Nearly 7 million workers will start the new year with higher wages

Note: This post was updated to clarify that Delaware’s minimum wage increase took effect on October 1, 2019.

At the start of the new year, minimum wages will have gone up in 22 states, lifting pay for 6.8 million workers across the country.i In total, workers affected by the increases will earn an extra $8.2 billion over the course of 2020 as a result of the changes. The increases range from a $0.10 inflation adjustment in Florida to $1.50 per hour raises in New Mexico and Washington. Affected workers who work year-round will see their annual pay go up between $150 and $1,700, on average, depending on the size of the minimum wage increase in their state.

The map and table below describe the increases in each state. Note that these estimates do not account for changes in local minimum wages separate from state law.ii There are 22 cities and counties with higher minimum wages taking effect on January 1, all of which can be found in EPI’s Minimum Wage Tracker. The estimates also do not include any “indirectly affected workers” making just above the new minimum wage who may receive raises as employers adjust their overall pay scales.

Figure A

State minimum wage increases will raise pay for nearly 7 million workers on January 1: States with minimum wage increases effective January 1, 2020, by type of increase

State Share of workforce directly benefiting Type of increase New minimum wage as of Jan. 1, 2020 Amount of increase Total workers directly benefiting Total increase in annual wages Average increase in annual earnings of year-round workers
Alabama -1 0.00%
Connecticut 0 0.00%
Georgia -1 0.00%
Hawaii 0 0.00%
Idaho -1 0.00%
Indiana -1 0.00%
Iowa -1 0.00%
Kansas -1 0.00%
Kentucky -1 0.00%
Louisiana -1 0.00%
Mississippi -1 0.00%
Nebraska 0 0.00%
Nevada 0 0.00%
New Hampshire -1 0.00%
North Carolina -1 0.00%
North Dakota -1 0.00%
Oklahoma -1 0.00%
Oregon 0 0.00%
Pennsylvania -1 0.00%
Rhode Island 0 0.00%
South Carolina -1 0.00%
Tennessee -1 0.00%
Texas -1 0.00%
Utah -1 0.00%
Virginia -1 0.00%
Washington D.C. 0 0.00%
West Virginia 0 0.00%
Wisconsin -1 0.00%
Wyoming -1 0.00%
Ohio 1 1.60% Inflation adjustment  $                   8.70  $       0.15                        84,000  $        12,303,000.00  $                                        150.00
South Dakota 1 1.70% Inflation adjustment  $                   9.30  $       0.20                          7,300  $           1,560,000.00  $                                        220.00
Florida 1 1.90% Inflation adjustment  $                   8.56  $       0.10                      160,700  $        23,766,000.00  $                                        150.00
Montana 1 1.90% Inflation adjustment  $                   8.65  $       0.15                          8,900  $           1,588,000.00  $                                        180.00
Minnesota 1 2.40% Inflation adjustment  $                 10.00  $       0.14                        68,100  $        11,030,000.00  $                                        162.00
New Mexico 2 2.70% Legislation  $                   9.00  $       1.50                        22,900  $        20,736,000.00  $                                        900.00
Alaska 1 3.00% Inflation adjustment  $                 10.19  $       0.30                        10,500  $           5,348,000.00  $                                        510.00
Illinois 2 3.30% Legislation  $                   9.25  $       1.00                      192,900  $      173,533,000.00  $                                        900.00
Michigan 2 3.40% Legislation  $                   9.65  $       0.20                      147,000  $        32,907,000.00  $                                        220.00
Delaware 2 4.00% Legislation  $                   9.25  $       0.50                        17,200  $        10,811,000.00  $                                        630.00
New York 2 4.00% Legislation  $                 11.80  $       0.70                      411,700  $      399,246,000.00  $                                        970.00
Vermont 1 5.20% Inflation adjustment  $                 10.96  $       0.19                        16,200  $           3,932,000.00  $                                        240.00
Missouri 3 5.40% Ballot measure  $                   9.45  $       0.85                      153,600  $      123,505,000.00  $                                        800.00
Maryland 2 7.60% Legislation  $                 11.00  $       0.90                      204,300  $      216,530,000.00  $                                    1,060.00
Arkansas 3 11.00% Ballot measure  $                 10.00  $       0.75                      119,300  $      113,142,000.00  $                                        950.00
Washington 3 11.60% Ballot measure  $                 13.50  $       1.50                      386,000  $      655,972,000.00  $                                    1,700.00
New Jersey 2 11.70% Legislation  $                 11.00  $       1.00                      460,400  $      480,308,000.00  $                                    1,040.00
Massachusetts 2 12.00% Legislation  $                 12.75  $       0.75                      420,600  $      409,981,000.00  $                                        970.00
Colorado 3 12.10% Ballot measure  $                 12.00  $       0.90                      318,400  $      382,354,000.00  $                                    1,200.00
California 2 16.90% Legislation  $                 13.00  $       1.00                  2,950,200  $  4,376,241,000.00  $                                    1,480.00
Maine 3 16.90% Ballot measure  $                 12.00  $       1.00                      102,900  $      130,250,000.00  $                                    1,270.00
Arizona 3 17.70% Ballot measure  $                 12.00  $       1.00                      511,900  $      653,915,000.00  $                                    1,300.00

 

Notes: *The New York minimum wage changes take effect on December 31, 2019. Delaware's minimum wage increase took effect on October 1. “Legislation” indicates that the new rate was established by the legislature. “Ballot measure” indicates the new rate was set by a ballot initiative passed by voters. “Inflation adjustment” indicates that the new rate was established by a formula, reflecting the change in prices over the preceding year.

Directly affected workers will see their wages rise because the new minimum wage rate exceeds their current hourly pay. This does not include additional workers who may receive a wage increase through “spillover” effects, as employers adjust overall pay scales.

Estimates for New York reflect changes in the minimum wage applicable to upstate New York ($11.80) and Nassua, Suffolk, and Westchester counties ($13.00). New York City's minimum wage reached $15 at the end of 2018 and there are no further increases scheduled.

Population growth between the data period and January 2020 estimated using state-specific projections for growth in the total population or the population ages 15—69, where available. Nominal wage growth between the data period (2017) and January 2020 estimated using the 3-year average of nominal wage growth of the bottom 20 percent of wage earners in each state from 2015 to 2018.  A full methodology is available in Minimum Wage Simulation Model Technical Methodology.

 

Source: Economic Policy Institute Minimum Wage Simulation Model using data from the Census Bureau, Bureau of Labor Statistics, and Congressional Budget Office. See Minimum Wage Simulation Model technical methodology [https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/].

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In seven states, the changes are the result of automatic annual inflation adjustments. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont all have provisions in their state minimum wage laws that require the wage be adjusted annually to reflect changes in prices over the preceding year. Doing so ensures that the minimum wage never declines in purchasing power, and workers paid the minimum wage can afford the same amount of goods and services year after year. 10 other states and the District of Columbia have enacted similar automatic adjustment provisions in their minimum wage laws that will begin after their minimum wages reach a higher statutory level in the coming years.

The increases in nine states—California, Delaware, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, and New York—are the result of legislation passed by state lawmakers to raise their state’s wage floors. Lawmakers in six of these states—California, Illinois, Maryland, Massachusetts, New Jersey, and New York—enacted legislation that will eventually bring their state minimum wages to $15 an hour. For 2020, minimum wages in these states will range between $11.00 and $13.00.

In six states—Arizona, Arkansas, Colorado, Maine, Missouri, and Washington—the January 1 raises result from ballot measures passed by the state’s voters. In the last several election cycles, voters have increasingly passed higher minimum wages, often in the face of inaction by their state legislatures. In fact, voters in Missouri passed a higher state minimum wage at the ballot box after state lawmakers nullified city minimum wage ordinances that had been enacted by local governments in Kansas City and St. Louis.Read more

Top 1.0% of earners see wages up 157.8% since 1979

Newly available wage data for 2018 show that annual wages for the top 1.0% were nearly flat (up 0.2%) while wages for the bottom 90% rose an above-average 1.4%. Still, the top 1.0% has done far better in the 2009–18 recovery (their wages rose 19.2%) than did those in the bottom 90%, whose wages rose only 6.8%. Over the last four decades since 1979, the top 1.0% saw their wages grow by 157.8% and those in the top 0.1% had wages grow more than twice as fast, up 340.7%. In contrast those in the bottom 90% had annual wages grow by 23.9% from 1979 to 2018. This disparity in wage growth reflects a sharp long-term rise in the share of total wages earned by those in the top 1.0% and 0.1%.

These are the results of EPI’s updated series on wages by earning group, which is developed from published Social Security Administration data and updates the wage series from 1947–2004 originally published by Kopczuk, Saez and Song (2010). These data, unlike the usual source of our other wage analyses (the Current Population Survey) allow us to estimate wage trends for the top 1.0% and top 0.1% of earners, as well as those for the bottom 90% and other categories among the top 10% of earners. These data are not top-coded, meaning the underlying earnings reported are actual earnings and not “capped” or “top-coded” for confidentiality.

Figure A

Cumulative percent change in real annual wages, by wage group, 1979–2018

Year Bottom 90% 90th–95th 95th–99th Top 1%
1979 0.0% 0.0% 0.0% 0.0%
1980 -2.2% -1.3% -0.2% 3.4%
1981 -2.6% -1.1% -0.1% 3.1%
1982 -3.9% -0.9% 2.2% 9.5%
1983 -3.7% 0.7% 3.6% 13.6%
1984 -1.8% 2.5% 6.0% 20.7%
1985 -1.0% 4.0% 8.1% 23.0%
1986 1.1% 6.4% 12.5% 32.6%
1987 2.1% 7.4% 15.0% 53.5%
1988 2.2% 8.2% 18.4% 68.7%
1989 1.8% 8.1% 18.2% 63.3%
1990 1.1% 7.1% 16.5% 64.8%
1991 0.0% 6.9% 15.5% 53.6%
1992 1.5% 9.0% 19.2% 74.3%
1993 0.9% 9.2% 20.6% 67.9%
1994 2.0% 11.2% 21.0% 63.4%
1995 2.8% 12.2% 24.1% 70.2%
1996 4.1% 13.6% 27.0% 79.0%
1997 7.0% 16.9% 32.3% 100.6%
1998 11.0% 21.3% 38.2% 113.1%
1999 13.2% 25.0% 42.9% 129.7%
2000 15.3% 26.8% 48.0% 144.8%
2001 15.7% 29.0% 46.4% 130.4%
2002 15.6% 29.0% 43.2% 109.3%
2003 15.7% 30.3% 44.9% 113.9%
2004 15.6% 30.8% 47.1% 127.2%
2005 15.0% 30.8% 48.6% 135.3%
2006 15.7% 32.5% 52.1% 143.4%
2007 16.6625450273242% 34.0650819079098% 55.3586221137521% 156.174314731946%
2008 16.0% 34.2% 53.8% 137.5%
2009 16.0% 35.3% 53.5% 116.2%
2010 15.2% 35.7% 55.7% 130.8%
2011 14.5% 36.2% 56.9% 134.0%
2012 14.6% 36.3% 58.3% 148.3%
2013 15.1% 37.1% 59.4% 137.5%
2014 16.6% 38.7% 62.3% 149.0%
2015 20.5% 43.1% 67.9% 156.2%
2016 21.0% 43.5% 68.1% 148.1%
2017 22.2% 44.2% 69.3% 157.3%
2018 23.9% 45.7% 71.3% 157.8%
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Source: EPI analysis of Kopczuk, Saez, and Song (2010, Table A3) and Social Security Administration wage statistics

