What’s at Stake in Harris v. Quinn
The Supreme Court is about to issue a decision on a case that could hit working people—especially working women—right in the paycheck. Harris v. Quinn is about isolating individual workers so they are weak and unable to protect themselves in a labor market that fails to reward their hard work. By weakening the unions that have organized home care workers, given them a voice, and helped them win wage and benefit increases that are lifting many of them out of poverty, Harris v. Quinn could block the road to economic opportunity for a largely female, economically disadvantaged workforce. Right-wing groups want the public to think Harris v. Quinn is as a case about freedom of speech and association; they pretend it is about protection of the individual—but how does it protect an individual if the end result is a smaller paycheck?
American workers, by and large, have suffered from stagnant wages for decades. At the same time, the percent of working Americans in unions or covered by union contracts has been falling. Studies suggest that a substantial part of this wage stagnation is the result of eroded unionization, as fewer workers, both union and nonunion, benefit from the unions’ ability to improve wage standards in particular industries and occupations. The consequence: profits have reached historic highs, CEO pay is in the stratosphere, but workers are not sharing in the nation’s ever-increasing wealth.
Almost anything that worsens these trends ought to be avoided, including anything that weakens unions or makes it harder for workers to bargain successfully. Americans need a raise: more pay for the work they do, better benefits, and more regular hours, and they need help in getting it. On their own, the ability of individual Walmart cashiers, for example, or Amazon’s warehouse workers to get a raise is negligible. But collectively, if they can join together and bargain as a group, they would have a chance to exert enough leverage to make the companies listen to their demands. The players in the NFL, MLB and NBA all know that what they have won had to be wrested from management.
Teachers, “Tenure,” Due Process, and Truly Helping Disadvantaged Children
This month, a California judge struck down California’s teacher tenure law in a landmark case, Vergara v. California. Proponents claim that eliminating tenure will mean fewer ineffective teachers at low-performing schools. But teacher tenure in the K-12 context does not mean a lifetime guarantee of a job. It means that teachers have basic rights—most importantly, the right to due process if the district wants to fire them. This distinction is critical, both because eliminating tenure does not necessarily make it easier to fire bad teachers, and because tenure can actually help attract good teachers to hard-to-staff schools, retain them, and support their role as voices for student justice in those schools.
There have been many good commentaries on why the Vergara ruling will do little to help students. Washington Post columnist Catherine Rampell nails the essential point, writing, “Making it easier to fire bad teachers isn’t going to magically cause the educational achievement gap to disappear. You need to be able to attract and retain more good teachers, too.”
New York University professor (and EPI board member) Pedro Noguera notes in the Wall Street Journal that both the plaintiffs’ suit and the judge’s verdict are fundamentally flawed. Noguera agrees that there are disparities in teacher qualifications and quality between schools serving high- versus low-income students, but tenure does not contribute to these differences. The fact is that schools serving low-income students have less funding and fewer resources than schools in more affluent areas. That means they aren’t able to pay teachers as much. It means class sizes are larger, nurses and counselors are fewer, libraries are worse. These and many other factors make it harder for low-income schools to attract and retain good teachers. The due-process protections afforded by tenure, at the very least, ensure that teachers who do stay in high-poverty schools can speak out against these inequities and be advocates for a more just system for their students.
American Workers Need Overtime Protections
Today, Sen. Tom Harkin (D-IA) and eight co-sponsors introduced legislation to restore overtime protections for low- and mid-wage salaried workers. The Restoring Overtime Pay for Working Americans Act would guarantee overtime pay for millions of salaried workers earning less than $52,000 a year.
Americans are working longer hours and are more productive than ever—yet wages are largely flat or falling. Indeed, the median worker saw a wage increase of just 5.0 percent between 1979 and 2012, despite overall productivity growth of 74.5 percent. One reason Americans’ paychecks are not keeping pace with their productivity is that millions of middle-class and even lower-middle-class workers are working overtime and not getting paid for it. This is because the federal wage and hour law is out of date—and especially the regulation that sets the salary level below which all employees must be paid time-and-a-half for their overtime hours.
