The latest red flag that all is not well with iPhone 5 production is the overnight riot that occurred at the dormitory of one of Foxconn’s plants in China that “makes parts for Apple’s iPhones and hardware for other companies” (quoting from NPR). According to Reuters, this riot involved 2,000 workers, was broken up by about 5,000 police, and the factory has been shut down for an indeterminate length of time.

The proximate cause of the riot is not yet clear; Foxconn said “the trouble started with a personal row that blew up into a brawl,” but Twitter-like postings claimed that “factory guards had beaten workers and that sparked the melee” (both quotes from the Reuters story). It is, of course, particularly difficult to obtain accurate, unbiased information of conditions at factories in China. At minimum, however, the severity of the riot demands an independent investigation and should give anyone pause before concluding that any worker rights concerns connected to the production of iPhones by Foxconn have been addressed.

Such pause is especially appropriate given other information that has come to light in the past two weeks. Read more

The results of the 2011 American Community Survey (ACS), released today by the U.S. Census Bureau, show that households across the United States are still coping with the damage wrought by the Great Recession.

Between 2010 and 2011, inflation-adjusted median household income either fell or stayed the same in every state except Vermont. Median household income significantly declined in 18 states, ranging from a 1.1 percent decline in Ohio to a 6 percent drop in Nevada. California (-3.8 percent), Georgia (-3.5 percent), Hawaii (-5.2 percent), Louisiana (-4.7 percent), New Jersey (-3.4 percent), and New Mexico (-3.1 percent) all experienced income declines of more than 3 percent. Thirty-one states showed no significant change in median household income. For the nation as a whole, median household income decreased by 1.3 percent.1

While overall household incomes declined, the distribution of income still became more inequitable. Twenty states saw a significant increase in income inequality as measured by the Gini index2: Arkansas, California, Florida, Georgia, Illinois, Louisiana, Maine, Michigan, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Tennessee, Texas, West Virginia, and Wisconsin. Income inequality did not decrease in any states nationwide.

The survey’s poverty results show similar cause for alarm. At the state level, both the number and percentage of people in poverty rose significantly in 17 states, with the largest increases occurring in Louisiana (+1.7 percent), Oregon (+1.6 percent), and Arizona (+1.5 percent). Vermont (-1.2 percent) was the only state where the poverty rate declined. Read more

“It is disappointing that no matter how advanced the technology introduced by Apple is, the old problems in working conditions remain at its major supplier Foxconn.” — SACOM, Sept. 20, 2012

In Sept. 2012, researchers from the Hong Kong-based Students and Scholars Against Corporate Misbehaviour (SACOM) conducted off-site interviews at Foxconn’s plants in Zhengzhou, China; the sole product of these plants is the iPhone. SACOM just released the findings of its interviews, New iPhone, Old Abuses: Have Working Conditions at Foxconn in China Improved? The report (sometimes quoted verbatim below) indicates:

• Overtime work is excessive, and well above that permitted by Chinese law. Monthly overtime hours have been between 80–100 hours in some of the production lines. This is two to three times the amount (36 hours) allowed by Chinese law. Workers often only get one day off every 13 days.
• Overtime work is often unpaid. Workers have to attend the daily work assembly meeting without payment. Also, on some production lines, workers must reach their work quota before they can stop working even if that means working overtime without pay. Read more

As our blog noted Tuesday, the 47 percent of Americans that Republican presidential nominee Mitt Romney dismisses as “dependent” on government because they don’t pay income taxes includes many elderly households. Romney concludes his remarks on the 47 percent by saying, “My job is not to worry about those people. … I’ll never convince them that they should take personal responsibility and care for their lives.”

Romney may not realize this, but a majority of the elderly fall into this category. The nonpartisan Tax Policy Center found that in 2011, 55.9 percent of elderly households paid no federal income taxes, compared to 43.9 percent of nonelderly households. In fact, as the graph below shows, at nearly every income level, the elderly are more likely to pay no federal income tax. Furthermore, nearly two-thirds of elderly units have cash incomes under $50,000, where the difference between the two groups is the greatest.