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As Figure A shows, the top 1.0% of earners are now paid 157.8% more than they were in 1979. Even more impressive is that those in the top 0.1% had more than double that wage growth, up 340.7% since 1979 (Table 1). In contrast, wages for the bottom 90% only grew 23.9% in that time. Since the Great Recession, the bottom 90%, in contrast, experienced very modest wage growth, with annual wages—reflecting growing annual hours as well as higher hourly wages—up just 6.8% from 2009 to 2018. In contrast, the wages of the top 0.1% grew 19.2% during those nine years.Read more

Three Republican-appointed white men are now deciding whether you have rights on the job

Yesterday marked the end of Democratic National Labor Relations Board (NLRB) Member Lauren McFerran’s term. McFerran ended her term offering the lone dissenting voice in the Trump board’s efforts to slow down union elections to give employers more time to campaign against the union, give employers the ability to make unilateral changes without bargaining with their workers’ union, weaken remedies when employers break the law, and more.

McFerran is the former Chief Labor Counsel for the Senate Committee on Health, Education, Labor, and Pensions (HELP Committee) and is widely respected by both labor and management. Her departure leaves a second open seat on the board that the Trump administration is tasked with filling. However, the Trump administration has not yet acted to nominate McFerran for a second term, nor has it nominated a Democrat to fill the other vacant Democratic seat that has been open since August 2018. The failure of the Trump administration to act is not for lack of a qualified nominee with widespread support. Former deputy general counsel and longtime NLRB career attorney Jennifer Abruzzo has reportedly been under consideration.

As a result, the NLRB has only Republican appointees for the first time in its 85-year history, and the three Republicans are all white men—two lawyers who represented corporations before coming to the NLRB, and one former Republican congressional staffer. There is no Democratic appointee to offer alternative views on workers’ rights under the National Labor Relations Act (NLRA), or to issue dissenting opinions when the Trump board goes off track. And there are no women or people of color participating in these decisions, even though women and people of color make up the majority of workers.

EPI previously reported on the unprecedented rollback of workers’ rights happening at the hands of these three NLRB appointees. The U.S. Chamber of Commerce—the nation’s largest business lobby—is 10 for 10 in winning action on its top 10 “wish list” for the Trump board. Unfortunately, things are likely to get worse, not better. With no Democratic appointee there to provide an alternative or dissenting viewpoint on the Trump board’s actions, we are likely to see a continued rollback of workers’ rights under this bedrock statute that, after all, is supposed to protect workers’ rights.

On its second anniversary, the TCJA has cut taxes for corporations, but nothing has trickled down

It’s been two years since Republicans passed their Tax Cuts and Jobs Act (TCJA), enough time for its effects to have come into full view. As we lay out in a report released today with the Center for Popular Democracy, the economic data that has come in since its passage has not been kind to the argument of the TCJA’s proponents.

The centerpiece of the TCJA was a large cut in the corporate tax rate. Supporters of the TCJA made the supply-side argument that higher corporate profits would juice investment, which would eventually trickle down to faster productivity growth that would mechanically boost workers’ wages. The theory behind this relied on a long chain of economic events occurring, and it was clear from the very beginning that there was little reason to trust a single link in the chain.

Despite some disingenuous and cynical arguments surrounding wages and bonuses, if the TCJA is to work as its supporters claimed, then the first thing we would see is a substantial uptick in investment. After two years, there is no evidence of any investment boom. Instead, investment growth followed along its pre-TCJA trend for a couple of quarters and then cratered. Year-over-year investment growth has sunk from 5.4% at the time of the TCJA’s passage to just 1.3% in the most recent quarter.

Figure A

More evidence the Trump tax cuts aren’t working as advertised: Change in real, nonresidential fixed investment shows no investment boom

Years Real, nonresidential fixed investment
2003-Q1 -2.3%
2003-Q2 1.6%
2003-Q3 4.0%
2003-Q4 6.8%
2004-Q1 5.2%
2004-Q2 4.9%
2004-Q3 5.7%
2004-Q4 6.5%
2005-Q1 9.2%
2005-Q2 8.2%
2005-Q3 7.4%
2005-Q4 6.1%
2006-Q1 8.0%
2006-Q2 8.2%
2006-Q3 7.8%
2006-Q4 8.1%
2007-Q1 6.5%
2007-Q2 7.0%
2007-Q3 6.8%
2007-Q4 7.3%
2008-Q1 5.8%
2008-Q2 3.8%
2008-Q3 0.2%
2008-Q4 -7.0%
2009-Q1 -14.4%
2009-Q2 -17.1%
2009-Q3 -16.1%
2009-Q4 -10.3%
2010-Q1 -2.3%
2010-Q2 4.1%
2010-Q3 7.5%
2010-Q4 8.9%
2011-Q1 8.0%
2011-Q2 7.3%
2011-Q3 9.3%
2011-Q4 10.0%
2012-Q1 12.9%
2012-Q2 12.6%
2012-Q3 7.2%
2012-Q4 5.6%
2013-Q1 4.3%
2013-Q2 2.3%
2013-Q3 4.4%
2013-Q4 5.4%
2014-Q1 5.5%
2014-Q2 8.1%
2014-Q3 8.4%
2014-Q4 6.9%
2015-Q1 5.0%
2015-Q2 2.5%
2015-Q3 0.8%
2015-Q4 -0.9%
2016-Q1 -0.7%
2016-Q2 0.0%
2016-Q3 1.1%
2016-Q4 2.4%
2017-Q1 4.2%
2017-Q2 4.3%
2017-Q3 3.5%
2017-Q4 5.4%
2018-Q1 6.0%
2018-Q2 6.9%
2018-Q3 6.8%
2018-Q4 5.9%
2019-Q1 4.8%
2019-Q2 2.6%
2019-Q3 1.3%
ChartData Download data

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Note: Chart shows year-over-year change in real, nonresidential fixed investment from 2003Q1 to 2019Q3.

Source: Adapted from Figure A in Hunter Blair, "The Tax Cuts and Jobs Act Isn’t Working and There’s No Reason to Think That Will Change," Working Economics (Economic Policy Institute blog), October 31, 2019.

Source: Adapted from Figure A in Hunter Blair, The Tax Cuts and Jobs Act Isn’t Working and There’s No Reason to Think That Will Change, Economic Policy Institute, October 2019. Data are from EPI analysis of data in Table 1.1.6 from the National Income and Product Accounts (NIPA) from the Bureau of Economic Analysis (BEA).

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To be blunt, this means that the $4,000 annual boost to average incomes that the White House Council of Economic Advisers promised to working families because of the TCJA did not—and will not—happen. While it’s been worse-than-advertised for working families, the TCJA has been an even bigger boon to large corporations and rich households. In fact, corporate tax revenues have come in even lower than the Congressional Budget Office originally projected, allowing corporations and their shareholders to make out like bandits.

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The Farm Workforce Modernization Act allows employers to hire migrant farmworkers with H-2A temporary visas for year-round jobs: Impacts are unknown and other wage-setting formulas should be considered

My last blog post described in detail how the Farm Workforce Modernization Act (FWMA)—a bipartisan piece of legislation in the House of Representatives that would legalize unauthorized immigrant farmworkers, make major reforms and expansions to the H-2A temporary work visa program, and require farm employers to use E-Verify—included an updated H-2A wage rule that could lower wages for migrant farmworkers. I also called on the House of Representatives to further assess the impacts of that the FWMA could have on the farm labor market by holding public hearings in the relevant committees of jurisdiction with expert testimony before voting on the bill. One of the other major provisions in the bill that also desperately needs a closer look is the FWMA’s proposal to allow H-2A jobs—which currently must only offer temporary or seasonal work—to become eligible for year-round agricultural occupations.

A look at annual average employment in in the Bureau of Labor Statistics’ (BLS) Quarterly Census of Employment and Wages (QCEW) data set shows there were just over 419,000 jobs in greenhouse and nursery production (155,000) and animal production and aquaculture (264,000), which represent the major year-round occupational categories in agriculture. Farm employers have been clamoring for years for Congress to allow them to hire temporary H-2A workers for many of these 419,000 permanent, year-round jobs, especially on dairies. Since they haven’t had the requisite support to pass legislation that would accomplish this, members of Congress have attempted multiple times to circumvent the regular legislative process by pushing to make the change through legislative riders on annual omnibus appropriations bills.

The FWMA contains provisions to make H-2A year round: For the first three years after enactment, 20,000 three-year H-2A visas per year would be made available for year-round agricultural jobs—meaning 60,000 after three years—with half allocated for the dairy industry. Although the maximum allowed number of year-round H-2A jobs seems relatively small at first, the number could rise rapidly—in years four through 10, the cap could increase by 12.5% per year—and after the tenth year, the cap could be eliminated.

Read more

Looking for evidence of wage-led productivity growth: EPI Macroeconomics Newsletter

While unemployment rates are sitting at their lowest levels in decades, wage growth (adjusted for inflation) remains slower than in previous periods of comparably low unemployment. Part of the reason why wage growth remains subdued is that productivity growth has been generally weak since the Great Recession ended. This week’s newsletter provides some guidance on a key question for macroeconomic policymakers like the Federal Reserve: do we need to take this slow rate of productivity growth as a given, or can we nudge productivity upward by allowing unemployment to sink even lower for longer?

