Macroeconomists seem overwhelmingly worried that the COVID-19 shock could cause a significant recession, if unaddressed by policy. This message has still yet to get fully through to most policymakers, it seems.

Much of the policy discussion so far has focused, admirably enough, on targeting aid to workers likely to be directly affected by the virus itself and to reduced work caused by the “social distancing.” The responses to these issue have been proper: boosting the capacity of the health system, mandating emergency paid sick leave, reforms to unemployment insurance (UI), and providing free testing.

These measures are smart and well-meaning. However, they need to be supplemented by large-scale stimulus. Simply put, we need to do more to buffer the wider economy against the fallout of the COVID-19 shock.

As workers are laid off from directly affected industries (like restaurants and travel), their incomes will fall and so they will spend less money in even nonaffected industries. Because the industries directly affected by COVID-19 disproportionately employ low-wage workers with little wealth (and therefore little to no savings to turn to to maintain spending when they are laid off), the reduction in spending that will accompany wage losses will be even faster and sharper than in typical recessions. These spending cutbacks will then cause work reductions and income losses in nonaffected industries, and the vicious cycle will deepen.

One prime propagating mechanism that will make this vicious cycle worse if left unchecked is the response of state and local government spending. A negative economic shock causes tax revenues in these governments to fall. Balanced budget rules at the state and local levels will cause spending to contract, putting further downward pressure on economic growth.

In short, the economic shock from COVID-19 will come extraordinarily fast and be very broad and will have a large effect on the economy. This means that even after targeted interventions are undertaken, quick-acting and large economic stimulus will be needed.Read more

The COVID-19 pandemic highlights the vast inequalities in the United States between those who can more easily follow the Center for Disease Control’s recommendation to stay home and seek medical attention when needed and those who cannot. High-wage earners are more likely to be able to stay home and to have health insurance to seek medical care than low-wage earners. And, those in certain sectors—e.g., information and financial activities—are more likely to have paid sick days or be able to work from home than those in other sectors—e.g., leisure and hospitality. COVID-19 also sheds light on another difference in economic security and access to medical care among workers: the benefits to being in a union.

Union workers are more likely to have access to paid sick days and health insurance on the job than nonunion workers. The figure below shows the significant differences in those rates using the National Compensation Survey.

Only two-thirds of nonunion workers have health insurance from work compared with 94% of union workers. Having health insurance means workers are more able to seek and afford the care they need. We know in that the United States, millions of people delay getting medical treatment because of the costs. Without health insurance, many do not have a regular source of care and simply won’t go to the doctor to get the attention and information they need to not only get better but also reduce the spreading of disease.

Union workers are also more likely to be able to stay home when they are sick because they are more likely to have access to paid sick leave. 86% of unionized workers can take paid sick days to care for themselves or family members, while only 72% of nonunion workers can.

Having a union allows workers and their families access to more tools to help them withstand the coronavirus pandemic. Union workers are more likely to be able to stay home and seek medical care, which will help strengthen their communities by being less likely to spread the virus.

“I keep my surfaces as clean as possible, wipe down tables every day, and use sanitizer, but it becomes an expense, because the district doesn’t give us wipes or sanitizer for our classrooms,” Kristin Luebbert, a teacher at the U School in North Philadelphia, recently told The Philadelphia Inquirer. “It’s just a worry—what’s the plan and how are we going to be safe?”

With fears over COVID-19 spreading throughout the nation’s classrooms, there is understandably a push to maintain cleanliness in all schools. Even the Centers for Disease Control weighed in with recommendations for schools and teachers in particular too: clean and disinfect frequently touched surfaces and objects in the classroom.

The question is who’s going to pay for the products needed to protect students and teachers?

Turns out, some teachers are using their own money to cover the cost of things such as hand sanitizers and wipes, according to some published reports on the issue. That expense is in addition to the, on average, $459 teachers spend on school supplies for which they are not reimbursed (adjusted for inflation to 2018 dollars), found an analysis by Economic Policy Institute economist Emma García.

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“What’s ahead for teachers in light of the threat of COVID-19 spreading will only add to the existing challenges and stress,” predicts García. “Teachers already act as first respondents when it comes to children’s basic needs, and schools are the only place where some students can have access to hot meals, medical care, washing their dirty laundry, or even to shelter. These, as well as the expense outlays, are worse in schools serving larger shares of low-income students.”Read more

Health inspections of cruise ships, to reduce the spread of infections. A recall of flammable infant sleepwear. An order to clean up contaminated soil or water. This work of the federal government often lets us take for granted the safety of the food we eat, the clothes we put on our kids, and even our collective ability to fight new illnesses like the coronavirus.

