Will the Supreme Court Annihilate One of the Most Effective Tools for Battling Racial Segregation in Housing?
The U.S. Supreme Court could be on the verge of issuing a major setback to racial integration efforts. In two weeks, it will hear oral arguments regarding whether the federal government and states should be permitted to pursue policies that perpetuate or exacerbate racial segregation in housing—even where no intent to segregate is proven.
The segregation of low-income minority families into economic and racial ghettos is one cause of the ongoing achievement gap in American education. Students from families with less literacy come to school less prepared to take advantage of good instruction. If they live in more distressed neighborhoods with more crime and violence, they come to school under stress that interferes with learning. When such students are concentrated in classrooms, even the best of teachers must spend more time on remediation and less on grade-level instruction.
The Economic Policy Institute, together with the Haas Institute for a Fair and Inclusive Society at the University of California, have organized a large group of housing scholars—historians and other social scientists—to sign a friend-of-the-court brief urging that housing policies perpetuating segregation should be banned.
Little Sign of a Tightening Labor Market
A drop in the unemployment rate from 5.8 percent in November to 5.6 percent in December could mean one of two things. It could mean that more people are getting jobs. Or, it could mean that people have given up looking and left the labor force. These days, the truth lies somewhere in between. Looking at December’s jobs report, however, it’s pretty clear that the primary reason the unemployment rate fell to 5.6 percent is a declining labor force.
Over 70 percent of the decline in the number of unemployed people between November and December was due to a drop in the labor force. The labor force participation rate fell from 62.9 percent to 62.7 percent between November and December. And, the employment-to-population ratio (the share of the population working) held constant at 59.2 percent.
Even with the decline in labor force participation, the unemployment rate in December 2014 remains elevated compared to 2007, which had an average rate of 4.6 percent. The table below compares the unemployment rates between today and 2007 across various demographic groups.
You can see that no one demographic group has been spared by the weak economy. Compared to 2007, unemployment is elevated for groups that typically face higher-than-average joblessness, such as people of color, younger workers, and those with only a high school degree. But unemployment is disproportionately higher (i.e. the ratio between the years is larger) for those with a college degree or working in “Management, professional, and related occupations.”
At an Average of 246,000 Jobs a Month in 2014, It Will Be the Summer of 2017 Before We Return to Pre-recession Labor Market Health
Dramatically falling employment in the Great Recession and its aftermath has left us with a jobs shortfall of 5.6 million—that’s the number of jobs needed to keep up with growth in the potential labor force since 2007. Each year, the population keeps growing, and along with it, the number of people who could be working. To get back to the same labor market we had before the recession, we need to not only make up the jobs we lost, but gain enough jobs to account for this growth.
The chart below projects out the potential labor force into the future. In December, the economy added 252,000 jobs; average monthly job growth in 2014 was 246,000 jobs. This is a clear improvement over the last several years, but the reality is that if we add 246,000 jobs a month going forward, it will take until August 2017 to hit the employment level needed to return the economy to the labor market health that prevailed in 2007.
Yes, job growth increased in 2014—in fact, job growth has gotten stronger each consecutive year in the recovery—and I’m optimistic that we will continue to see job growth that strong or stronger in the upcoming months. The high of the last year occurred in November, with today’s revisions bringing the number of jobs added in that month up to 353,000. If we were to create that number of jobs—the highest monthly number of the recovery—every month, we would return to pre-recession labor market health in August 2016. That’s awfully optimistic, and yet, still nearly 9 years since the recession began.
December Caps of a Year of Strong Job Growth but Stagnant Wages
With today’s jobs report, we can now look at the state of the labor market in 2014 as a whole, and examine the trajectory of our economic recovery. The good news is that in 2014 people were increasingly finding jobs. The bad news is that we are still digging our way out of the recession, and wage growth remains stagnant and untouched by recovery.
