy to expand trade, but on the economics, it is certainly not correct. In textbook trade models, using policy levers (lower tariffs, for example) to boost trade with poorer countries will indeed cause total national income in the United States to rise. But these same textbooks also predict that the resulting expansion of trade will redistribute far more income than it creates. And the direction of this redistribution is upward. So it is perfectly possible to have policy efforts to expand trade lead to higher national income yet leave the majority of workers worse off. Importantly, the losers in these textbook models are not just workers directly displaced by imports—they’re all the workers in the entire economy who resemble the trade-displaced in terms of education and credentials.

Read more

This post originally appeared in The Globalist.

The presidential primary campaigns of both political parties have exposed widespread voter anger over U.S. global trade policies. In response, hardly a day has recently gone by without the New York Times, the Washington Post and other defenders of the status quo lecturing their readers on why unregulated foreign trade is good for them. The ultimate conclusion is always the same—that voters should leave complicated issues like this to those intellectually better qualified to deal with them. Trade experts, according to Binyamin Appelbaum of the Times have been “surprised” at the popular discontent over this issue. Their surprise only shows how disconnected the elite and the policy class that supports it is from the way most people actually experience the national economy. The United States has always been a trading nation. But until the 1994 North American Free Trade Agreement, trade policy was primarily an instrument to support domestic economic welfare and development.

A lop-sided deal: Investment vs. jobs

Starting with NAFTA, pushed through not by a Republican president, but by the Bill Clinton in 1994, it became a series of deals in which profit opportunities for American investors were opened up elsewhere in the world in exchange for opening up U.S. labor markets to fierce foreign competition. As Jorge Castañeda, who later became Mexico’s foreign minister, put it, NAFTA was “an agreement for the rich and powerful in the United States, Mexico and Canada, an agreement effectively excluding ordinary people in all three societies.” For 20 years, leaders of both parties have assured Americans that each new NAFTA-style deal would bring more jobs and higher wages for workers, and trade surpluses for their country. It was, they were told, an iron law of economics.

Read more