Specifically, I address the widespread speculation about the possibility of “wage-led productivity growth”—the hypothesis that tight labor markets that push up labor costs lead firms to invest more in labor-saving equipment and practices. Some suggestive evidence of this wage-led productivity growth has been shown in patterns of macroeconomic data. This newsletter provides some more suggestive evidence from patterns of productivity growth broadly but also across a set of very detailed industries when the labor share of industry income rises and falls. Here are the key findings:

  • At the aggregate level, a rise in the labor share of corporate-sector income is associated with a small but significant rise in the pace of average productivity growth over the subsequent two years.
  • At detailed industrial levels (looking at 124 industries mostly in manufacturing), this relationship is even stronger: a 1 percentage-point rise in the labor share of industry income is associated with a 0.1 percentage-point increase in the average pace of productivity growth over the subsequent two years.
  • These relationships between labor share of income and productivity growth are consistent with a scenario in which firms try harder to make labor-saving investments and organizational changes when labor becomes scarcer and the need to pay higher wages threatens to pinch profits. If the labor share of corporate-sector income rose from today’s 78% to the 82% that characterized the tight labor markets of 2000, this would imply a boost to productivity of roughly 0.4 percentage points—an amount that would cut almost in half the gap between the productivity growth in recent years and the productivity growth of the late 1990s.

These results are obviously suggestive, not dispositive. The key challenge to testing the causal link that runs from higher pressure labor markets to increased effort by firms to find and adopt labor-saving practices and investments is finding truly exogenous changes in labor market tightness. This search for exogenous changes in the cost pressures firms face should be a prime preoccupation for macroeconomic policymakers in the near future. In the rest of this newsletter, we’ll describe our findings in a bit more detail and discuss their potential implications.Read more

House vote imminent on the bipartisan Farm Workforce Modernization Act—which would lower wages for migrant farmworkers: Hearings and assessments of impacts still needed

On October 30, Representatives Zoe Lofgren (D-Cal.) and Dan Newhouse (R-Wash.), along with dozens of other bipartisan cosponsors, introduced the Farm Workforce Modernization Act (FWMA), a compromise bill negotiated between representatives of agribusiness, farmworker advocates, and unions that would legalize unauthorized immigrant farmworkers, make major reforms and expansions to the H-2A temporary work visa program, and require farm employers to use E-Verify, an electronic employment verification system, to verify whether newly hired workers are authorized to be employed in the United States. The FWMA could legalize hundreds of thousands of unauthorized farmworkers while restructuring the landscape for farm employment. The House of Representatives looks set to vote on the FWMA as early as this week.

The FWMA would solve an important farm labor issue—perhaps the most important issue—legalizing unauthorized farm workers and their families. But it would also change the rules of a problematic temporary work visa program, H-2A, where migrant workers are indentured to their employers, often abused and exploited in the fields, paid low wages and robbed of their wages, sometimes live in substandard housing, and have at times been victims of human trafficking.

The H-2A rule changes in the FWMA would expand the H-2A program to year-round occupations, prohibit wage growth that might otherwise occur in the free market, and codify into law most of a new H-2A wage regulation that was recently put into place by the Trump administration—which is geared towards lowering the wages of most migrant workers in the H-2A program—and which many worker advocates opposed publicly. These provisions should raise concerns about the impact of the FWMA on the H-2A program and the future farm labor force but have not yet been explored in any congressional hearing focusing on the FWMA or through the publication of any government reports, or even credible research by non-governmental organizations.

Considering the large and emerging role of H-2A in farm labor, perhaps the single biggest question about the FWMA from a labor standards perspective is: what will happen to H-2A wage rates under the bill? The FWMA updates and codifies a new H-2A wage rule—known as the Adverse Effect Wage Rate or AEWR. In the absence of any existing credible analysis of the FWMA, I offer some comments below outlining my concerns with some of the H-2A wage provisions in the bill. In order to understand its possible impact however, a brief discussion of the current AEWR and the recently proposed Trump H-2A wage rule is needed because the FWMA mostly incorporates the proposed Trump H-2A wage rule.Read more

What to watch on jobs day: Concerning slowdown in job growth and weakening wage growth

As we approach the end of 2019, it’s important to keep the long-run perspective on economic health in mind, but also investigate new trends that have emerged in the last several months that need to be closely monitored. Two concerning trends are the slowdown in nominal wage growth as well as the slowdown in payroll employment growth.

Let’s start with payroll employment growth. On its face, the pace of job growth in 2019 hasn’t been particularly troubling. The economy continues to move in the right direction—though at a slightly slower pace than the last couple of years—soaking up sidelined workers as the unemployment rate remains at historically low levels. But, when you factor in the preliminary benchmark revisions—which showed a half million fewer jobs created between April 2018 and March 2019—the data indicate weaker employment growth this year than originally reported. The final benchmark revisions won’t be released until the January 2020 employment numbers are released in February, but the preliminary release is troubling. And large downward revisions are sometimes associated with early signs of a recession because it means the Bureau of Labor Statistics (BLS)’s model for predicting the births and deaths of firms is off, often accompanied by a turning point in the economy. These revisions don’t tell us a recession is necessary on the immediate horizon, but they are certainly something to keep in mind as the year winds down.

While the topline numbers are important to track, it’s also important to look under the hood. Manufacturing employment, for instance, has exhibited a notable slowdown in employment growth this year. The figure below shows the month-to-month change in manufacturing employment over the last two years with two important modifications. First, I’m using a three-month moving average to smooth the volatility in the series. Second, I’m removing the effect of the 46,000 striking GM workers that depressed the October numbers.

Figure A

Manufacturing employment growth tapers off: Manufacturing monthly employment growth, in thousands, three month moving average, October 2017–October 2019

Date Three month moving average
2017-10-01 23.3
2017-11-01 19.3
2017-12-01 26.0
2018-01-01 24.7
2018-02-01 25.0
2018-03-01 22.3
2018-04-01 24.3
2018-05-01 21.0
2018-06-01 25.0
2018-07-01 24.3
2018-08-01 20.0
2018-09-01 15.3
2018-10-01 18.3
2018-11-01 24.7
2018-12-01 25.3
2019-01-01 21.3
2019-02-01 15.0
2019-03-01 7.3
2019-04-01 2.7
2019-05-01 0.7
2019-06-01 5.0
2019-07-01 5.3
2019-08-01 5.3
2019-09-01 0.3
2019-10-01 2.3
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Note: Adjusted for striking workers: https://www.bls.gov/ces/publications/strike-report.htm.

Source: EPI analysis of Bureau of Labor Statistics' Current Employment Statistics public data series

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This obvious slowdown in manufacturing employment is troubling in itself, but the reason to look more closely at manufacturing isn’t simply because it’s a significant share of the economy (10% of private-sector employment) and historically has been a place for decent non-college jobs—largely due to the relatively high levels of unionization in that sector in the past. Manufacturing is one of the most cyclical sectors, bested only by construction (among major industries) in its prediction of upcoming economic slowdowns. And, construction isn’t looking too hot either. Average monthly construction job growth so far in 2019 is about half as fast as it was in 2018. This does not mean we are necessarily headed toward a recession, but this is certainly an indicator to keep an eye on in coming months.

The Federal Reserve is doing the right thing by cutting the federal funds rate this year, helping to keep the economy from stalling and for workers to hopefully see stronger wage growth. The figure below shows year-over-year nominal wage growth over the last several years. After rising to 3.4% in February 2019, the rate of growth has been tapering off. Wage growth is now back down to 3.0% over the year, significantly lower than levels consistent with inflation targets and productivity potential. This is slower than expected given that the unemployment rate has been at or below 4.0% for 20 months in a row. All else equal, the relative scarcity of workers should be driving up wages as employers have to compete to attract and retain the workers they want.Read more

OECD highlights temporary labor migration: Almost as many guestworkers as permanent immigrants

The 2019 edition of the Organization for Economic Cooperation and Development’s (OECD) annual International Migration Outlook report included a new chapter, “Capturing the ephemeral: How much labour do temporary migrants contribute in OECD countries?” It’s a good question, and one that had not yet been answered.

There is a dearth of data on temporary labor migration programs (TLMP) or schemes—aka guestworker programs, where migrants are employed temporarily in a country outside their own—and it hinders the ability of policymakers to make informed decisions. The OECD declared TLMPs are “a core concern in the public debate across OECD countries” but warns that their impacts are “understudied.” This information deficit exists despite the fact that TLMPs are controversial and make up an increasing share of labor migration, and in the United States in particular have been at the center of debates about how to reform the U.S. immigration system.

Why are TLMPs controversial and at the center of public debates? First, their size. One of OECD’s key findings is that the 4.9 million temporary labor migrants that entered OECD countries in 2017 is “almost as many… as permanent migrants in all categories combined.” Ignoring temporary labor migration in the OECD means ignoring nearly half of all migration.

Many employers want larger TLMPs and fewer regulations governing their use. But there are high economic, social, and psychological costs for the migrant workers who participate in temporary programs, including frequent human rights violations suffered in both countries of origin and destination. Further, some abuses that are technically legal are facilitated by the legal frameworks of TLMPs. In most TLMPs, employers control the visa status of their temporary migrant employees or “guestworkers”—which means getting fired makes them deportable. In part, that’s why TLMPs have been called things like “The New American Slavery.”

TLMPs raise technical issues that are not easily resolved. For example: Which industries are permitted to hire migrant workers? How will appropriate numerical limits in TLMPs be determined? What rights will migrants have once they’ve been admitted into receiving country labor markets? Can they bring their families? Will migrants be tied to one employer or be allowed to change jobs and employers? How will receiving country governments ensure that migrants return after their employment contracts end, or will migrants be allowed to become permanent residents? Do citizens in receiving countries have first preference for jobs that employers want to fill with migrants? Will migrants be paid the same wages as similarly situated local workers?Read more

Workers will lose more than $700 million annually under proposed DOL rule

In October, the Trump administration published a proposed rule regarding tips which, if finalized, will cost workers more than $700 million annually. It is yet another example of the Trump administration using the fine print of a proposal to attempt to push through a change that will transfer large amounts of money from workers to their employers. We also find that as employers ask tipped workers to do more nontipped work as a result of this rule, employment in nontipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.2%, resulting in 243,000 jobs shifting from being nontipped to being tipped. Given that back-of-the-house, nontipped jobs in restaurants are more likely to be held by people of color while tipped occupations are more likely to be held by white workers, this could reduce job opportunities for people of color.

The background: Employers are not allowed to pocket workers’ tips—tips must remain with workers. But employers can legally “capture” some of workers’ tips by paying tipped workers less in base wages than their other workers. For example, the federal minimum wage is $7.25 an hour, but employers can pay tipped workers a “tipped minimum wage” of $2.13 an hour as long as employees’ base wage and the tips they receive over the course of a week are the equivalent of at least $7.25 per hour. All but eight states have a subminimum wage for tipped workers.