We can’t take it for granted anymore. An obscure agency that most Americans have never heard of has issued a request for information that one-sidedly solicits input about how government is a problem, with the transparent goal of creating more roadblocks to government enforcement of environmental, consumer protection, labor, and other regulations. Right-wing groups are already mobilizing a campaign in response, prompting scores of comments expressing fervent yet vague support for the president. Many more comments are surely in the works, by corporations offering more polished and pointed explanations of their need to operate unfettered. The Trump administration has made clear its intent to do their bidding and more, but we don’t have to make it easy. Think tanks, public interest lawyers, community and advocacy organizations, and the general public can and should weigh in, to protect the government’s basic ability to protect our shared well-being.

At the hub of the agencies that report to the president is the Office of Management and Budget (OMB), which sets rules across the federal government for what agencies do and how they behave. In late January, the OMB issued a highly unorthodox request that assumes agencies behave unfairly, and asks how to make agency actions friendlier to alleged lawbreakers. It’s a clear invitation to corporate wrongdoers to provide anecdotes masquerading as evidence. The OMB’s head characterized the request as a means to end “bureaucratic bullying.” They’ve already decreed that agencies must repeal two rules for every new one they issue, no matter the harm to the public; this request is another effort to hamstring the government’s ability to pursue corporate wrongdoing.

The OMB’s request strangely floats importing criminal due process concepts into the civil administrative context. It asks whether there should be an “initial presumption of innocence,” for example, and whether investigated parties should be able “to require an agency to ‘show cause’ to continue an investigation.” But we are talking about corporations under civil investigation based on potential harm to broad swaths of people. If a business is suspected of polluting a playground, do we really want to slow down investigation and enforcement? Most of us would prefer swift government action in such circumstances.Read more

The United States is unprepared for the COVID-19 pandemic given that many workers throughout the economy will have financial difficulty in following the CDC’s recommendations to stay home and seek medical care if they think they’ve become infected. Millions of U.S. workers and their families don’t have access to health insurance, and only 30% of the lowest-paid workers have the ability to earn paid sick days—workers who typically have lots of contact with the public and aren’t able to work from home.

There are deficiencies in paid sick days coverage per sector, particularly among those workers with a lot of public exposure. Figure A displays access to paid sick leave by sector. Information and financial activities have the highest rates of coverage at 95% and 91%, respectively. Education and health services, manufacturing, and professional and business services have lower rates of coverage, but still maintain at least three-quarters of workers with access. Trade, transportation, and utilities comes in at 72%, but there are significant differences within that sector ranging from utilities at 95% down to retail trade at 64% (not shown). Over half of private-sector workers in leisure and hospitality do not have access to paid sick days. Within that sector, 55% of workers in accommodation and food services do not have access to paid sick days (not shown).

Of the public health concerns in the workforce related to COVID-19, two loom large: those who work with the elderly, because of how dangerous the virus is for that population, and those who work with food, because of the transmission of illness. Research shows that more paid sick days is related to reduced flu rates. There is no reason to believe contagion of COVID-19 will be any different. When over half of workers in food services and related occupations do not have access to paid sick days, the illness may spread more quickly.

What exacerbates the lack of paid sick days among these workers is that their jobs are already not easily transferable to working from home. On average, about 29% of all workers can work from home. And, not surprisingly, workers in sectors where they are more likely to have paid sick days are also more likely to be able to work from home. Over 50% of workers in information, financial activities, and professional and business services can work from home. However, only about 9% of workers in leisure and hospitality are able to work from home.

Many of the 73% of workers with access to paid sick days will not have enough days banked to be able to take off for the course of the illness to take care of themselves or a family member. COVID-19’s incubation period could be as long as 14 days, and little is known about how long it could take to recover once symptoms take hold. Figure B displays the amount of paid sick days workers have access to at different lengths of service. Paid sick days increase by years of service, but even after 20 years, only 25% of private-sector workers are offered at least 10 days of paid sick days a year.

The small sliver of green shows that a very small share (only about 4%) of workers—regardless of their length of service—have access to more than 14 paid sick days. That’s just under three weeks for a five-day-a-week worker, assuming they have that many days at their disposal at the time when illness strikes. The vast majority of workers, over three-quarters of all workers, have nine days or less of paid sick time. This clearly shows that even among workers with access to some amount of paid sick days, the amounts are likely to be insufficient.

As COVID-19—commonly known as the coronavirus—continues to spread throughout the world, it is likely to have a direct impact on the United States through the health and well-being of our population. It is also likely to have an impact on economic activity, as workers stop working to care for themselves or their families, and people generally reduce social spending. I’ll be watching this in tomorrow’s job report from the Bureau of Labor Statistics, and keeping an eye on it in the coming months. The first order of business, however, is to make sure that workers can follow the Centers for Disease Control and Prevention (CDC)’s recommendations to stay home and seek medical care—if they are lucky enough to have paid sick days and health insurance. While there are still very few reported cases in the United States, it is expected to spread and the effects may be far-reaching.