In December, the economy added 252,000 jobs, while average monthly job growth in 2014 was 246,000 jobs. This is a clear improvement over the last several years. Since the end of the recession, we have seen an increasing number of jobs added each year, albeit a slow increase. In 2010, average monthly job growth was only 88,000. Average monthly job growth rose in each consecutive year, up to 194,000 in 2013 and 246,000 jobs a month in 2014.
If we continue to see the 2014 level of jobs growth for the next few years, we will return to pre-recession labor market health in August 2017. On the one hand, 246,000 jobs a month is a decent rate of growth; on the other hand, September 2017 is almost three years away, and nearly 10 years since the recession began.
Despite the minor surge in job creation over the last year, there is still substantial slack in the labor market, as evidenced by the continued sluggishness in nominal wage growth. Private sector nominal average hourly earnings grew 1.7 percent annually in December, lower than average, but in line with what we’ve seen this year so far. Nominal hourly earnings averaged $24.44 in 2014, up from $23.96 in 2013—the average annual growth rate between 2013 and 2014 was 2.0 percent.
As you can see in the figure below, for the last five years, nominal wages have grown far slower than any reasonable wage target. The fact is that the economy is not growing enough for workers to feel the effects in their paychecks and not enough for the Federal Reserve to slow the economy down out of fear of upcoming inflationary pressure. If the Fed acts too soon, it will slow labor share’s recovery and come at a cost to Americans’ living standards. It is imperative that the Fed keep their foot off the brake for as long as it takes to see modest (if not strong) wage growth for America’s workers.
Nominal wage growth has been far below target in the recovery: Year-over-year change in private-sector nominal average hourly earnings, 2007–2014
| All nonfarm employees | Production/nonsupervisory workers | |
|---|---|---|
| Mar-2007 | 3.6427146% | 4.1112455% |
| Apr-2007 | 3.3234127% | 3.8461538% |
| May-2007 | 3.7257824% | 4.1441441% |
| Jun-2007 | 3.8575668% | 4.1267943% |
| Jul-2007 | 3.4482759% | 4.0524434% |
| Aug-2007 | 3.5433071% | 4.0404040% |
| Sep-2007 | 3.2337090% | 4.1493776% |
| Oct-2007 | 3.2778865% | 3.7780401% |
| Nov-2007 | 3.3203125% | 3.8869258% |
| Dec-2007 | 3.1113272% | 3.8123167% |
| Jan-2008 | 3.1067961% | 3.8619075% |
| Feb-2008 | 3.0464217% | 3.7296037% |
| Mar-2008 | 3.0332210% | 3.7746806% |
| Apr-2008 | 2.8324532% | 3.7037037% |
| May-2008 | 3.0172414% | 3.6908881% |
| Jun-2008 | 2.6666667% | 3.6186100% |
| Jul-2008 | 3.0000000% | 3.7227950% |
| Aug-2008 | 3.2794677% | 3.8263849% |
| Sep-2008 | 3.2747983% | 3.6425726% |
| Oct-2008 | 3.3159640% | 3.9249147% |
| Nov-2008 | 3.5916824% | 3.8548753% |
