Recently, everyone from Hillary Clinton to the American Enterprise Institute  (AEI) has been focused on the “gig” economy—businesses like Uber and Taskrabbit that let consumers call up services on demand with their computers or phones. Despite all the attention these businesses have received, both AEI and the Wall Street Journal have pointed out that the gig economy supposedly has not shown up in Bureau of Labor Statistics job data. But while the on-demand economy has not appeared in government labor statistics—yet—that does not mean that it is not having an impact on people’s livelihoods. The rise of the gig economy is part of a wider trend that Yale political scientist Jacob Hacker has noted of risk being shifted from employers onto the backs of workers. New technologies have only accelerated this shift.

Drivers for Uber and Lyft, as well as most workers in the gig economy, are classified as independent contractors, despite the fact that their employers direct much of their work activities. Uber, for example, tells drivers where to pick up passengers and also deactivates drivers’ accounts if they consistently receive poor ratings from passengers. But because they are independent contractors, drivers are responsible for insuring their own vehicles, and the company does not provide them with health insurance, paid vacation, or retirement benefits. Independent contractors are also unable to file for unemployment compensation, must bear all of the cost of Social Security payroll taxes, and cannot file for workers’ compensation.

Ride-sharing is not the only part of the economy where workers are frequently misclassified as independent contractors, however. Misclassification happens throughout the economy, everywhere from construction to housecleaning to home health care. Across the board, this practice leads to lower wages and tax revenues, among other social costs.

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Matt Yglesias is an insightful writer, but his recent article, “Hillary Clinton’s favorite chart is pretty misleading” is itself very misleading. Since the Clinton campaign’s “favorite chart” is an EPI chart, which Jared Bernstein and I originally came up with twenty years ago, I think it’s important to set the record straight. The main problem is that Yglesias does not actually engage with the chart he says he’s criticizing.

“That bargain has eroded. Our job is to make it strong again.” pic.twitter.com/T3ARkHJRsz

— Hillary Clinton (@HillaryClinton) July 13, 2015

The chart compares the growth of average productivity since 1948 with the growth of the hourly compensation (all wages and benefits) of production/nonsupervisory workers, a group comprising 82 percent of payroll employment (blue collar workers in manufacturing and non-managers in services).

The point is to show that the pay of a typical worker has not grown along with productivity in recent decades, even though it did just that in the early post-war period. That is, it shows a substantial disconnect between workers’ pay and overall productivity—a disconnect that has not always existed. We use data on production/nonsupervisory workers because there is no other data series on the pay of a typical worker that goes back to the early post-war period. The point of the chart is to show not only the current divergence but also that it was not always present—also, these data tend to move with the economy-wide median wage.

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(This is the fifth of six blog posts on disability.)

Earlier blog posts in this series questioned Stanford economist Mark Duggan’s Senate testimony that disability incidence is rising because low-wage workers have an increasing incentive to apply for benefits instead of working or looking for work. This post considers a related claim made by Duggan: that an increase in the share of beneficiaries with mental health disorders and musculoskeletal conditions reflects “the liberalization of the program’s medical eligibility criteria that occurred in the mid-1980s” and is problematic because “the employment potential of SSDI applicants with these more subjective conditions is substantial and it is often difficult to verify the severity of these conditions.”

The first part of Duggan’s claim is true, but somewhat misleading with respect to mental health. After Congress expanded and clarified eligibility criteria in 1984 in response to an ill-conceived effort by the Reagan Administration to reduce disability rolls, there was a rebound in disabled worker awards for mental health and other conditions. But the share of awards for mental health conditions declined as the baby boomers approached retirement because mental health problems don’t increase with age as much as other conditions.

On the other hand, the share of awards due to musculoskeletal conditions has grown steadily, more than offsetting declines in the shares due to mental health, cancer, and cardiovascular disease (see Figure 1). As discussed in earlier blog posts, there has been no upward trend in overall disability incidence over the past 20 years. Moreover, the employment potential of disability applicants is very low, even among those denied benefits. Nevertheless, it is reasonable to ask why there has been an increase in the share of awards for musculoskeletal conditions, and why increases in life expectancy due to such factors as a steep decline in smoking and advances in the treatment of cardiovascular disease haven’t led to a decline in overall disability, especially since fewer jobs now require hard physical labor.

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(This is the fourth of six blog posts on disability.)

In Senate testimony earlier this year, Stanford economist Mark Duggan claimed that Social Security Disability Insurance (SSDI) was an “important factor” in the decline in labor force participation in the United States relative to other industrialized countries. In an earlier blog post, I showed that even research cited by Duggan found that disability receipt had a negligible impact on overall employment. Is it still possible that SSDI has a noticeable impact on labor force participation, a measure that includes unemployed workers actively looking for work? It might, if you believe—as Duggan does—that the process of applying for benefits is enough to make people stop looking for work. But as will be detailed in this blog post, there are more likely explanations for the relative decline in labor force participation in the United States compared to Europe, including more supportive labor market policies in Europe.

In his testimony, Duggan points to an increase since 1990 in the prime-age (25-54) labor force participation rate for the EU-15 countries (countries that belonged to the European Union before it expanded into Eastern Europe) and a decline in the same measure in the United States. (Note that Duggan focuses on a measure that excludes older workers who have higher disability rates. The labor force participation of older workers is higher in the United States than in Europe, a fact that does not support Duggan’s claim that disability insurance is keeping Americans out of the labor force.)

Research that considers multiple causes for recent declines in participation in the United States generally finds that an aging workforce and unemployment—especially long-term unemployment—have been the main drivers (see, for example, research from the Council of Economic Advisors and Harvard University). The question is whether SSDI caused some unemployed workers to exit the labor force, or whether they would have exited regardless.

Looking at longer-term trends, the biggest difference between the United States and the EU-15 has been an increase in female employment and labor force participation in Europe, in which the adoption of family-friendly labor policies likely played a role. Prime-age employment rates in Europe are now similar to the United States (solid lines in the figures below) though they remain lower for older workers (dashed lines).

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Hillary Clinton appropriately defines her economic policy goal as raising “incomes for hardworking Americans so they can afford a middle-class life” rather than “hitting some arbitrary growth target untethered to people’s lives and livelihoods.” The object of economic policy, in other words, is not growth or redistribution but higher living standards for the vast majority! Bravo. Equally important is that one of her three pillars of growth—fair growth—focuses on ending the wage stagnation that has limited median incomes for the past generation. America “needs a raise” and we need to reward “actually building and selling things.” As Clinton said, “If you work hard, you ought to be paid fairly.” So, if there was any doubt that addressing wage stagnation would be the central economic policy issue debated in the upcoming Presidential election then Hillary Clinton’s economic vision speech ended it.

Clinton’s speech sets the foundation for the emerging debate on wages by asserting that: (1) wage stagnation is the result of policy choices (it should be added, “on behalf of those with the most income, wealth and power”); and (2) ending wage stagnation is the “core economic challenge” to boosting middle class incomes and lifting more households into the middle class. Let the debate begin. We look forward to hearing from other candidates not only how they plan to obtain growth, but also how such growth will translate to higher pay for the vast majority. That generally hasn’t happened since 1979.

This is, of course, exactly the debate we hoped for when the Economic Policy Institute launched its Raising America’s Pay initiative in June 2014, and it is also how we framed the debate in our initial paper (“Raising America’s Pay: Why It’s Our Central Economic Policy Challenge”) and in our Raising America’s Pay policy agenda. In fact, making wage growth the central economic issue has been a key conclusion of every State of Working America published since its inception in 1988. Thanks are due to the fast-food and Walmart workers and their allies for establishing that wage growth for the vast majority is the immediate and central economic policy issue. Let the debate begin among the Democrats, among the Republicans, and then between the parties in the general election.

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(This is the third of six blog posts on disability.)

In two earlier blog posts, I look at evidence compiled in Senate testimony by Stanford economist Mark Duggan arguing that financial incentives are driving a growth in disability rolls. I cite research showing that disability benefits aren’t growing relative to earnings and that age-adjusted disability incidence isn’t rising, though there has been a modest increase for women offset by a modest decline for men.

This isn’t surprising, because as we’ll see in today’s blog post, even research cited by Duggan and other critics shows that disability receipt has a negligible impact on work effort. Very few beneficiaries would be able to support themselves by working if they weren’t receiving benefits, based on the dismal employment prospects of rejected applicants who were on the margin of being accepted.

Though Duggan and other critics claim disability insurance reduces employment, the Social Security Disability Insurance (SSDI) program creates strong incentives for beneficiaries to stay in, or return to, the workforce. Beneficiaries are allowed to earn up to $1090 a month (the current threshold for “substantial gainful activity”) with no reduction in benefits. Since most disabled beneficiaries rely on modest government benefits for most of their incomes (see the Center on Budget and Policy Priority’s informative chartbook), the fact that fewer than 10 percent avail themselves of this opportunity suggests that for most, even part-time or intermittent work isn’t an option. Another 4 percent are able to resume “substantial gainful activity” as their health and job prospects improve. Though the latter will forgo cash benefits if they remain gainfully employed above the SGA threshold for more than 12 months, they retain health benefits regardless of earnings for a longer period and are eligible for expedited reinstatement of cash benefits if their earnings drop. In short, the SSDI program is designed to encourage beneficiaries to return to or stay in the workforce.

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In June, Supreme Court decisions on Obamacare and same-sex marriage overshadowed another important decision, this one on housing discrimination, confirming that the Fair Housing Act not only prohibits actions or policies that are intentionally bigoted, but also those that have the effect of disadvantaging minorities, even where no racist intent can be proven.

The decision, whose background and implications I have discussed in more detail for The American Prospect in “The Supreme Court’s Challenge to Housing Segregation,” was widely interpreted as a civil rights victory, but yesterday a New York Times editorial disagreed. Supreme Court experts on Scotusblog, the excellent independent journalistic enterprise devoted to covering the court and its decisions, had in the moments after the court’s opinion was handed down, also denied that the decision was an advance for civil rights. On closer examination, however, the Times/Scotusblog theory doesn’t hold up.

“This might seem to be a ‘liberal’ result”, the Times wrote, “except that 11 federal appeals courts had agreed on this reading for decades. There was no legal dispute, in other words, only the persistent efforts of some justices to reverse accepted law because they didn’t like it.” The Scotusblog experts also noted that although Justice Kennedy’s majority opinion endorsed a prohibition on policies that have a discriminatory effect, it also described so many conditions required for proof of discriminatory effects that it seemed to make it more difficult to win cases where only such effects, not intent, have been proven. In sum, the argument went, the fact that this case was heard at all was a civil rights defeat–it is quite unusual for the court to take up a case where all lower courts are in agreement–and although the civil rights opponents lost the case, it gave these opponents tools to narrow, if not eviscerate, the power of the Fair Housing Act.

Justice Kennedy’s warnings about the narrow circumstances in which policies can be prohibited because of their effects, without provable intent, were generally warnings that were already present in appellate and previous Supreme Court decisions–for example, that a policy does not violate civil rights laws simply because there are statistical differences in how it impacts minorities; it also must be “arbitrary, artificial, and unnecessary”.

In important ways, Justice Kennedy’s opinion may have breathed life into the Fair Housing Law that the law had not previously possessed. The opinion did so by effectively acknowledging that the “Fair Housing Act” is a euphemism–it is not really about “fair” housing, whatever that may mean, but about desegregated housing, which is what the Act was intended to roll back when it was adopted in 1968.

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