In terms of the economy, there has already been an impact on the manufacturing sector as inputs from China are delayed because of temporary factory closures. The Federal Reserve has cut interest rates in expectation of further economic disruptions. Many employers are making contingencies for workers to telecommute rather than risk illness. Unfortunately, this isn’t an option for millions of workers in direct service professions across the economy. Another likely side effect of the pandemic is a pull-back on social consumption. Either because people become sick themselves or are avoiding public spaces, there will likely be a drop in certain types of spending across the economy.Read more

Twenty-three states and the District of Columbia raised their minimum wage in 2019 through legislation, referendum, or because the minimum wage was indexed to inflation in those states. Low-wage workers in these states saw much faster wage growth than low-wage workers in states that did not increase their minimum wage between 2018 and 2019, as shown in EPI’s latest State of Working America Wages report. This blog post dives a bit deeper by dispelling some tempting explanations for what might be happening, such as stronger across-the-board wage growth in those states (didn’t happen) or employment losses (not borne out in the data).

Figure A shows in green the states with minimum wage increases that occurred through legislation or referendum in 2019, while states in blue had automatic increases resulting from indexing the minimum wage to inflation. Workers in states that increased their minimum wage between 2018 and 2019 account for about 55% of the U.S. workforce. The nominal minimum wage increases ranged from $0.05 (0.5%) in Alaska to $1.00 (9.1%−10.0%) in California, Massachusetts, and Maine.

Figure B compares 10th-percentile wage growth in states with minimum wage increases compared with those without increases. Growth at the 10th percentile in states without minimum wage increases was much slower (0.9%) than in states with any kind of minimum wage increase (4.1%). This result holds true for both men and women. The 10th-percentile men’s wage grew 3.6% in states with minimum wage increases, compared with 0.7% growth in states without any minimum wage increases, while women’s 10th-percentile wages grew 2.8% in states with minimum wage increases and 1.4% in states without.

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On February 26, EPI President Thea Lee testified before the House Committee on Ways and Means on the impact of the imbalanced U.S.–China economic relationship on U.S. jobs, wages, businesses, and long-term growth.

In her testimony, Lee discussed the history of U.S. trade policy toward China, problems with Trump’s “phase one” deal with China, and fundamental flaws in the U.S.–China economic relationship. According to new EPI research, the growing U.S.–China trade deficit was responsible for the loss of 3.7 million U.S. jobs between 2001 and 2018. These job losses are spread across all 50 states and the District of Columbia—and every congressional district in America.

Watch her testimony:

COVID-19—commonly known as the coronavirus—is now a potential threat for the United States and we all “need to be preparing for significant disruption of our lives,” warned the Centers for Disease Control and Prevention (CDC) this week.

Unfortunately, preparing for the “significant disruption” will be economically unimaginable for one group of Americans—the millions of people in the United States who do not have access to paid sick days or have health insurance with a regular health care provider.

The CDC released very clear instructions to help prevent the spread of respiratory diseases, including staying home when you are sick. Not everyone has that option.

Overall, just under three-quarters (73%) of private-sector workers in the United States have the ability to earn paid sick time at work. And, as shown in Figure A, below, access to paid sick days is vastly unequal. The highest-wage workers are more than three times as likely to have access to paid sick leave as the lowest-paid workers. Whereas 93% of the highest-wage workers had access to paid sick days, only 30% of the lowest-paid workers are able to earn sick days. In this way, access to paid sick days increases with wages among workers, disproportionately denying workers at the bottom this important security. And low-wage workers are more likely to be found in occupations where they have contact with the public—think early care and education workers, home health aides, restaurant workers, and food processors. When workers or their family members are sick, they shouldn’t have to decide between staying home from work to care for themselves or their dependents and paying rent or putting food on the table. But that is the situation our policymakers have put workers in.

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This week, my colleagues hosted a discussion on the policies that the 2020 presidential candidates should focus on in order to help black workers in the economy. One of the challenges that the presidential candidates should discuss is how to reduce the black–white wage gap—which has stubbornly persisted over the last four decades. Black-white wage gaps are large and have gotten worse in the last 20 years.

The latest findings on wage growth as documented in EPI’s State of Working America Wages 2019 report indicate wages in general are slowly improving with the growing economy, but wage inequality has grown and wage gaps have persisted, and in some cases, worsened. In this post, I will highlight the worsening black-white wage gap and look at it from multiple dimensions. Since 2000, by any way it’s measured, the wage gap between black and white workers has grown significantly.

The figure below compares wages for black and white workers over the last 19 years, highlighting the gaps in wages in 2000, the last time the economy was closest to full employment, 2007, the last business cycle peak before the Great Recession, and 2019, the latest data available. Against these benchmarks, I illustrated the growth in the average gap, the gap for low-, middle-, and high-wage workers, the gap for workers with a high school diploma, a college degree, and an advanced degree, and a regression-adjusted wage gap (controlling for age, gender, education, and region).

