What to Watch on Jobs Day: Will the Number of Missing Young Workers Decline Again?
There are currently nearly one million “missing workers” under the age of 25. (In total, there are 5.3 million missing workers, who are neither working nor actively seeking work due to the weak labor market.) In March, the total number of missing workers dropped substantially, due almost entirely to an increase in the labor force participation of workers under the age of 25, particularly men. It turns out that the March increase in labor force participation of young men simply partially reversed a five-month slide, and their labor force participation remains far below its long-run trend. However, what happens with the labor force participation of young men in April will help clarify whether the March increase was a real step in the right direction or just a one-month fluke in a volatile series.
The figure below shows the number of missing young workers (men and women combined). There is a great deal of volatility month-to-month, so looking at the long-run trend is crucial. The number of missing workers under age 25 shot up to 1.6 million between early 2007 and early 2010, and then fluctuated around that level for a year-and-a-half, before declining to its current level of 950,000 (580,000 men and 370,000 women). I should note that this calculation takes into account long-run trends in labor force participation, such as lower labor force participation of young people due to increasing college enrollment over recent decades. (The methodology for calculating the number of missing workers is described here.) But it is also true that today’s missing young workers have not been able to “shelter in school” from the labor market effects of the Great Recession. Increases in college and university enrollment rates between 2007 and 2012 were no greater than the increases seen before the recession began—and since 2012, college enrollment rates have dropped substantially. This is discussed in more depth in my latest paper, on the class of 2014.
Missing workers* under age 25, January 2006–March 2014
| Missing workers | |
|---|---|
| Jan-2006 | 230,000 |
| Feb-2006 | -20,000 |
| Mar-2006 | 70,000 |
| Apr-2006 | 150,000 |
| May-2006 | 60,000 |
| Jun-2006 | 0 |
| Jul-2006 | 50,000 |
| Aug-2006 | -160,000 |
| Sep-2006 | 110,000 |
| Oct-2006 | -40,000 |
| Nov-2006 | -120,000 |
| Dec-2006 | -200,000 |
| Jan-2007 | -120,000 |
| Feb-2007 | 50,000 |
| Mar-2007 | 90,000 |
| Apr-2007 | 380,000 |
| May-2007 | 570,000 |
| Jun-2007 | 230,000 |
| Jul-2007 | 420,000 |
| Aug-2007 | 710,000 |
| Sep-2007 | 200,000 |
| Oct-2007 | 300,000 |
| Nov-2007 | 160,000 |
| Dec-2007 | 290,000 |
| Jan-2008 | 140,000 |
| Feb-2008 | 560,000 |
| Mar-2008 | 530,000 |
| Apr-2008 | 350,000 |
| May-2008 | -80,000 |
| Jun-2008 | 190,000 |
| Jul-2008 | 210,000 |
| Aug-2008 | 300,000 |
| Sep-2008 | 270,000 |
| Oct-2008 | 360,000 |
| Nov-2008 | 620,000 |
| Dec-2008 | 470,000 |
| Jan-2009 | 760,000 |
| Feb-2009 | 500,000 |
| Mar-2009 | 630,000 |
| Apr-2009 | 540,000 |
| May-2009 | 660,000 |
| Jun-2009 | 670,000 |
| Jul-2009 | 770,000 |
| Aug-2009 | 940,000 |
| Sep-2009 | 1,170,000 |
| Oct-2009 | 1,410,000 |
| Nov-2009 | 1,360,000 |
| Dec-2009 | 1,460,000 |
| Jan-2010 | 1,640,000 |
| Feb-2010 | 1,510,000 |
| Mar-2010 | 1,470,000 |
| Apr-2010 | 1,240,000 |
| May-2010 | 1,400,000 |
| Jun-2010 | 1,680,000 |
| Jul-2010 | 1,540,000 |
| Aug-2010 | 1,360,000 |
| Sep-2010 | 1,610,000 |
| Oct-2010 | 1,440,000 |
| Nov-2010 | 1,370,000 |
| Dec-2010 | 1,650,000 |
| Jan-2011 | 1,460,000 |
| Feb-2011 | 1,570,000 |
| Mar-2011 | 1,480,000 |
| Apr-2011 | 1,580,000 |
| May-2011 | 1,700,000 |
| Jun-2011 | 1,720,000 |
| Jul-2011 | 1,780,000 |
| Aug-2011 | 1,480,000 |
| Sep-2011 | 1,370,000 |
| Oct-2011 | 1,220,000 |
| Nov-2011 | 1,290,000 |
| Dec-2011 | 1,380,000 |
| Jan-2012 | 1,600,000 |
| Feb-2012 | 1,390,000 |
| Mar-2012 | 1,470,000 |
| Apr-2012 | 1,520,000 |
| May-2012 | 1,410,000 |
