State policy solutions for good home health care jobs—nearly half held by Black women in the South—should address the legacy of racism, sexism, and xenophobia in the workforce
Introduction
Home health care workers are part of the “care economy” that makes all other work possible.
These workers include nursing, psychiatric, and home health aides; personal and home care aides; and nursing assistants working in private households. They provide services and support for older adults, people with chronic illnesses, and people with disabilities allowing them to stay in their homes and communities, rather than nursing homes or other institutions. And the COVID-19 public health emergency further highlighted the importance of this workforce, who provide long-term care at a time when congregate settings are limited in their ability to support physical distancing or quarantining.
So why don’t we value these workers?
Jobs report doesn’t show signs of recession—yet—as labor market remains strong: The Fed should still be wary of raising interest rates much further
Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 528,000 jobs added in July.
Rising inflation is a global problem: U.S. policy choices are not to blame
Key takeaways:
- An international comparison among OECD countries shows that rising inflation is a global phenomenon, not unique to the United States.
- This fact argues strongly that high inflation in the U.S. has not been driven by any unique American policy—not the American Rescue Plan and other generous fiscal relief during the pandemic recession and recovery nor anything else U.S.-centric.
- Some have argued that the global rise of inflation means that many countries— including the U.S.—overstimulated their economies and generated excess aggregate demand. But this explanation is not supported by the data. The countries with larger declines in unemployment over the past 18 months have not seen larger inflation spikes.
Consumer price data for June 2022 showed another month of rapid inflation, with overall inflation rising 9.1% year-over-year and core inflation (which doesn’t include volatile energy and food prices) rising by 5.9%. This level of inflation has obviously become a major political issue this year. But however this issue resonates politically, as an economic matter a common narrative that blames the Biden administration and its policy choices for causing the inflation is deeply misleading.
This is not simply a case for exonerating the Biden administration’s choices—how the recent inflationary outbreak is interpreted will have huge consequences for how policymakers respond. A loud chorus of economic analysts and influential policymakers continue highlighting the need for the Federal Reserve to continue raising interest rates sharply to slow growth to “rein in” inflation. This approach risks terrible consequences and threatens to cast aside the amazing policy achievement of a full jobs recovery from the pandemic recession.
What to watch on jobs day: Can wage growth normalize without substantially higher unemployment?
On Friday, the Bureau of Labor Statistics (BLS) will release its monthly report on the state of the labor market. In addition to top-line payroll employment growth and changes in labor force participation, probably the most anticipated measure is the pace of nominal wage growth.
Even with the recent contraction in gross domestic product (GDP), the labor market has been expanding at a steady rate and wage growth continues to fall short of inflation. Despite this, many remain worried that abnormally high nominal wage growth (relative to pre-pandemic) will prevent inflation from returning to more-normal levels in the year ahead. In this jobs day preview post, we take a closer look at wage growth using several different measures to gauge just how worried we should be that wage growth will not normalize in the coming year without aggressive policy measures that cause collateral damage (like higher unemployment) in the labor market. We find that most of these measures show decelerating wage growth in very recent quarters.
Job openings declined in June but remain much higher than pre-pandemic
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for June. Read the full Twitter thread here.
Slight correction. Job openings are down each month since March’s series high. That’s three months in a row of declines. Please pardon the error in counting months when it’s now August and the data are for June.
— Elise Gould (@eliselgould) August 2, 2022
Not a recession—yet: The Fed’s overly aggressive interest rate hikes increase risk of recession
Yesterday’s data showing negative gross domestic product (GDP) growth for the second consecutive quarter has sparked a debate about whether the U.S. economy is in recession. Below are some quick thoughts interpreting the numbers, and some larger questions about recession and inflation.
- We’re very likely not in recession currently, even though we’ve had two straight quarters of negative GDP growth. The “two straight quarters” criterion for a recession is a rough rule of thumb. The more generally accepted arbiter of business cycles in the U.S. is the National Bureau of Economic Research Business Cycle Dating Committee, which weighs changes in many economic variables to determine the start and end dates of recessions. The most notable statistics arguing against the view that we’re in recession currently are unemployment and employment growth. Both remain quite strong.
- The negative growth in the first quarter of 2022 was mostly driven by statistical quirks that hid some real strength in the economy. Specifically, exports were quite weak and imports quite strong, but both of these measures can be pretty volatile. Net exports in the second quarter, for example, were positive and added to growth. But, if I had to choose one measure of the strength of the domestic economy that stripped out volatile measures that could be introducing noise in our assessment, I’d choose domestic demand growth (known officially as final sales to domestic purchasers)—this is a measure of spending by U.S.-based households, businesses, and governments that strips out volatile changes in firms’ inventories. In the first quarter, this domestic demand growth was acceptably strong, rising at a 2.0% rate.
- Conversely, fundamental growth in the second quarter was weak. Domestic demand growth actually shrank in the quarter. On top of that fundamental weakness, a statistical quirk—a huge decline in the contribution to GDP made by changes in firms’ inventories—also weighed unusually on growth.