In a system like this, the more nontipped work that is done by tipped workers earning the subminimum wage, the more employers benefit. This is best illustrated with a simple example. Say a restaurant has two workers, one doing tipped work and one doing nontipped work, who both work 40 hours a week. The tipped worker is paid $2.50 an hour in base wages, but gets $10 an hour in tips on average, for a total of $12.50 an hour in total earnings. The nontipped worker is paid $7.50 an hour. In this scenario, the restaurant pays their workers a total of ($2.50 + $7.50) * 40 = $400 per week, and the workers take home a total of ($12.50 + $7.50) * 40 = $800 (with $400 of that coming from tips).

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Analyses claiming that taxes on millionaires and billionaires will slow economic growth are fundamentally flawed

In recent weeks, a number of policy analyses of progressive economic policies—a surtax on high-incomes, a wealth tax, and Social Security expansion—have claimed these policies would damage economic growth. Policymakers should give these analyses very little weight in debates about these issues, for a number of reasons.

First, and most important, is the fact that all of these analyses are grounded in an economic view of the world that sees growth as constrained by the economy’s productive capacity (or the supply side of the economy) and not by the spending of households, businesses and government (the economy’s demand side). These estimates have other problems too—they are not even particularly convincing supply-side estimates and even if the economy’s growth really was constrained by supply, these estimates would still be misleading about the effects of these policies on welfare. But the biggest reason why policymakers should give these analyses zero weight is because they assume that growth is almost never demand-constrained.

Before the Great Recession, the assumption that growth was nearly always supply constrained was almost universally held by economists and macroeconomic policymakers. It was recognized that demand (or aggregate spending) could occasionally be too weak to fully employ the economy’s productive capacity and hence cause rising unemployment, but it was generally thought that such periods were rare and would end quickly after the Federal Reserve sensibly cut interest rates. Because shortfalls of demand relative to supply were rare and short and easy to fix, the reasoning went, any real constraint on the economy’s growth over the long-run must be the pace of growth of supply. Growth in supply is generally driven by growth in the quality of the workforce, the productive stock of plants, equipment and research, and growth in technological progress, which together lead to growing productivity—or the amount of income or output generated in an average hour of work.

The assumption that supply constraints are much more likely to bind overall growth than demand constraints drove almost all macroeconomic policymaking in the decades before the Great Recession. For example, the Federal Reserve for decades feared lower unemployment far more than lower inflation. Lower unemployment was a signal that demand was rising relative to supply, and if one thinks growth was generally supply-constrained, this meant that demand growth would quickly outstrip supply growth and lead to rising inflation. Lower inflation, conversely, meant that supply growth was outpacing demand growth—but that was always a temporary and easy-to-fix condition. The decades-long bipartisan overreaction to rising federal budget deficits is also a byproduct of assuming the economy’s growth is supply constrained. Deficits boost demand growth. If one assumes that demand is generally marching in lock-step with supply, then larger deficits that boost demand imply that supply constraints will soon bind and cause inflation (or interest rate increases). Smaller deficits, conversely, reduce demand growth. But if the danger of demand growth slowing too much is low and easy-to-fix, then that’s not a problem.Read more

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Bipartisan Senate budget bill could damage the economy during recessions

Last week, the Senate Budget Committee passed a bipartisan set of budget reforms out of committee. While they include some important steps forward, such as effectively eliminating the archaic debt limit, their centerpiece is a deeply damaging provision that, if passed into law, would make recessions far more damaging by forcing Congress to consider steep cuts just when the economy would be most hurt by them.

Under the reforms, instead of passing a budget every year, Congress would be on a two-year budget cycle. This is not totally objectionable. The damaging provisions are the “special reconciliation instructions“ provided in the second year of this budget cycle. In the first year, the Congressional Budget Office (CBO) would project the debt-to-GDP ratio from the budget. In the second year, CBO would report on whether the federal government is meeting those debt-to-GDP targets, and if not, trigger the special reconciliation instructions. These instructions would require the Senate Budget Committee to recommend an amount of deficit reduction in response to missing the debt-to-GDP targets and create a fast track for passing those deficit reductions.

Others have rightly focused on the extent to which this could line up budget cuts to programs that U.S. families rely on, like Medicaid, Medicare, and the Affordable Care Act. For example, revenues have come in even lower than CBO expected following the Republican Tax Cuts and Jobs Act (TCJA). If this reform bill were in place, Congress would be expected to respond to these larger-than-expected tax cuts for the rich with deficit reduction. This has been in the Republican leadership playbook all along, as they have made it abundantly clear that cuts to vital programs for low- and moderate-income families are the intended next step after passing regressive tax cuts for the rich and corporations. Read more

Where do the Democratic presidential candidates stand on migrant workers and labor migration?

The Trump administration’s harsh enforcement tactics and human rights violations at the border have rightly gotten most of the attention in press coverage about immigration lately, and enforcement has been the basis for the very few questions that Democratic presidential candidates have been asked about immigration so far in the primary debates. What’s gotten less attention and no discussion after five Democratic primary debates are the 17% of workers in the U.S. labor force who are foreign-born, including the 5% of the workforce who are vulnerable to wage theft and other abuses because they lack an immigration status, or the 1% who have an immigration status that is mostly owned and controlled by their employer, by virtue of being employed through U.S. temporary work visa programs.

Only a miniscule number of mentions have been made in the candidates’ published immigration plans about the intersection of immigration and the labor market, and there’s been no discussion on the debate stages about what the Democratic candidates would propose to reform future U.S. labor migration—i.e., migration for the purpose of work. In the past this has sometimes been referred to as “future flows” of migrants: the pathways available to persons from abroad who want to come to the United States to be employed, or avenues for employers that wish to hire migrants, either through temporary work visa programs or as permanent immigrants.

The fifth Democratic Presidential Primary Debate on November 20 was no different than the past four: virtually no discussion of immigration in general—with only one narrow question about the border wall—and no discussion at all about labor migration. Will this change during the sixth debate in December? I hope so, because a positive vision of U.S. labor migration that is fair to immigrants and Americans and fosters solidarity—rather than a corporate-driven race to the bottom on wages and labor standards, which employer groups often push for—is something worth talking about and an argument that progressives can win.

Migrants in the United States are living and working during a time when the president in office clearly doesn’t value their contributions, but nevertheless benefits economically from their labor: President Trump has hired undocumented workers at his companies—some of whom have alleged they were exploited—as well as guestworkers with temporary visas in programs he has expanded, where migrant workers are tied to employers and often underpaid—all while demonizing and scapegoating migrants as criminals and rapists. For the most part, President Trump has gotten a pass on his blatant hypocrisy.

By failing to bring up labor migration issues, the Democratic presidential candidates have not managed to expose Trump’s glaring weakness on the issue. While a significant share of the blame for not discussing the topic at the debates falls at the feet of the moderators, the candidates are making a mistake by not mentioning the contributions that migrant workers make or the challenges they face in the workplace. The candidates also haven’t offered many details about how they would re-make the immigration system so that future migrant workers can enter the U.S. labor market with equal rights and fair pay in their plans for immigration that are published on their campaign websites. A quick summary of what’s included in the immigration plans of a few of the major candidates makes this abundantly clear.Read more

Latina workers have to work nearly 11 months into 2019 to be paid the same as white non-Hispanic men in 2018

November 20 is Latina Equal Pay Day, the day that marks how long into 2019 a Latina would have to work in order to be paid the same wages her white male counterpart was paid last year. That’s nearly 11 months longer, meaning that Latina workers had to work all of 2018 and then this far—to November 20!—into 2019 to get paid the same as white non-Hispanic men did in 2018. Put another way, a Latina would have to be in the workforce for 57 years to earn what a non-Hispanic white man would earn after 30 years in the workforce. Unfortunately, Hispanic women are subject to a double pay gap—an ethnic pay gap and a gender pay gap. And, this pay gap widened over previous year when it “only” took until November 1 for Hispanic women catch up to non-Hispanic men.

The date November 20 is based on the finding that Hispanic women workers are paid 53 cents on the white non-Hispanic male dollar, using the 2017 March Current Population Survey for median annual earnings for full-time, year-round workers. We get similar results when we look at average hourly wages for all workers (not just full-time workers) using the monthly Current Population Survey Outgoing Rotation Group for 2018—which show Hispanic women workers being paid 56 cents on the white male dollar.Read more

Welcome developments on limiting noncompete agreements: A growing consensus leads to new state laws, a possible FTC rule making, and a strong bipartisan Senate bill

There is a growing bipartisan consensus that noncompete agreements harm workers and the economy. This bipartisanship scarcely seemed possible back in 2015 when we were government lawyers coordinating investigations by the Offices of the Illinois and New York Attorneys General into Jimmy John’s use of noncompete agreements for sandwich makers and delivery drivers. But earlier this month, in what seems like the first bipartisan federal effort in far too long, Senators Todd Young (R-Ind.) and Chris Murphy (D-Conn.) introduced a bipartisan bill that would effectively stop the abuse of noncompete agreements. This builds on a year in which six state legislatures also passed significant noncompete reforms.

The growing use of noncompete agreements

Employer use of noncompete agreements has mushroomed in recent years. These agreements prevent people from working for their former employer’s competitors, and they were once used sparingly to prevent, for example, executives with trade secrets or confidential business information from sharing them with new employers. Now, they’re often used indiscriminately to chill job mobility for employees with no access to such information. A 2015 study found that 40% of Americans have had a noncompete agreement at some point in their career. As lawyers, we’ve worked on cases involving noncompete agreements used for janitors, receptionists, customer service workers, fledgling journalists, even employees of a day care center.

Why are noncompete agreements so bad? They fly in the face of our fundamental American belief that anyone can work hard, gain skills, and move on to a better opportunity to build a better life. Noncompete agreements can trap workers in jobs they want to leave—whether because of sexual harassment or other poor working conditions, or even just a bad boss. They limit the talent pool, preventing employers from hiring the best worker for the job. Noncompete agreements can also stifle economic dynamism, blocking people from starting their own businesses.

Workers’ inability to leave their jobs because of noncompete agreements and similar limitations has also contributed to the wage stagnation of recent decades. Two studies released just last month found that noncompete agreements adversely affected wages and job mobility. This makes sense, given that the agreements erode the leverage that workers typically get from the threat of leaving their jobs to work elsewhere. That threat is now empty for millions of Americans subject to these provisions, showing that noncompete agreements aren’t really about trade secrets anymore. They’re about limiting workers’ bargaining power.Read more

The Tax Cuts and Jobs Act isn’t working and there’s no reason to think that will change

Proponents of the Tax Cuts and Jobs Act (TCJA) made bold claims about the effects that the TCJA’s corporate rate cuts would have on the paychecks of U.S. households. The economic theory rests on corporate rate cuts bringing forth enough additional savings to finance new investment spending. Specifically, higher after-tax corporate profits are passed down to shareholders in the form of higher dividends. These higher dividends attract more savings from abroad and incentivize U.S. households to save more. These extra savings finance new investments in plants and equipment, which boost the productivity of workers, and eventually that increased productivity boosts workers’ wages.

