As The Huffington Post has reported, Senator Bernie Sanders (I-Vt.) is introducing three amendments to the Senate’s comprehensive immigration bill (S.744). Two are intended to create and open up jobs for young people, and the third would prohibit large companies that have announced mass layoffs from hiring temporary foreign workers. Sanders is rightly concerned about youth unemployment (which averaged 16.2 percent nationwide last year, and 13.1 percent in Vermont) and the massive expansion of current temporary foreign worker programs and the creation of new ones in the Senate bill. He’s also correct to see the connection between these two phenomena.

On the Senate floor Tuesday, Sanders discussed the inconsistency between the country’s persistently high youth unemployment and the Summer Work Travel (SWT) program. The SWT program was created to facilitate cultural exchanges, by allowing foreign college students to work and travel in the United States. But over time it has become a large guestworker program run by the State Department without the necessary basic rules to protect workers. Unlike other programs that allow foreign residents to work here temporarily, the SWT program does not require that guestworkers be paid a prevailing wage, or require employers to first recruit, or even advertise, jobs to U.S. workers before they can hire guestworkers on J-1 nonimmigrant visas.

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In his latest Bloomberg column, Ezra Klein has a nice feature of my recent paper on income inequality growth in the United States and the role of tax policy. Klein’s dichotomy of the income inequality debate splits the “fatalists” from the “redistributions,” with differing views on government’s role in widening income inequality. Downplaying government’s complicity and scope for policy, Klein’s fatalists chalk up income inequality growth to market forces and factors like globalization, technological change, and job polarization. (See Larry Mishel, John Schmitt, and Heidi Shierholz refute this latter argument.) The redistributionists, on the other hand, believe that government policy has contributed to income inequality and policy should be reoriented to instead push back against post-tax, post-transfer income inequality growth.

With regard to the fatalists, one cannot dispute on objective grounds that changes in federal tax and transfer policies between 1979 and 2007 have exacerbated post-tax, post-transfer income inequality growth, up 33 percent over this period, versus market-based income inequality growth of 23 percent (both measured by the Gini index). Moreover, the role of tax policy changes in exacerbating post-tax and post-transfer inequality is understated in these measures because of the phenomenon of “bracket creep”—top incomes rise faster than the inflation adjustment for tax brackets, subjecting more income to taxation at top rates—which innately increases the redistributive nature of the tax and transfer system over time. But while tax and transfer policy should have been pushing harder against inequality growth instead of exacerbating it, there are practical limits to how much increased redistribution can mitigate strong market trends.

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So some papers that will make up a symposium in the summer issue of the Journal of Economic Perspectives about the rise of the top 1 percent of incomes are hitting the airwaves. Larry Mishel and I are contributing one as well, The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes. Greg Mankiw mounts a self-described “defense” of the top 1 percent here (PDF), Miles Corak writes about the implications of inequality for mobility here (PDF), and Alvaredo, Atkinson, Piketty and Saez examine the top 1 percent in historical and international perspectives here (PDF).1

Our argument (shocker) is that the rise of the top 1 percent of incomes is not simply the result of a competitive, well-functioning market rewarding skills and capital to the precise degree necessary to elicit their supply. Instead, lots of the rise in top 1 percent of incomes is about the creation and/or redistribution of economic rents.

We highlight the two occupations that dominate the top 1 percent—corporate executives and finance professionals—and review the voluminous data and research literature that strongly suggests that these occupations exercise substantial market power over their own pay, and that their pay exceeds the contribution they make to economic output. We also provide new evidence that CEO compensation has grown far more than that of other top wage earners, those in the top 0.1 percent of the wage structure. The current pay gap between CEOs and other top earners is much greater than during the 1947-79 period and has grown far faster than the college-high school wage premium since 1979. This is evidence that directly contradicts the claim that CEO pay has been largely set by the market for talent.

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Who in America is willing to work 100 hours a week without getting paid for those brutally long hours (not to mention without the time-and-a-half pay required for overtime)? The answer should be, “no one.” But for undocumented immigrants, who don’t have the right to take above-board, normal jobs, almost any job, no matter how abusive or how low the pay, is better than nothing—especially if they owe debts to criminal smugglers who know where their families live.

According to the New York Times, fourteen 7-Eleven franchises have been charged with raking in $180 million since 2000 in illegal profits from underpaying employees, and another 40 franchises are under investigation. Employees who should have been paid as much as $1000 a week were paid only $300-$500 while being forced to live in unregulated, substandard boardinghouses operated by the stores’ owners.

It took 13 years for an employee to finally complain about wage theft and call in the authorities to break up the illegal operation. That’s a good measure of the fear and intimidation that keeps the undocumented in the shadows and lets greedy employers get away with paying sweatshop wages.

Clearly, legalization of the undocumented will improve the labor market in the United States by bringing abused workers out of the shadows and starting the process of lifting wages. However, this will work better and faster if Congress also provides the right enforcement resources, including the Labor Department wage and hour inspectors and attorneys needed to investigate and prosecute cheating businesses and the criminals who run them. The U.S. spends $18 billion a year on border security and immigration enforcement, and will spend even more if the Senate’s proposed comprehensive immigration law, S.744, is enacted. It seems clear to me that some of those funds should be redirected to the Labor Department and its never-ending battle against wage theft and exploitation.