The black–white wage gap is smallest at the bottom of the wage distribution, where the minimum wage serves as a wage floor. The largest black–white wage gap as well as the one with the most growth since the Great Recession, is found at the top of the wage distribution, explained in part by the pulling away of top earners generally as well as continued occupational segregation, the disproportionate likelihood for white workers to occupy positions in the highest-wage professions.

It’s clear from the figure that education is not a panacea for closing these wage gaps. Again, this should not be shocking, as increased equality of educational access—as laudable a goal as it is—has been shown to have only small effects on class-based wage inequality, and racial wealth gaps have been almost entirely unmoved by a narrowing of the black–white college attainment gap, as demonstrated by William Darity Jr. and others.

Black workers can’t simply educate their way out of the gap. Across various levels of education, a significant black–white wage gap remains. Even black workers with an advanced degree experience a significant wage gap compared with their white counterparts. And after controlling for age, gender, education, and region, black workers are paid 14.9% less than white workers.

While the wage gaps differ depending on measure, what is obvious from the trends displayed is that the gaps widened in the full business cycle 2000–2007 and continued to grow in the Great Recession and its aftermath. Even though the black unemployment rate has fallen precipitously over the last several years, wage growth has remained particularly weak for black workers.

As always, it’s important to remember the historical and social contexts for differences in black and white labor market experiences and labor market outcomes (see Razza). Workers’ ability to claim higher wages rests on a host of social, political, and institutional factors outside of their control. The systematic social deprivation and economic disadvantage is maintained and reinforced by those with economic and political power. Furthermore, occupational segregation plays a significant role in these gaps, for both black men and black women. And, black women, in particularly, can face larger wages gaps with white men than the sum of their parts, meaning the black women face a double wage penalty for their race and gender. The trends in black–white wage gaps found here are supported by other important research that shows that black-white wage gaps expanded with rising inequality from 1979 to 2015.

Given a long history of excluding black Americans from social and political institutions that boost wage growth, the stubbornness of racial wage gaps is less surprising. However, the fact that they are getting worse is troubling. The good news is that policy can make a difference.

We see in the figure that the minimum wage keeps the lowest-wage black workers from even lower wages. In states that increased in the minimum wage between 2018 and 2019, low-wage workers saw stronger wage growth than in states that had no increase in their minimum wage in that period. Raising the federal minimum wage would disproportionately benefit black workers because they are overrepresented among low-wage workers and are less likely to live in states or localities that have passed a minimum wage that is higher than the current federal minimum.

Aside from strengthening and enforcing labor standards such as the minimum wage, making it easier for workers to form unions can narrow the black–white wage gap. Black workers are more likely to be in a union than white and get a bigger wage boost to being in a union than white. Therefore, unions can help shrink the black–white wage gap. Related, research has shown that the decline of unionization led to an expansion of the black–white wage gap.

Using all fiscal and monetary policy levers to achieve and maintain high-pressure labor markets can improve relative labor market outcomes for black workers, including participation in the labor force and work hours as well as wage growth. The U.S. certainly saw this stronger across the board growth in the tight labor market of the late 1990s.

In 2019, black wages exceeded their 2000 and 2007 levels across the wage distribution for the first time in this recovery. I’m hopeful that as the economy continues to move toward genuine full employment, black workers will see their wages rise. But it will take more than a couple of years of a full-employment economy to close racial wage gaps and compensate for years of lower wages, lower incomes, and lower wealth.

Economic Policy Institute’s Director of Research Josh Bivens and American Enterprise Institute’s Jospeh Antos addressed the issue of Medicare for All, and the larger role health care policy is playing in Campaign 2020 on C-Span’s Washington Journal Saturday.

The United States needs movement forward on healthcare that makes it accessible and affordable, said Bivens during the discussion.

“I think there’s a real hunger out there for something for health reform,” he explained. “Health care is something that Americans worry about the most, not just their health but would means for financial security and that worry is well-placed. We have a uniquely dysfunctional health care system.

“We spend on a per capita basis about $10,000 per person, we have some great health systems in the world, number one in terms of health outcomes as France and the Netherlands who spend literally half of what we spend. One of the reasons why a single-payer plan would be expensive is because we still have 27 million uninsured people and 60 million underinsured people. So, yeah, it would be more expensive to give health care to people who need it, but that’s the virtue of a fundamental reform. Keeping costs down by keeping people excluded, seems to me as not the way to go.”

Bivens is the author of a soon-to-be released paper on the impact of fundamental health care reform, including Medicare for All, on wages and job quality.

Sign up here for EPI’s newsletter so you don’t miss the report’s release, or any other essential labor research, analysis and trends from EPI’s research team.

President Trump’s proposed 2021 budget claims to help the “most vulnerable populations,” including seniors. But vulnerable older Americans are among those who would be most hurt if this draconian budget were ever enacted.

