President Obama hit all the right notes in his speech today addressing income inequality. I was pretty tough on him last July in a similar speech where I said he was better at the diagnosis of the problem than in proposing solutions. In particular, I pointed out he failed to acknowledge that to generate expanded opportunity and a broader middle class requires broad-based wage growth. After all, a good working definition of the middle class is people and families that rely almost exclusively on the income from work—wages and benefits. They don’t have income from owning stocks or other financial assets and don’t receive much ‘transfer income’ from the government.

Today, the president did better; he said “growth alone does not guarantee higher wages and incomes” and said, “the third part of this middle-class economics is empowering our workers.” He followed this with recommendations to strengthen collective bargaining, achieve pay equity for women, rebuild manufacturing and raise the minimum wage. I appreciate that. He noted the need to continue to combat racial discrimination while also asserting the increased prominence of class as a determinant of well-being. Providing more skills and better education is always critical for social mobility and improved productivity. He urged a strengthening of our social safety net, including retirement savings and Social Security. He called for maintaining the unemployment benefits needed to protect the long-term unemployed. And, he said that the Affordable Care Act was an important cornerstone in providing economic security, which it surely is. These are the basic ingredients needed to generate a different set of outcomes than the disheartening ones produced over the last few decades. Bravo!

It was nice to see the President use our research on the pay disparity between CEOs and typical workers (273:1) and the wealth disparity between the top one percent and the median household (288:1).

Sure, there are a few misguided distractions in the speech—more exports, but nothing about trade deficits which involves imports, the need for corporate tax reform—but no reason to dwell on those items at this moment. You always want to see improvement and this speech definitely improves on the July speech. It’s great that he said ”our number one priority is to restore opportunity and broad-based growth for all Americans” and an A+ speech would have inserted ‘wage’ before growth.

In his New York Times column this morning, David Brooks uses a garden metaphor to instruct us on the different functions of the public and private sector. He writes that the government is like the “stem,” providing us with the essential but rather uninteresting infrastructure to allow the “flower” of private life to bloom. Thus, we need parks, public transportation and public safety, but people can provide their own picnic.

Putting aside that there might be other things we need for a picnic—such as safe food and a job with a day off—Brooks’ division of responsibility is reasonable. But the political context of his column is nonsense. What we face today is not some theoretical ignorance of the right balance between things that are private and things that are public; all but the most libertarian understand the public’s role in providing “stem” functions. The reality is that everywhere we look, essential public functions are being undermined, if not destroyed, by privatization.

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Apple’s ugly labor problems aren’t limited to its Foxconn factories, and they aren’t going away.

The labor rights group Students and Scholars Against Corporate Misbehaviour (SACOM) first exposed the wave of employee suicides at Apple’s Chinese contractor, Foxconn, and the grueling conditions in which hundreds of thousands of employees work. SACOM has regularly revealed Apple’s failure to abide by its so-called code of conduct, and along with another watchdog group, China Labor Watch, has monitored Apple’s failure to live up to its announced intention to clean up sweatshop conditions at its factories in China and to stop the use of indentured student labor.

In April, China Labor Watch reported that two more Apple/Foxconn workers had committed suicide by jumping from buildings to their death. China Labor Watch also found labor law violations at ten other Apple suppliers, including Pegatron.

Now SACOM has released a new report that details the serious labor rights violations at another Apple supplier, Biel Crystal, which reportedly makes 60 percent of Apple’s touch screens. SACOM reports that five Biel Crystal workers employed at its Huizhou factory have killed themselves since 2011. One possible cause is the stress of working horrific hours—11 hours a day, seven days a week, with only a day off in a month. This is a gross violation of Chinese labor law, which limits overtime to 39 hours a month. The Biel Crystal employees work more than twice as much overtime as the law allows.

When will American consumers wake up to Apple’s crushing exploitation of Chinese workers?

This year, EPI is delighted to join the growing ranks of nonprofits participating in Giving Tuesday.

While Americans have embraced the bargain-hunting possibilities of Black Friday, Small Business Saturday, and Cyber Monday, Giving Tuesday seeks to round out the week that follows Thanksgiving by returning to a theme of giving back. Giving Tuesday, which started last year—largely through the initiative of New York City’s 92^nd St Y—is a day to support nonprofit organizations and kick off the season of annual giving by donating to a charity of your choice.

Of course we hope you will consider a donation to EPI. But the bigger message here is to take time to give back in some way. You can share who you’re giving to and help promote the nonprofits near and dear to your heart using the hashtag #GivingTuesday.

We are deeply grateful for the contributions from supporters we receive throughout the year that fund our research and activities, including this blog. We wish you safe travels and happy holidays, from the EPI family to yours.

National average scores of students on the 2012 Program for International Student Assessment (PISA) will be released Tuesday, and we urge commentators and education policymakers to avoid jumping to quick conclusions from a superficial “horse race” examination of these scores.

Typically, The U.S. Department of Education (ED) is given an advance look at test score data by the Organization for Economic Cooperation and Development (OECD) and issues press releases with conclusions based on its preliminary review of the results. The OECD itself also provides a publicized interpretation of the results. This year, ED and the OECD are planning a highly orchestrated event, “PISA Day,” to manipulate coverage of this release.

It is usual practice for research organizations (and in some cases, the government) to provide advance copies of their reports to objective journalists. That way, journalists have an opportunity to review the data and can write about them in a more informed fashion. Sometimes, journalists are permitted to share this embargoed information with diverse experts who can help the journalists understand possibly alternative interpretations.

In this case, however, the OECD and ED have instead given their PISA report to selected advocacy groups that can be counted on, for the most part, to echo official interpretations and participate as a chorus in the official release.1 These are groups whose interpretation of the data has typically been aligned with that of the OECD and ED—that American schools are in decline and that international test scores portend an economic disaster for the United States, unless the school reform programs favored by the administration are followed.

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Last year, EPI fiscal policy analyst Ethan Pollack released a report showing that a number of revenue increases called for in the Congressional Progressive Caucus’s (CPC) annual budget could support truly significant job-creation programs. Ethan specifically estimated job gains stemming from using the revenue to support infrastructure projects.

Besides national numbers, he also broke down job-gains by every state. We decided to update these numbers with revenue estimates the last CPC budget, just to remind people that even if it is decided (mistakenly) that the budget deficit is too large and cannot be allowed to rise to support job creation programs, these programs can still be funded with progressive tax increases and create jobs (less efficiently than if funded by deficits, but still significant job creators on net).

Our call for financing deficit neutral job programs with progressive tax increases is not simply an ideological preference. Rather, progressive tax increases (i.e., raising money from high-income households and corporations) impose a much smaller drag on economic recovery than broader based increases, allowing for the greatest job gains when paired with infrastructure spending. This is an extremely well documented piece of empirical economics.

Below we have replicated the tables for revenue and job creation using updated numbers. We only show numbers for 2014 through 2016, as the job creation numbers depend on the assumption that the economy is not at full employment. Beyond 2016 it’s impossible to assess this assumption one way or the other.

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The post originally appeared on the Huffington Post.

The deeper you are in the inner sanctums of power, the slower you are to get disturbing news from the rest of the world. So, I suppose it should be no surprise that it has taken so long for a prominent member of the American policy elite to suggest openly to his colleagues that the core assumption upon which they have been managing the economic crisis might be dead wrong.

Four and a half years after the current “recovery” began, economic pain remains widespread. Wages and incomes are still falling, the share of jobless working age people has not declined, and hunger and homelessness are rising.

Yet the Washington/Wall Street message to the rest of America remains: Have patience.

True, acknowledges the official story, we’re in the slowest recovery since the 1930s. But capitalist markets always fluctuate around a long-term trend of expansion at full employment. It follows that what goes down must come up. So, after previously assuring us that a deep recession would mean a strong recovery, they now tell us the deep recession is the reason for the weak one. Anyway, the accepted wisdom continues; as long as the Federal Reserve keeps the cost of capital (i.e., interest rates) low, sooner or later the natural workings of the market will return us to pre-2008 prosperity.

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Yesterday’s NYT column by David Carr about internships doesn’t just bury the lede, it takes it hostage and heads off in the opposite direction before revealing that Carr thinks businesses ought to pay their interns and will be rewarded for it. Carr starts out by seeming to make fun of young people who think they’re too good to get someone else’s coffee and drycleaning and seems in particular to have no patience for an intern who moved to New York to work for Vogue only to find herself being abused and undervalued—and crying into her pillow at night. He argues that lawsuits enforcing interns’ right to be paid might be ill-conceived.

But the column takes an abrupt turn when Carr describes the experience of The Atlantic Media, which ended its practice of hiring unpaid interns soon after the Labor Department issued a Fact Sheet declaring most unpaid internships at for-profit companies illegal. The Atlantic began paying its interns (Carr doesn’t mention that it provided backpay to previous interns who had been unpaid) rather than doing away with internships altogether. It created year-long fellowships involving mentoring and education, substantive work, and honest compensation. Far from suffering financially, the company has thrived. The fellows are diverse, smart, creative, and bring new energy to the company.

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Huffington Post reports a recent floor speech where Sen. Elizabeth Warren (D-Mass.)  condemned the notion that we ought to be cutting back on Social Security benefits rather than expanding them:

“Sen. Elizabeth Warren (D-Mass.) recently joined the push to increase Social Security benefits, saying the program can be kept solvent for many years with “some modest adjustments.”

“The suggestion that we have become a country where those living in poverty fight each other for a handful of crumbs tossed off the tables of the very wealthy is fundamentally wrong,” Warren said in a Senate floor speech on Monday. “This is about our values, and our values tell us that we don’t build a future by first deciding who among our most vulnerable will be left to starve.”

She added, “We don’t build a future for our children by cutting basic retirement benefits for their grandparents.”

I agree with Warren: It’s morally wrong to cut Social Security benefits when seniors are already struggling and the generations coming behind us will have fewer pensions and lousier savings in their 401(k)s, if they have any savings at all.  We are a wealthy nation, but our wealth is being shifted away from the majority and into the pockets of a smaller and smaller slice of upper income earners and rich families.  As EPI’s State of Working America reveals, from 1983 (when the last major Social Security reform was enacted) through 2010, the wealth of the bottom 60 percent of Americans actually declined.  Even as the nation’s wealth increased by 63 percent, the bottom 60 percent of families were made poorer because a range of policies froze their wages, shipped their jobs overseas, lowered the minimum wage (after adjustment for inflation), and indebted them by raising the price of education.

Further, as much as I agree with Sen. Warren on the merits and understand why she felt the need to push back on the “grandparents vs. grandchildren” framing, I don’t think she went far enough in her argument here—because it is actually the grandchildren who are really the most at risk. Maya MacGuineas and Alan Simpson pretend that if we don’t cut “entitlements” (earned benefits) like Social Security now, we will somehow bankrupt our grandchildren. So their solution is….to cut the grandchildren’s income. Raising the retirement age for the generations coming behind us means cheating them, cutting their benefits when we should be raising taxes now to fund their future benefits.  They are the ones who will lose the ability to retire while they can still enjoy it. They are the janitors, cashiers, factory workers, construction workers, and nurses’ aides who will be forced to work even longer in physical jobs or see their benefits cut to levels even closer to poverty. Already, the average benefit is just a little more than the poverty threshold, $14,760 vs. $11,490.

Besides being morally wrong, cutting Social Security is economically incoherent. As EPI has shown repeatedly, retirement insecurity is growing and essentially every “leg of the retirement stool” besides Social Security is failing American workers and retirees. In short, the next generations will need a strong Social Security system more than ever. If they are to have what they need, Social Security must be expanded, not cut back. Its funding must be shored up by scrapping the cap, the arbitrary limit that lets the top earners escape taxation on salaries over $113,700 a year, while the bottom 90 percent pay on every nickel they earn. Additional benefits will require higher payroll taxes, but those taxes will be a fair price for better financial security for the elderly. For some details on this, see Monique Morrissey’s presentation at the National Academy for Social Insurance from earlier this year.

The debate over “secular stagnation” started by Larry Summers and Paul Krugman continues on. Contributions from Jared Bernstein, Dean Baker, and Daniel Davies are worth reading (as are plenty I’m missing, for sure).

The root question being discussed is whether or not the shortfall in aggregate demand that drove the Great Recession and continues to depress the U.S. economy (and other advanced economies) is something that will afflict us for a long time, and if so what to do about it.

Historically, the prospect of demand shortfalls lasting a decade is not something that worried macroeconomists. The general assumption was that economies were pretty resilient, and so long as the Federal Reserve cut short-term interest rates as downturns loomed, recessions would be short and recoveries rapid. And for recessions in the U.S. before 1990, that seemed borne out by the data. Yet the last three recoveries have been slow—and each one slower than the last. And the recovery following the 2001 recession really only happened when an enormous asset bubble in housing pumped hundreds of billions of dollars of demand into the economy, and even with this enormous (and ephemeral) boost, the recovery was still anemic. Hence the concerns over “secular stagnation,” or, demand shortfalls that linger on for a long time.

Yesterday’s addition to all of this, from the BBC, discusses an implicit debate between Krugman and Joseph Stiglitz about whether or not the inequality is a key influence depressing demand and making recovery so hard.

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