We pointed out at the time that in practice, this theory wasn’t likely to hold. After the TCJA passed, we indicated that by increasing deficits, the specifics of the TCJA didn’t even conform to the economic theory that was supposed to support it.

But that wasn’t enough to stop the TCJA’s proponents from making disingenuous arguments about the effects it was having on the economy. Proponents pointed to corporate claims that they were giving out bonuses or raising wages in the wake of the TCJA. The economic theory above shows clearly how this was nothing but a corporate PR ploy. Even in theory, it takes time for corporate profits to trickle down into worker wages, and we weren’t the only ones pointing this out. Unsurprisingly, data since then show those bonuses didn’t materialize for workers.Read more

What to Watch on Jobs Day: Anticipated distortions to payroll employment and wage growth

The uneasy question on everyone’s lips these days seems to be about when the next recession is coming. Ironically, every month that gets added to the longest economic recovery in modern history brings increasing scrutiny to even the slightest sign of a downturn. As we turn our attention to the Bureau of Labor Statistics (BLS) October Employment Situation Report this week, two of those signs—a drop in payroll employment and a slowdown in nominal wage growth—are deserving of deeper exploration.

First, we expect some noise in the October payroll estimates due to two temporary, but fully anticipated and measurable effects. According to the BLS CES Strike Report, October payroll estimates will be reduced by 46,000 because of the General Motors (GM) strike, which started in mid-September 2019 and ended last Friday. What that means, in practical terms, is that private sector payroll employment for the month of October, in the absence of the GM strike, was actually 46,000 higher than what will be reported. Another event that could have some effect on the number of jobs added in October will be temporary hiring for the Decennial Census, which could potentially inflate the number of public sector jobs.

While the October jobs report may not be the most straightforward indicator of current job growth patterns, in August BLS reported a major downward revision in the number of jobs added over the past year. Specifically, the release of the preliminary estimate of its benchmark revision to payroll employment revealed that there were a half million fewer jobs created between April 2018 and March 2019 than was originally reported. Given weaker private sector employment growth in September relative to the prior 3- to 6-month averages, we will be watching for whether October employment growth, net of the effects of the GM strike and Census hiring, is stronger or weaker than recent trends.Read more

Wage growth targets are good economics—if you get the details right: EPI Macroeconomics Newsletter

Josh Bivens, director of research at EPI

Earlier this month, Olivier Blanchard—the former chief economist at the International Monetary Fund and an influential figure in macroeconomics—suggested that the Federal Reserve should consider targeting inflation in nominal wages rather than (or in addition to) inflation in prices. I was predictably intrigued by this: I proposed a nominal wage inflation target for the Fed a few years back.

This edition of the newsletter quickly sketches out the logic of a nominal wage inflation target to guide Fed decision-making on interest rates, and it highlights one particularly important detail: the assumed rate of productivity growth used to specify the target. If the rate of productivity growth is endogenous to the degree of labor market slack (as some evidence indicates), then using real-time estimates of productivity growth as an input into the wage target could threaten to lock in the damage to wage growth done by too-slack labor markets.

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A little-known agency that is supposed to protect workers is instead eroding workers’ basic labor rights

Donald Trump ran for president promising to uplift workers. But his actions have done the exact opposite.

According to a new EPI report, Trump appointees on the board of a small, independent agency called the National Labor Relations Board (NLRB)—and the NLRB’s Trump-appointed general counsel (GC)—are working hard to undermine workers’ rights to join together in collective action to improve pay and working conditions.

“Scabby the Rat,” Chad Laird, licensed under CC BY-NC-SA 2.0

As authors Celine McNicholas, Margaret Poydock, and Lynn Rhinehart warn, Trump’s appointees have ticked off one by one the 10 items on a U.S. Chamber of Commerce hit list of NLRB policies to overturn. And they’re not done yet: The NLRB plans to go after more worker protections in the months ahead.

Under the National Labor Relations Act (NLRA), most nonsupervisory private-sector workers have the right to join together in collective action—whether that is through forming a union or some other means—to negotiate with employers about the terms and conditions of their employment. The NLRB was established to safeguard those rights by investigating and prosecuting violations of the law.

Instead, the three Trump appointees to the agency’s board and the agency’s Trump-appointed GC are systematically rolling back workers’ rights through a flurry of employer-friendly case decisions, rulemakings, and guidance memos. At the same time, the agency has downsized by 10 percent of its staff: The ratio of covered workers to NLRB staff is now roughly 96,000-to-1, up from 65,000-to-1 in 2011.

Here, in general terms, are just a few of the things the Trump NLRB is doing (those of you who know your way around labor law can go directly to the report):Read more

Seven questions EPI’s experts would ask at tonight’s debate

For all of the hype surrounding U.S. electoral debates, the flashy cable news forum and gladiator-style tone of the questions often lead to candidates jostling for soundbites rather than debating actual substance.

Economic inequality and the erosion of worker power are not only central to EPI’s mission, they are also key to the American political landscape today. With that in mind we tapped our experts for a bit of a wishful thinking exercise, collecting questions on a variety of issues that are core to our research.

Here are seven issues we would like to see raised in tonight’s presidential debate:

  1. Stagnant wages are one of the main challenges facing American workers. What do you see as the chief culprit and what policies would you implement to address this problem?
  2. What do you see as the key causes of income inequality, and what are your top two solutions? Is CEO pay too high? What would you do to rein it in?
  3. How do you plan to address America’s racist institutions, and the persistent lack of minority and woman representation in the most powerful offices of the land?
  4. Trump’s trade policies are chaotic, but he appears to have tapped into a problem that resonates with voters—trade deals that favor corporations over people. What is your positive alternative to Trump on trade?
  5. Name one way in which your thinking about the economy has changed over time. What’s an economic policy you’ve supported in the past that you no longer support?
  6. Teachers in Chicago are on the brink of a massive strike, part of a nationwide trend, as they push for social and educational justice for students of color. What is your long-term plan to fully support America’s public schools and how would you ensure that students of color get additional resources needed to overcome decades of disinvestment?
  7.  Upon taking office, you will inherit a humanitarian crisis at the border that is mostly the result of Trump’s draconian policies and his administration’s mismanagement. What would you do to address the reports of human rights violations by agents of the United States government and to end the poor conditions inside ICE immigration jails and Border Patrol facilities?

Black and Hispanic men could face disproportionate job loss due to transportation automation

On August 12, 2019, Democratic presidential candidate Andrew Yang tweeted, “I’ve done the MATH, it’s not immigrants taking our jobs, it’s automation. Instead of blaming immigrants, let’s give our citizens the means to thrive through the fourth industrial revolution.” This, like much of Yang’s and others’ current discourse regarding automation, is focused on an exaggerated fear that automation can and soon will replace workers’ roles in production, resulting in widespread job loss. But for hundreds of years, technological progress has continually reshaped the way work is done—and yet this progress has never resulted in a long-term decline in the labor force. Focusing on overstated risks of job loss from automation distracts from efforts to advocate for higher wages, better benefits, and increased bargaining power—issues that have been, and will continue to be, essential to the well-being of workers and their families.

However, while there is no reason to believe that automation will lead to widespread, sustained decline in the overall number of jobs, there will be specific jobs, industries, and workers for whom the impact of automation will come with real costs, at least in the short term. One industry in which concerns about automation may be warranted in the near term is transportation. Ford and Volvo have both announced plans to put fully autonomous vehicles on the road as early as 2021; Honda has announced a partnership with GM to begin developing autonomous vehicles; and Nissan recently introduced “no-hands driving” on highways in its ProPilot 2.0. While consumer skepticism may slow down the industry’s timelines, many advances have already been made: Most new cars have computerized driver assistance options; Tesla’s Autosteer has logged at least one billion miles of supervised autonomous driving; and Caterpillar is already producing autonomous vehicles for hauling mining materials.Read more

What to Watch on Jobs Day: How big is the teacher shortfall?

On Friday, the Bureau of Labor Statistics will release September’s numbers on the state of the labor market. As usual, I’ll be paying close attention to nominal wage growth as well as the prime-age employment-to-population ratio, which are two of the best indicators of labor market health. Friday’s report will also give us a chance to examine the “teacher shortfall”—the gap between local public education employment and what is needed to keep up with growth in the student population.

Thousands of local public education jobs were lost during the recession which began in 2008, and those losses continued deep into the official economic recovery, even as more students started school each year. This has been true of public sector jobs in general—continued austerity at all levels of government has been a drag on public sector employment, which has failed to keep up with population growth.

Teacher strikes in several states over the last few years have highlighted deteriorating teacher pay as a critical issue. My colleagues Sylvia Allegretto and Larry Mishel find that average weekly wages of public school teachers have fallen over the last two decades and the teacher wage penalty continues to grow, reaching a record 21.4% in 2018. My colleagues Emma García and Elaine Weiss have further documented shortcomings and teacher shortages and recently how much teachers have to pay out of their own pockets for school supplies for their classrooms. Low pay makes it harder to attract and retain teachers who have the qualifications associated with teacher effectiveness in the classroom.

The costs of a significant teacher employment gap are high, consequences measurable: larger class sizes, fewer teacher aides, fewer extracurricular activities, and changes to curricula. Last year, the local public education job shortfall remained large. To solve this problem, state and local governments need to fund more teaching positions and raise pay to close the teacher pay gap and attract and retain the qualified teachers our children deserve. On Friday, I will compare where jobs in public education should be, using the pre-recession ratio, student population growth, and the most recent jobs numbers.

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Household income growth was slower and less widespread in 2018 than in 2017

The state income data from the American Community Survey (ACS), released this morning by the Census Bureau, showed that in 2018, household incomes across the country rose—albeit more slowly, and in fewer states, than in the previous year. From 2017 to 2018, inflation-adjusted median household incomes grew in 33 states and the District of Columbia (14 of these changes were statistically significant.) This marks a decline from the broader growth seen between 2016 and 2017 when median household incomes grew in 40 states and the District of Columbia, with 24 of those changes being statistically significant.