| Dec-2008 | 3.6303630% | 3.8418079% |
| Jan-2009 | 3.5310734% | 3.7183099% |
| Feb-2009 | 3.4725481% | 3.6516854% |
| Mar-2009 | 3.1775701% | 3.5254617% |
| Apr-2009 | 3.2212885% | 3.2924107% |
| May-2009 | 2.8358903% | 3.0589544% |
| Jun-2009 | 2.7365492% | 2.9379157% |
| Jul-2009 | 2.5889968% | 2.7056875% |
| Aug-2009 | 2.4390244% | 2.6402640% |
| Sep-2009 | 2.2977941% | 2.7457441% |
| Oct-2009 | 2.3383769% | 2.6272578% |
| Nov-2009 | 2.0529197% | 2.6746725% |
| Dec-2009 | 1.8198362% | 2.5027203% |
| Jan-2010 | 1.9554343% | 2.6072787% |
| Feb-2010 | 1.8140590% | 2.4932249% |
| Mar-2010 | 1.7663043% | 2.2702703% |
| Apr-2010 | 1.7639077% | 2.4311183% |
| May-2010 | 1.8987342% | 2.5903940% |
| Jun-2010 | 1.7607223% | 2.4771136% |
| Jul-2010 | 1.8476791% | 2.4731183% |
| Aug-2010 | 1.7070979% | 2.4115756% |
| Sep-2010 | 1.8867925% | 2.2447889% |
| Oct-2010 | 1.8817204% | 2.5066667% |
| Nov-2010 | 1.6540009% | 2.1796917% |
| Dec-2010 | 1.7426273% | 2.0169851% |
| Jan-2011 | 1.9625335% | 2.2233986% |
| Feb-2011 | 1.8262806% | 2.1152829% |
| Mar-2011 | 1.8246551% | 2.1141649% |
| Apr-2011 | 1.9111111% | 2.1097046% |
| May-2011 | 2.0408163% | 2.1041557% |
| Jun-2011 | 2.1295475% | 2.0493957% |
| Jul-2011 | 2.2566372% | 2.2560336% |
| Aug-2011 | 1.9434629% | 1.9884877% |
| Sep-2011 | 1.9400353% | 1.9864088% |
| Oct-2011 | 2.1108179% | 1.7169615% |
| Nov-2011 | 2.0228672% | 1.8210198% |
| Dec-2011 | 1.9762846% | 1.8210198% |
| Jan-2012 | 1.7060367% | 1.3982393% |
| Feb-2012 | 1.9247594% | 1.5018125% |
| Mar-2012 | 2.1416084% | 1.7080745% |
| Apr-2012 | 2.0497165% | 1.7561983% |
| May-2012 | 1.7826087% | 1.4425554% |
| Jun-2012 | 1.9548219% | 1.5447992% |
| Jul-2012 | 1.7741238% | 1.3853258% |
| Aug-2012 | 1.8630849% | 1.3340174% |
| Sep-2012 | 1.9896194% | 1.3839057% |
| Oct-2012 | 1.4642550% | 1.2787724% |
| Nov-2012 | 1.8965517% | 1.4307614% |
| Dec-2012 | 2.1102498% | 1.6351559% |
| Jan-2013 | 2.1505376% | 1.8896834% |
| Feb-2013 | 2.1030043% | 2.0408163% |
| Mar-2013 | 1.8827557% | 1.8829517% |
| Apr-2013 | 1.9658120% | 1.7258883% |
| May-2013 | 2.0504058% | 1.8791265% |
| Jun-2013 | 2.1729868% | 2.0283976% |
| Jul-2013 | 1.9132653% | 1.9736842% |
| Aug-2013 | 2.2118248% | 2.1265823% |
| Sep-2013 | 2.0356234% | 2.1739130% |
| Oct-2013 | 2.2495756% | 2.2727273% |
| Nov-2013 | 2.1573604% | 2.2670025% |
| Dec-2013 | 1.9401097% | 2.3127200% |
| Jan-2014 | 1.9789474% | 2.2055138% |
| Feb-2014 | 2.1017234% | 2.4500000% |
| Mar-2014 | 2.1419572% | 2.2977023% |
| Apr-2014 | 1.9698240% | 2.2954092% |
| May-2014 | 2.0510674% | 2.3928215% |
| Jun-2014 | 1.9599666% | 2.2862823% |
| Jul-2014 | 2.0442219% | 2.2828784% |
| Aug-2014 | 2.1223471% | 2.4789291% |
| Sep-2014 | 1.9950125% | 2.2761009% |
| Oct-2014 | 1.9510170% | 2.2222222% |
| Nov-2014 | 1.9461698% | 2.1674877% |
| Dec-2014 | 1.6549441% | 1.6216216% |
* Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income.
Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series
Turning to the household survey, where the official unemployment rate is determined, we see a similar story. The unemployment rate in December declined to 5.6 percent, primarily due to a drop in the labor force. All together, the unemployment rate for 2014 averaged 6.2 percent, down significantly from its high of an average of 9.6 percent in 2010. And, just in the last year, the unemployment rate has fallen dramatically, from an average of 7.4 percent in 2013. That said, the official unemployment rate fails to take into account millions of missing workers—workers who have been sidelined by the weak economy and who are expected to return to the labor market when job opportunities significantly improve.
Millions of potential workers sidelined: Missing workers,* January 2006–December 2014
| Date | Missing workers |
|---|---|
| 2006-01-01 | 530,000 |
| 2006-02-01 | 110,000 |
| 2006-03-01 | 110,000 |
| 2006-04-01 | 250,000 |
| 2006-05-01 | 210,000 |
| 2006-06-01 | 110,000 |
| 2006-07-01 | 60,000 |
| 2006-08-01 | -120,000 |
| 2006-09-01 | 120,000 |
| 2006-10-01 | -50,000 |
| 2006-11-01 | -220,000 |
| 2006-12-01 | -500,000 |
| 2007-01-01 | -460,000 |
| 2007-02-01 | -210,000 |
| 2007-03-01 | -150,000 |
| 2007-04-01 | 650,000 |
| 2007-05-01 | 560,000 |
| 2007-06-01 | 360,000 |
| 2007-07-01 | 370,000 |
| 2007-08-01 | 840,000 |
| 2007-09-01 | 410,000 |
| 2007-10-01 | 800,000 |
| 2007-11-01 | 280,000 |
| 2007-12-01 | 250,000 |
| 2008-01-01 | -320,000 |
| 2008-02-01 | 220,000 |
| 2008-03-01 | 50,000 |
| 2008-04-01 | 340,000 |
| 2008-05-01 | -60,000 |
| 2008-06-01 | 20,000 |
| 2008-07-01 | -70,000 |
| 2008-08-01 | -90,000 |
| 2008-09-01 | 180,000 |
| 2008-10-01 | 60,000 |
| 2008-11-01 | 420,000 |
| 2008-12-01 | 420,000 |
| 2009-01-01 | 710,000 |
| 2009-02-01 | 620,000 |
| 2009-03-01 | 1,050,000 |
| 2009-04-01 | 750,000 |
| 2009-05-01 | 650,000 |
| 2009-06-01 | 650,000 |
| 2009-07-01 | 1,040,000 |
| 2009-08-01 | 1,320,000 |
| 2009-09-01 | 2,050,000 |
| 2009-10-01 | 2,270,000 |
| 2009-11-01 | 2,300,000 |
| 2009-12-01 | 3,120,000 |
| 2010-01-01 | 2,770,000 |
| 2010-02-01 | 2,690,000 |
| 2010-03-01 | 2,440,000 |
| 2010-04-01 | 1,940,000 |
| 2010-05-01 | 2,530,000 |
| 2010-06-01 | 2,950,000 |
| 2010-07-01 | 3,220,000 |
| 2010-08-01 | 2,830,000 |
| 2010-09-01 | 3,200,000 |
| 2010-10-01 | 3,640,000 |
| 2010-11-01 | 3,310,000 |
| 2010-12-01 | 3,800,000 |
| 2011-01-01 | 3,910,000 |
| 2011-02-01 | 4,110,000 |
| 2011-03-01 | 3,960,000 |
| 2011-04-01 | 4,000,000 |
| 2011-05-01 | 4,110,000 |
| 2011-06-01 | 4,220,000 |
| 2011-07-01 | 4,640,000 |
| 2011-08-01 | 4,100,000 |
| 2011-09-01 | 3,990,000 |
| 2011-10-01 | 4,090,000 |
| 2011-11-01 | 4,090,000 |
| 2011-12-01 | 4,150,000 |
| 2012-01-01 | 4,450,000 |
| 2012-02-01 | 4,180,000 |
| 2012-03-01 | 4,240,000 |
| 2012-04-01 | 4,630,000 |
| 2012-05-01 | 4,240,000 |
| 2012-06-01 | 4,060,000 |
| 2012-07-01 | 4,520,000 |
| 2012-08-01 | 4,630,000 |
| 2012-09-01 | 4,500,000 |
| 2012-10-01 | 3,930,000 |
| 2012-11-01 | 4,370,000 |
| 2012-12-01 | 4,070,000 |
| 2013-01-01 | 4,350,000 |