The budget would slash Medicaid and non-defense discretionary spending, eliminating or drastically shrinking programs targeted at low-income people, including programs benefiting seniors, such as the Low Income Home Energy Assistance Program. At first glance, the administration appears to spare middle-class seniors, a group with high voter turnout that tends to support the president and his party. Despite the president’s hints that Social Security and Medicare will be on the chopping block after the election, the budget would spare retirement benefits (except those for federal employees) and claims to achieve Medicare savings only by eliminating “excessive spending and distortionary payment incentives” while “preserv[ing] benefits and access to care.”

Some Medicare provisions in the president’s budget, such as site-neutral payments across different types of facilities, address genuine problems in how Medicare is administered. But the nearly half trillion in proposed savings from Medicare over 10 years includes provisions that would indirectly affect Medicare beneficiaries’ access to care, such as reducing payments to partially cover unpaid medical bills for Medicare beneficiaries. Since unlimited out-of-pocket expenses are a major cause of bankruptcy for older Americans in poor health, reducing these reimbursements would cause some providers to avoid treating Medicare patients who have expensive conditions and limited resources—and would surely lead to hospital and clinic closures in underserved areas. Middle-class seniors and providers who treat them wouldn’t be spared, since lower-middle-class seniors ineligible for Medicaid are those most likely to spend a high share of their income on health care. The problem of uncompensated care would be compounded by the administration’s attempts to roll back Medicaid expansion under the Affordable Care Act (ACA), which has helped hospitals treating low-income and uninsured patients in expansion states.

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That’s why we decided to sum up what we think are the top five Valentine’s Day gifts ideas for working people across the country.

Power through collective action!

Our economy is out of balance. Corporations and CEOs hold too much power and wealth, and working people know it. Workers are mobilizing, organizing, protesting, and striking at a level not seen in decades, and they are winning pay raises and other real change by using their collective voices.

But, the fact is, it is still too difficult for working people to form a union at their workplace when they want to. The law gives employers too much power and puts too many roadblocks in the way of workers trying to organize a union. The Protecting the Right to Organize (PRO) Act will go a long way toward restoring workers’ right to join together to bargain for better wages and working conditions by streamlining the process when workers form a union, ensuring that they are successful in negotiating a first agreement, and holding employers accountable when they violate labor law. The U.S. Senate should join the House of Representatives and pass the PRO Act in order to restore power to working people.

Affording bread…and roses

The real (inflation-adjusted) minimum wage is now roughly 30 percent lower than it was in 1968, and it has been more than 10 years since congress raised the minimum wage—the longest stretch in history. To end this shameful streak, it is incumbent upon the Senate to take up and pass the Raise the Wage Act immediately. Raising the federal minimum wage to $15 by 2025 would lift wages for 33.5 million workers across the country—more than one-fifth of the wage-earning workforce. The increase would boost total annual wages for these low-wage workers by $92.5 billion, lifting annual earnings for the average affected year-round worker by $2,800. Recent survey data have shown that 74% of U.S. workers live paycheck to paycheck. Policymakers should give working people the ability to make ends meet—but also the ability to treat themselves occasionally.

Failure to raise the federal minimum wage has taken thousands of dollars out of the pockets of minimum wage workers: The real value of the minimum wage (adjusted for inflation) is 17% less than 10 years ago and 31% less than in 1968

Note: All values are in June 2019 dollars, adjusted using the CPI-U-RS.

Source: Adapted from Figure C in David Cooper, Elise Gould, and Ben Zipperer, Low-Wage Workers Are Suffering from a Decline in the Real Value of the Federal Minimum Wage, Economic Policy Institute, August 2019).

Source: Adapted from Figure C in David Cooper, Elise Gould, and Ben Zipperer, Low-Wage Workers Are Suffering from a Decline in the Real Value of the Federal Minimum Wage, Economic Policy Institute, August 2019). The figure reflects EPI analysis of historical minimum wage data in the Fair Labor Standards Act and amendments.

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Pay workers for their hours worked, or give them their time back

The U.S. Department of Labor announced in September its final overtime rule, which will set the salary threshold under which salaried workers are automatically entitled to overtime pay to $35,568 a year. The rule leaves behind millions of workers who would have received overtime protections under the much stronger rule, published in 2016, that Trump administration chose to abandon. A stronger overtime protection would pay more workers for working more than 40 hours a week, or allow them extra time with their families.

Seven states have already taken steps to raise the overtime threshold, but without further action, it’s estimated that 8.2 million workers who would have benefited from the 2016 rule will be left behind by the Trump administration’s rule, including 3.2 million workers who would have gotten new overtime protections under the 2016 rule and 5.0 million who would have gotten strengthened overtime protections under the 2016 rule. States should follow suit and extend the overtime protections so workers don’t continue to lose out on their hard-earned wages.

