Don’t Blame the Poor for the Faults of Our Economy
When assigning blame for our nation’s persistent poverty problem, many policymakers tend to focus on underlying demographics or behavior of the poor—factors like racial background or the rise of single parent households, instead of the stark economic reality the poorest Americans have to contend with. While demographics and individual behavior have a place in the policy discussion, growing inequality is the primary reason the poverty rate has remained elevated over the last several decades.
The chart below breaks down the poverty rate and shows how demographic and economic factors affected the poverty rate between 1979 and 2013. Since 1979, increasing inequality has been the largest poverty-boosting factor, outweighing racial identity and family structure and completely eclipsing the effects of overall economic growth and educational attainment in driving down the poverty rate. Despite our growing economy and the fact that poor workers are now more educated than ever, rising inequality has worked to keep low-income people in poverty. This increase in inequality was driven by stagnating wages for low- and middle-income households (for example, 10th percentile real wages were actually lower in 2013 than they were in 1979).
Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement microdata based on Danziger and Gottschalk (1995)Impact on poverty rate of economic, demographic, and education changes, 1979–2013
Factor
Effect
Inequality
7.1
Growth
-3.4
Education
-2.9
Family structure
1.6
Race
1.1
Interaction
-0.5
More Notes on the Gains From Trade and Who Gets Them
The New York Times’ Binyamin Appelbaum wrote an excellent piece yesterday on the costs and benefits of globalization. But because I’ve thought a lot about this topic, I have some hobby-horse issues concerning how economists characterize how large the gains from trade are and how its gains and losses are distributed. Put simply, the overall net benefits of trade are much smaller than commonly advertised, but the regressive redistribution trade causes is considerable.
First, on the gains from trade policy (i.e., how much we should expect national income to rise if we sign trade agreements), Appelbaum refers to a piece from the Peterson Institute of International Economics claiming that trade liberalization added 7.3 percent of GDP to American incomes by 2005—about $9000-10,000 per American household. This is just not true. It’s a wildly inflated number that should not be in the policy debate (and if you need much smarter and better-credentialed people making the some point—here’s Dani Rodrik). This number is an effort to bully people into going along with today’s trade agreements by making them think the stakes are utterly enormous. In fact, even if it was correct (again, it’s not) this study would be irrelevant to today’s trade policy debates because the sum total of economic gains from all post-1982 trade agreements (this includes NAFTA, the completion of the General Agreement on Tariffs and Trade, the formation of the WTO, and the permanent normal trading relations with China) is estimated to be just $9 per household, meaning that 99.9 percent of the gains from trade estimated in the study happened before 1982. So even if trade liberalization really did spur mammoth gains at some point in the (distant) past, the effects were over by the early 1980s.
Second, on the distribution of gains and losses from trade, it is striking to me that so many economists who favor signing every trade agreement that comes down the pike can still feign surprise that expanded trade seems to be bad for most workers’ wages. Put simply, it is completely predicted in textbook trade economics that wages for most workers will fall and inequality will rise when the United States trades more with poorer trading partners. Yes, expanded trade is predicted to lead to higher overall national income, but it is also predicted to redistribute enough income within the United that it can (and is likely to) make most workers worse-off. This should not be a surprise to anyone familiar with the topic.
H-1B Visas Do Not Create Jobs or Improve Conditions for U.S. Workers
The common wisdom on Capitol Hill, carefully nurtured by corporate lobbyists and campaign cash, is that America needs more high-tech guestworkers, requiring a big increase in the number of H-1B guestworker visas made available each year. A number of senators, including Amy Klobuchar and Orrin Hatch, have introduced legislation to double or triple the number of non-immigrant tech workers who can be imported each year, despite evidence from the U.S. Government Accountability Office, independent researchers, and various media reports that the H-1B is used to lower wages and displace U.S. workers.