| 2013-02-01 | 4,790,000 |
| 2013-03-01 | 5,310,000 |
| 2013-04-01 | 5,060,000 |
| 2013-05-01 | 4,840,000 |
| 2013-06-01 | 4,700,000 |
| 2013-07-01 | 5,030,000 |
| 2013-08-01 | 5,150,000 |
| 2013-09-01 | 5,370,000 |
| 2013-10-01 | 6,120,000 |
| 2013-11-01 | 5,700,000 |
| 2013-12-01 | 5,950,000 |
| 2014-01-01 | 5,850,000 |
| 2014-02-01 | 5,650,000 |
| 2014-03-01 | 5,330,000 |
| 2014-04-01 | 6,210,000 |
| 2014-05-01 | 5,940,000 |
| 2014-06-01 | 5,950,000 |
| 2014-07-01 | 5,810,000 |
| 2014-08-01 | 5,890,000 |
| 2014-09-01 | 6,250,000 |
| 2014-10-01 | 5,720,000 |
| 2014-11-01 | 5,760,000 |
| 2014-12-01 | 6,100,000 |
* Potential workers who, due to weak job opportunities, are neither employed nor actively seeking work
Note: Volatility in the number of missing workers in 2006–2008, including cases of negative numbers of missing workers, is simply the result of month-to-month variability in the sample. The Great Recession–induced pool of missing workers began to form and grow starting in late 2008.
Source: EPI analysis of Mitra Toossi, “Labor Force Projections to 2016: More Workers in Their Golden Years,” Bureau of Labor Statistics Monthly Labor Review, November 2007; and Current Population Survey public data series
What to Watch on Jobs Day: Looking Back on 2014
As we await the last jobs report for 2014, it’s useful to step back and look at the December report in the context of the entire year—and in the context of the recovery as a whole. If December’s numbers come in as expected, we will see a relatively strong labor market in 2014, compared to the economy in the Great Recession and the beginning of the recovery.
Arguably, the real recovery did not even begin until 2014. Job growth was considerably stronger in 2014 than in previous years, and the unemployment rate, along with the long-term unemployment rate, measurably declined. Meanwhile, the employment-to-population ratio of prime age workers (25-54 years old) increased, and the rate of involuntarily part-time workers declined while those voluntarily working part-time increased. These are all pieces of good news. I expect these trends to continue in the right direction in December, or at least remain stable.
The one indicator that hasn’t improved over the year—and one we don’t expect to change in the December report—is nominal wages. Nominal wage growth has been consistently below target over the last five years, and last year was no exception. EPI has been tracking nominal wages, and it’s clear that the cumulative cost to slow wage growth is mounting. Indeed, nominal wages will be the key indicator to watch in 2015. As the labor market continues to improve, more people will find employment and the rolls of missing workers (those who have been sidelined in the weak economy) should shrink. As workers return to the labor force and get jobs, the unemployment rate will better reflect the state of the labor market. Eventually, a healthier labor market should translate into decent wage growth. The question is, when will workers start seeing the decent economic news reflected in their paychecks?