Let your workers move on

At least 36 million workers—27.8% of the private-sector workforce—are required to enter noncompete agreements. Noncompete agreements are employment provisions that ban workers at one company from going to work for, or starting, a competing business within a certain period of time after leaving a job. Establishments with high pay or high levels of education among workers are more likely to use noncompetes, but noncompetes agreements are also common in workplaces with low pay and low levels of education. More than a quarter (29.0%) of private-sector workers with an average hourly wage below $13.00 require noncompetes for all their workers. Noncompetes are part of a disturbing trend of employers requiring workers to sign away their rights. Noncompetes may be contributing to weak wage growth, given that changing jobs is how workers often get a raise. And given that noncompetes limit the ability of individuals to start businesses or take other jobs, it also is not difficult to see that noncompetes may be contributing to the declines in dynamism in the U.S. labor market. Congress should pass the bipartisan legislation, the Workforce Mobility Act of 2019, to prohibit noncompete agreements.

Labor protections for Uber drivers shuttling around Valentine’s couples

The General Counsel of the National Labor Relations Board recently released a memo claiming that Uber drivers are independent contractors, not employees of Uber. The reality is that these drivers have very little entrepreneurial freedom: Drivers can’t raise revenues because they can’t control prices or expand their customer base through marketing. Unlike a typical enterprise, Uber drivers do not build earnings as they get more experience. Uber drivers are not able to choose their customers—drivers are penalized for rejecting or not accepting trips. And after accounting for Uber’s commissions and fees and vehicle expenses, and taking into account the cost of a modest package of health insurance and other benefits equivalent to those earned by W-2 workers, Uber drivers earn the equivalent of $9.21 in hourly wages—less than what is earned by 90% of all other wage and salary earners, and below the minimum wage in 13 of the 20 major urban markets where Uber operates.

Recently, AB5 went into effect in California, a set of protections aimed at combatting the misclassification of workers as independent contractors, helping ensure that California’s employees have access to basic labor and employment protections denied to independent contractors including: minimum wage and overtime protections, paid sick days and family leave, workers’ compensation benefits, and unemployment insurance benefits. Policymakers across the country should take notice and provide similar protections to workers in their states.

The overall goods and services trade deficit declined 1.7% ($10.9 billion) in 2019, while the total deficit in goods trade fell 2.4% ($21.4 billion). However, the U.S. trade deficit in non-oil goods, which is dominated by trade in manufactured products, increased 1.8% in 2019. Aside from petroleum, trade was a net drag on the economy in 2019 and on manufacturing, in particular.

The small decline in overall U.S. trade deficits follows an 18.3% increase in the goods trade deficit in the first two years of the Trump administration. Taken altogether, the U.S. goods trade deficit increased $116.2 billion (15.5%) in the first three years of the Trump Administration. It has proven neither quick nor easy to reduce the growing U.S. goods trade deficit.

The petroleum products deficit decreased 72.6% in 2019, masking the 1.8% increase in the non-oil goods trade deficit within the overall 2.4% decline in the U.S. goods trade balance. The fracking revolution has resulted in a significant reduction in oil imports (13.9%) and a small increase in petroleum exports (2.8%).

Recent changes in petroleum trade yield this shocking factoid: The United States became a net exporter of petroleum products for the last four months of 2019. This reflects a key element of Trump’s trade “strategy” to export liquefied natural gas (LNG) to the rest of the world, which comes at a steep cost. This will drive up U.S. prices for natural gas and oil, despite the fact that low energy prices were a key element of the mini-recovery in US manufacturing exports. Increased LNG exports will hurt U.S. consumers by increasing fuel costs, heightening risks of transport and catastrophic port explosions, and exacerbating global warming and air pollution levels in the country as a whole.

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On Friday, the Bureau of Labor Statistics (BLS) will revise nonfarm payroll employment, hours, and earnings data to reflect the annual benchmark process in the establishment survey. Each year, the BLS benchmarks total nonfarm payroll employment to state unemployment insurance tax records. In August 2019, BLS released preliminary benchmark revisions to payroll employment for April 2018 through March 2019, but revisions don’t get officially incorporated into the historical numbers until the final revisions are released. While revisions in most years tend to be relatively small, this year’s preliminary revisions came in much higher. The preliminary estimate of the benchmark revision indicates a downward adjustment to March 2019 total nonfarm employment of -501,000. This means that between April 2018 and March of 2019, there were a half million fewer jobs created than initially reported. Over the last ten years, preliminary revisions averaged about -92,000, so -501,000 is very large in comparison. And, usually the difference between the preliminary revisions and the final revisions is plus or minus 40,000. Therefore, it’s likely tomorrow’s final revisions will also be around 500,000 fewer jobs in that period.