| Jun-2012 | 1,310,000 |
| Jul-2012 | 1,310,000 |
| Aug-2012 | 1,690,000 |
| Sep-2012 | 1,480,000 |
| Oct-2012 | 1,220,000 |
| Nov-2012 | 1,220,000 |
| Dec-2012 | 1,210,000 |
| Jan-2013 | 1,110,000 |
| Feb-2013 | 1,300,000 |
| Mar-2013 | 1,510,000 |
| Apr-2013 | 1,320,000 |
| May-2013 | 1,300,000 |
| Jun-2013 | 1,040,000 |
| Jul-2013 | 1,190,000 |
| Aug-2013 | 1,350,000 |
| Sep-2013 | 1,080,000 |
| Oct-2013 | 1,270,000 |
| Nov-2013 | 1,300,000 |
| Dec-2013 | 1,290,000 |
| Jan-2014 | 1,360,000 |
| Feb-2014 | 1,480,000 |
| Mar-2014 | 950,000 |
* Potential workers who, due to weak job opportunities, are neither employed nor actively seeking work, and are thus not reflected in the unemployment rate
Source: Authors' analysis of Toossi (2007) and Current Population Survey public data series
Paul Ryan Still Doesn’t Understand the Scale of the Poverty Problem
Earlier today, House Budget Committee Chair Paul Ryan (R-Wis.) continued his study of poverty with a hearing entitled, “A Progress Report on the War on Poverty: Lessons from the Frontlines.” Featuring witnesses from several poverty-fighting non-profits, Rep. Ryan styled the hearing as a “listening exercise” to hear about the strategies these charities and non-profits use to help alleviate poverty on the local level.
While it is admirable that Rep. Ryan gave a platform for community leaders to share their stories, he seems to have no sense of the scale of the problem before him. Indeed, Rep. Ryan’s veneration for the work of private charity is quite the contrast with his opinion of the federal government’s anti-poverty programs, which he has disparaged as “duplicative,” “complex,” and “ineffective.” However, for as much good work as it does, private philanthropy has well-known biases, as charitable donations tend to flow disproportionately to more glamorous causes, and often dry up during business cycle downturns—just when they’re needed most. In short, while individual charities and non-profits do incredible work to help our communities, they lack the ability to create widespread change; only the federal government has the resources to help alleviate poverty at the scale that is required.
Austerity’s Legacy: GDP is Far Below Potential, and Not Climbing
Today’s GDP report was, not to get too technical, just crummy nearly across-the-board. Consumption spending was up, but the personal savings rate fell, meaning that the increased consumer spending was not financed by good wage and income growth, but by reducing savings. Exports fell sharply (hard to blame on bad U.S. weather) while most categories of investment fell as well. Core price deflators also ticked down again, signaling that economic slack is surely not shrinking.
One of the only bright spots in the report was that government spending is shifting from a large drag on growth to roughly neutral. This is what qualifies as decent news in today’s low expectations economy, I guess. We’ve tried to illustrate the historically large drag that austerity has put on the current recovery, in a bunch of ways. Here’s another try.
The figure below shows the simple percentage point contribution to GDP growth from government spending. Two things stand out.
Proposed Cuts to Detroit Pensions No Cause for Rejoicing
The tentative deal reached between Detroit Emergency Manager Kevyn Orr and the Detroit pension funds has been characterized in the New York Times and other news reports as a victory for workers and retirees. This is true only in the sense that much worse cuts had been threatened.
The confusion stems from a tendency to treat cost-of-living adjustments (COLAs) as icing on the cake rather than necessary for subsistence, when in fact workers would be better off with equivalent across-the-board cuts than an erosion in the real value of benefits. COLA cuts take a bigger bite as retirees age and face dwindling savings and higher out-of-pocket health costs (exacerbated, in this case, by proposed cuts to retiree health benefits).
