Tuesday’s New York Times ran two interesting articles with the rather alarming headlines: “U.S. Drug Firms Seek Inversion Deals to Evade Taxes” and “Reluctantly, Patriot Flees Homeland for Greener Tax Pastures.” Both articles reported on U.S. multinational corporations trying to merge with smaller foreign corporations to move the parent corporation offshore to a lower tax country, known as corporate inversions. In essence, the corporations are giving up U.S. “citizenship” so as to avoid U.S. taxes. It is time for Congress to put a stop to the erosion of the corporate income tax base.

The corporate inversions that have been in the news recently are Pfizer wanting to become a U.K. firm (the deal has been temporarily withdrawn), and Walgreens wanting to become a Swiss firm. Now AbbVie, a Chicago-based firm, wants to become an Irish firm, and Mylan, a Pittsburgh firm, wants to become a Dutch firm (ironically, the CEO of Mylan was named “Patriot of the Year” in 2011 by Esquire magazine).

These mergers have several things in common. First, the current shareholders of the U.S. firms will own the majority of the stock in the new foreign firm (typically 70 to 79 percent). Second, little or no economic activity will be moved from the United States to the new home country. Third, the corporate tax bill of the new firm will be substantially lower. Last, some of the current stockholders could face higher tax bills. Let me discuss each in turn.

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This morning, the Congressional Budget Office released its latest long-term budget outlook. While CBO projects the federal debt to begin increasing sharply in future decades, the main takeaway is that, with the debt stable for the remainder of this decade relative to the size of the economy, Congress should not see these projections as a reason to double down on economy-stunting austerity. Instead, policymakers should take advantage of our fiscal health to make the investments necessary to help boost our demand-starved economy and our still-flagging labor market.

CBO expects annual deficits to range from 2.8 to 3.5 percent of GDP through 2020—down from a peak of 10 percent of the economy in 2009—and not to reach 4.5 percent again until 2027. Yes, says CBO, over the long run our debt is a problem, especially as health care costs truly escalate in coming decades. And yes, CBO assumes that certain tax and spending policies will lapse when they will in all likelihood be extended, meaning today’s projections of future deficits are too low. But while our recent political past is strewn with the carcasses of failed grand bargains, fiscal commissions, and super committees, this near-term picture shows us that our deficit hysteria has calmed for good reason—there is no near-term deficit problem.

Let’s look at it this way. Since the Simpson-Bowles fiscal commission released its final proposal in December 2010, actual and projected budget deficits have fallen by $2.2 trillion over the 2011–2020 window, compared to the baseline the fiscal commission was working with—even with no bipartisan grand bargain over the budget.

How has this happened? A mix of poor policy choices and good fiscal news has given our budget some fiscal breathing room.

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The U.S. steel industry won an important victory late Friday afternoon when the Department of Commerce announced that it would impose punitive tariffs on manufacturers in Korea and eight other nations who have dumped steel pipes in the United States at artificially low prices (producers from India and Turkey were also hit with countervailing duties to offset illegal subsidies). The background for this decision is explained in our May report on surging steel imports, which showed that the U.S. steel industry is facing its worst import crisis in more than a decade, with more than half a million U.S. jobs at risk.

Commerce’s decision last week concerned imports of Oil Country Tubular Goods (OCTG), steel pipe that is used to build out the infrastructure needed to support the booming American oil and gas fracking industry. Imports of unfairly cheap and subsidized steel pipes have decimated domestic producers and threaten the jobs and incomes of thousands of steelworkers and their families. U.S. Steel had already announced the closure of two U.S. plants making OCTG pipe, and many more jobs and plants are at risk. Among the nine countries included in the OCTG case, Korea was by far the largest supplier of imported steel pipe sold at artificially low prices.

In a closely related development, a Wall Street Journal story published last Thursday asked “Is Korean Steel Really Chinese?” This is an important issue in the larger steel crisis. Our May report showed that the major cause of the global steel crisis is the growth of excess global steel production capacity. Chinese producers account for more than a third of total excess global capacity, which now exceeds half a billion metric tons. Much of this capacity is targeted on the U.S. market, one of the largest and most open in the world.

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Anti-government conservatives have been attacking public employees and their pensions for years, but the attacks picked up after the financial crisis in 2008, when the stock market crashed, leaving many public plans—and private plans, too—temporarily underfunded. Rather than going after Wall Street and searching for ways to prevent a repeat of the sub-prime mortgage crisis or too-big-to-fail banking, which threatened the entire economy (and not just public employee pensions), conservatives are trying to use the crisis to cut pension benefits. They want to claim that the current state of public pensions is somehow inevitable, even though it is unprecedented and clearly the result of the market crash. They want people to ignore the cause of the pension plans’ underfunding and simply do away with them, replacing them with individual accounts, just as they want to destroy Social Security and replace it into private accounts.

As part of this anti-pension campaign, National Review Online recently published a story with the provocative headline, “How the High Costs of Public-Sector Pensions Affect States’ Economic Growth.” The story, in fact, has nothing to do with economic growth. Instead, it describes a report that simply ranks the states on the size of their pension plans’ underfunding, while admitting that its data are out-of-date, which “argues for caution in interpreting this or any study on current public pension funding.”

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Here are some stories that are worth reading today:

NFL cheerleader lawsuit update: Buffalo Jills win one against Bills (Los Angeles Times): “A judge in New York ruled this week that a wage lawsuit against the NFL’s Buffalo Bills can continue, despite the team’s claim that the cheerleaders are not its employees.”

The US will start running out of money for roads in August. Here’s why. (Vox): “The United States is less than a month away from yet another transportation crisis.”

Can a new brand of unions help America’s workers? (Fortune): “As unions come under siege, emerging labor groups are testing new ways to rebuild workers’ bargaining power.”

American workers die needlessly in the heat every year (Washington Post): “According to the Occupational Safety and Health Administration, we could do a much better job of protecting those men and women. In 2012, 31 outdoor workers died in the heat and 4,120 fell ill, according to OSHA stats.”

Paying Employees to Stay, Not to Go (New York Times): “While they make $7.25 an hour, the federal minimum wage, Mr. Nawn receives $9 an hour, which Boloco sets as the floor at its chain of 22 restaurants, most of them in New England.”

The release of the June 2014 jobs numbers this morning marked the five-year anniversary of the official end of the recession (and start of the recovery) in June 2009, making this a reasonable time to address one of the persistent myths of this recovery—that the jobs recovery has been weak because of a “skills mismatch,” whereby workers do not have the skills they need for the jobs that are available.

This brief commentary provides an in-depth look at this issue, but the unemployment numbers released today also provide good information. In an update to this post, the table below shows the June unemployment rate, the unemployment rate in 2007, and the ratio of the two, for a variety of demographic categories and by occupation and industry. We see that while (as per usual) there is considerable variation in unemployment rates across groups, the unemployment rate is substantially higher now than it was before the recession started for all groups. The unemployment rate is between 1.2 and 1.7 times as high now as it was seven years ago for all age, education, occupation, industry, gender, and racial and ethnic groups. Elevated unemployment across the board, like we see today, means that the weak labor market is due to employers not seeing demand for their goods and services pick up in a way that would require them to significantly ramp up hiring, not workers lacking the right skills or education for the occupations or industries where jobs are available.

The release of the June 2014 jobs numbers this morning marked the five-year anniversary of the official end of the recession (and start of the recovery) in June 2009. It was a strong report. A couple of thoughts:

• We added 288,000 jobs in June, bringing the second-quarter average growth rate to 272,000. This is strong job growth. The only sobering part is that we still have a gap in the labor market of 6.7 million jobs, and even if we saw June’s rate of job growth every month from here on out, we still wouldn’t get back to health in the labor market for another two and a half years.
• The unemployment rate dropped from 6.3 percent to 6.1 percent, and it was mostly for good reasons! Recall that the unemployment rate can drop for good reasons—a higher share of potential workers find jobs—or bad reasons—potential workers drop out of, or never enter, the labor force because job opportunities are so weak. Most (though not all) of the improvement in the unemployment rate since its peak of 10 percent in the fall of 2009 has been for bad reasons. But in June, the drop in the unemployment rate was largely of the good kind. The labor force participation rate held steady, and the share of the age 16+ population with a job increased by one-tenth of a percent. Furthermore, the share of the “prime-age” population with a job (my favorite measure of labor market health), increased by three-tenths of a percent, restoring it to its March level following two months of declines.
• The issue of “missing workers”—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job—still looms large in today’s labor market. I estimate that there are roughly 6 million such workers, and if they were in the labor force looking for work, the unemployment rate would be 9.6 percent instead of 6.1 percent.

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Aside from the oddity that the numbers are being released on a Thursday, what should we be looking for tomorrow? Last month, as predicted, much was made of the fact that we now have more total jobs (public and private combined) than we did before the Great Recession began in December 2007 (of course, due to the growth of the potential labor force since that time, we are still millions of jobs in the hole).

The data being released tomorrow are for June 2014, which marks the five-year anniversary of the official end of the recession (and start of the recovery) in June 2009. One thing that has been historically unique about this recovery is the unprecedented loss of public sector jobs. The private sector began adding jobs in the spring of 2010, but the public sector continued shedding jobs until last summer. The figure below shows the public sector jobs gap. We are currently 716,000 public sector jobs below where we were when the recovery started, but to keep up with population growth since then, we should have added over 800,000 jobs, so we are around 1.5 million public sector jobs down. About a third of them are teachers and other employees in public K-12 education.

The total number of public sector jobs hit its low of the recovery last July, so we are no longer shedding public sector jobs. However, we have also not started filling in the gap, as public sector jobs have been roughly flat since last summer. The loss of public sector jobs has been an enormous drag on our recovery that was not a factor in earlier recoveries.

Monday’s Supreme Court decision in Harris v Quinn was destructive in several ways. It undermines the unionization that has been transforming home health care from a rock-bottom, minimum wage job with no respect and no benefits into something much better. That, in turn, could worsen the care provided the disabled by lowering pay, making the profession less attractive, and worsening turnover. The nakedly political decision damages the constitution and the credibility of the Court. And the majority opinion foretells even greater damage for public employee unionization and collective bargaining when the Court revisits these issues again.

The Court held that the historically disadvantaged , mostly female home-care workers (“personal assistants”) and their union have lesser rights than “full-fledged public employees” because the state is not their employer for all purposes—though it is for the crucial purposes of bargaining their wages and benefits. Because of that, in the Court’s view the employees’ union and the state don’t have a great enough interest in labor stability to enforce a provision in the collective bargaining agreement that requires all covered employees to pay their fair share of the costs of bargaining  and enforcing the contract (an agency fee). Dissenting employees get a free ride, because in the Court’s view, their right not to pay the agency fee is more important than the right of the majority of home-care workers to have an effective union that will raise their wages far beyond the cost of the agency fee. That balancing is plainly wrong and reflects Justice Alito’s 19^th century dislike of unions, his hostility to the government’s duty to “promote the general welfare,” and his contempt for majority rule. (So what if a majority of the employees voted to require the fair share provision?)

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