The ACS data showed an increase of 0.2% in the inflation-adjusted median household income for the country as a whole—an increase of just $130 for a typical U.S. household and a slowdown in growth compared to the past three years: household incomes increased by 3.8% in 2015, 2.0% in 2016, and 2.5% in 2017. [i] Despite these increases, households in 23 states still had inflation-adjusted median incomes in 2018 below their 2007 pre-recession values, which makes this year’s slowdown particularly disappointing.

From 2017 to 2018, the largest percentage gains in household income occurred in Idaho, where the typical household experienced an increase of $2,085 in their annual income—an increase of 3.9%. Maryland remains the state with the highest median household income at $83,242, having experienced a slight increase (0.6%) from 2017 to 2018. The District of Columbia has the highest median household income in the country at $85,203—though comparing D.C. to states is problematic, since D.C. is a city, not a state. Read more

Poverty continues to fall in most states, though progress appears to be slowing

The 2018 American Community Survey (ACS) data released today shows that the slowdown in income growth from 2017 to 2018 reported earlier this month by the Census Bureau also indicates a slowdown in progress reducing poverty in many states. From 2017 to 2018, the poverty rate decreased in 36 states and the District of Columbia, with 14 of those states experiencing statistically significant declines. For comparison, from 2016 to 2017, poverty fell in 42 states plus the District of Columbia, with 20 states and the District of Columbia having statistically significant reductions.

The poverty rate rose in 14 states, with increases of 1.3 percentage points in Rhode Island, and 0.8 percentage points each, in Connecticut and Arkansas—although only Connecticut’s increase was statistically significant.

The continued reductions in poverty rates for most states are welcome news; however, most states have still not recovered to their 2007, pre-Great Recession poverty rates. Moreover, 38 states had higher poverty rates in 2018 than in 2000.

The national poverty rate, as measured by the ACS, fell 0.3 percentage points to 13.1 percent in 2018, making it nearly the same as the ACS poverty rate in 2007, when it was 13.0 percent. It remains 0.9 percentage points above the rate from 2000.

Between 2017 and 2018, West Virginia had the largest decline in its poverty rate (-1.3 percentage points), followed by Delaware (-1.1 percentage points), Louisiana (-1.1 percentage points), Idaho (-1.0 percentage points), and Arizona (-0.9 percentage points). Poverty increased most in in Rhode Island (1.3 percentage points), Connecticut (0.8 percentage points), Arkansas (0.8 percentage points), Maine (0.5 percentage point), Montana (0.5 percentage point), and Iowa (0.5 percentage point). Read more

More than eight million workers will be left behind by the Trump overtime rule: Workers would receive $1.4 billion less than under the 2016 rule

Yesterday, the U.S. Department of Labor announced 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.

For quick details on the history of this rulemaking, see this statement. The two tables below show just how many workers this administration is turning its back on with this rule, and how much money workers will lose. Using the same methodology used by the Department of Labor in their estimates of the economic impact of the rule, I estimate 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. As the table shows, this administration is turning its back on 4.2 million women, 2.7 million parents of children under the age of 18, 2.9 million people of color, and 4.6 million workers without a college degree.

Table 1

Number of salaried workers left behind by the Trump overtime rule, by demographic group

Workers left behind by 2019 rule Under the 2016 rule Under the 2019 rule
Total workers left behind Workers who would have gotten new protections under 2016 rule Workers who would have gotten strengthened protections under 2016 rule Total affected workers Workers with new protections Workers with strengthened protections Total affected workers Workers with new protections Workers with strengthened protections Total salaried workers
 All 8,210,000 3,230,000 4,980,000 13,470,000 4,550,000 8,920,000 5,260,000 1,320,000 3,950,000 59,140,000
Gender
Male 4,000,000 1,410,000 2,590,000 6,560,000 1,970,000 4,590,000 2,560,000 560,000 1,990,000 32,570,000
Female 4,210,000 1,820,000 2,390,000 6,910,000 2,580,000 4,340,000 2,710,000 760,000 1,950,000 26,570,000
Parental Status
Not a parent 5,500,000 2,170,000 3,330,000 9,060,000 3,060,000 6,000,000 3,550,000 890,000 2,660,000 37,470,000
Father 1,330,000 450,000 870,000 2,130,000 630,000 1,510,000 810,000 180,000 630,000 12,210,000
Mother 1,380,000 600,000 770,000 2,280,000 860,000 1,420,000 900,000 250,000 650,000 9,460,000
Race/ethnicity
White 5,260,000 2,230,000 3,030,000 8,220,000 3,120,000 5,100,000 2,960,000 890,000 2,070,000 40,680,000
Black 1,000,000 340,000 650,000 1,680,000 480,000 1,200,000 680,000 140,000 540,000 5,460,000
Hispanic 1,240,000 360,000 880,000 2,410,000 530,000 1,880,000 1,170,000 170,000 1,000,000 7,230,000
Asian 560,000 240,000 320,000 930,000 340,000 580,000 370,000 100,000 260,000 4,810,000
Others 140,000 50,000 90,000 230,000 70,000 160,000 90,000 20,000 70,000 960,000
Age
16–24 500,000 200,000 290,000 1,000,000 320,000 680,000 500,000 120,000 380,000 2,800,000
25–34 2,400,000 1,040,000 1,360,000 3,840,000 1,420,000 2,420,000 1,440,000 380,000 1,060,000 13,510,000
35–44 1,830,000 710,000 1,120,000 2,930,000 980,000 1,950,000 1,100,000 270,000 830,000 14,550,000
45–54 1,800,000 670,000 1,130,000 2,880,000 940,000 1,940,000 1,080,000 260,000 810,000 14,330,000
55–64 1,330,000 470,000 860,000 2,170,000 670,000 1,500,000 840,000 200,000 650,000 10,720,000
65+ 350,000 130,000 220,000 660,000 220,000 440,000 310,000 90,000 220,000 3,220,000
Education
Less than high school 310,000 40,000 270,000 800,000 60,000 740,000 500,000 30,000 470,000 1,980,000
High school 1,900,000 450,000 1,450,000 3,470,000 680,000 2,780,000 1,570,000 230,000 1,340,000 9,240,000
Some college 2,400,000 830,000 1,570,000 4,040,000 1,210,000 2,830,000 1,640,000 380,000 1,270,000 12,080,000
College degree 2,650,000 1,330,000 1,320,000 3,800,000 1,790,000 2,000,000 1,150,000 460,000 680,000 20,810,000
Advanced degree 950,000 580,000 370,000 1,360,000 800,000 570,000 410,000 220,000 190,000 15,030,000
States
All  8,210,000  3,230,000  4,980,000  13,470,000  4,550,000  8,920,000  5,260,000  1,320,000  3,950,000  59,140,000
Alabama 110,000 40,000 70,000 180,000 70,000 110,000 70,000 20,000 50,000 720,000
Alaska 10,000 10,000 20,000 10,000 10,000 10,000 10,000 100,000
Arizona 150,000 70,000 80,000 240,000 90,000 150,000 90,000 20,000 70,000 1,130,000
Arkansas 80,000 30,000 40,000 130,000 50,000 80,000 50,000 10,000 40,000 450,000
California 780,000 300,000 480,000 1,290,000 430,000 870,000 510,000 130,000 380,000 6,640,000
Colorado 170,000 60,000 110,000 280,000 90,000 190,000 110,000 30,000 80,000 1,240,000
Connecticut 70,000 30,000 40,000 120,000 40,000 70,000 40,000 10,000 30,000 720,000
Delaware 30,000 10,000 20,000 40,000 10,000 30,000 20,000 10,000 180,000
Washington, D.C. 20,000 10,000 10,000 30,000 10,000 20,000 10,000 10,000 240,000
Florida 680,000 270,000 420,000 1,160,000 380,000 780,000 480,000 110,000 370,000 3,880,000
Georgia 340,000 130,000 210,000 570,000 180,000 390,000 230,000 50,000 180,000 2,100,000
Hawaii 40,000 10,000 30,000 60,000 20,000 50,000 30,000 10,000 20,000 250,000
Idaho 40,000 20,000 20,000 70,000 20,000 40,000 30,000 10,000 20,000 250,000
Illinois 330,000 140,000 190,000 510,000 180,000 330,000 190,000 40,000 140,000 2,500,000
Indiana 160,000 70,000 90,000 270,000 100,000 170,000 110,000 30,000 80,000 1,090,000
Iowa 80,000 30,000 40,000 120,000 50,000 70,000 40,000 10,000 30,000 510,000
Kansas 60,000 30,000 40,000 110,000 40,000 70,000 40,000 10,000 30,000 480,000
Kentucky 110,000 40,000 60,000 170,000 60,000 110,000 70,000 20,000 50,000 660,000
Louisiana 120,000 40,000 80,000 200,000 60,000 140,000 80,000 20,000 60,000 730,000
Maine 30,000 10,000 20,000 50,000 20,000 30,000 20,000 10,000 220,000
Maryland 150,000 60,000 90,000 250,000 90,000 160,000 90,000 30,000 70,000 1,400,000
Massachusetts 180,000 80,000 110,000 300,000 110,000 190,000 120,000 30,000 80,000 1,670,000
Michigan 190,000 90,000 110,000 300,000 120,000 180,000 100,000 30,000 70,000 1,530,000
Minnesota 130,000 50,000 80,000 180,000 70,000 110,000 50,000 10,000 40,000 1,060,000
Mississippi 70,000 20,000 40,000 120,000 30,000 80,000 50,000 10,000 40,000 410,000
Missouri 160,000 80,000 90,000 260,000 100,000 160,000 100,000 20,000 70,000 1,030,000
Montana 20,000 10,000 10,000 30,000 10,000 20,000 10,000 10,000 130,000
Nebraska 50,000 20,000 30,000 80,000 30,000 50,000 30,000 10,000 20,000 330,000
Nevada 70,000 20,000 50,000 120,000 40,000 80,000 50,000 10,000 30,000 430,000
New Hampshire 30,000 20,000 20,000 50,000 20,000 30,000 20,000 10,000 10,000 280,000
New Jersey 280,000 100,000 180,000 450,000 140,000 320,000 170,000 40,000 130,000 2,200,000
New Mexico 40,000 10,000 20,000 70,000 20,000 50,000 30,000 10,000 20,000 280,000
New York 600,000 210,000 390,000 1,000,000 290,000 710,000 400,000 80,000 320,000 4,250,000
North Carolina 280,000 100,000 170,000 440,000 150,000 290,000 170,000 40,000 120,000 1,820,000
North Dakota 20,000 10,000 10,000 30,000 10,000 20,000 10,000 10,000 120,000
Ohio 230,000 100,000 120,000 370,000 150,000 220,000 150,000 50,000 100,000 1,770,000
Oklahoma 100,000 40,000 60,000 170,000 50,000 110,000 70,000 20,000 50,000 640,000
Oregon 90,000 40,000 50,000 150,000 50,000 90,000 50,000 20,000 40,000 670,000
Pennsylvania 310,000 130,000 180,000 490,000 190,000 310,000 190,000 60,000 130,000 2,220,000
Rhode Island 20,000 10,000 10,000 40,000 20,000 20,000 10,000 10,000 190,000
South Carolina 150,000 60,000 90,000 230,000 80,000 150,000 80,000 20,000 60,000 870,000
South Dakota 20,000 10,000 10,000 30,000 10,000 20,000 10,000 10,000 120,000
Tennessee 180,000 80,000 100,000 280,000 100,000 180,000 110,000 30,000 80,000 1,090,000
Texas 820,000 300,000 520,000 1,430,000 430,000  1,000,000 610,000 130,000 480,000 5,480,000
Utah 60,000 30,000 40,000 100,000 40,000 60,000 40,000 10,000 30,000 500,000
Vermont 20,000 10,000 10,000 30,000 10,000 20,000 10,000 10,000 110,000
Virginia 220,000 80,000 140,000 380,000 120,000 260,000 160,000 40,000 120,000 1,890,000
Washington 150,000 60,000 100,000 230,000 80,000 160,000 80,000 20,000 60,000 1,300,000
West Virginia 40,000 10,000 20,000 60,000 20,000 40,000 30,000 10,000 20,000 240,000
Wisconsin 120,000 50,000 70,000 180,000 70,000 110,000 60,000 20,000 40,000 930,000
Wyoming 10,000 10,000 20,000 10,000 10,000 10,000 10,000 80,000