The revisions will also provide details on changes in the initial payroll employment estimates by sector. For instance, in the preliminary release, the revisions were located primarily in “leisure and hospitality”, “professional and business services”, and “retail trade” with downward revisions of -175,000, -163,000, and -146,400, respectively. On Friday, the historical data will reflect the final benchmarks overall and by sector.

Tracking trends in nominal wage growth

Turning to nominal wage growth, the most important economic indicator to watch in 2020, last month there was a large drop for production/nonsupervisory workers. The figure below charts year-over-year changes in private-sector nominal average hourly earnings for “all nonfarm employees” as well as “production/nonsupervisory workers.” After remaining consistently higher than “all nonfarm” for nearly a year and at or above 3.4% for much of that time, it fell to 3.0% in December, its lowest point since September 2018. This begs the question of whether this is simply a blip and production/nonsupervisory workers will continue to pull away or if the separation in growth rates between the two over the last year was mostly statistical noise.

At this point in the recovery—with unemployment at or below 4.0% for 22 months—wage growth remains lower than expected. As employment growth consistently remains higher than working-age population growth, more and more workers are pulled into the labor force and finding jobs. As this slack gets absorbed, workers should be getting scarcer and scarcer. Therefore, employers would typically have to pay more to attract and retain the workers they want. After increasing in 2018, wage growth for all nonfarm employees has slowed for much of 2019 and remains below target levels.

On Friday, the BLS will also be employing new population controls in the Current Population Survey (CPS) starting in January 2020. Unlike the establishment survey, these changes to the CPS are not updated historically so caution should be exercised when making comparisons with data for December 2019 or earlier periods. The BLS is also making some changes to their methodology in terms of providing new seasonally adjusted series for measures of labor market underutilization as well as beginning to include both those in opposite-sex and same-sex marriages in estimates of married persons.

The new benchmarks to the establishment survey as well as revisions to the household survey will provide much fodder for thought on Friday morning. And, wage growth continues to be the most important indicator to watch as it lags behind overall improvements in the labor market.

In his State of the Union address tonight, President Trump plans to extol the “blue-collar boom” in the economy along with his purported “great American comeback.” He’ll claim this based on two recent signature trade deals—the United States-Mexico-Canada Agreement (USMCA) and a “phase one” deal with China. Unfortunately, both agreements will likely to lead to more outsourcing and job loss for U.S. workers, and the facts just don’t support Trump’s claims about the broader economy.

Trump comes from a world that has ardently championed globalization, like many of his predecessors. However, that approach has decimated U.S. manufacturing over the past 20 years, eliminating nearly 5 million good factory jobs as shown in Figure A, below. Nearly 90,000 U.S. factories have been lost as well.

Trump has not brought these jobs back, nor will his present policies change the status quo. Globalization, and China trade in particular, have also hurt countless communities throughout the country, especially in the upper Midwest, mid-Atlantic, and Northeast regions. The nation has lost a generation of skilled manufacturing workers, many of whom have dropped out of the labor force and never returned. All of this globalized trade has reduced the wages of roughly 100 million Americans, all non-college educated workers, by roughly $2,000 per year.

In addition, more than half of the U.S. manufacturing jobs lost in the past two decades were due to the growing trade deficit with China, which eliminated 3.7 million U.S. jobs, including 2.8 million manufacturing jobs, between 2001 and 2018. In fact, the United States lost 700,000 jobs to China in the first two years of the Trump administration, as shown in our recent report. The phase one trade deal will not bring those jobs back, either.

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President Trump is likely to tout the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) during his annual State of the Union Address. The centerpiece of the TCJA was a corporate rate cut that proponents claimed would eventually trickle down to workers’ wages—boosting the average American household’s wages by $4,000. We pointed out at the time that there was a lot wrong about this economic theory in practice. Even so, key to the theory is that investment would surge after the tax cuts were enacted. And without a substantial uptick in investment, the typical worker has no chance of benefiting from the TCJA’s corporate rate cuts. Instead, investment has cratered since the TCJA passed. In fact, last week’s GDP data showed that for the first time since the Great Recession, investment has declined for three straight quarters. Given that boosting business investment was the primary stated goal of the TCJA, this seems like an unambiguous policy failure for working people, benefiting only the rich and corporations.

As President Trump prepares to deliver his State of the Union address, here are three charts that show why the economy is still not “working great” for all black workers in America.

Even with a historically low average annual black unemployment rate of 6.1% in 2019, black workers are twice as likely to be unemployed as white workers overall and are more likely to be unemployed than white workers at every education level. Only black workers with some college or more education have an unemployment rate lower than the overall unemployment rate of white workers.

It is true that workers with higher levels of education have better employment outcomes. But in today’s economy getting a college degree doesn’t provide the universal boost that it used to. We have a high underemployment rate—a high share of college graduates who are working in jobs that do not require a college degree. And as the chart shows, black college graduates are more likely than white college graduates to be employed in occupations that do not require a college degree.

