When President Obama and Japanese Prime Minister Abe meet on Friday, currency manipulation and Japan’s unfair trade policies must be addressed. The Yen has declined 13% in the past three months, in part because Mr. Abe has pledged to weaken monetary policy to spur growth. A weaker Yen lowers the cost of Japanese imports in the U.S. and raises the cost of U.S. exports in Japan and other countries where our products compete. While a more expansionary domestic monetary policy is an appropriate tool for a country stuck far below economic potential because of demand shortfalls, Japan has also displayed a historic pattern of intentionally lowering the value of their own currency vis-à-vis the U.S. dollar by buying U.S. denominated assets. Because the first-order effect of this direct currency manipulation is to create demand for Japan at the expense of the U.S., which is also currently starved of demand, this is not responsible policy for a country as large and important in global trade markets as Japan.

Currency manipulation is the single most important cause of growing U.S. trade deficits and Japan has a well established reputation as a currency manipulator. Japan has expressed a desire to join the proposed Trans-Pacific Partnership (TPP), a regional free-trade agreement with 10 other countries.  The TPP should include language to end currency manipulation by Japan and other trading partners.  Elimination of currency manipulation by China, Japan and other countries could create 2.2 to 4.7 million jobs, expand U.S. GDP and reduce the federal deficit, according to a recent EPI report.

The U.S. trade deficit with Japan increased from $66.4 billion in 2011 to $79.9 billion in 2012, an increase of $13.4 billion (20.2 percent).1 Growing trade deficits lead to job losses and growing unemployment or weaker growth in the United States.Read more

Jordan Weissman put together a nice series of charts in The Atlantic that help us better understand what’s at stake in the debate over tripling the number of “guest” workers admitted to the U.S. each year with college degrees and skills in science or engineering. It’s gotten harder and harder for U.S. PhDs to find work, and especially work that pays a salary that corresponds to the intellect of and investment made by these students, who are truly our best and brightest. A question members of Congress have to answer is: do we want to encourage or discourage U.S. students from pursuing these top degrees? Is NIH paying science post-docs enough? Is industry doing enough to recruit young U.S.-trained scientists? Will the Hatch-Klobuchar plan to admit 300,000 temporary, foreign high tech workers each year make matters better or worse for our young PhDs? Will the addition of as many as 1.8 million new foreign tech workers over six years crowd the U.S. labor market and depress wages?

Here’s a roundup of what we read today:

• The Wage Theft Epidemic (In These Times)
• A Chat With Mike The Mailman, Who Delivers the Mail (For Now) (The Billfold)
• Good News on Health Care Costs and the Budget (Economist’s View)
• Equipping the Fed for a Future Crisis (New York Times)
• New study badly undermines GOP position on sequester (Washington Post)
• Erskine Bowles: ‘Being far out front of the president on revenues wasn’t something I wanted to do again’ (Washington Post)

Both advocates and opponents talk a lot about how a minimum wage increase would affect Americans who are trying to find jobs. For the first time, we have insight into what job seekers themselves think about minimum-wage issues, thanks to newly-released data from the American National Election Survey.

The majority of job seekers report that raising the minimum wage to keep pace with the cost of living would be good for them personally. In fact, ten times as many job seekers report that minimum-wage increases would be good for their lives (66.5 percent) than report that it would be bad for their lives (6.5 percent). By a seven-to-one margin, they think it would be good (71.0 percent), rather than bad (10.1 percent), for America overall.

Here are the details. The data come from the American National Election Survey collected in December 2011 (ANES EGSS3 preliminary), which surveyed a nationally-representative sample of 1315 Americans including 126 job seekers. Job seekers are those currently not working and looking for work as well as those working part time but who would prefer full-time work. Using post-stratification weights among respondents, here are the questions and results.

Proposal: Raise the minimum wage every year to keep pace with inflation.

Would this be good, bad, or neither good nor bad for you personally?

Would this be good, bad, or neither good nor bad for the country?

