Job growth strong in December as wage growth slows
Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 223,000 jobs added in December and wage growth slowing.
Proposed FTC rule would ban noncompete agreements and empower workers
Today, the U.S. Federal Trade Commission (FTC) released a proposed rule that, if finalized, would ban noncompete agreements. EPI research has found that at least 36 million workers—27.8% of the private-sector workforce—are required to enter noncompete agreements, which are employment provisions that ban workers at one company from working for, or starting, a competing business within a certain period of time after leaving a job.
In response, EPI president Heidi Shierholz shared a Twitter thread applauding the proposed rule.
From EPI president, Heidi Shierholz (@hshierholz):
This morning the @FTC released a proposed rule that, if finalized, will ban noncompete agreements. It is REALLY good. 1/ https://t.co/KlnlFHzIjS
— Heidi Shierholz (@hshierholz) January 5, 2023
The research on this is clear. Noncompetes are ubiquitous, they reduce wages, keep workers from finding better opportunities, and reduce the formation of new firms. 3/ https://t.co/NsnAmuwkkY
— Heidi Shierholz (@hshierholz) January 5, 2023
In other words, noncompetes are about reducing competition, fullstop. That’s bad for workers and bad for consumers. This rule would be an important step in creating an economy that works for everyone. 5/ https://t.co/HT8Mjc3NsY
— Heidi Shierholz (@hshierholz) January 5, 2023
Job openings remain significantly lower than 2022 peak
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for November. Read the full Twitter thread here.
While not much changed in the JOLTS report for November, when we benchmark against latest peaks and troughs, we can see how much these labor market metrics have moderated over the last two years. Job openings and hires are down about 12% from their peaks earlier in 2022. pic.twitter.com/V5ueoVLHFl
— Elise Gould (@eliselgould) January 4, 2023
More than 8 million workers will get a raise on New Year’s Day: 23 states and D.C. will see minimum wage hikes ranging from $0.23 to $1.50 an hour
On January 1, 23 states and Washington, D.C. will increase their minimum wages, raising pay for an estimated 8.4 million workers across the country.1 In total, workers’ wages will increase by more than $5 billion, with average annual raises for affected full-time workers ranging from $150 in Michigan to $937 in Delaware. In addition, 27 cities and counties will increase their minimum wages on January 1, adding to the number of workers likely to see increased earnings.
The state with the stingiest increase is Michigan with a 23-cent raise bringing the total to $10.10 an hour, while the biggest hike of $1.50 an hour is in Nebraska, raising the rate to $10.50 an hour.2 Washington, D.C. will not increase its regular minimum wage, but will increase its tipped minimum wage by 65 cents to $6.00 an hour as a result of a ballot measure to eliminate the tipped minimum wage by 2027. When the New Year’s celebrations die down, Washington will be the state with the highest minimum wage of $15.74 an hour.
Proposed New York state minimum wage legislation would boost wages for nearly 2.9 million workers: Minimum wages would range by region from $20 to $21.25 per hour by 2026
Key takeaways:
- Proposed Raise Up New York legislation, sponsored by State Senator Jessica Ramos and Assembly Member Latoya Joyner, would raise the minimum wage to $21.25 an hour in New York City and suburban Nassau, Westchester, and Suffolk counties by 2026. It would also raise upstate New York’s minimum wage to $20 an hour by 2026.
- Starting in 2027, upstate New York would catch up to the statewide wage, and both would be adjusted each year to keep up with rising consumer prices and worker productivity.
- We find that nearly 2.9 million workers—32% of the state’s workforce—would receive raises averaging $3,307 a year.
- These minimum wage increases would be a vital support for low-wage workers in one of the most expensive states in the nation and arrive at a time when the purchasing power of workers’ wages has been eroded rapidly by recent price increases.
Updated minimum wage legislation in the New York State Senate and Assembly (S3062D/A7503C) would secure much-needed wage increases for almost 2.9 million workers throughout the state. The proposed Raise Up New York legislation—which would index annual statewide increases to inflation and labor productivity—would help protect workers’ economic security as prices rise, and prevent inequality from widening as the economy grows.
A fair way of calculating the minimum wage
Currently, New York has distinct minimum wage schedules for three different regions in the state: New York City, the suburban counties of Nassau, Westchester, and Suffolk, and the remainder of upstate New York. As shown in Table 1, New York City’s minimum wage is $15 per hour, where it has stood since 2018. Nassau, Westchester, and Suffolk counties’ minimum wage reached $15 per hour at the end of 2021, while the minimum wage for the rest of the state is currently $13.20 with scheduled annual increases that will track nominal labor productivity (real productivity plus inflation) until it eventually reaches $15.00 per hour.