The abuse of temporary foreign workers in the United States has been well documented, from the Bracero program of the 1960s to the recent cases of seafood workers in Maryland (PDF) and Louisiana, fast-food workers in Pennsylvania, and forestry workers in Georgia. The wrongs to workers are sometimes nothing short of criminal: wage theft, violence and threats of violence, even peonage.

But harm is done to U.S. workers, too, before temporary “guest” workers are ever brought to the U.S.  The businesses that could and should be recruiting and hiring workers here in the U.S. at decent wages are shunning them to hire more exploitable, more desperate foreigners. The law and regulations that govern guestworker programs, most notably the H-2B non-immigrant visa program, are ignored or circumvented, leaving U.S. workers jobless while people from thousands of miles away do jobs the local workers are able and willing to do.

The law and regulations forbid the admission of any H-2B guestworker to the U.S. unless the employer attests that U.S workers capable of performing the job are not available and that the employment of foreign workers will not adversely affect the wages and working conditions of similarly employed U.S. workers. The Department of Labor and the various State Workforce Agencies are charged with verifying that the jobs of U.S. workers are protected, but they have failed to do so.

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A few articles that our experts found interesting recently:

• A New Guide for Understanding Our Inequality (Inequality.org)
• Fight the Future (New York Times)
• Housing discrimination persists in U.S. in more subtle ways, HUD report says (Washington Post)
• It’s Not a Housing Boom. It’s a Land Grab (Color Lines)
• No More Captive Workers (Roll Call)
• Young, black and buried in debt: How for-profit colleges prey on African-American ambition (Salon)

Fred Hiatt trots out the standard centrist argument for cutting the already-stingy system of American social insurance (Social Security, Medicare, Medicaid): we need to cut this spending to preserve the “good” spending that he likes—non-defense discretionary (NDD in budget jargon) spending.

I agree with him that lots of NDD spending is good—it includes the general business of running the non-defense portions of the government as well as programs like Head Start, and it also includes a substantial chunk of public investment financed by the federal government. So yes, let’s preserve this.

But this claimed tension between spending on Social Security and Medicare versus NDD spending is plain false. We recently looked at various competing budget proposals to see what their implications were for NDD spending and public investment at the end of the budget window. Paul Ryan’s budget, which takes a chainsaw to the social insurance programs also saw the biggest squeeze on NDD spending and public investment. President Obama’s budget, which included damaging cuts to Social Security and was couched in the language of protecting public investment, still saw NDD and public investment spending reach historic lows by the end of the budget window. The Congressional Progressive Caucus Back to Work budget had no cuts to social insurance and yet had substantially higher NDD spending and public investment than all other plans. Read more

Friday’s infographic from Stateline at the Pew Charitable Trusts shows year-over-year job creation at the state level. We track state-level job trends at the Economic Policy Institute also, paying particular attention to trends in job creation and state unemployment rates.

These trends are important—they provide point-in-time information and benchmark states’ progress getting back on track since the start of the Great Recession in 2007. Our monthly analyses track trends over the previous three months, six months and year. Many of our EARN state partners produce reports that drill down deeper in their respective state labor markets.

It’s important, though, to step back and look at these recent trends in the context of job loss during the Great Recession and population growth since the beginning of the recession.

This lens on state economies tells a very different, though equally important, story about what is happening in the labor market at the state level. We see, for instance, that despite the fact that Texas has led job creation, with 326,000 jobs gained between April 2012 and April 2013, it continues to have a jobs deficit of nearly 600,000 jobs. In other words, in order for Texas to return to pre-recession employment rates, the state would need to create another 594,100 jobs.

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Catherine Rampell had a good piece in the Times yesterday on the rise in college completion among 25-29 year olds. She surveys lots of interesting data and comes away with the generally encouraging conclusion that college completion is on the rise.

But two influences she identifies as probable suspects in driving this increase don’t really fit the data: a rising college wage premium and the decision of young people to “shelter” in college while the recession-damaged labor market remains weak. We’ve examined both of these in the past, and, the college wage premium has actually been flat for over a decade and there didn’t really seem to be much sheltering during or after the Great Recession.

Given this, the real reasons for increased college completion seem like open, and important, questions.

Since the late 1970s, the United States has experienced a sharp divergence in the distribution and growth of market-based income, with gains overwhelmingly skewed toward the very top of the income distribution and away from the bottom. This era of widening income inequality represents a sharp break from the first three decades following World War II, when the gains from growth were shared fairly equally across the income distribution, even tilted somewhat favorably towards lower-income over upper-income workers. The increasingly lopsided concentration of income growth at the top of the distribution comes at the expense of stagnant or falling living standards for working families.

Policymakers have lately taken more of an interest in curbing income inequality growth, and to that end, it is critical to understand the impact and scope of tax policy. Changes in tax and transfer policies are one of the more easily quantifiable contributors to income inequality, say compared with policies (or lack thereof) related to labor protections, collective bargaining, minimum wage erosion and trade.

While both tax and transfer policies can influence inequality growth, tax policy is particularly policy relevant. Tax policy can more easily be fitted to the upwardly skewed income distribution than transfer policy, and there is vastly more market-based income than transfer income at the top of the scale, so doing so would further advance Congress’s prioritization of deficit reduction. Additionally, changes in tax policy can be implemented faster than changes in many transfer benefits, as politicians are reluctant to change retirement benefits for those approaching retirement.

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