Note: Subtotals may not add up to totals due to rounding. Following the methodology used by the U.S. Department of Labor, the estimates include all workers affected by the federal salary threshold increase, and do not account for higher state salary thresholds.

Source: EPI analysis of pooled Current Population Survey Outgoing Rotation Group microdata, 2016–2018, following the methodology used in the U.S. Department of Labor’s 2019 final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” 29 CFR Part 541 (published September 24, 2019).

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With this rule, the Trump administration is cheating workers out of billions. The annual wage gains from this rule are $1.4 billion dollars less than they would have been under the 2016 rule—and these annual earnings losses balloon over time because the Trump administration neglected to include automatic indexing in their rule. Once again, President Trump has turned his back on the working people of this country.

Table 2

The total annual wages workers will lose under the Trump overtime rule will grow to $1.8 billion in the first 10 years of implementation : Projected wages workers lose under the Trump overtime rule relative to the 2016 rule in the first 10 years of implementation of the Trump rule

Projected standard threshold under the 2016 rule Standard threshold under the 2019 rule Wages lost under the 2019 rule relative to the 2016 rule Total wage increase under the 2016 rule Total wage increase under the 2019 rule
2020 $51,064 $35,568 $1,431,100,000 $1,787,200,000 $356,100,000
2021 $51,064 $35,568 $1,334,500,000 $1,606,000,000 $271,500,000
2022 $51,064 $35,568 $1,246,300,000 $1,477,100,000 $230,800,000
2023 $55,055 $35,568 $1,579,900,000 $1,770,700,000 $190,800,000
2024 $55,055 $35,568 $1,459,000,000 $1,632,400,000 $173,400,000
2025 $55,055 $35,568 $1,360,300,000 $1,504,200,000 $144,000,000
2026 $59,098 $35,568 $1,663,800,000 $1,798,500,000 $134,700,000
2027 $59,098 $35,568 $1,560,800,000 $1,687,000,000 $126,200,000
2028 $59,098 $35,568 $1,473,600,000 $1,595,800,000 $122,200,000
2029 $63,346 $35,568 $1,826,900,000 $1,938,300,000 $111,400,000

Notes: Subtotals may not add up to totals due to rounding. Following the methodology used by the U.S. Department of Labor, the estimates include all workers affected by the federal salary threshold increase, and do not account for higher state salary thresholds. Calculations account only for wage increases of workers with new protections (i.e., they do not account for workers with strengthened protections).

Source: EPI analysis of pooled Current Population Survey Outgoing Rotation Group microdata, 2016–2018, following the methodology used in the U.S. Department of Labor’s 2019 final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” 29 CFR Part 541 (published September 24, 2019).

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Table 3

The total annual wages workers will lose under the Trump overtime rule in 2020, by state

Wages lost under the 2019 rule relative to the 2016 rule Total wage increase under the 2016 rule Total wage increase under the 2019 rule
US Total  $ 1,431,100,000 $ 1,787,200,000 $ 356,100,000
Alabama  $ 17,600,000  $ 23,700,000  $ 6,100,000
Alaska  $ 2,400,000  $ 3,100,000  $ 800,000
Arizona  $ 29,000,000  $ 35,900,000  $ 6,800,000
Arkansas  $ 11,200,000  $ 14,600,000  $ 3,400,000
California  $ 133,000,000  $ 167,100,000  $ 34,100,000
Colorado  $ 32,400,000  $ 44,600,000  $ 12,200,000
Connecticut  $ 12,400,000  $ 15,800,000  $ 3,400,000
Delaware  $ 3,200,000  $ 4,000,000  $ 800,000
Washington, D.C.  $ 4,700,000  $ 6,000,000  $ 1,300,000
Florida  $ 98,700,000  $ 117,500,000  $ 18,700,000
Georgia  $ 43,400,000  $ 53,200,000  $ 9,700,000
Hawaii  $ 4,400,000  $ 5,200,000  $ 900,000
Idaho  $ 6,400,000  $ 8,300,000  $ 1,900,000
Illinois  $ 68,500,000  $ 81,000,000  $ 12,400,000
Indiana  $ 33,000,000  $ 40,300,000  $ 7,300,000
Iowa  $ 20,400,000  $ 23,700,000  $ 3,300,000
Kansas  $ 15,300,000  $ 17,900,000  $ 2,600,000
Kentucky  $ 21,400,000  $ 28,800,000  $ 7,300,000
Louisiana  $ 20,300,000  $ 25,100,000  $ 4,800,000
Maine  $ 8,500,000  $ 9,900,000  $ 1,400,000
Maryland  $ 30,800,000  $ 42,100,000  $ 11,300,000
Massachusetts  $ 38,500,000  $ 51,500,000  $ 13,000,000
Michigan  $ 49,100,000  $ 64,100,000  $ 15,100,000
Minnesota  $ 28,500,000  $ 34,100,000  $ 5,600,000
Mississippi  $ 9,500,000  $ 12,400,000  $ 2,900,000
Missouri  $ 34,400,000  $ 39,700,000  $ 5,300,000
Montana  $ 4,500,000  $ 5,300,000  $ 800,000
Nebraska  $ 10,000,000  $ 12,500,000  $ 2,500,000
Nevada  $ 10,000,000  $ 12,200,000  $ 2,100,000
New Hampshire  $ 6,800,000  $ 8,800,000  $ 2,000,000
New Jersey  $ 34,800,000  $ 44,300,000  $ 9,500,000
New Mexico  $ 5,100,000  $ 6,800,000  $ 1,700,000
New York  $ 80,100,000  $ 99,300,000  $ 19,100,000
North Carolina  $ 45,700,000  $ 55,100,000  $ 9,400,000
North Dakota  $ 3,200,000  $ 3,900,000  $ 700,000
Ohio  $ 45,000,000  $ 60,900,000  $ 15,900,000
Oklahoma  $ 14,700,000  $ 19,900,000  $ 5,200,000
Oregon  $ 19,400,000  $ 26,500,000  $ 7,100,000
Pennsylvania  $ 51,500,000  $ 67,600,000  $ 16,100,000
Rhode Island  $ 4,600,000  $ 6,700,000  $ 2,100,000
South Carolina  $ 19,400,000  $ 23,700,000  $ 4,300,000
South Dakota  $ 3,300,000  $ 3,600,000  $ 400,000
Tennessee  $ 33,000,000  $ 42,000,000  $ 9,100,000
Texas  $ 141,700,000  $ 173,100,000  $ 31,400,000
Utah  $ 16,500,000  $ 19,900,000  $ 3,400,000
Vermont  $ 4,100,000  $ 4,700,000  $ 600,000
Virginia  $ 28,200,000  $ 35,300,000  $ 7,100,000
Washington  $ 40,500,000  $ 44,800,000  $ 4,300,000
West Virginia  $ 5,000,000  $ 6,400,000  $ 1,300,000
Wisconsin  $ 24,100,000  $ 31,200,000  $ 7,100,000
Wyoming  $ 2,600,000  $ 3,200,000  $ 600,000

Notes: Subtotals may not add up to totals due to rounding. Following the methodology used by the U.S. Department of Labor, the estimates include all workers affected by the federal salary threshold increase, and do not account for higher state salary thresholds. Calculations account only for wage increases of workers with new protections (i.e., they do not account for workers with strengthened protections).

Source: EPI analysis of pooled Current Population Survey Outgoing Rotation Group microdata, 2016–2018, following the methodology used in the U.S. Department of Labor’s 2019 final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” 29 CFR Part 541 (published September 24, 2019).

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Trump’s labor board wants to deprive graduate student workers of their basic right to form unions

The Trump-appointed National Labor Relations Board proposed a rule last week that would rob graduate teaching assistants and other student employees of the rights to organize and collectively bargain. This is just the most recent example of the board’s attack on working people. Last month, the board determined that misclassifying workers as independent contractors does not violate the National Labor Relations Act (NLRA). Before that, the General Counsel’s office released a deeply flawed memo that found that Uber drivers were not employees under the NLRA.

The trend with the Trump board seems to be to take a statute which broadly protects private sector workers and whittle away at its scope. At a time when worker advocates are demanding more workers have the right to a union and collective bargaining, the Trump board’s graduate teaching assistant proposal demonstrates a fundamental lack of understanding of the modern workforce.

Had the Trump board considered any data or conducted any meaningful analysis of the academic workplace in developing the proposed rule, it would have discovered that the last several decades have seen significant changes in labor conditions. Universities have increasingly relied on graduate teaching assistants and contingent faculty, with the growth in graduate assistant positions and non-tenure track positions outpacing the increase in tenured and tenure-track positions between the Fall of 2005 and Fall 2015.

These positions have dramatically lower compensation than faculty. The average salary of a graduate teaching assistant during the 2015-2016 school year was $35,810. Individuals who are working while enrolled in graduate school deserve livable wages. One way to address this issue is through collective bargaining—the very right the Trump board seeks to rob from these workers.