- In short, the negative growth in the first quarter of 2022 looked much worse than it was. This is far less true for the negative growth in the second quarter.
Unions helped keep workers in jobs and paid during the pandemic
In a new EPI technical paper, I review data on how union workers fared relative to their nonunion counterparts during the first two years of the COVID-19 pandemic. The nationally representative data allow me to draw several important conclusions about what unions have been able to do for the workers they represent as the country confronts COVID-19.
First, unions helped maintain pay for workers. Specifically, union workers—union members and nonmembers who were covered by a collective bargaining contract—were more likely than nonunion workers to receive pay during periods when their workplaces were not open for business. Even after controlling for a wide range of worker characteristics, such as industry, occupation, education, age, gender, race and ethnicity, marital status, state of residence, and others, union workers were 10 percentage-points more likely than nonunion workers to have been paid by their employers for hours not worked due to pandemic-related closures or lost business during the pandemic period.
Second, unions saved jobs. My estimates suggest job losses were 2,000 jobs per month lower for union members than nonunion members during the first six months of the pandemic when the economy was suffering most. Even as the economy started to recover over the subsequent 16 months, unions continued to preserve an average of 1,700 jobs per month. During the 22 months I analyzed in my paper, unions saved just over 40,000 jobs, relative to what happened to workers in nonunion establishments.
Third, the union boost to wage levels remained. The union weekly earnings premium—the 7% by which the weekly earnings of union workers exceeded the earnings of comparable nonunion workers—held steady over the course of the pandemic. The pandemic hit all workers hard, but it did not reduce the relative position of union workers.
Additional findings and a complete discussion of the methodology used are available here.
Putting Minnesota’s record-low unemployment numbers in context
Minnesota set a record in June with an unemployment rate of 1.8%, the lowest number recorded for any state ever since the data began to be collected in 1976. While this is good news, the headline unemployment number must be put in proper context. In Minnesota, and across the country, payroll employment and labor force participation are still down considerably from before the pandemic. Policymakers should resist the temptation to treat a low unemployment rate as proof the economy is overheating, and instead should continue pursuing policies to bring workers into the workforce, raise wages, reduce barriers to employment, and promote racial and gender equity.
The unemployment rate is an important measure, but it doesn’t tell the full story
A 1.8% unemployment rate means that only 1.8% of Minnesotans looking for jobs report that they’re unable to find one. That’s good news. And it’s not just Minnesota that’s doing well. The June 2022 unemployment numbers also showed Nebraska at 1.9% unemployment, New Hampshire and Utah at 2.0%, and Vermont at 2.2%. Eighteen states, in total, had a June unemployment rate below 3%.
And yet, every single one of these states still had fewer jobs in June than before the pandemic. EPI’s Economic Indicators page shows that the United States is still down 524,000 jobs from its pre-pandemic peak. If we account for population growth over the last 2.5 years, the country has 3 million fewer jobs than we would expect if pre-pandemic trends had continued.
Inflation is no excuse for inaction on needed tax reforms and investments
In recent months, a number of policymakers have cited inflation concerns as the source of their opposition to budget reconciliation proposals that would raise taxes progressively and boost federal spending on public investments and social insurance. (Many of these proposals were once collected together and named the Build Back Better Act (BBBA), but since negotiations over the full BBBA faltered there has been no single name for the shifting permutations of tax and spending changes that are under debate.)
Today’s inflation is a real concern—it is running too high and is reducing households’ purchasing power. But linking fiscal policy decisions about the proper level of taxes and spending in the medium and long run to today’s inflation makes little sense. Even worse, many of these policymakers cast both the tax increases and the spending increases as potentially inflationary. This is not just unwise—it is simply economically innumerate.
The value of the federal minimum wage is at its lowest point in 66 years
The value of the federal minimum wage has reached its lowest point in 66 years, according to an EPI analysis of recently released Consumer Price Index (CPI) data. Accounting for price increases in June, the current federal minimum wage of $7.25 per hour is now worth less than at any point since February 1956. At that time, the federal minimum wage was 75 cents per hour, or $7.19 in June 2022 dollars.
Last July marked the longest period without a minimum wage increase since Congress established the federal minimum wage in 1938, and continued inaction on the federal minimum wage over the past year has only further eroded the minimum wage’s value. As shown in Figure A, a worker paid the current $7.25 federal minimum wage earns 27.4% less in inflation-adjusted terms than what their counterpart was paid in July 2009 when the minimum wage was last increased, and 40.2% less than a minimum wage worker in February 1968, the historical high point of the minimum wage’s value.
The minimum wage increases of the late 1960s expanded the coverage of the minimum wage to include industries like agriculture, nursing homes, restaurants, and other service industries. The earlier exemption of these industries from the federal minimum wage disproportionately excluded Black workers from this important labor protection. The application of the minimum wage to these industries raised workers’ incomes and directly reduced Black-white earnings inequality. Congress’s failure to raise the minimum on a regular basis in the interim, however, has eroded the value of the federal minimum wage and worsened racial earnings gaps.