The deal would initially cut the pensions of general employees by 4.5 percent and eliminate these workers’ 2.25 percent annual COLA. Police and firefighters would see no initial cuts and would retain a 1 percent annual COLA. Though the uniformed services face a smaller cut in percentage terms (a reduction of roughly 15 percent in real lifetime benefits as shown in the table below), they lose more in dollar terms because they tend to retire younger and have larger pensions. Because Detroit police and firefighters aren’t covered by Social Security, their real incomes in retirement may be nearly as affected as those of general employees, who face larger cuts in percentage terms but at least will receive inflation-adjusted Social Security benefits.
Get Rid of Job Killing Tax Extenders; Pay For the Rest
The House Ways and Means Committee plans to mark up six bills tomorrow that would make six temporary tax breaks—part of an annual tax extenders package—permanent. The justification being given for making these provisions permanent is they will “help businesses grow the economy and create jobs.” The resulting permanent increase in budget deficits, however, could eventually reduce economic growth and job growth if the debt-to-GDP ratio becomes large enough.
More importantly, two of the provisions cannot be said to boost even short-term economic growth. The CFC look-though rule (H.R. 4464) and the active financing exception (H.R. 4429) help multinational corporations avoid paying U.S. taxes and create incentives to move jobs and investments overseas. Making these two tax provisions permanent would eliminate jobs and increase budget deficits by $80 billion over the next 10 years.
The six tax provisions that Chairman Camp wants to make permanent are part of a group 50 to 60 temporary tax provisions that are routinely extended for another year or two, and which typically reduce tax revenues by about $100 billion over 10 years. Like other temporary measures, such as extending unemployment insurance for unemployed workers during times of weak labor demand, the budget cost of the tax extenders package is rarely offset. (Mr. Camp notes that paying for the tax extenders package “is not consistent with recent practice by Congress.”) But the House GOP is now demanding that a temporary extension of unemployment insurance (budget cost of about $10 billion) be fully paid for, but not the permanent extension of selected tax extenders (budget cost of $310 billion).
With this markup, committee chairman Dave Camp appears to have morphed from a serious legislator trying to piece together a revenue-neutral reform of our byzantine tax system to a politician who talks out of both sides of his mouth—he supports fiscal responsibility but is proposing to make six temporary business tax breaks permanent and in doing so increase federal deficits by over $300 billion over the next 10 years. If he were truly concerned about long-term fiscal challenges, he would offset these tax breaks by permanently closing other tax loopholes, and he would not be working to make provisions that kill jobs a permanent part of the tax code.
Three-Fourths of Job Injuries on Farms Go Unreported
Today is Workers Memorial Day, a day of remembrance for the thousands of workers who die on the job each year, and the tens of thousands whose lives are shortened by illness or disease contracted at work. It’s easy to see the dangers of construction work, or to imagine why logging would be the single most dangerous occupation. But farm work is far from most people’s minds when it comes to dangerous work. It turns out that that’s partly because so little is reported about the dangers, either to the media or to government agencies.
New research, published in the April issue of the Annals of Epidemiology, finds that approximately 77 percent of non-fatal occupational injuries and illnesses in agriculture go unreported. Such a large undercount likely results in fewer private and public resources devoted to ameliorating agricultural safety and health threats.
The Bureau of Labor Statistics’ annual Survey of Occupational Injuries and Illnesses (SOII) estimates the number and types of nonfatal injuries and illnesses within and across all industries. Injuries include fractured bones, lacerations, severed body parts, and head trauma; illnesses include asthma, chronic obstructive pulmonary disease, and cancer. The SOII estimated there were 19,700 injuries and illnesses for crop farms and 12,400 for livestock farms in 2011. My colleagues and I estimated that the numbers of cases was actually 74,932 and 68,504, respectively, which means the SOII undercounted by 74 percent and 82 percent.
A Million Veterans Would Benefit from a Minimum Wage Increase
We ask a lot of our armed forces. They serve our country in some of the most dangerous environments and difficult situations faced by any American. Yet having endured those experiences, too many veterans returning to civilian jobs find themselves in work that barely pays enough to live on. In fact, of the roughly 10 million veterans working in America today, 1 in 10—that’s one million veterans—is paid wages low enough that they would receive a raise if the federal minimum wage were increased to $10.10 per hour, as proposed in the Fair Minimum Wage Act of 2013.