In a recovery, as the unemployment rates falls, you expect wages to grow. But in that respect this current recovery significantly lags the recovery of the late 1990s. Both recoveries have had similar declines in the unemployment rate, but wages today have not grown nearly as fast or as evenly across race and gender as they did during the late 1990s. Today, workers with bachelor’s degrees are not seeing nearly the level of wage growth that this group saw in the late 1990s. In fact, wages fell for black college graduates between 2015 and 2019, even as unemployment rates were falling significantly.

In preparation for President Trump’s State of the Union speech, the Economic Policy Institute has assembled research from the last year that examines the real state of the union for working people on wages, manufacturing and trade, taxes, labor standards, housing, and immigration.

Wages and employment

• 2019 had solid job growth, but wage growth slowed. Average monthly job creation has held remarkably steady for the past nine years, but it did soften in the last year, from 223,000 in 2018 to 176,000 in 2019. Wage growth slowed for much of the year, providing further evidence that we are not yet at genuine full employment. After hitting a recent high point of 3.4% year-over-year wage growth, the growth rate has measurably decelerated and wage growth closed out the year at only 2.9% in December.
• Wage growth for low-wage workers has been strongest in states with minimum wage increases
• More on longer wage trends in our Nominal Wage Tracker.

Manufacturing and trade

• Jobs lost to China. Recent EPI research found that 700,000 jobs were lost to China in the first two years of Trump’s presidency—many of them manufacturing jobs.
• China trade deal will not restore 3.7 million U.S. jobs lost since China entered the WTO in 2001
• U.S.-Mexico-Canada Agreement—Weak tea, at best
• What’s good for Wall Street is often bad for American workers and manufacturing

Taxes

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In 2019 the unemployment rate was below 4% for the second straight year, the first time this has happened since 1968 and 1969. Despite the current stretch of low unemployment, by many other measures the labor market does not seem particularly tight. Most obviously, wage growth has been accelerating a bit, but is still disappointing relative to what wage growth we would expect at this level of unemployment.

Productivity growth has firmed up slightly in recent years, but employers still aren’t acting like labor costs are something they’re particularly worried about containing through investments in capital equipment or better processes.

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Today is Earned Income Tax Credit (EITC) Awareness Day, an effort to make low-income taxpayers aware of the tax credit that provides an important boost to low- and moderate-income families. It also provides the opportunity to address a common misconception around the EITC.

Policy discussions sometimes describe EITC expansions and minimum wage increases as alternative, competing policies for helping low-income workers. But, as economist Jesse Rothstein and I explain in a new report, this framing is incorrect. The two policies are actually complementary. A minimum wage increase and EITC expansion are more effective together than either is on its own.

Federal, state, and local increases in minimum wages have raised the incomes of low-wage workers and their families. The best published scholarship estimates that a $12 an hour minimum wage in 2017—very similar in real terms to current proposals for a gradual increase to a $15 an hour federal minimum wage—would have lowered the number of individuals living in poverty by six million, with disproportionately large effects for people of color.

In contrast, the EITC is a refundable tax credit available to low-income families who have positive earned income: Eligible households receive a net tax refund that supplements their earnings. In 2018, over 22 million working families and individuals received an average credit of nearly $3,200. Like the minimum wage, a large body of research indicates that the EITC reduces poverty, and the tax credit also improves health and educational outcomes. In addition, the EITC can also raise total incomes above the low floor guaranteed by the minimum wage in many parts of the country. The current EITC refund adds 39%—or about $5,800—to the pretax earnings of a single parent with two children working full-time at the federal minimum wage.

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This morning, Commerce Secretary Wilbur Ross claimed that the coronavirus outbreak in China “will help accelerate the return of jobs to North America.” This comment is not only cruel and inhumane, but it’s also a testament to just how little the Trump administration understands about America’s trade problems and how to solve them. Even the administration’s less off-the-cuff plans for rebuilding U.S. manufacturing have little chance of working. For example, as I noted previously, President Trump’s “phase one” trade deal with China is unlikely to significantly reduce the massive U.S. job losses that have resulted from growing U.S. trade deficits with China.

A new EPI analysis shows that growing trade deficits with China cost 3.7 million U.S. jobs between 2001 and 2018, including 700,000 jobs lost in the first two years of the Trump administration. Job losses occurred in all 50 states, every congressional district, and every industry. Manufacturing was hit the hardest, with 2.8 million jobs lost. Given this toll and the Trump administration’s rhetoric, you’d think they’d look for real solutions. Instead, Trump appears desperate to sign his deal, any deal, so that he can claim progress on reducing trade deficits. But he is shortsighted on trade because his arrangement with Beijing ignores at least two key problems. First, it assumes that China will suddenly obey trade rules and commitments it has never previously respected. And second, it limits Washington’s ability to respond to the currency misalignment currently hampering U.S. exporters.

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