Knowing that job-seekers—those with among the most to lose if opponents of increasing the minimum wage were correct in predicting job-loss—so clearly favor increasing the minimum wage to help workers keep up with inflation should matter to policy makers. Instead of listening only to talking heads speaking in the name of job-seekers, let’s hear the voices of job-seekers themselves.

Aaron Sojourner is a labor economist at the University of Minnesota’s Carlson School of Management.

Most members of Congress know very little about the H-2 guest worker visa programs, and, unfortunately, what they do know is mostly from speaking to a handful of business people who use the program or from listening to lobbyists who market ridiculous “studies” about how H-2 workers help the economy. They might have an image in their minds of “guest” workers lining up to take good jobs in the United States that no one else wants, and happily returning year after year. But Congressmen have little contact with H-2 workers and most are unaware of the widespread and ugly abuses that have marred the programs for decades. If they knew how often the programs have been used to exploit, cheat, and degrade foreign workers, they would realize it is no better than the infamous Bracero program of 50 years ago and should be either drastically reformed or abolished.

The Southern Poverty Law Center has been representing H-2 workers throughout the southern U.S. for years, hearing their stories of abuse and exploitation and suing on their behalf to recover at least some of the wages promised but unpaid, the fees extorted from helpless victims, the travel costs and debts incurred in return for unkept promises of well-paid, steady work. SPLC’s experience is captured in its new report, Close to Slavery 2013, which every journalist and immigration policy expert ought to read.

Every H-2 worker is not mistreated, but as Close to Slavery makes clear, so many workers are so badly abused that the program can’t be allowed to go on as it has. Year after year, international recruiters trick unsophisticated foreigners into borrowing large sums of money for the right to have a good job and substantial earnings in the U.S., only to find themselves locked into rural labor camps, poorly housed and fed, treated like prison labor, paid far less than promised, and then forced to repay recruiters and employers for expenses never mentioned during recruitment. SPLC has represented thousands of abused workers and won tens of millions of dollars in damages, but most H-2 workers have no access to our legal system, and even the judgments won often go unpaid.

Attempts by the U.S. Department of Labor to fix the H-2B non-agricultural program through regulatory improvements have been blocked by senators and congressmen from both parties who either don’t understand or don’t care that allowing these abuses to continue hurts U.S. workers, not just the foreign victims. The government’s failure to fix the well-documented problems in the program’s design makes it clear that any expansion of the program must be defeated. Real immigration reform would include reform of the H-2 visa and much tighter controls on the businesses that compete by exploiting the program and the guest workers themselves.

Our links today include a video:

• Book trailer for Behind the Kitchen Door by Saru Jayaraman
• Why Gender Equality Stalled (New York Times)
• Janet Yellen explains our crummy recovery in three charts (Washington Post)
• Who Gets Hurt Most by Higher Unemployment? (On the Economy)

Americans need Social Security more than ever, and they’re willing to pay for it. Rather than more cuts, we need higher benefits across the board.

This was the gist of my presentation at the National Academy of Social Insurance conference last month, whose theme was “Social Security and Medicare in a Time of Budget Austerity” (emphasis added). I wasn’t expecting it to go over very well.

Though my colleague Josh Bivens likes to point out that deficit reduction doesn’t necessarily imply spending cuts, and though Republicans don’t hesitate to call for tax cuts in the same context, there’s a general sense that expanding social insurance programs is out of the question and the best we can hope for is targeted measures to protect the most vulnerable.[1]

Even many progressives have trimmed their sails. Though most reject the need for additional cuts, few call for fully reversing cuts enacted in 1983, notably the gradual increase in the retirement age that is still taking effect. Progressives have also been divided about raising the payroll tax rate, the only way to pay for significant benefit increases while preserving the program’s contributory structure. Though almost all agree we should “scrap the cap” on taxable earnings, this only gets you part of the way to closing the projected shortfall in the aftermath of the Great Recession.Read more

Raising the minimum wage to $9.00 per hour, as the President called for in his State of the Union address, would be a good step toward reversing some of the huge decline in the purchasing power of the minimum wage that has occurred over the past 45 years.  Now as lawmakers, pundits, bloggers, economists, and the public begin talking about the president’s proposal, it’s important that we keep the true value of the minimum wage in context, and look at how the president’s proposed minimum wage compares both with precedent and what the minimum wage might have been had we not let its value erode for so long.