Moreover, as my colleague Josh Bivens has written, it’s important that the good economic news doesn’t prompt the Federal Reserve to raise interest rates any time soon. Many analysts and prognosticators worry that falling unemployment will cause wages to rise significantly, pushing up inflation above the Fed’s 2 percent target. But with wage growth continuing to be sluggish, there’s no reason to worry about runaway inflation. And putting the brakes on the economy too soon could have a disastrous impact.
Check back tomorrow when we’ll reflect on the 2014 labor market, including jobs, unemployment, and wages. We’ll update our missing workers calculator, assess the jobs gap, and analyze nominal wage growth in the context of Federal Reserve policy.
Agribusiness Reveals its Dislike of Deferred Action for Unauthorized Immigrants
As I and others have written over the past month and half or so, President Obama’s new Deferred Action for Parental Accountability initiative (DAPA) will shield from deportation and provide work authorization to unauthorized immigrants who have a son or daughter who is a U.S. citizen or legal permanent resident, if they are not an enforcement priority and have been residing in the country for at least five years. DAPA will give the potentially four million who qualify the full spectrum of workplace rights provided under U.S. law. This means immigrant workers will be able to hold accountable employers who commit wage theft or violate workplace safety laws, without fearing threats of deportation that employers may lob at them to keep them from complaining. It’s easy to see how raising the floor for unauthorized immigrant workers in this way will benefit all workers, raise wages, and increase tax revenue. But nevertheless, not everyone is happy about it.
I always suspected that the agricultural industry would not support deferred action or any DAPA-like program, but until now the industry had been relatively quiet about their position. My assumption was that—because unauthorized immigrants comprise such a large share of the workforce employed in agricultural occupations, and because ag employers directly benefit from having unauthorized immigrant employees who can’t complain about dangerous workplaces where pesticides are in the air and extreme, triple-digit temperatures are the norm—they would find objectionable anything that increased farmworkers’ bargaining power or that allowed them to move to better-paying jobs in other industries. Because unauthorized immigrants don’t have a lot of bargaining power and are mostly employed by bosses willing to violate the law, they can’t easily get a job anywhere else, which means they have to put up with the low wages that are on offer in ag.
So I was pleasantly surprised to see some truth seep out onto the airwaves, thanks to a three-minute interview conducted by Tucker Carlson the other day on Fox and Friends, which sheds some light on what the ag industry really thinks about DAPA.
The President Set a Goal of Doubling Exports by 2014—Why Haven’t We?
The United States failed to achieve a doubling of exports between 2009 and 2014, as promised in President Obama’s National Export Initiative (NEI). It wasn’t even close. Total U.S. goods and services exports increased by less than 50 percent ($766 billion, or 48.4 percent) between 2009 and 2014 (estimated), as shown in the figure below. Meanwhile, imports increased by an even larger $883.8 billion, and as a result, the U.S. trade deficit increased by $117.0 billion.
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. Between 2009 and 2014 the growth in imports more than offset the increase in exports, resulting in a growing trade deficit, as shown in the figure. Growing trade deficits have eliminated millions of jobs in the United States, and put downward pressure on employment in manufacturing, which competes directly with most imported products. For example, growing trade deficits with China alone have displaced 3.2 million U.S. jobs between 2001 (when China entered the WTO) and 2013, with 1.3 million of those jobs lost since 2009 alone.
U.S. exports, imports, and trade balance change, 2009 –2014
| Goods | Services | |
|---|---|---|
| Exports | $569.00 | $197.84 |
| Imports | $792.00 | $91.77 |
| Trade Balance | $0.00 | $-117.00 |
Sources: EPI's analysis of U.S. Census Bureau, U.S. International Trade in Goods and Services
The Economy Really is Doing a Bit Better—So Let’s Not Ruin It
People are excited by recent good news on the economy—especially the 321,000 jobs created in November and the 5.0 percent (annualized) growth rate posted by gross domestic product (GDP) in the third quarter of this year. The excitement is understandable—this is genuinely good news. Yet we shouldn’t lose sight of how far away from a healthy economy we remain. We’re climbing more rapidly out of the hole that the Great Recession left us in, but we’re still really only halfway there.
