January is the month for “benchmark revisions,” which is when BLS revises its sample-based estimates to match other comprehensive data sources. Preliminary estimates of the benchmark revision, released last fall, showed that with this benchmark revision, the over-the-year change in employment between March 2012 and March 2013 is likely to be revised downward by 124,000. This means that we are likely to find that the gap in the labor market due to the Great Recession and its aftermath is larger than we think it is. Right now, the gap is estimated to be 7.7 million, if the preliminary estimates hold, the gap is instead over 7.8 million.

Another thing happening with this benchmark revision is a code change that moves nearly half a million in employment from the Private Household industry—which is not counted in the establishment survey—to the Education and Health Care Services industry, which is. This means the level of employment in the establishment survey will increase to reflect this coding change. I checked with BLS and they reported they will be revising employment, hours, and wage data back to 1979 to reflect this change.

The household data (which is where the unemployment rate and the labor force participation rate come from) will also be affected by new population controls, but in accordance with standard practice, earlier household data will not be revised to reflect these changes. This means that if you want to know the change in unemployment and labor force participation between December and January, you can’t look at the regular published data, and instead must look at the extra information provided, which will show the over-the-month change after removing the effect of the new controls. Look to tables B and C here to see what information was provided last year at this time.

The U.S. Court of Appeals for the Third Circuit ruled yesterday that the Department of Labor’s H-2B visa wage methodology regulation is valid, handing a defeat to a coalition of employers who want to keep wages low for employees in forestry, seafood, hospitality, landscaping and other physically demanding jobs.  In Louisiana Forestry Association v. Secretary, U.S. Department of Labor, the court held that the Immigration and Nationality Act gives the Department of Homeland Security the authority to rely on the Labor Department’s decisions about whether U.S. workers are available for jobs that employers want to offer to foreign workers, and whether U.S. workers will be adversely affected if foreign workers are admitted to the U.S. to do particular jobs.

The Labor Department issued a regulation in 2011 that sets out the most important element for making that determination: setting a prevailing wage rate for each occupation and requiring businesses to advertise jobs to workers in the United States at that rate before hiring foreign workers. The court held that the regulation is valid and rejected the businesses’ argument that the Department of Labor cannot set wages at a level high enough to attract U.S. workers.

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The employment data last month showed that just 74,000 payroll jobs were added in December. It is unlikely that the underlying job growth rate is this weak, so the January data, which comes out on Friday, should look substantially better. However, beating 74,000 jobs is a very low bar. To get back to pre-recession labor market conditions in three years, we would need to be adding 285,000 jobs per month. It’s more likely that we’ll see something closer to the average number of jobs added per month in 2013, which was 182,000. At that rate it will take well over five more years to get back to health in the labor market.

Another thing to watch is the labor force participation rate (LFPR), which has dropped from 66.0% to 62.8% over the last six years.  My estimates suggest that about one-quarter of that drop is due to long-run factors like baby boomers hitting retirement age and increasing college enrollment of young people, and had nothing to do the Great Recession or the weak recovery. That means about three-quarters of the drop in LFPR is due to potential workers either dropping out of, or never entering, the labor force because job opportunities are so weak.

The labor force may have dropped further in January, due to the expiration of federal unemployment insurance benefits in December. Careful research (here and here) shows that these benefits were keeping people in the labor force. To receive unemployment insurance, workers must be actively seeking work, so receiving UI was giving people a reason to keep looking for work even though job prospects are bleak. (This is actually a good thing because it may increase the share of displaced workers who ultimately find work). A drop in labor force participation due to the expiration of UI extensions would likely lead to another “bad” kind of drop in the unemployment rate—one that comes from potential workers giving up looking for work, not potential workers finding work. This would compound an already serious issue—there are already 6 million “missing workers,” who, because of weak job opportunities, are neither employed nor actively seeking a job. If these missing workers were in the labor market looking for work, the unemployment rate would be 10.2% instead of 6.7%.

The Congressional Budget Office’s new 10-year Budget and Economic Outlook, released this morning, is truly the bearer of bad news. Compared with CBO’s previous outlook, released last May, spending over the next decade is projected to fall, revenues are projected to dramatically fall, and economic growth is projected to plummet.