This largely reflects intentional features of the tax code to reduce elderly tax burdens. Read more

Republican presidential nominee Mitt Romney is taking much deserved flack for the leaked video of him professing—at a $50,000 a plate fundraiser—utter disdain for the less fortunate half of the population. The tax policy issues at stake have been well covered: my colleague Ethan Pollack and Ezra Klein both have graphical dissections of who the 47 percent of households are and why they do not earn enough to owe federal income tax liability, and Ruth Marcus poses four poignant questions deserving answers from the Romney camp on the tax policy implications of his remarks. I’ve explained in the past why this misleading conservative grievance is a red herring. And as Rob Reich points out, Romney’s remarks incoherently conflate the 47 percent not paying income taxes with “entitled” recipients of government programs, ignoring that “entitlements”—Medicare, Social Security, and unemployment insurance—are funded by payroll taxes. But there’s a much broader point than the tax policy issues being hashed out in the blogosphere and op-ed pages: Romney’s prior comments, budget proposals, and selection of running mate all suggest the same antipathy toward the poor and the middle class.

Romney landed himself in hot water last February when he shrugged off the plight of the poor alongside the fortune of the wealthy: “I’m not concerned about the very poor—we have a safety net there. If it needs repair, I’ll fix it. … We have a very ample safety net … we have food stamps, we have Medicaid, we have housing vouchers…” After widespread backlash for these remarks, Romney clarified what he meant: “My focus is on middle income Americans. We do have a safety net for the very poor and I said if there are holes in it, I want to correct that.” So how would his budget “repair” the safety net?Read more

For those of you that aren’t news junkies, Mitt Romney was caught on tape at a May 17 fundraiser proclaiming: “Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect. … My job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives.” Here’s a look at these 47 percent of Americans and why his suggestion that they don’t take personal responsibility for their lives is complete nonsense.

1) The 47 percent are mostly employed or elderly: More than 80 percent of the 47 percent that don’t pay federal income tax are either elderly or are employed (and thus still pay the payroll tax). The remaining tax units overwhelmingly make less than $20,000 a year (which is below the federal poverty line for a family of four).

2) Today’s nontaxpayers (federal income tax, that is) are tomorrow’s or yesterday’s taxpayers. Contrary to Romney’s implication, these are not two distinct groups; rather, people go back and forth between the two groups over their lifetime. In fact, most of the 47 percent are either seniors who already paid federal income taxes over the course of their working life or young people who will do so once they hit their mid-20s. By the time they reach 50, there’s a nearly 80 percent chance they’ll be paying the federal income tax.Read more

Robert Samuelson’s op-ed in Sunday’s Washington Post argues that the United States has reached or passed “the practical limits of ‘economic stimulus.’” He’s wrong, and much of the evidence he points to on the fiscal side ranges between grossly misleading and simply inaccurate. Several points:

• More fiscal expansion—particularly deficit-financed spending on infrastructure, aid to states, safety net spending, and well-targeted tax cuts—would accelerate economic growth and boost employment. This may be disputed on editorial pages, but it is not disputed by economists paid for their economic analysis. See analyses from Moody’s Analytics, Macroeconomic Advisers, or EPI’s own analysis of President Obama’s American Jobs Act, most of which Congress has not acted upon. Claims to the contrary are also belied by concern about the so-called “fiscal cliff” professed by both sides of the political aisle; politicians are worried that budget deficits closing too quickly will push the economy into a double-dip recession, as the Congressional Budget Office has forecast under its current law baseline.
• The point of the American Recovery and Reinvestment Act (ARRA) and subsequent ad hoc fiscal stimulus was to boost aggregate demand, not primarily “to inspire optimism by demonstrating government’s commitment to recovery.” Increased aggregate demand from ARRA kicking in and ramping up was responsible for arresting the economy’s rapid contraction in 2009 and the simultaneous deceleration (and eventual reversal) of job losses, not the confidence fairy.Read more