You can see this measured in terms of how many jobs we need to restore the labor market health that prevailed immediately before the Great Recession began, or in the share of “prime-age” adults (ages 25-54) that have jobs.
And in terms of restoring average wage growth we’re not even halfway there. In fact, we’re still essentially nowhere yet.
All of this makes one twist on the commentary about recent good news really odd—the idea that there may be a dark cloud to the silver lining if it makes the Fed raise interest rates sooner and slow recovery. This perspective shows just how strange an economic world we’re living in.
Yes, we’re now growing relatively fast, both on the GDP and jobs side. But that’s what’s supposed to happen following recessions: you have to re-absorb the workers who were laid-off during the recession as well as provide jobs for the normal inflow of potential workers into the labor force. What’s been remarkable in the recovery since the Great Recession so far is that this above-trend growth really never happened. Moreover, there’s nothing in a period of above-trend growth following a recession that argues the Fed must spring into action to stomp on it.
Five Things We Could Change if the Real World Worked More like the Fictional World of Annie
In the spirit of the season, this post combines a few of my favorite year-end traditions—reflecting on the past, setting goals for the future and December movie releases. At the top of my “movies to see” list is a remake of one of my childhood favorites, Annie. The 2014 adaptation of the film includes a few twists on the 1982 version of the film I first fell in love with—the most obvious being African American actors playing the lead roles of Annie and Will Stacks (originally Oliver “Daddy” Warbucks).
In fact, Annie’s story has been reincarnated many times over since cartoonist, Harold Gray, first introduced his Little Orphan Annie comic strip in 1924 but the basic premise has stayed the same. A rich benefactor, who has amassed immense wealth through capitalism (specifically in World War I, hence the name Warbucks), adopts a little girl and transforms her life from that of a poor, abused, outcast orphan into a beloved daughter with full access to anything she can dream of.
Early versions of the Little Orphan Annie comic strip often espoused views of politics that sound awfully familiar today—including the idea that providing the masses with jobs that pay fairly and treating workers with respect is the obligation of virtuous capitalists. Also central to the story of Annie is how the perspective and priorities of the adults in charge of her well-being shape the child’s future. As a man of great wealth, power and influence, Warbucks didn’t suggest a bootstraps approach as the way to a better life, rather he offered the girl support as needed and often intervened in Annie’s life during crisis.
While Annie’s story is a fictional expression of her creator’s political views, it can also serve as a metaphor for many of today’s social and economic challenges. I’m not suggesting in any way that paternalism is the solution to inequality and poverty. Rather, I offer a list of five things that might be different if more of our nation’s wealth, power and influence were used to positively transform lives and promote economic mobility.
There Should Be Overtime Protection—and Pay—For Anyone Paid Less Than $51,000 a Year
In March 2014, President Obama directed Secretary of Labor Tom Perez to prepare an update of the regulations that govern exemptions from the Fair Labor Standards Act (FLSA) requirement that employers pay time-and-a-half for work beyond 40 hours in a week. The so-called “white collar” exemptions for professionals, executives, and administrators include a threshold salary below which every employee is guaranteed overtime pay regardless of his or her work duties. Above that salary level, the employer doesn’t have to pay anything for overtime hours—not even minimum wage—if the work performed meets certain criteria.
The salary threshold has rarely been increased, and since 1975, its real value has been eroded by inflation. It currently stands at $455 a week, or $23,660 a year—below the poverty level for a family of four and nothing like a true executive or professional salary. Whereas 65% of salaried workers were guaranteed overtime coverage by the salary threshold in 1975, just 11% are covered today.
In the past year, four significant proposals have been made to update the salary threshold, and each would guarantee coverage to a different number of workers. The figure and table below show that as the threshold increases, millions more employees are guaranteed overtime coverage.