The proposed Raise Up New York legislation would increase the minimum wage for New York City and Nassau, Westchester, and Suffolk counties to $21.25 through 2026, and then increase the minimum wage annually by nominal labor productivity. The tipped minimum wage would also increase while remaining two-thirds of the regular minimum wage as stipulated in New York law.1 The minimum wage for the rest of the state would reach $20.00 an hour in 2026 before catching up to NYC and the suburban counties in 2027.2 The inflation and labor productivity adjustments would follow the same formula that New York has already been using for state minimum wage increases in recent years.
Beyond the numbers: What teaching shortages look like in practice
In a recent report, we reviewed the size and scope of the national teacher shortage using data from a wide range of public and private sources, including the Bureau of Labor Statistics, the National Center for Education Statistics, the RAND Corporation, and others. The available data consistently point to a large and growing problem of teacher vacancies that looks unlikely to be filled without substantial efforts to increase job quality for teachers.
But in pulling together our report, we realized that the statistics we presented don’t fully capture what shortages actually look like—in practice—for school districts, teachers, and students. To convey at least a part of that missing texture, we’ve pulled together some recent journalistic and more granular accounts of how state and local school education officials have responded to the long-term rise in teacher vacancies. Unfortunately, almost all of these have proved to be less than ideal for teachers and students.
EPI’s top charts of 2022: EPI’s most popular charts tell the story of how pandemic setbacks in income inequality were mitigated by pandemic relief
Rising CEO pay, a pandemic further undermining low and middle-income workers, and the growing gap between worker productivity and their pay continued to impede income equality.
Through it all, however, government pandemic stimulus programs gave a lifeline to many of those struggling to make ends meet, helping keep millions out of poverty.
All these important topics were among the Economic Policy Institute’s top charts this year.
Here’s a rundown on what saw the most engagement among EPI’s readers:
Inflation is easing: Fed should slow rate hikes
Inflation numbers out Tuesday are encouraging, providing more evidence that any movement to continue raising interest rates at breakneck speed and potentially slow the economy needs to be squashed. The Consumer Price Index (CPI)—released by the U.S. Bureau of Labor Statistics—rose 0.1% in November, and the all-items index increased 7.1% year-over-year. EPI research director Josh Bivens breaks down what the data tell us about rising prices.
“Inflation can normalize without taking a hammer to the head of the economy,” stresses EPI Research Director Josh Bivens, about the report and any steps by the Federal Reserve to push for steep interest rate hikes at its meeting this week.
“It was a very good report,” he explained. “The remaining inflation in this report was essentially food and shelter.” While rising food prices harm consumers, there’s no policy lever that the Fed has to usefully target these. These price increases are related, he added, to Russia’s invasion of Ukraine and global commodity markets more generally, not to any overheating of the U.S. economy.
“On shelter,” he continued, “the data strongly indicate that large rental inflation declines are on the way in 2023—they’ve already shown up in industry data, and these very reliably show up 6-12 months later.”
What’s at stake for state and local governments in the year-end government funding negotiations
As the clock ticks toward the end of the 117th Congress, legislators on Capitol Hill are reportedly still locked in negotiations on how to fund the government for 2023. Congress faces the deadline this week—December 16—to pass a plan for government funding, when the short-term continuing resolution (CR) to fund the government will expire.
The federal appropriations fight has serious stakes for state and local governments. Democrats in Congress, in particular, are pushing to not merely pass another short-term CR to keep the funding as is, but to pass a comprehensive spending bill, or omnibus, that fully appropriates funding that meets the realities of the moment. The outcome of these negotiations will, as always, have real consequences for working people and our economic stability overall.
The appropriations debate has especially high economic stakes because of long-standing inaction on Capitol Hill to address the debt limit. The new House Republican majority in the 118th Congress has already signaled their willingness to once again use the debt ceiling to force harmful spending cuts.
Top five EPI blog posts of 2022: Inflation and minimum wage increases among the most-read posts
Inflation concerns were top of mind for workers and their families across the country, but misinformation on the cause of rising prices was rampant. To figure out what was really going on, many readers turned to the Economic Policy Institute for research-based answers.
The majority of EPI’s top blog posts this year dealt with inflation, including how corporate profits, not workers’ wages, were contributing to bigger price tags.
But the top post in 2022 was on minimum wage increases in 21 states, a welcome pay hike for workers struggling to make ends meet.
Here is a rundown of the top five posts: