As Jeff Faux notes, we seem to have reached the part of the debate over the TPP when facts and evidence have largely given way to table-pounding. But given that this is still a live debate and that silly arguments continue to proliferate, here are a couple of clarifications that might be helpful to the debate:

First, a vote for the TPP is a vote to reduce the wages of most American workers and increase inequality. Yes, policies that boost U.S. imports (like the TPP) raise total national income in the United States, but they also redistribute so much more income within the United States that most workers are made worse off. And to be clear about this, the losses are not just the workers directly displaced by trade. Instead, it’s the wages of all workers in the economy who compete with the trade-displaced workers for other jobs—about 100 million workers in all. The way to think of it is that landscapers and waitresses don’t lose their jobs to trade, but their wages suffer from having to compete with laid-off apparel workers looking for work elsewhere.

Now, it’s true that the TPP would reduce wages for most Americans and increase inequality just a little bit. But that’s the direction. And it’s also true that expanded trade can potentially benefit everybody if the winners compensate the losers, but that would require complementary compensatory policies, and ones on a scale much, much larger than the Trade Adjustment Assistance (TAA) often throws in with trade agreements.

And while TPP proponents low-ball the wage-suppressing effect of TPP, they often exaggerate the overall benefits for national income. But the source of both gains and losses from trade are the same: domestic reshuffling of production that sees importable sectors shrink and export sectors expand. So how big are the TPP’s estimated income benefits? Not very big—it’s estimated to increase U.S. GDP by about 0.4 percent cumulatively over the next 12 years, according to a paper by Petri and Plummer (2012) for the Peterson Institute for International Economics (PIIE). Yesterday, the normally-sharp Adam Posen (President of PIIE) put these benefits in an interview at a few tenths of a percent of GDP each year. That’s clearly wrong, even by his own shop’s estimates (roughly ten times higher than what the Petri and Plummer (2012) paper shows). Posen claimed on Twitter that this 0.4-percent-over-12-years estimate was “a lower bound” that “doesn’t show dynamic gains from productivity growth thru competition”. But that’s not right—the Petri and Plummer (2012) PIIE estimate is actually a significant increase relative to an earlier estimate by the same authors, and they justify the newer higher estimate exactly by saying they’re now incorporating estimates of productivity gains stemming from more-competitive firms gaining market share after TPP’s passage.*

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Despite officially ending in June 2009, the Great Recession and its aftermath continues to have a damaging effect on the labor market prospects of young adults. The depth of the recession and the slow pace of recovery since it ended means that seven classes of students have now graduated into a weak labor market and have had to compete with more experienced workers for a limited and slowly growing pool of job opportunities. Recent improvements in economic conditions have begun to finally translate into better job prospects for young graduates, but there is a long way to go before we return to the labor market health of the pre-recession period.

Although the labor market is slowly recovering, unemployment remains elevated for both young high school and college graduates; underemployment rates for these groups are also unusually high. As seen in the charts below, the unemployment rate is 7.2 percent for young college graduates and 19.5 percent for young high school graduates. Although these rates have come down from the peaks after the Great Recession, they are still elevated above their 2007 levels (5.5 percent for college grads and 15.9 percent for high school grads), which were already high compared to the more favorable rates seen in 1995-2000. The Class of 2015 joins a sizable backlog of unemployed college graduates from the last six graduating classes (the classes of 2009–2014) in a difficult job market.

Figure A

Unemployment and underemployment rates of young high school graduates, 1994–2015*

Date	Unemployment	Underemployment
1994-12-01	14.6%	28.1%
1995-01-01	14.5%	27.9%
1995-02-01	14.1%	27.6%
1995-03-01	13.9%	27.4%
1995-04-01	14.0%	27.4%
1995-05-01	14.0%	27.3%
1995-06-01	14.2%	27.3%
1995-07-01	14.3%	27.4%
1995-08-01	14.4%	27.2%
1995-09-01	14.6%	27.4%
1995-10-01	14.7%	27.2%
1995-11-01	14.9%	27.3%
1995-12-01	15.0%	27.4%
1996-01-01	15.4%	27.5%
1996-02-01	15.5%	27.4%
1996-03-01	15.6%	27.4%
1996-04-01	15.5%	27.2%
1996-05-01	15.5%	27.2%
1996-06-01	15.2%	26.9%
1996-07-01	15.1%	26.9%
1996-08-01	15.1%	27.0%
1996-09-01	15.1%	27.1%
1996-10-01	15.4%	27.4%
1996-11-01	15.4%	27.1%
1996-12-01	15.4%	27.2%
1997-01-01	15.4%	27.3%
1997-02-01	15.5%	27.5%
1997-03-01	15.3%	27.4%
1997-04-01	15.4%	27.5%
1997-05-01	15.1%	27.0%
1997-06-01	15.2%	26.8%
1997-07-01	15.0%	26.3%
1997-08-01	15.0%	26.1%
1997-09-01	14.7%	25.9%
1997-10-01	14.4%	25.5%
1997-11-01	14.3%	25.3%
1997-12-01	14.0%	25.0%
1998-01-01	13.7%	24.5%
1998-02-01	13.6%	24.2%
1998-03-01	13.5%	23.9%
1998-04-01	13.2%	23.7%
1998-05-01	13.3%	24.1%
1998-06-01	13.1%	23.9%
1998-07-01	12.9%	23.7%
1998-08-01	12.9%	23.4%
1998-09-01	13.0%	23.4%
1998-10-01	12.9%	23.1%
1998-11-01	12.8%	23.1%
1998-12-01	12.6%	22.8%
1999-01-01	12.6%	22.7%
1999-02-01	12.6%	22.7%
1999-03-01	12.5%	22.7%
1999-04-01	12.6%	22.6%
1999-05-01	12.4%	22.2%
1999-06-01	12.2%	22.1%
1999-07-01	12.2%	22.0%
1999-08-01	12.1%	21.9%
1999-09-01	12.0%	21.8%
1999-10-01	12.0%	21.7%
1999-11-01	12.1%	21.8%
1999-12-01	12.3%	21.7%
2000-01-01	12.2%	21.6%
2000-02-01	12.1%	21.3%
2000-03-01	12.3%	21.3%
2000-04-01	12.3%	21.2%
2000-05-01	12.3%	21.4%
2000-06-01	12.4%	21.3%
2000-07-01	12.3%	21.2%
2000-08-01	12.4%	21.2%
2000-09-01	12.2%	20.9%
2000-10-01	12.0%	20.9%
2000-11-01	12.1%	20.8%
2000-12-01	12.1%	20.8%
2001-01-01	12.2%	20.9%
2001-02-01	12.2%	21.1%
2001-03-01	12.1%	21.0%
2001-04-01	12.2%	21.1%
2001-05-01	11.9%	20.7%
2001-06-01	12.0%	20.9%
2001-07-01	12.3%	21.1%
2001-08-01	12.5%	21.3%
2001-09-01	12.9%	22.0%
2001-10-01	13.3%	22.5%
2001-11-01	13.6%	23.2%
2001-12-01	13.9%	23.8%
2002-01-01	14.2%	24.1%
2002-02-01	14.5%	24.5%
2002-03-01	14.9%	25.1%
2002-04-01	15.2%	25.4%
2002-05-01	15.6%	25.9%
2002-06-01	16.0%	26.3%
2002-07-01	16.3%	27.0%
2002-08-01	16.6%	27.4%
2002-09-01	16.5%	27.6%
2002-10-01	16.5%	27.5%
2002-11-01	16.6%	27.5%
2002-12-01	16.4%	27.2%
2003-01-01	16.6%	27.5%
2003-02-01	16.6%	27.8%
2003-03-01	16.6%	27.9%
2003-04-01	16.6%	27.9%
2003-05-01	16.8%	28.2%
2003-06-01	17.0%	28.5%
2003-07-01	17.1%	28.9%
2003-08-01	17.1%	28.9%
2003-09-01	17.2%	29.0%
2003-10-01	17.4%	29.5%
2003-11-01	17.6%	29.6%
2003-12-01	17.6%	29.8%
2004-01-01	17.5%	29.6%
2004-02-01	17.3%	29.5%
2004-03-01	17.4%	29.8%
2004-04-01	17.4%	29.8%
2004-05-01	17.3%	29.8%
2004-06-01	17.0%	29.7%
2004-07-01	16.8%	29.1%
2004-08-01	16.6%	28.9%
2004-09-01	16.6%	28.6%
2004-10-01	16.4%	28.4%
2004-11-01	16.1%	28.3%
2004-12-01	16.0%	28.1%
2005-01-01	16.0%	27.8%
2005-02-01	16.2%	27.8%
2005-03-01	16.1%	27.7%
2005-04-01	16.1%	27.7%
2005-05-01	16.1%	27.6%
2005-06-01	16.2%	27.7%
2005-07-01	16.1%	27.7%
2005-08-01	16.4%	27.9%
2005-09-01	16.4%	27.8%
2005-10-01	16.3%	27.6%
2005-11-01	16.2%	27.4%
2005-12-01	15.9%	27.1%
2006-01-01	16.0%	27.1%
2006-02-01	15.9%	26.9%
2006-03-01	15.7%	26.6%
2006-04-01	15.8%	26.5%
2006-05-01	15.7%	26.4%
2006-06-01	15.4%	26.1%
2006-07-01	15.5%	26.1%
2006-08-01	15.4%	26.0%
2006-09-01	15.5%	26.1%
2006-10-01	15.5%	26.5%
2006-11-01	15.5%	26.4%
2006-12-01	15.8%	26.9%
2007-01-01	15.6%	26.9%
2007-02-01	15.4%	26.9%
2007-03-01	15.3%	27.0%
2007-04-01	15.2%	27.0%
2007-05-01	15.2%	26.9%
2007-06-01	15.5%	27.0%
2007-07-01	15.5%	27.0%
2007-08-01	15.6%	26.9%
2007-09-01	15.5%	26.7%
2007-10-01	15.5%	26.5%
2007-11-01	15.5%	26.5%
2007-12-01	15.9%	26.8%
2008-01-01	16.1%	27.1%
2008-02-01	16.4%	27.5%
2008-03-01	16.9%	28.0%
2008-04-01	16.9%	28.4%
2008-05-01	17.2%	28.9%
2008-06-01	17.4%	29.7%
2008-07-01	18.0%	30.6%
2008-08-01	18.2%	31.0%
2008-09-01	18.6%	31.7%
2008-10-01	19.0%	32.5%
2008-11-01	19.5%	33.4%
2008-12-01	19.7%	34.1%
2009-01-01	20.2%	34.9%
2009-02-01	20.9%	35.8%
2009-03-01	21.3%	36.7%
2009-04-01	21.9%	37.6%
2009-05-01	22.4%	38.5%
2009-06-01	22.9%	39.3%
2009-07-01	23.5%	40.5%
2009-08-01	24.4%	41.9%
2009-09-01	25.1%	43.0%
2009-10-01	25.9%	44.1%
2009-11-01	26.6%	44.8%
2009-12-01	27.1%	45.4%
2010-01-01	27.6%	46.0%
2010-02-01	27.8%	46.5%
2010-03-01	27.8%	46.5%
2010-04-01	28.0%	46.7%
2010-05-01	28.1%	46.8%
2010-06-01	28.1%	46.8%
2010-07-01	28.0%	46.5%
2010-08-01	27.8%	46.6%
2010-09-01	27.7%	46.6%
2010-10-01	27.4%	46.3%
2010-11-01	27.2%	46.6%
2010-12-01	27.1%	46.6%
2011-01-01	26.9%	46.6%
2011-02-01	26.6%	46.3%
2011-03-01	26.8%	46.4%
2011-04-01	26.7%	46.4%
2011-05-01	26.5%	46.5%
2011-06-01	26.4%	46.5%
2011-07-01	26.7%	47.2%
2011-08-01	26.6%	47.0%
2011-09-01	26.4%	46.8%
2011-10-01	26.2%	46.6%
2011-11-01	26.3%	46.3%
2011-12-01	26.2%	46.1%
2012-01-01	26.1%	45.8%
2012-02-01	26.1%	45.7%
2012-03-01	25.8%	45.2%
2012-04-01	25.7%	44.9%
2012-05-01	26.0%	44.9%
2012-06-01	26.2%	44.8%
2012-07-01	25.9%	44.2%
2012-08-01	25.9%	44.2%
2012-09-01	26.0%	44.3%
2012-10-01	26.1%	44.4%
2012-11-01	25.9%	44.3%
2012-12-01	25.7%	44.2%
2013-01-01	25.4%	43.9%
2013-02-01	25.2%	43.7%
2013-03-01	25.2%	43.8%
2013-04-01	25.1%	43.8%
2013-05-01	24.8%	43.7%
2013-06-01	25.0%	43.9%
2013-07-01	24.6%	43.6%
2013-08-01	24.8%	43.5%
2013-09-01	24.6%	43.1%
2013-10-01	24.3%	42.7%
2013-11-01	24.0%	42.4%
2013-12-01	23.4%	41.9%
2014-01-01	23.1%	41.7%
2014-02-01	23.0%	41.7%
2014-03-01	22.9%	41.5%
2014-04-01	22.5%	41.1%
2014-05-01	22.0%	40.6%
2014-06-01	21.4%	40.1%
2014-07-01	21.3%	40.0%
2014-08-01	20.6%	39.5%
2014-09-01	20.3%	39.1%
2014-10-01	20.1%	38.7%
2014-11-01	20.0%	38.5%
2014-12-01	19.9%	38.0%
2015-01-01	19.9%	37.7%
2015-02-01	19.8%	37.3%
2015-03-01	19.5%	37.0%

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The data underlying the figure.

* Data reflect 12-month moving averages; data for 2015 represent 12-month average from April 2014 to March 2015.

Note: Shaded areas denote recessions. Underemployment data are only available beginning in 1994. 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

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An eye-opening story published last week by the New York Times revealed how manicurists in New York’s booming nail salon industry are subject to brazen exploitation. Workers are exposed to dangerous chemicals, expected to work excessively long hours, subject to racial and ethnic discrimination and verbal abuse, and regularly paid less than the minimum wage—if they’re paid at all. New hires are even forced to pay their employers a “training fee,” before working unpaid for weeks until their employer arbitrarily deems them worthy of getting paid.

The good news is that New York Governor Andrew Cuomo has already ordered emergency measures to investigate and combat these abuses. The bad news is that what’s happened in New York is the product of national policy failures that almost guarantee these same practices are not unique to the Empire State, or to the nail salon industry.

Many of the manicurists described in the piece are undocumented immigrants. Failure to protect any group of workers—even those without lawful immigration status—is damaging to all workers. When businesses can exploit immigrant workers who cannot speak out for fear of deportation, it lowers the wages of other workers in the same or similar fields—whether they are authorized to work or not. Regardless of how someone has entered the country, if they are engaged in employment, they should have some practical and accessible recourse against exploitative labor practices. Legalization would, by itself, raise labor standards for tens of millions of Americans, along with the immigrants most directly affected.

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This post originally appeared on The Huffington Post.

Barack Obama’s petulant criticism last Friday of Democrats who do not support his proposed Trans-Pacific Partnership reminds me of the old tongue-in-cheek advice to young lawyers: “If the facts are on your side, pound the facts. If the law is on your side, pound the law. If neither is on your side, pound the other lawyer.”

The facts are definitely not on the president’s side. For two decades the trade deals negotiated by the last three presidents have lowered U.S. wages, lost jobs and generated a chronic trade deficit that requires our country to borrow more money every year in order to pay for imports. The president’s main argument that exports have risen, without mentioning that imports have risen much faster, is now transparently deceitful to anyone who can add and subtract.

Neither is the law in his corner. As did his predecessors, Bill Clinton and George Bush, he assures Americans that this deal will be different because, you see, it will protect workers. But the secret draft, which had to be revealed to Americans by Wikileaks, shows that once again a trade agreement will be used to enhance the power of multinational corporate investors over people who have to work for a living. As AFL-CIO President Richard Trumka pointed out recently, the Office of the U.S. Trade Representative, which is charged with negotiating and enforcing the deal, does not even believe that murder and other brutal acts committed against labor union activists violate the “worker-protection” clauses to trade agreements.

So, like a lawyer trained to defend the indefensible, Obama is desperately pounding the opposition. They are “just wrong,” he says, without showing us why. He accuses them of “making stuff up”—that is, that they are liars. He whines that they are “whupping on me.” He charges, nonsensically, that they “want to pull up the drawbridge and isolate themselves.”

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In January of this year, I projected that the black unemployment rate would reach single digits by mid-2015. That happened this month as job growth of 223,000 in April was more in line with the monthly average in 2014. At 9.6 percent, the black unemployment rate is the lowest it’s been since June 2008 and nearly two (1.8) percentage points below where it was this time last year. Though this is an important milestone, the rate remains above the annual average of 8.3 percent in 2007, meaning there’s still much further to go before we declare a full recovery for black workers.

Though the unemployment rate for black men fell to nearly the same rate for black women in April, black men and black women have made very unequal progress, as can be seen in Figure A. This is an amplification of the fact that although men lost more jobs than women during the recession, they have also rebounded faster in the recovery.

Figure A

Black unemployment rate by gender, December 2007–April 2015

	Black Men	Black Women
Dec-2007	10.0%	8.0%
Jan-2008	10.0%	8.2%
Feb-2008	9.0%	7.8%
Mar-2008	9.8%	8.7%
Apr-2008	9.2%	8.1%
May-2008	10.4%	8.9%
Jun-2008	10.7%	8.3%
Jul-2008	11.8%	8.3%
Aug-2008	11.4%	9.9%
Sep-2008	12.8%	9.9%
Oct-2008	13.3%	9.6%
Nov-2008	13.6%	9.7%
Dec-2008	14.9%	9.6%
Jan-2009	15.7%	10.1%
Feb-2009	16.5%	11.2%
Mar-2009	16.6%	11.0%
Apr-2009	18.4%	11.9%
May-2009	17.8%	12.4%
Jun-2009	17.5%	12.5%
Jul-2009	17.2%	12.7%
Aug-2009	17.7%	12.3%
Sep-2009	17.6%	13.3%
Oct-2009	18.3%	13.6%
Nov-2009	18.8%	13.0%
Dec-2009	18.4%	14.0%
Jan-2010	19.2%	14.1%
Feb-2010	19.2%	13.3%
Mar-2010	20.6%	13.5%
Apr-2010	18.7%	14.7%
May-2010	17.5%	13.6%
Jun-2010	18.4%	12.4%
Jul-2010	17.8%	13.7%
Aug-2010	18.1%	14.0%
Sep-2010	18.3%	14.0%
Oct-2010	17.6%	13.9%
Nov-2010	18.1%	14.4%
Dec-2010	17.3%	13.9%
Jan-2011	18.1%	13.7%
Feb-2011	17.6%	13.7%
Mar-2011	18.2%	13.6%
Apr-2011	18.6%	14.6%
May-2011	18.5%	14.3%
Jun-2011	17.9%	14.5%
Jul-2011	17.4%	14.4%
Aug-2011	18.6%	14.5%
Sep-2011	17.3%	14.7%
Oct-2011	16.6%	13.0%
Nov-2011	17.6%	13.9%
Dec-2011	16.7%	14.3%
Jan-2012	13.7%	13.4%
Feb-2012	15.6%	12.7%
Mar-2012	15.1%	13.1%
Apr-2012	15.0%	11.7%
May-2012	14.9%	12.3%
Jun-2012	15.3%	13.5%
Jul-2012	15.7%	12.6%
Aug-2012	15.1%	12.9%
Sep-2012	15.2%	12.1%
Oct-2012	15.5%	13.0%
Nov-2012	14.5%	12.3%
Dec-2012	14.8%	13.2%
Jan-2013	14.4%	13.2%
Feb-2013	14.2%	13.5%
Mar-2013	13.7%	12.6%
Apr-2013	13.8%	12.5%
May-2013	14.9%	12.2%
Jun-2013	14.7%	12.9%
Jul-2013	13.5%	11.4%
Aug-2013	14.8%	11.3%
Sep-2013	15.4%	11.0%
Oct-2013	14.0%	12.1%
Nov-2013	13.4%	11.5%
Dec-2013	12.7%	11.1%
Jan-2014	13.3%	11.0%
Feb-2014	13.7%	10.4%
Mar-2014	12.8%	11.7%
Apr-2014	12.0%	10.9%
May-2014	12.2%	10.7%
Jun-2014	11.7%	9.9%
Jul-2014	12.1%	10.8%
Aug-2014	11.7%	11.4%
Sep-2014	11.9%	10.2%
Oct-2014	11.6%	10.2%
Nov-2014	12.1%	10.1%
Dec-2014	12.0%	9.0%
Jan-2015	11.5%	9.3%
Feb-2015	11.3%	9.5%
Mar-2015	10.7%	9.6%
Apr-2015	9.7%	9.5%

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Source: EPI analysis of Bureau of Labor Statistics' Current Population Survey

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Between April 2014 and April 2015, job gains for black men far outpaced those of black women (an increase of 7.6 percent and 3.9 percent, respectively). As a result, black men’s unemployment rate declined 2.3 percentage points over the last year, compared to a decline of 1.4 percentage points for black women. Since the end of 2014, employment growth for black women has slowed even further, leaving black women’s unemployment rate 0.5 percentage points higher in April 2015 than it was in December 2014. Meanwhile, black men’s unemployment rate was 2.3 percentage points lower in April 2015 than December 2014.

Although caution should always be used in placing too much emphasis on a single month of data, the last four months raise some questions about whether the recovery has stalled for black women and why.

Recent debates over the Trans-Pacific Partnership (TPP) have highlighted the failure of the treaty to include a provision to stop countries from actively weakening the value of their own currency in order to run trade surpluses.

The way this currency management works is that countries (most notably China, though there are many others as well) buy assets denominated in dollars—mostly U.S. Treasuries. This boosts the demand for dollars in global markets and weakens demand for the Chinese renminbi. This in turn increases the value of the dollar, which makes U.S. exports expensive in global markets and makes foreign imports cheaper to U.S. consumers. The result is that exports are suppressed while imports grow and the U.S. trade deficit widens.

Opponents of including a currency provision in the TPP have made a number of bad arguments, and one of them is that currency management was once a problem, but isn’t anymore. They often point to recent appreciation of the Chinese currency as evidence that the problem of currency management is behind us. But this is incorrect—the evidence that currency management is still a problem is simply that foreign purchases of dollar-denominated assets remained strong in 2014. There is zero doubt that absent this continued intervention, the U.S. dollar would weaken. Further, the nearly $1 trillion in purchases of dollar denominated assets that has characterized each year since 2008 has led to a large stock of dollar assets held by foreign investors and governments, and this large stock (over and above the annual flow of dollar purchases) also keeps the value of the dollar stronger than it would otherwise be.

Further, two pieces of recent evidence suggest strongly that excess dollar strength could be becoming a real drag on recovery. In the first quarter numbers on gross domestic product, the rising trade deficit knocked 1.3 percentage points off the economy’s annualized growth rate. Then trade data for March came in showing a very large rise in the deficit. Finally, today’s jobs report shows that growth of employment in manufacturing has stagnated in the last quarter (rising at an average monthly rate of less than 2,000 jobs), after rising at an average monthly rate of 18,000 in 2014.

This post is crossposted on the National Women’s Law Center’s Womenstake Blog.

Here’s a Mother’s Day gift idea for Congress: Rather than getting mom flowers or chocolate, how about passing a policy that increases economic security for families, injects billions of dollars into communities, and ensures that women and people of color are paid more fairly?

That’s just what the Raise the Wage Act would do. Introduced last week by Sen. Patty Murray (D-WA) and Rep. Robert “Bobby” Scott (D-VA), the Raise the Wage Act would increase the minimum wage from $7.25 to $12 per hour by 2020 and then “index” it to median wages, so that the minimum would automatically go up as overall wages rose, beginning in 2021. It also would gradually phase out the lower tipped minimum cash wage so that tipped workers would be paid the regular minimum wage before tips—something that only happens in a handful of states today. Federal law currently allows employers to pay tipped workers a pre-tip wage of just $2.13 per hour, a policy that leaves tipped workers nearly twice as likely to live in poverty as other workers.

Passing the Raise the Wage Act would especially help women, particularly women of color. Women are the majority (56 percent) of workers who would benefit from increasing the federal minimum wage to $12 by 2020. As shown in the figure below, 30 percent of working women—roughly 20 million—would get a raise. The gains are even more substantial for working women of color, 37 percent of whom—8.6 million—would see their pay increase. (All of these statistics are available in EPI’s analysis of the proposal.)

Fig. 1

Share of selected groups that would get a raise by increasing the federal minimum wage to $12 by 2020

	Share of each group that would get a raise by increasing the federal minimum wage to $12 by 2020
Women	29.6%
Working moms	27.3%
Single moms	39.6%
Women of color	37.1%

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The data underlying the figure.

Source: EPI analysis of Raise the Wage Act using Current Population Survey Outgoing Rotation Group microdata

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While policy makers in Washington are at least paying lip service to the need to lift the stagnant wages of America’s middle class, politicians in state capitals across the country are cutting the wages and benefits of public employees and school teachers, passing so-called “right-to-work” laws to weaken unions, and cutting back on unemployment insurance with the aim of forcing jobless workers to take any job, no matter how poor.

Indiana is a leader in this sorry parade. It passed right-to-work two years ago, and now the legislature has repealed (with the support of a governor with aspirations for national office) the state’s eight-decade old prevailing-wage law, which required contractors on state-funded construction projects to pay their construction workers the average wage in the locality where the work is done. Like the federal Davis-Bacon Act, the rationale for the law was straightforward: The state government should not be in the business of driving down wages. When it pays for construction work, rather than forcing a race to the bottom, it should respect local area standards.

But powerful interests, from the Koch Brothers and the American Legislative Exchange Council to the Associated Builders and Contractors, like the idea of a race to the bottom. From their perspective, the best wage is the lowest wage they can get away with, since companies’ profit margins will be higher with every dollar that isn’t paid to a construction worker. Indiana politicians are dancing to the tune the Kochs are calling.

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