Months ago, we released an analysis showing that increasing the federal minimum wage to $10.10 would lift wages for 27.8 million workers nationwide. The one million veterans that would benefit from such an increase are a relatively small segment of this larger group, but the fact that a million former service members would benefit from raising the minimum wage should dispel the persistent myth that raising the minimum wage only benefits teenagers and students from affluent families. Not only is this an inaccurate description of the typical low-wage worker, but the veterans that would get a raise look nothing like this affluent teen stereotype and are, in some ways, noticeably different from the larger population of would-be beneficiaries from a minimum-wage increase. (See the table below for details, or click here for a pdf.)
New BLS Data Show College Enrollment Rates of Recent High School Grads Have Been Dropping Since 2009
In this recent post, I pointed out that after increasing for decades, college enrollment rates have dropped since 2012. The data in that post are college/university enrollment rates for people age 20-24—I used those ages because they are very easy to get from the BLS site.
This morning, BLS released their annual report on college enrollment and work activity of recent high school grads. The figure shows college enrollment of recent high school graduates (specifically, it’s the college enrollment rate in October 2013 of people age 16-24 who graduated from high school earlier the same year). The data are volatile year to year, but they show that college enrollment of brand new high school graduates has been dropping since 2009. This is a worrisome trend, particularly to the extent that it is due to students being unable to enter college because the lack of decent work in the weak recovery meant they could not put themselves through school or because their parents were unable to help them pay for school due to their own income or wealth losses during the Great Recession and its aftermath. Falling college enrollment indicates that upward mobility may become more difficult for working class and disadvantaged high school graduates.
In a couple weeks, we will release our annual “Class of …” report, which will detail the labor market prospects of new high school and college graduates. (Here is last year’s report.) In this report, we investigate the drop in enrollment, including the fact that dropping enrollment rates at a time when employment is not increasing very strongly means that a larger share of young people are “disconnected”—i.e. not enrolled and not employed. This represents an enormous loss of opportunities for this cohort that will have long-term scarring effects on their careers.
A Key Lesson From Piketty: You Can’t Reverse Inequality or Provide Broad-Based Prosperity While Ignoring the Top 1 Percent
EPI was lucky enough to co-host the first American event for Thomas Piketty to discuss his new book Capital in the Twenty-First Century (video from the event is online if you missed it). Piketty’s book is getting justly deserved praise, and his work suggests a dizzying array of political and policy implications.
Chief among them is something that remains surprisingly controversial, even among those genuinely concerned with the rise in American inequality: the idea that ameliorating this inequality and providing decent living standards growth, for the bottom and middle requires braking income growth at the very top.
The logic is pretty simple: given overall income growth, more income being claimed by the very top must necessarily come at the expense of families at the bottom and middle. So, when the top 1 percent’s share of income doubled between 1979 and 2007, this meant that there was much less room to provide income growth to the bottom and middle. The objection to this logic is, of course, that income growth is not given, and attempts to steer more income growth away from the top and towards the bottom and middle would have just led to slower overall growth.
But there are plenty of reasons to doubt this. Let me start with an appeal to authority: Piketty put it pretty bluntly in the EPI/WCEG event yesterday, saying “we don’t need 19th century inequality to generate 21st century growth.” And, appealing to the same authority, but this time relying on empirical evidence, Piketty and co-authors have shown that cutting taxes for the top 1 percent actually increases their own pre-tax income growth and reduces income growth at the bottom.
Thinking About Death and Taxes on April 15
“’Tis impossible to be sure of any thing but Death and Taxes” -Christopher Bullock, The Cobler of Preston, 1716
“Things as certain as Death and Taxes” -Daniel Defoe, The History of the Devil, 1727
“[N]othing can be said to be certain, except death and taxes” -Benjamin Franklin, Letter to Jean-Baptiste Leroy, 1789
Every year on Tax Day, there are always jokes about death and taxes, and questions on which one is preferable. (For example, recall the character in the Hitchhiker’s Guide to the Galaxy series—Hotblack Desiato—who spent a year dead for tax purposes.) Almost no one, however, talks about the group of taxpayers who worry about neither death nor taxes: corporations.
By the end of the day, almost every individual taxpayer will be reminded of the certainty of taxes (while death has been postponed for another year). 30 percent of taxpayers fall into the 15 percent tax bracket. They can expect to pay about $3,000 in federal income taxes, on an adjusted gross income of almost $50,000. (This does not count the all the other taxes paid such as Social Security payroll taxes and state and local income taxes.) These taxpayers face a 15 percent statutory tax rate and paid a bit over 6 percent of their AGI in federal income taxes.