In looking to merge with Canadian coffee-and-doughnuts icon Tim Hortons, Burger King is just the latest American multinational to buy a smaller foreign company and reincorporate abroad, lowering its tax bill in the process. This maneuver, called a “corporate inversion,” has picked up steam this year as Congress has stood idly by, twiddling its thumbs.

There is something unseemly about corporate inversions—that American companies would reap the benefits of American infrastructure, labor, customers, and local and federal tax incentives, and then move—just on paper—abroad, just to help their bottom lines. Executives of these now “foreign,” inverted companies don’t have to move and the companies can remain listed on American stock exchanges, but some (perfectly-legal) paper shuffling allows them to escape paying U.S. taxes. And while President Obama has appealed to corporations’ sense of “economic patriotism,” the companies—despite recent Supreme Court decisions—are not people; they don’t have emotions separate from their desire to maximize profits.

While both parties profess to disdain the practice of inversions, they disagree on what to do about them. Democrats have taken a sensible approach, writing bills that would prohibit inversions unless 50 percent of the value of the stock of the newly-merged company were held by foreigners (which makes a lot of intuitive sense), up from the current 20 percent as mandated by the most recent anti-inversion legislation, signed into law by George W. Bush. Other proposals would limit the potential benefits of corporate inversions, for example by withholding federal contracts from inverted corporations or by making it harder for a newly-foreign parent company to transfer loads of debt to its now American subsidiary and then write off the interest paid on that debt. (The Obama administration is looking to see if it can implement rule changes like this without Congress’s approval, but worries remain about whether such new rules would survive the inevitable legal challenges.)

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The Wallethub state school quality rankings that were released earlier this month add to a growing list of such guides. They join those of the Education Law Center, which has ranked state school systems since 2011 using a four-part funding equity model, Students First’s state report cards, and the Brookings Institution Brown Center’s Education Choice and Competition rankings of large urban districts. There are many others, but these four illustrate some of the diversity in both approaches to ranking schools and types of institutions that rank them.

All four suggest to parents and policymakers that their system identifies the highest quality schools. Yet they produce a very disparate set of “best” and “worst” states (and districts). Two of Wallethub’s top three—New Jersey and Massachusetts—are among two of the the three states that Education Law Center also ranks highest: New Jersey, Massachusetts, and Connecticut. In contrast, two of Students First’s top-ranked three, Louisiana and Florida, are among the lowest on Education Law Center’s sufficiency ranking. The Brown Center gives top billing to the New Orleans’ Recovery School District, New York City, and Washington, DC, and Students First also gives DC high marks, while Wallethub has it dead last, behind Mississippi. And Wallethub ranks Louisiana, Students First’s top-ranked state, 48th of 51.

As the new school year refocuses our attention on education and school quality, what are we to make of these conflicting numbers? Can we use the rankings to help us make good decisions, whether as parents or policymakers?

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Earlier this year, we showed that an increase in illegal steel dumping was putting up to half a million U.S. jobs at risk, in a study I co-authored with the law firm of Stewart and Stewart. On Friday, the U.S. International Trade Commission (USITC) determined by a vote of 5-0 that companies from South Korea, along with five other countries (India, Turkey, Ukraine, Vietnam, and Taiwan) are dumping Oil Country Tubular Goods (OCTG) into the U.S. steel market.  Countervailing duties will also be assessed on OCTG imports from Turkey and India. OCTG is a high-value steel product used in the rapidly growing U.S. oil and gas fracking industry. U.S. imports of OCTG products from the subject countries more than doubled between 2010 and 2013. South Korean imports, which represent more than half of all U.S. OCTG imports, were being shipped to the United States at prices far below fair value.

The USITC vote follows on the heels of a decision by the Commerce Department that it would impose punitive tariffs on manufacturers of OCTG from Korea and the other countries involved in this case. As I noted last month, Commerce’s decision (today endorsed by the USITC) to assess duties on OCTG imports from Korea and other countries is a victory for steel workers, U.S. steel producers, and the millions of people whose jobs depend on the U.S. steel industry.

In the run-up to the decision, U.S. steelworkers mounted a “nationwide call to action” to “ensure that our trade laws are fully enforced.” This campaign featured rallies in six of the major steel-producing states, which were supported by bipartisan letters signed by more than 150 members of the U.S. House of Representatives and by 57 members of the U.S. Senate. As Steelworkers President Leo Girard pointed out, this national campaign “should not be necessary to ensure that our trade laws are enforced.” U.S. officials should enforce U.S. fair trade laws to the fullest extent allowable under U.S. and international law. And the time has come for a complete reassessment of U.S. trade laws to close loopholes and ensure that the law is promptly and effectively enforced to the full extent intended by Congress and the president.

I was saddened to learn of the death of Sen. Jim Jeffords of Vermont this week. He was the rare politician who combined intelligence, humility, and a sense of humor, with a deep love for his state and his country. Like Sen. Paul Wellstone, Jeffords never held himself above the congressional staff who worked for him and around him, and he certainly didn’t hold himself above the people he represented, despite his Harvard and Yale degrees and his elevated position, which ultimately included service as chairman of the Senate Committee on Health, Education, Labor and Pensions and the Committee on Environment and Public Works.