Further, in spite of the majority’s insistence that collective bargaining will harm “academic freedom,” there is a wealth of evidence to the contrary. Public universities have had graduate student worker unions for 50 years. In 2016, more than 64,000 graduate student employees were unionized at 28 institutions of higher education in the public sector. The colleges and universities with union represented student employees have not reported a loss of “academic freedom” as the Trump board suggests.

In reality, union-represented graduate student employees at public universities have reported that they enjoy higher levels of personal and professional support than that reported by non-union represented students. Unionized and nonunionized student employees report similar perceptions of academic freedom. However, union-represented graduate student workers did report receiving higher pay than non-union represented graduate student workers. Perhaps this is one reason why there have been so many successful organizing campaigns on campuses across the country the last few years. Student employees at several private universities have unionized and won better working conditions–better pay, better health care, better child care. The Trump board’s proposal would rob student employees of these gains.

The Trump board is committed to rolling back workers’ rights to a union and collective bargaining. They routinely advance political proposals based on flawed facts and legal reasoning. Through decisions, general counsel memos, and rulemaking the agency is making it more and more difficult for working people to have a voice in the workplace. All workers deserve the basic right to a union. The NLRB is the agency responsible for ensuring that right and we must hold them accountable for betraying their statutory duty.

Members of the public are invited to comment on the Trump board’s most recent proposal. Comments can be submitted here.

What’s luck got to do with it? When it comes to money, quite a bit

The notion that hard work is all that’s needed to achieve a prosperous or even comfortable living in the United States has come under increasing scrutiny in recent years as stagnant wages for most workers have led to talk about the demise of the American Dream.

Randy Schutt, a long-time progressive activist and researcher, has created a simple model to help illustrate just how much dumb luck, mere chance and circumstance, can play a role in who becomes wealthy and who remains poor.

The project, intended to illustrate certain nuances about economic inequality to students and researchers, is called “The Chancy Islands: A Land of Equally Capable People But With Unequal Luck.

His imaginary archipelago includes places like Rugged Island and Mercy Island, the first unforgiving, the latter much less so, and everything in between—Flat Island, Combo Island, Parity Island, etc.

“We’re always told that if you work hard and persist through adversity that you can rise above your humble (or horrible) circumstances and become wealthy. But that isn’t true,” Schutt said. “Most people are so beaten down by our economic system that they have to be lucky just to get by. And they have to be very lucky to do well and extremely well to get super rich.”

The statistics bear our Schutt’s narrative. Economic mobility, defined as the chance that someone born in the bottom fifth of the income distribution can sweat their way to the top fifth, is extremely low in the United States (around 7.5%)—and actually much lower than other rich nations, because of a much weaker social safety net.

You can explore the models for yourself by going to the website. But Schutt comes to the following conclusion after having examined all of the different combinations and possibilities exhaustively:

“It turns out that even with absolutely no differences in talent or effort, severe inequality can still arise just from the random shocks of wealth-depleting natural events such as serious illnesses, bad accidents, and natural disasters,” said Schutt. “Some households will amass vast fortunes without having done anything to justify their windfall; others will slide into poverty and homelessness without having done anything to warrant their impoverishment.”

Schutt adds, on a hopefully note, that his model also suggests “a few simple mitigation measures can almost completely rebalance such a society, essentially eliminating any long-term inequality.”

Such policies include, perhaps unsurprisingly, taxing the wealthy in ways that are becoming increasingly popular with the American electorate.

Why is the economy so weak? Trade gets headlines, but it’s more about past Fed rate hikes and the TCJA’s waste

Josh Bivens, director of research at EPI

The Federal Reserve meets this week against a backdrop of mounting evidence of a slowing economy. Since the last Federal Open Market Committee (FOMC) meeting, revised data on gross domestic product (the widest measure of the nation’s economic activity) and job growth have shown that 2018 saw much slower growth than previously reported.

Between April 2018 and March 2019, for example, the economy created 500,000 fewer jobs than had originally been reported. Only 105,000 jobs were created in August if temporary Census positions are excluded: this is roughly half the pace of growth that characterized pre-revision estimates of average job growth in 2018.

These clear signs of an economic slowdown raise the obvious question, “Why has growth faltered?”

While many pundits and economists have blamed the escalating trade conflict between the Trump administration and China, there are much more obvious sources of this slowdown: the Fed’s own premature interest rate increases between December 2015 and 2018 and the utter waste of fiscal resources that was the Tax Cuts and Jobs Act (TCJA) passed at the end of 2017.

To be clear, the Trump administration’s trade conflict is stupid and destructive, and its attempt to pin the blame for the slowdown on the Fed is self-serving. And the Trump administration’s scapegoating others for the weak economy takes real hubris given that its signature economic policy initiative—the TCJA—has been such an obvious failure in terms of spurring growth.

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Racial and ethnic income gaps persist amid uneven growth in household incomes

Yesterday’s Census Bureau report on income, poverty, and health insurance coverage in 2018 shows that while there was a slowdown in overall median household income growth relative to 2017, income growth was uneven by race and ethnicity. Real median income increased 4.6% among Asian households (from $83,376 to $87,194), 1.8% among African American households (from $40,963 to $41,692), 1.1% among non-Hispanic white households (from $69,851 to $70,642), and only 0.1% among Hispanic households (from $51,390 to $51,450), as seen in Figure A. The only groups for which income growth was statistically significant were Asian and Hispanic households.

In 2018, the median black household earned just 59 cents for every dollar of income the median white household earned (unchanged from 2017), while the median Hispanic household earned just 73 cents (down from 74 cents).

Figure A

Real median household income, by race and ethnicity, 2000–2018

Year White  Black  Hispanic  Asian  White-imputed   Black-imputed  Hispanic-imputed  Asian-imputed  White  Black  Hispanic  Asian  White  Black  Hispanic  Asian 
2000 $66,712  $43,380  $48,500  $69,069 $44,614 $46,989
2001 $65,835 $41,899 $47,721 $68,161 $43,091 $46,234
2002 $65,646 $40,839 $46,334 $73,660 $67,965 $42,001 $44,890 $79,501
2003 $65,388 $40,633 $45,160 $76,231 $67,698 $41,789 $43,753 $82,276
2004 $65,178 $40,292 $45,670 $76,631 $67,481 $41,438 $44,247 $82,708
2005 $65,458 $39,898  $46,360  $76,873 $67,771  $41,033 $43,846 $84,991 
2006 $65,449 $40,116 $47,169 $78,291 $67,762 $41,257 $45,699 $86,560
2007 $66,676 $41,388 $46,958 $78,343 $69,032 $42,565 $45,495 $86,616
2008 $64,923 $40,154 $44,326 $74,913 $67,217 $41,296 $42,945 $82,824
2009 $63,895 $38,423 $44,628 $74,982 $66,153 $39,516 $43,238 $82,901
2010 $62,857 $37,114 $43,433 $72,402 $65,078 $38,170 $42,080 $80,048
2011 $62,001 $36,215 $43,217 $71,139 $64,192 $37,245 $41,870 $78,653
2012 $62,465 $36,945 $42,738 $73,415 $64,672 $37,996 $41,406 $81,169
2013 $62,915 $37,547 $44,228 $70,687 $65,138 $38,615 $42,850 $78,153 $65,138 $38,615 $42,850 $78,153
2014 $63,976 $37,854 $45,114 $78,883 $63,976 $37,854 $45,114 $78,883
2015 $66,721 $39,440 $47,852 $81,788 $66,721 $39,440 $47,852 $81,788
2016 $68,059 $41,924 $49,887 $85,210 $68,059 $41,924 $49,887 $85,210
2017 $69,806 $41,584 $51,717 $83,314 $69,806 $41,584 $51,717 $83,314 $69,851 $40,963 $51,390 $83,376
2018 $70,642  $41,692  $51,450  $87,194 

 

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The data below can be saved or copied directly into Excel.

Note: Because of a redesign in the CPS ASEC income questions in 2013, we imputed the historical series using the ratio of the old and new method in 2013. Solid lines are actual CPS ASEC data; dashed lines denote historical values imputed by applying the new methodology to past income trends. The break in the series in 2017 represents data from both the legacy CPS ASEC processing system and the updated CPS ASEC processing system. White refers to non-Hispanic whites, black refers to blacks alone or in combination, Asian refers to Asians alone, and Hispanic refers to Hispanics of any race. Comparable data are not available prior to 2002 for Asians. Shaded areas denote recessions.

Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Poverty Tables (Table H-5 and H-9)

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Based on EPI’s imputed historical income values (see the note under Figure A for an explanation), 11 years after the start of the Great Recession in 2007, only African American households remained below their pre-recession median income. Compared with household incomes in 2007, median household incomes in 2018 were down 2.1 percent for African American households, but up 0.7% for Asian households, 2.3% for non-Hispanic white households, and 13.1% for Hispanic households. Asian households continued to have the highest median income, despite large income losses in the wake of the recession.

The 2018 poverty rates also reflect the patterns of income growth between 2017 and 2018. As seen in Figure B, poverty rates for all groups were down slightly or unchanged, but remained highest among African Americans (20.7%, down 1.0 percentage point), followed by Hispanics (17.6%, down 0.7 percentage points), Asians (10.1%, up 0.4 percentage points), and whites (8.1%, down 0.4 percentage points). African American and Hispanic children continued to face the highest poverty rates—28.5% of African Americans and 23.7% of Hispanics under age 18 lived below the poverty level in 2018. African American children were more than three times as likely to be in poverty as white children (8.9%).Read more

Government programs kept tens of millions out of poverty in 2018

**Correction: The SSI number in Figure B was corrected to 2,949,000 from 3,949,000.**

From 2017 to 2018, the official poverty rate fell by 0.5 percentage points, as household incomes rose modestly, albeit at a slower pace than the previous three years. This was the fourth year in a row that poverty declined, but the poverty rate remains half a percentage point higher than the low of 11.3% it reached in 2000.

Since 2010, the U.S. Census Bureau has also released an alternative to the official poverty measure known as the Supplemental Poverty Measure (SPM).

The SPM corrects many deficiencies in the official rate. For one, it constructs a more comprehensive threshold for incomes families need to live free of poverty, and adjusts that threshold for regional price differences. For another, it accounts for the resources available to poor families that are not included in the official rate, such as food stamps and other in-kind government benefits.

As shown in Figure A, a larger proportion of Americans are in poverty as measured by the SPM than as measured by the official measure. (Importantly, however, researchers who constructed a longer historical version of the SPM found that it shows greater long-term progress in reducing poverty than the official measure.) In 2018, the SPM increased by 0.1 percentage points to 13.1%. Under the SPM, 42.5 million Americans were in poverty last year, compared with 38.1 million Americans under the “official” poverty measure.Read more