On the spending side, a combination of policy changes and slower projected economic growth has led to a downward revision of $594 billion in projected outlays over the next decade. And on the other side of the ledger, projected federal revenues have decreased by $1.4 trillion, all due to newly anticipated slower GDP growth and lower inflation (not to mention a further $200 billion decrease in revenues due to technical corrections). The result is almost a $1 trillion increase in federal deficits over the next ten years.

As this morning’s CBO numbers make clear, economic growth is the largest driver of federal revenue, and hence, the key to bringing down deficits. In the short-run, spurring more growth through fiscal policy is easy from an economic perspective—allow the budget deficit to rise to finance spending that spurs aggregate demand in our still demand-starved economy, fostering a full recovery from the Great Recession. In the longer run, improving overall productivity and growth is key. As the CBO report states, “if the growth of real GDP and taxable income was 0.1 percentage point higher or lower per year than in CBO’s baseline projections, revenues would be roughly $270 billion higher or lower over the 2015-2024 period.”

So how did we get in such dire straits regarding growth?

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For years, health and labor economists have studied the inefficiencies created by the fact that most Americans under 65 get health insurance through their job. One potentially large inefficiency is “job lock”—people making decisions to take and/or keep a particular job because without it, they wouldn’t have affordable health insurance. The research literature tells us that job lock occurs among workers who would otherwise be entrepreneurs, those who would rather retire, and full-time workers who would rather work part-time, as well as for a host of other reasons.

The value of the employer-sponsored health insurance system is two-fold (and please bear with the oversimplification). First, it pools risk and charges the same price for workers within an organization regardless of their or their dependents’ health status. Second, it’s far better than what’s historically been offered in the individual health insurance market (e.g. denied policies, excluded conditions, discriminatory pricing, etc.). Enter the Affordable Care Act, which has now established state-based health insurance exchanges that significantly reform the individual insurance market and make it possible for many workers and their families to find affordable health insurance coverage outside the employment-based market.

Which brings us to today. The Congressional Budget Office released its Budget and Economic Outlook, and, in Appendix C, one can find an expanded discussion of the labor market effects of the Affordable Care Act.

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The U. S. Senate is about to vote again on providing unemployment compensation for millions of jobless people who are still looking for work after exhausting their regular state unemployment benefits, which usually happens after 26 weeks. The emergency program, which had been in place since the recession hit in 2008, expired at the end of last year. More than 1.6 million people who would have gotten some help have been cut off, left without the income they desperately need to pay their bills and put food on the table. The Senate is expected to vote tomorrow on a brief, three-month extension.

Senators in several states with very high shares of people who have been jobless for more than six months have not signaled which way they will vote: Sen. Kelly Ayotte in New Hampshire (31.6% of the unemployed are long-term), Sen. Rob Portman of Ohio (34.6% of the jobless are long-term), Sen. Ron Kirk of Illinois (41.3% of the unemployed are long-term), and Sen. Dan Coates of Indiana (29.1% of the unemployed are long-term). The unemployment rate in Illinois (8.6%), in Indiana (6.9%), and Ohio (7.2%), is above the national average.

Even though weekly unemployment insurance benefits average less than $300 a week, they make a huge difference to families that might otherwise have no income at all. They can also have a powerful, positive impact on the economy. EPI’s Heidi Shierholz and Lawrence Mishel estimate that continuing the full program of emergency long-term unemployment compensation would have supported more than 300,000 jobs in 2014. The much-reduced program the Senate will debate tomorrow will affect far fewer workers and have a smaller, but still positive impact on jobs and the economy.

A blog post by researchers at the Federal Reserve Bank of New York has been making the rounds today, arguing that much of the decline in the employment to population ratio (EPOP) since the Great Recession began is actually reflecting changing demographics of the workforce. The researchers (Samuel Kapon and Joseph Tracy) argue that the overall U.S. EPOP in recent years should have been expected to fall relatively rapidly simply because so many U.S. workers were reaching typical retirement ages and were voluntarily leaving paid work. Given this, they claim that the overall EPOP is a misleading labor market indicator if it’s large fall and subsequent non-recovery is taken as evidence that a demand shortfall continues to keep aggregate demand further beneath the economy’s productive potential than other labor market measures—like the overall unemployment—are currently indicating.

I don’t think this is right.

First, as Matthew Klein has noted on Twitter, the same reasoning doesn’t apply if we just look at the EPOP for prime-age working adults—those between 25 and 54. It seems hard to imagine why lots of these workers would be voluntarily retiring starting right at the beginning of the Great Recession. And yet this measure shows the same sharp decline and subsequent very slow recovery as the overall measure.