When I first met Jeffords in 1982, he was a senior Republican on the House Education and Labor Committee, already exercising an independent streak by opposing Ronald Reagan’s efforts to eliminate any role for the federal government in employment and training programs. He supported the Job Training Partnership Act, and got involved in the bill’s minutiae, sitting late at night with mostly Democratic staffers as the formulas for distributing funds to the states and local entities were worked out. By pushing to give greater weight to factors like poverty, unemployment, long-term unemployment, or total population in the formulas, a state like Vermont could see its funding change dramatically, and Jeffords made sure the staff assigned to negotiate and draft the bill pushed the right buttons for his state. He was the only member of Congress in the room.

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A common but erroneous theme in the media about recent labor market trends is that technology (the robots!) threatens job growth and is the cause of wage stagnation and inequality. Politicians, policymakers, and pundits echo this as well. These insights come from research on the “job polarization hypotheses”—the claim that computerization leads to the “simultaneous growth of high-education, high-wage and low-education, low-wages jobs at the expense of middle-wage, middle education jobs” and, correspondingly, to wage polarization. It is noteworthy, therefore, that MIT Professor David Autor, the leading intellectual architect of the job polarization hypothesis, has presented a paper at the Federal Reserve Bank of Kansas City’s economic policy symposium in Jackson Hole, Wyo., which finds that job polarization did not occur in the 2000s and that, in any case, job polarization is not necessarily connected to wage polarization.

This confirms the findings of others, such as Beaudry, Green, and Sand and my own research with Heidi Shierholz and John Schmitt. One can only applaud Autor for updating his analysis of employment and wage trends, and acknowledging the lack of occupational job polarization in the 2000s and its failure to be able to explain wage trends. One can only hope that the economics commentariat will follow suit and ramp up their exploration of other causes of stagnant and unequal wage growth. Immodestly, I would suggest our recent paper, Raising America’s Pay, as a starting point.

In 2010, Autor wrote the influential paper The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings for the Center for American Progress and the Hamilton Project. This paper laid out what became the conventional wisdom: “the structure of job opportunities in the United States has sharply polarized over the past two decades, with expanding job opportunities in both high-skill, high-wage occupations and low-skill, low wage occupations, coupled with contracting opportunities in middle-wage, middle-skill white-collar and blue-collar jobs” and “this pattern of employment polarization has a counterpart in wage growth.”

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The following is a slightly edited version of remarks delivered on an Economic Policy Institute teleconference on Friday, July 25, 2014. 

Since the Great Recession began almost 7 years ago, the Fed has been the most proactive and the most effective macroeconomic policy-making institution both in attempting to end the recession and then subsequently trying to spur a full recovery. It’s been the most effective by far in the United States and almost certainly the most effective in the world. The Fed deserves a lot of praise for this stance and the economic evidence argues strongly that it should continue to prioritize boosting employment and spurring a full economic recovery. Specifically, this evidence indicates:

• The economy continues to have enormous amounts of productive slack—including in the labor market.
• Until this slack is taken up, wage-driven inflationary pressures just will not materialize.
• Wage and compensation growth will have to more than double to put significant upward pressure on overall price-growth in coming years—meaning that the Fed should be fully comfortable with nominal compensation growth as high as 4 percent over the next couple of years. This follows from the fact that trend productivity growth is roughly 1.5 percent so that 2.0 to 2.5 percent nominal compensation growth above 1.5 percent implies rising unit labor costs corresponding to 2.0 percent inflation, allowing for an additional to 0.5 compensation growth at the expense of historically thick profit margins.

The Fed is commonly described as being tasked with targeting more rapid employment growth and economic activity until the point that such rapid growth begins to spur accelerating inflation. The U.S economy is nowhere near the point where growth is rapid enough to spark accelerating inflation. Instead, we remain far from fully recovered from the Great Recession, and because of this, inflationary pressures just aren’t in the data.

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The following is a slightly edited version of remarks delivered on an Economic Policy Institute teleconference on Friday, July 25, 2014. 

Any systematic look at the current data on the U.S. labor market says that the large costs of the incomplete recovery are quite apparent. We still have a labor market that faces three major ongoing problems. The first is that our very incomplete macroeconomic recovery means that we have continuing high cyclical non-employment and a lot of slack left in the labor market. Even if you look at prime-age workers, those 25 to 54 years old, we’re only one-third of the way back in terms of the employment rate to where we were before the Great Recession.

If you look at young workers, the situation is particularly dire. We still have close to record low employment rates for those less than 25 years old. For disadvantaged and minority young men, the fraction that are both out of school and out of work has increased enormously since 2007; for young black males aged 20 to 24 by almost 10 percentage points from about 23 percent to 32 percent. Over the last year, we are finally seeing some significant recovery in employment, but it’s not nearly enough yet to make people whole and create real opportunities for those in many low-income and working-class communities.