The senators endlessly proclaim that H-1B employees are good for our economy, that businesses can’t find enough talent here, that the H-1Bs are innovative, the “best and the brightest,” and that importing them leads to more job creation. In support, they cite a paper by Agnes Scott College researcher Madeline Zavodny, which found that hiring H-1Bs creates jobs for Americans: specifically, that “adding 100 H-1B workers results in an additional 183 jobs among U.S. natives.”
The problem is that it isn’t true. Zavodny’s research couldn’t discern whether the H-1Bs were hired because the economy was growing and jobs were being created—for natives and guestworkers alike—or whether the H-1Bs were responsible for the job growth. (The weakness of her results is demonstrated by another, completely implausible finding she reports, that H-2B unskilled guestworkers are associated with two-and-a-half times greater job creation than the college-educated H-1Bs: 464 jobs for every 100 H-2B guestworkers. The notion that hiring low-wage-earning landscapers and groundskeepers, hotel maids and dishwashers—most of whom have little or no college education—spurs spectacular job growth is ludicrous on its face.)
Growing Consensus that Labor Market Slack Remains: The Fed Should Stay the Course and Wait to Increase Rates Until the Weakness Has Lessened Substantially
Nominal wage growth’s failure to significantly increase over the last several months (and years) is evidence enough that there’s sufficient labor market slack to convince the Federal Reserve to keep its foot off the economic brakes and not increase short-term interest rates. Nominal hourly wages have grown at only around 2.0-2.3 percent annually, far below wage growth that would be consistent with the Fed’s own 2 percent inflation target, 1.5 percent trend productivity growth, and a stable labor share of income. It’s clear from the evidence that the Fed should not even consider raising interest rates to forestall inflation until wage growth is consistently above this target.
One of the leading forces (besides the 30+ year trend in workers losing bargaining power ) behind sluggish wage growth is the fact that there’s still much labor market slack left in the economy today. The headline unemployment rate underestimates this slack because some of it shows up as cyclically depressed rates of labor force participation instead of elevated unemployment. Over the last couple of years, we’ve been tracking what we call “missing workers”—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted in the labor force if they are actively seeking work, these missing workers are not included in the labor force and hence are not classified as officially unemployed.
While it’s clear that some structural forces (aging of the Baby Boomers, for example) are putting downward pressure on labor force participation rates, it’s clear that some of the depressed participation rate is still reflecting cyclical weakness. New evidence released today backs up our “missing worker” interpretation that the unemployment rate is underestimating the true degree of labor market slack because labor force participation remains cyclically depressed. The Goldman Sachs Global Macro Research US Daily (sorry, no link: paywall) points out that research from the New York Fed implies that the overall “jobs gap” may be 3 million, even while the Fed’s estimates of the ”unemployment gap”—the gap between today’s unemployment rate and the rate consistent with stable inflation— is much lower. In short, the headline unemployment rate does indeed continue to obscure how much labor market slack remains. The Goldman team draws out the policy implications:
“This implies much less urgency to start normalizing monetary policy . . . and it is an important reason why we think it would be better for the FOMC to wait until 2016 before starting the normalization process.”
I couldn’t agree more. Sluggish wage growth and depressed labor force participation continue to show signs of a weak economy and the Fed should continue staying the course until the economy is considerably stronger. Acting too soon, would be a mistake for the economy and the people in it.
The TPP Debate: Never Real and No Longer Polite
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.*
Job Prospects Have Improved for Graduates, but the Class of 2015 Still Faces a Challenging Labor Market
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.
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% |
* 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
The Policy Failures Exposed by the New York Times’ Nail Salon Investigation
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.
JOLTS Data Suggest a Sideways-Moving Economy
This morning’s Job Openings and Labor Turnover Survey (JOLTS) report rounds out the employment situation for March. Last week, we saw substantial downward revisions to payroll employment, revisions that exposed one of the slowest job gains in recent years. The job openings data reveal the same story: the recovery may be slowing. That said, April job growth was considerably stronger, but taking into account the most recent three month job-growth average, the economy won’t resemble the strength of the pre-recession economy (such as it was) until August 2017.