In his speech, the President noted that a parent who is a minimum wage worker and works full time, year round, does not make enough money to be above the federal poverty line.  This wasn’t always the case.  Figure 1 shows the annual earnings of a minimum wage worker compared with the federal poverty line for a family of two or three. Until the 1980s, earning the minimum wage was enough for a single parent to not live in poverty.  Indeed, a minimum-wage income in 1968 was higher than the poverty line for a family of three.  But as the figure shows, today’s minimum wage is not enough for single-parents to reach even the most basic threshold of adequate living standards.  The president’s proposal to raise the minimum to $9 per hour would bring the minimum wage back to a more reasonable level, although it would still fall short of the 1968 peak.

Read more

It is critical that we preserve Social Security even if it means increasing Social Security taxes paid by working Americans.

If you agree with this statement, you’re like 82 percent of respondents to a National Academy of Social Insurance poll, including the majority in all age groups, income brackets, and party affiliations.  An even higher share (87 percent) support raising taxes on wealthy Americans to preserve Social Security, which could be done by lifting the cap on taxable earnings, currently set at $113,700.

OK, so let’s fix Social Security and move on to real problems, like health care cost inflation and Kim and Kanye’s questionable taste in photo ops.

Not so fast, say some Very Serious People, who are leery of surveys that lend support for higher taxes. After telling everyone for years that our problems are caused by wanting to have our cake and eat it too, pundits are at a loss when it turns out not to be the case—at least not when it comes to Social Security. Thus, Wall Street Journal economics editor David Wessel, who recently assured an interviewer that “the problem is that the American people want more in benefits than they’re willing to send to Washington in taxes,” dismissed the NASI poll out of hand:

I saw the poll that NASI released this morning and I have to say, some of it I found almost impossible to believe.Read more

The H-1B ‘non-immigrant’ temporary foreign guest worker program is called a valuable tool for employers to attract and retain the “best and brightest” immigrants in the science, technology, engineering, and math (STEM) fields. Because employers may petition for permanent residence for their H-1B employees, the visa is sometimes described as a “bridge to immigration” that will keep the smartest foreign STEM workers in the U.S. permanently and thus improve the nation’s competitiveness. In part that’s how Senators Hatch, Rubio, Coons and Klobuchar explain their new bill – known as the “I-Squared Act” – that would more than quadruple the size of the H-1B program.

However, for the biggest users of the program, this view is false: In 2012, the 10 employers receiving the largest number of H-1B visas were all in the business of outsourcing and offshoring high-tech American jobs. Many of the jobs that went to H-1B workers should have instead gone to U.S. workers, but employers are not required to recruit them before applying for an H-1B, and can even replace their U.S. workers with H-1Bs. The top 10 H-1B employers were granted an astonishing 40,170 visas; nearly half the total annual quota. The table also shows each firm’s immigration yield: the ratio of permanent residence applications to new H-1B petitions for these companies. It is evidence of the companies’ intention to hire and keep their H-1B workers in the country permanently.

Immigration yield for top 10 H-1B employers, fiscal 2012

Rank	Employer	Approved initial I-129 petitions for H-1B	PERM applications for H-1B workers	Immigration yield	Significant offshoring*
1	Cognizant	9,281	669	7%	X
2	Tata	7,469	4	0%	X
3	Infosys	5,600	21	0%	X
4	Wipro	4,304	30	1%	X
5	Accenture	4,037	8	0%	X
6	HCL America	2,070	44	2%	X
7	Tech Mahindra SATYAM	1,963	20	1%	X
8	IBM & IBM India	1,846	96	5%	X
9	Larsen & Toubro	1,932	15	1%	X
10	Deloitte	1,668	260	16%	X

* A significant component of this company's business model is offshore outsourcing.

Source: Author's analysis of PERM Disclosure Data, Office of Foreign Labor Certification, Department of Labor, fiscal 2012; and I-129 data by employer, USCIS, fiscal 2012

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