Second, even as we get back closer to full employment, from which we remain very far from, we will still have the scars of the Great Recession including huge increases in the long-term unemployed and in disconnected young workers who have not gotten the types of opportunities needed to jump start their careers and to be poised to move up the career ladder in a stronger economy. So we will need to run a tight labor market for longer than normal—possibly even allowing inflation to eventually overshoot the Fed’s target for a modest period as suggested in a recent paper by Glenn Rudebusch and San Francisco Fed President John Williams—just to help make many American families whole once again and to make enough progress in combating long-term unemployment.

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President Obama is reportedly considering “deferring” (temporarily suspending) the deportation of up to five million unauthorized immigrants, which would expand and be modeled after his 2012 Deferred Action for Childhood Arrivals (DACA) initiative. This has led to a stimulating and lively public discussion regarding the extent of the president’s legal authority under U.S. immigration law. Understanding the basics of what the president may or may not do under existing law, his constitutional authority and responsibilities, and what Congress can do about it if it disapproves of the president’s course of action, is essential for evaluating the various policy arguments and should help non-lawyers follow the many nuances of this substantive debate.

Here are four questions and answers to get you up to speed:

1. Does the president have legal authority to defer the deportation of all unauthorized immigrants?

No. The president cannot refuse to enforce immigration laws, or enforce an immigration law in a way that is contrary to the aims of the law, or change immigration policy on his own. This requirement comes from the “Take Care” clause in the U.S. Constitution, which requires the president to ensure “that the Laws be faithfully executed” (Article II, Section 3). The Immigration and Nationality Act, the United States’ main set of immigration laws, contains many provisions specifying who is a “removable” (i.e., deportable) migrant (the term the law uses is “alien”). Right now there are an estimated 11.7 million unauthorized immigrants in the United States, who are deportable unless they can prove that they deserve to remain in the country because they are entitled to a legal status under U.S. law.

Congress provides the executive branch the funds to enforce the immigration laws, but it has not provided nearly enough funding to deport all 11.7 million unauthorized immigrants. The Department of Homeland Security (DHS) believes that the amount Congress has appropriated is enough to deport approximately 400,000 unauthorized immigrants per year (3.4 percent of the total) and that is how many people the Obama administration has been deporting. If the president were to refuse to deport any unauthorized immigrants, such action would violate his constitutional duty to faithfully execute the laws and amount to a de facto legalization in direct contradiction of what Congress has required of the president.

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Last week, the Office of Management and Budget (OMB) announced that it was cancelling plans to reclassify factoryless goods producers (FGPs) such as Apple and Nike—most of which are now in wholesaling or management of companies (both service industries)—into manufacturing. The FGP proposal is part of a broader set of changes to the North American Industry Classification System (NAICS) that were scheduled to take effect in 2017. The FGP plan would have also required government agencies to move trade in goods made by manufacturing service providers (MSPs), such as China’s Foxconn (which builds Apple products) into services. The OMB proposal was highly controversial, and more than 26,000 comments were submitted for the record. In addition, more than 40 members of the House and Senate signed letters to the OMB raising objections and requesting clarification on a number of unresolved issues regarding the proposal.

In a recent policy memo, I noted that the proposal would artificially inflate manufacturing output and employment by treating outsourced production as part of domestic manufactured output, while artificially suppressing the reported U.S. goods trade deficit, with offsetting reductions in the services trade surplus. The proposal would also require manufacturing firms to begin reporting trade and manufacturing activities on a value-added basis, which would introduce a new level of distortion in U.S. international trade statistics that would undermine enforcement of U.S. fair trade laws. Finally, adoption of the FGP proposal, as initially formulated, could undermine U.S. Buy American Laws and U.S. Export-Import Bank policies.

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In honor of Social Security’s 79th birthday, here’s an update to a 2011 blog post refuting Social Security myths spread by critics of the program.

1. Social Security costs are escalating out of control. No. Costs are projected to rise from roughly five to six percent of GDP before leveling off.
2. Americans want benefits but aren’t willing to pay for them. Wrong again. Americans across political and demographic lines support paying Social Security taxes and prefer raising taxes over cutting benefits as a way to close the projected shortfall. A popular option is raising taxes on high earners, since earnings above $117,000 aren’t taxed. But Americans prefer to close the gap on the revenue side even if they’re asked to pay more themselves.
3. Our children and grandchildren will drown in debt if we don’t cut the social safety net. No, future generations will drown in debt if we don’t address health cost inflation. Though the Affordable Care Act and other factors have slowed costs considerably, this isn’t enough—we need to get costs closer in line with those in Europe and Canada. Cutting Medicare or Medicaid benefits just pushes costs onto the private sector. And there’s no reason to lump Social Security in with other programs since it’s funded through dedicated taxes and prohibited by law from borrowing.
4. The Baby Boomers will sink us. On the contrary. We saw them coming. Social Security began building up a trust fund in the early 1980s in anticipation of the Boomer retirement. The trust fund is projected to keep growing for another five years to almost $3 trillion, not quite enough to get us through the peak Boomer retirement years (the Great Recession took a bite). Read more