The total number of job openings fell slightly to 5.0 million in March and the number of unemployed workers fell slightly to 8.6 million. Taken together, the result was a job-seekers-to-job-openings ratio that held steady at 1.7. This ratio has been declining steadily from its high of 6.8-to-1 in July 2009, as shown in the figure below.
The job-seekers ratio, December 2000–March 2015
| Month | Unemployed job seekers per job opening |
|---|---|
| Dec-2000 | 1.1 |
| Jan-2001 | 1.1 |
| Feb-2001 | 1.3 |
| Mar-2001 | 1.3 |
| Apr-2001 | 1.3 |
| May-2001 | 1.4 |
| Jun-2001 | 1.5 |
| Jul-2001 | 1.5 |
| Aug-2001 | 1.7 |
| Sep-2001 | 1.8 |
| Oct-2001 | 2.1 |
| Nov-2001 | 2.3 |
| Dec-2001 | 2.3 |
| Jan-2002 | 2.3 |
| Feb-2002 | 2.4 |
| Mar-2002 | 2.3 |
| Apr-2002 | 2.6 |
| May-2002 | 2.4 |
| Jun-2002 | 2.5 |
| Jul-2002 | 2.5 |
| Aug-2002 | 2.4 |
| Sep-2002 | 2.5 |
| Oct-2002 | 2.4 |
| Nov-2002 | 2.4 |
| Dec-2002 | 2.8 |
| Jan-2003 | 2.3 |
| Feb-2003 | 2.5 |
| Mar-2003 | 2.8 |
| Apr-2003 | 2.8 |
| May-2003 | 2.8 |
| Jun-2003 | 2.8 |
| Jul-2003 | 2.8 |
| Aug-2003 | 2.7 |
| Sep-2003 | 2.9 |
| Oct-2003 | 2.7 |
| Nov-2003 | 2.6 |
| Dec-2003 | 2.5 |
| Jan-2004 | 2.5 |
| Feb-2004 | 2.4 |
| Mar-2004 | 2.5 |
| Apr-2004 | 2.4 |
| May-2004 | 2.2 |
| Jun-2004 | 2.4 |
| Jul-2004 | 2.1 |
| Aug-2004 | 2.2 |
| Sep-2004 | 2.1 |
| Oct-2004 | 2.1 |
| Nov-2004 | 2.3 |
| Dec-2004 | 2.1 |
| Jan-2005 | 2.2 |
| Feb-2005 | 2.1 |
| Mar-2005 | 2.0 |
| Apr-2005 | 1.9 |
| May-2005 | 2.0 |
| Jun-2005 | 1.9 |
| Jul-2005 | 1.8 |
| Aug-2005 | 1.8 |
| Sep-2005 | 1.8 |
| Oct-2005 | 1.8 |
| Nov-2005 | 1.7 |
| Dec-2005 | 1.7 |
| Jan-2006 | 1.7 |
| Feb-2006 | 1.7 |
| Mar-2006 | 1.6 |
| Apr-2006 | 1.6 |
| May-2006 | 1.6 |
| Jun-2006 | 1.6 |
| Jul-2006 | 1.8 |
| Aug-2006 | 1.6 |
| Sep-2006 | 1.5 |
| Oct-2006 | 1.5 |
| Nov-2006 | 1.5 |
| Dec-2006 | 1.5 |
| Jan-2007 | 1.6 |
| Feb-2007 | 1.5 |
| Mar-2007 | 1.4 |
| Apr-2007 | 1.5 |
| May-2007 | 1.5 |
| Jun-2007 | 1.5 |
| Jul-2007 | 1.6 |
| Aug-2007 | 1.6 |
| Sep-2007 | 1.6 |
| Oct-2007 | 1.7 |
| Nov-2007 | 1.7 |
| Dec-2007 | 1.8 |
| Jan-2008 | 1.8 |
| Feb-2008 | 1.9 |
| Mar-2008 | 1.9 |
| Apr-2008 | 2.0 |