Second, a key piece of the method used by Kapon and Tracy to estimate the “trend” EPOP actually answers the question that should be answered by the data. This is how they describe one aspect of their method for constructing the trend:

“… we adopt the normalization that over the thirty-one years in our data sample any business-cycle deviations between the actual and the adjusted E/P ratios will average to zero.”

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After two years of debate and foot-dragging, the House and Senate have finally agreed on a farm bill—one that comes with a ten-year price tag of $956 billion. Despite being widely referred to as “the farm bill,” most (almost 80 percent) of the spending in the Agriculture Act of 2014 (its official name) is actually for nutrition programs. And most of that 80 percent goes to fund the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps).

This isn’t to say the other $200 billion in the farm bill—the sections that more closely relate to actual farms—is not worth commenting on. It is. Among other controversies, a vastly disproportionate share of crop insurance subsidies —which were significantly increased in the bill—accrues to the largest (and richest) farm operators.

The big controversy within the bill, however, is the $8.5 billion cut from SNAP over the next decade. The cuts come from a tightening of the eligibility and benefit rules. Many of these are small-bore: prohibiting deducting the costs of medical marijuana when determining a household’s discretionary income and thus its level of SNAP benefit, disallowing households with large lottery or gaming winnings from receiving SNAP benefits, ensuring violent ex-felons receive benefits only if they follow the terms of their parole, and so on. (CBPP has an excellent rundown of such provisions.)

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Since the end of the Great Recession, Maryland’s economy has slowly healed. The state has gained back all of the jobs lost in the downturn, and Maryland’s unemployment rate of 6.1 percent is down significantly from its high of 8.0 percent in early 2010. Yet despite this improvement, there are still considerable challenges facing Maryland workers and families. Population growth since December 2007 means that the state needs to create more than 180,000 jobs just to get back to the unemployment rate preceding the recession.1 Furthermore, wages have fallen significantly for the majority of Maryland workers, particularly for low-wage workers—real wages at the 20^th percentile declined by a nation-leading $1.24 since 2009. Raising Maryland’s minimum wage would combat these downward wage trends and put much-needed money in the pockets of low-income workers who are likely to spend that additional income right away. Given current economic conditions, where tepid consumer demand is holding back employment growth, this additional consumer spending would provide a modest, but meaningful boost to Maryland’s economy.

The Maryland Minimum Wage Act of 2014 (SB 331 and HB 295), similar to a proposal we analyzed last year, would raise Maryland’s minimum wage from the current $7.25 per hour to $10.10 per hour by 2016. It would also increase the tipped minimum wage from 50 percent to 70 percent of the full minimum wage, and index both wage rates to rise automatically with the cost of living. The data show that this proposal would improve the well-being of thousands of working families in Maryland, while injecting almost half a billion dollars into the economy.

Download the PDF version of this analysis

This analysis provides an overview of the economic impact and demographic details of the workers who would benefit from the proposed increase in the minimum wage, examining their gender, age, race and ethnicity, educational attainment, work hours, family composition, and other characteristics. It also details the estimated economic activity and job-creation impacts that would result from raising the Maryland minimum wage to $10.10.

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In his State of the Union Address, President Obama said that because “ninety-eight percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs.” This suggests that small businesses will benefit most from trade, but that is not the case. In fact, two-thirds of U.S. exports are generated by multinational companies (domestic and foreign) operating in this country, as shown in the figure below. These massive firms also generated more than two thirds of U.S. imports and an even larger share of the job-destroying U.S. goods trade deficits.

And therein lies the not so hidden underbelly of international trade and investment deals that the president has consistently refused to discuss: job displacing imports. A surge of imports from low wage countries has driven down wages for working people in the United States. In fact, imports are responsible for 90% of the growth in the college/noncollege wage gap since 1995.

Those same multinational companies were the biggest supporters of trade and investment deals with Mexico, Korea and China, deals that have cost U.S. workers nearly four million jobs in the past two decades. Now, the multinationals are demanding that the president complete trade deals with nearly a dozen countries in Asia and Latin America (the TPP), and a new trade and investment deal with Europe (the TTIP) that will open our markets to goods made by millions of low wage workers in Eastern Europe.

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