The Obama administration announced another trade case against China, this one focused on China’s blatant, illegal subsidies to exporters of auto parts. These subsidies have helped China take a growing share of the huge U.S. auto parts market, at a cost of tens of thousands of good manufacturing jobs. EPI researchers reported on the breadth and depth of these illegal subsidies earlier this year and warned that they threatened to decimate employment in the U.S. industry just as it got back to its feet after the Great Recession. As EPI’s Rob Scott and Hilary Wething wrote in January: “Chinese auto-parts exports increased more than 900 percent from 2000 to 2010, largely because the Chinese central and local governments heavily subsidize the country’s auto-parts industry; they provided $27.5 bil­lion in subsidies between 2001 and 2010 (Haley 2012).” The U.S. trade deficit in auto parts with China reached $9.1 billion in 2010 and has continued to grow.

It’s great to see President Obama stand up for fair trade, even if the timing is provoking some skepticism in the media. As I’ve pointed out to several reporters, Republican presidential nominee Mitt Romney has been calling on Obama to get tougher on China’s unfair trade practices. Romney can hardly complain when the president does exactly what Romney recommends. And with tens of thousands of good jobs at stake, it would have made no sense for Obama to delay this case until after the election; every month of delay would just mean more bankrupt manufacturers, more plant closings, and more jobs lost.

The administration, following its standard, cautious practice, has not tackled the full extent of illegal Chinese subsidies. Rather, it’s gone after the low-hanging fruit, the clearly prohibited, high-profile, publicly reported, targeted subsidies that depend on export volume. There’s much more to do. In a report for EPI, Usha Haley, Professor of International Business at Massey University in New Zealand, documented more than $27 billion in Chinese government subsidies to the auto parts industry from 2001 to 2011 and identified another $11 billion in subsidies planned for the future. Preventing this massive intervention will be critical if the U.S. auto parts industry is to get back on its feet, let alone to thrive and grow. The case announced today was a logical place to start.

I’m told that it’s the one-year anniversary of the beginning of the Occupy Wall Street (OWS) activities. Smarter political minds than mine can tell you why OWS either mattered or not, or matters still or not. My quick take on them (a wholly unoriginal one) is that they introduced an element into the economic conversation that was not simply obsessing about the size of the budget deficit and how to reduce it.

Given that this deficit conversation was  inane and destructive, the OWS movement deserves great credit for breaking it up. Further, given that the element OWS introduced in the nation’s conversation—the growth of inequality in recent decades—is the most important economic trend in the past generation, they deserve even further credit; they didn’t just interrupt a dumb conversation, they tried to start a relevant one.

We tried to argue that many of the claims of the OWS movement were well-supported by economic-data—see our paper here. Since then, we have released our newest edition of The State of Working America—see the website (and data) here—which further cements the case that inequality was  the primary barrier to decent growth in low– and middle-income households living standards, and which links the growth of this inequality to intentional policy decisions made explicitly to redistribute income upwards. Read more

Four years ago, we published Grading Education: Getting Accountability Right. We surveyed national samples of adults, school superintendents, state legislators and school board members and concluded that they all supported a balanced set of goals for public education, including not only basic skills but also reasoning, social skills, preparation for civic participation, a good work ethic, good physical and emotional health, and appreciation of the arts and literature. Accountability systems based heavily on basic math and reading skills will undermine these balanced goals by creating incentives to shift instruction towards those aspects of the curriculum on which the school or teachers are being evaluated.

You can read the introduction and summary of Grading Education for more. You can also look at a summary of the goals survey. In addition, a chapter summarizing how other fields—medicine, job training, law enforcement—have learned about the dangers of standardized accountability was published separately. And an appendix reprints a sample of letters and statements we have received from teachers describing how standardized testing, and preparation for it, has destroyed creative and successful curricula and instruction nationwide.

EPI assembled a group of prominent testing experts and education policy experts to assess the research evidence on the use of test scores to evaluate teachers.Read more