| May-2008 | 2.1 |
| Jun-2008 | 2.3 |
| Jul-2008 | 2.4 |
| Aug-2008 | 2.6 |
| Sep-2008 | 3.0 |
| Oct-2008 | 3.1 |
| Nov-2008 | 3.4 |
| Dec-2008 | 3.7 |
| Jan-2009 | 4.4 |
| Feb-2009 | 4.6 |
| Mar-2009 | 5.4 |
| Apr-2009 | 6.1 |
| May-2009 | 6.0 |
| Jun-2009 | 6.2 |
| Jul-2009 | 6.8 |
| Aug-2009 | 6.5 |
| Sep-2009 | 6.2 |
| Oct-2009 | 6.5 |
| Nov-2009 | 6.3 |
| Dec-2009 | 6.1 |
| Jan-2010 | 5.6 |
| Feb-2010 | 5.9 |
| Mar-2010 | 5.7 |
| Apr-2010 | 4.9 |
| May-2010 | 5.1 |
| Jun-2010 | 5.3 |
| Jul-2010 | 5.0 |
| Aug-2010 | 5.1 |
| Sep-2010 | 5.2 |
| Oct-2010 | 4.8 |
| Nov-2010 | 4.9 |
| Dec-2010 | 4.9 |
| Jan-2011 | 4.8 |
| Feb-2011 | 4.5 |
| Mar-2011 | 4.4 |
| Apr-2011 | 4.5 |
| May-2011 | 4.6 |
| Jun-2011 | 4.4 |
| Jul-2011 | 4.0 |
| Aug-2011 | 4.4 |
| Sep-2011 | 3.9 |
| Oct-2011 | 4.0 |
| Nov-2011 | 4.1 |
| Dec-2011 | 3.7 |
| Jan-2012 | 3.5 |
| Feb-2012 | 3.6 |
| Mar-2012 | 3.3 |
| Apr-2012 | 3.5 |
| May-2012 | 3.4 |
| Jun-2012 | 3.4 |
| Jul-2012 | 3.5 |
| Aug-2012 | 3.4 |
| Sep-2012 | 3.3 |
| Oct-2012 | 3.3 |
| Nov-2012 | 3.2 |
| Dec-2012 | 3.4 |
| Jan-2013 | 3.3 |
| Feb-2013 | 3.0 |
| Mar-2013 | 3.0 |
| Apr-2013 | 3.1 |
| May-2013 | 3.0 |
| Jun-2013 | 3.0 |
| Jul-2013 | 3.0 |
| Aug-2013 | 2.9 |
| Sep-2013 | 2.8 |
| Oct-2013 | 2.7 |
| Nov-2013 | 2.7 |
| Dec-2013 | 2.6 |
| Jan-2014 | 2.6 |
| Feb-2014 | 2.5 |
| Mar-2014 | 2.5 |
| Apr-2014 | 2.2 |
| May-2014 | 2.1 |
| Jun-2014 | 2.0 |
| Jul-2014 | 2.0 |
| Aug-2014 | 1.9 |
| Sep-2014 | 2.0 |
| Oct-2014 | 1.9 |
| Nov-2014 | 1.9 |
| Dec-2014 | 1.8 |
| Jan-2015 | 1.8 |
| Feb-2015 | 1.7 |
| Mar-2015 | 1.7 |
Note: Shaded areas denote recessions.
Source: EPI analysis of Bureau of Labor Statistics Job Openings and Labor Turnover Survey and Current Population Survey
TPP: Obama’s Folly
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.”
Black Unemployment Rate Falls to Single Digits in April as Black Men Catch Up to Black Women
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.
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% |
Source: EPI analysis of Bureau of Labor Statistics' Current Population Survey
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.