Updating overtime rules is one important step in giving Americans the raises they deserve. If the threshold is raised from its current $455 per week ($23,660 annually) to $984 per week ($51,168 per year, the threshold’s 1975 level, adjusted for inflation) millions of salaried workers would be guaranteed the right to overtime pay if they work more than 40 hours in a week.
This bill would go above and beyond the recent announcement by President Obama in strengthening overtime pay regulations. I salute Sen. Harkin for taking up this issue and calling for a reasonable salary level, indexed for inflation, along the lines Jared Bernstein of the Center on Budget and Policy Priorities and I have advocated. Sen. Harkin led the battle in Congress in 2004 to block a set of very detrimental changes the Bush administration made to the overtime rules. While Sen. Harkin was not entirely successful, he did force the Bush Labor Department to issue a final rule that was less damaging than its first proposal. It’s heartening to see that both Sen. Harkin and his colleagues, along with the Obama administration, continue to believe that low and mid-level workers should be paid when they work overtime. If more workers were paid time-and-a-half when they worked overtime, it would boost the economy and show that in America, hard work pays off.
A Repatriation Holiday to Fund the Highway Trust Fund is Not Only a Bad Idea but a Costly One
In politics, bad ideas never go away, even after being shown to be bad. A repatriation tax holiday is a case in point. Senators of both parties have suggested using revenue generated from a repatriation holiday to plug near-term shortfalls in the Highway Trust Fund, which will be depleted within a couple of months. The problem, of course, is that revenues are only generated in the short-run, and revenue losses in out-years dominate the overall budget impact of a repatriation holiday.
Under its baseline budget, the Congressional Budget Office projects a fiscal year 2015 Highway Trust Fund shortfall of about $12 billion. The Joint Tax Committee projects that a repatriation holiday enacted this year would bring in about $13 billion in additional revenue in fiscal year 2015. Sounds like a great fix for a budget problem. What is not mentioned is cumulative Highway Trust Fund shortfalls between 2016 and 2024 total $824 billion and that the repatriation holiday will reduce federal tax revenues by $115 billion over the same period. Consequently, using a repatriation holiday as a short-term fix would increase longer-term federal budget problems associated with underfunding the Highway Trust Fund—increasing projected deficits from $824 billion to almost $1 trillion over the next 10 years. Surely, a repatriation holiday is a bad and costly idea.
But there are also other problems with a repatriation holiday, which requires a brief and, admittedly, wonkish review of the 2004 repatriation holiday.
Thoughts on the Black Labor Force Participation Rate
Recently, my Economic Snapshot on the resilience of black labor force participation has gotten some attention in a few well-known media outlets. The main finding of the snapshot was that part of the reason the black-white unemployment rate gap has grown during the post-Great Recession period is because labor force participation has fallen by less for blacks than for whites. In a blog post for the Washington Post, Philip Bump examined the robustness of that observation by comparing historic data on labor force participation rates and unemployment rates for blacks and whites dating back to 1973. He concludes that “the problem is that Wilson’s explanation doesn’t appear to hold up over time.”
But this is only a problem if one assumes I was making a statement about the entire run of post-World War II U.S. economic history. I wasn’t. I was instead looking only at why the black-white unemployment gap grew in the past seven years. Importantly, focusing on these particular seven years is not an arbitrary or random selection—that’s the period of time since the previous business cycle peak, a span of time often looked at by researchers to assess labor market trends. That being said, I think Philip’s exercise is an interesting one and worth repeating, by comparing changes over similar periods of time in previous business cycles.
If Obama Must Delay Deportation Review, Relief For Unauthorized Immigrants Should Be Bold and Broad
Over the past five years under President Obama’s leadership, the U.S. immigration enforcement system, including its main tools of migrant detention and deportation, has vastly expanded into a “formidable machinery” that has expelled unauthorized immigrants at a record pace—a total of approximately 2 million in five years. A year ago, the Senate made progress toward fixing the system by passing a bipartisan comprehensive immigration bill that would reform almost every aspect of the immigration system, including legalization and a path to citizenship for unauthorized immigrants. But the effort has stalled in the Republican-controlled House of Representatives…
Looking at Segregation Through the Peer Effects Lens
That our children attend schools that are segregated by race is probably not a surprise for any of us. While, as researchers, we might debate how consequential segregation is, we can likely agree that, on its face, segregation raises some important societal concerns; it challenges our sense of what a moral and fair system looks like. It poses barriers to social cohesion, inclusion, and integration—and their well-known positive impacts on society—and it limits our children’s preparedness for the multicultural world in which they live.
As we mark the 60th anniversary of the Supreme Court’s Brown vs. Board of Education decision, and the declaration that “separate but equal” is unconstitutional, we look back on both progress made in desegregating schools and, more recently, backtracking on those efforts and current initiatives that sideline them. Although separate but equal is unconstitutional, separate and unequal is very much a reality.
Most Missing Workers Are Nowhere Near Retirement Age
In today’s weak labor market, there are around 6.0 million “missing workers”—potential workers who, because of weak job opportunities in the aftermath of the Great Recession, are neither employed nor actively seeking work. Some have suggested that many of these missing workers may be at or near retirement age and, in the face of weak job opportunities, have simply decided to retire earlier than they otherwise would have. While this would clearly indicate a huge waste of human potential and a serious indictment of macroeconomic policymakers that allowed economic weakness to linger on so long, it would also indicate that these workers are very unlikely to rejoin the labor force in coming years no matter how dramatically economic conditions improve. This would in turn mean that their absence is not in fact an indicator of current slack in the labor market.
The figure below provides an age breakdown of the missing workforce. It shows that nearly three-quarters of missing workers are age 54 or younger, which means they are unlikely to be early retirees. Even if all of the missing workers age 55 and over will never reenter the labor force no matter how strong job opportunities get, that still leaves 4.4 million missing workers age 54 or younger who would be likely to re-enter the labor force when job opportunities strengthen. In other words, weak labor force participation rate remains a key component of total slack in the labor market.
Women Surpassed Their Pre-recession Employment Peak 9 Months Ago, Men Still Haven’t
With the addition of 217,000 jobs in May, the U.S. labor market has now surpassed its pre-recession employment peak, a benchmark (the pre-recession employment peak) which is of zero economic interest. Given the growth in the potential labor force since December 2007, we should have added 7.0 million jobs since then, but instead we have added a net 113,000, so the labor market is still 6.9 million in the hole.
One interesting piece is the breakdown of that jobs gap by gender. As you can see in the chart below, women actually surpassed their pre-recession peak last August, but are still 3.2 million jobs in the hole given growth in the potential female labor force since December 2007. Men, on the other hand, are still nearly 700,000 jobs below their pre-recession employment peak, and given growth in the potential male labor force, are 3.7 million jobs down.
Statistics that Spin: Foreign Goods to Be Considered U.S. Goods?
This past year, President Obama’s commitment to rebuilding our nation’s manufacturing sector has taken center stage. In February, he explained why producing goods here at home is important to our country:
“For generations of Americans, manufacturing was the ticket to a good middle-class life. We made stuff. And the stuff we made—like steel and cars and planes—made us the economic leader of the world. And the work was hard, but the jobs were good. And if you got on an assembly plant in Detroit or in a steel plant in Youngstown, you could buy a home. You could raise kids. You could send them to college. You could retire with some security. And those jobs didn’t just tell us how much we were worth, they told us how we were contributing to the society and how we were helping to build America, and gave people a sense of dignity and purpose. They saw a Boeing plane or one of the Big Three cars rolling off the assembly line, and they said, you know what, I made that. And they were iconic. And people understood that’s what it meant for something to be made in America.”
The president has continually called for curtailing corporate incentives to outsource manufacturing to other countries, saying “it is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.” A White House fact sheet summarizes his plans for restoring U.S. manufacturing jobs.
Apparently, some folks in the administration haven’t gotten the message. On May 22, the Office of Management and Budget issued a notice for comments on a proposal to dramatically alter the way government keeps statistics on domestic industries. The proposal suggests “that factoryless goods producers (FGPs) be classified” as manufacturers.