The federal minimum wage has languished at $7.25 since 2009. As inflation erodes the real value of the federal minimum, twenty nine states (and D.C.) have taken it upon themselves to raise their state minimum wages. Some states have made small changes (such as Arkansas, which raised its minimum wage to $7.50), while others have moved forward more boldly (such as Massachusetts, where the state minimum wage will reach $11.00 by 2017.) Some passed incremental increases which will take place over two or three years, while others have automatic increases every year to account for inflation. Several enacted changes to their laws back in 2006, while others have jumped on the new wave of action that has taken place in the past few years. There is tremendous variation in minimum wage policy across the states, and EPI’s minimum wage tracker provides a simple and intuitive way to understand the breadth of state, local, and federal minimum wage policy.

Here are some interesting trends and data points worth noting:

Five states do not have a minimum wage. Alabama, Louisiana, Mississippi, South Carolina, and Tennessee all defer to the federal minimum wage of $7.25 in the absence of any state laws. Wyoming and Georgia both have a state minimum wage lower than the federal minimum. The minimum wage in both of these states is $5.15, but the federal minimum wage applies.

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Recently, everyone from Hillary Clinton to the American Enterprise Institute  (AEI) has been focused on the “gig” economy—businesses like Uber and Taskrabbit that let consumers call up services on demand with their computers or phones. Despite all the attention these businesses have received, both AEI and the Wall Street Journal have pointed out that the gig economy supposedly has not shown up in Bureau of Labor Statistics job data. But while the on-demand economy has not appeared in government labor statistics—yet—that does not mean that it is not having an impact on people’s livelihoods. The rise of the gig economy is part of a wider trend that Yale political scientist Jacob Hacker has noted of risk being shifted from employers onto the backs of workers. New technologies have only accelerated this shift.

Drivers for Uber and Lyft, as well as most workers in the gig economy, are classified as independent contractors, despite the fact that their employers direct much of their work activities. Uber, for example, tells drivers where to pick up passengers and also deactivates drivers’ accounts if they consistently receive poor ratings from passengers. But because they are independent contractors, drivers are responsible for insuring their own vehicles, and the company does not provide them with health insurance, paid vacation, or retirement benefits. Independent contractors are also unable to file for unemployment compensation, must bear all of the cost of Social Security payroll taxes, and cannot file for workers’ compensation.

Ride-sharing is not the only part of the economy where workers are frequently misclassified as independent contractors, however. Misclassification happens throughout the economy, everywhere from construction to housecleaning to home health care. Across the board, this practice leads to lower wages and tax revenues, among other social costs.

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Matt Yglesias is an insightful writer, but his recent article, “Hillary Clinton’s favorite chart is pretty misleading” is itself very misleading. Since the Clinton campaign’s “favorite chart” is an EPI chart, which Jared Bernstein and I originally came up with twenty years ago, I think it’s important to set the record straight. The main problem is that Yglesias does not actually engage with the chart he says he’s criticizing.

“That bargain has eroded. Our job is to make it strong again.” pic.twitter.com/T3ARkHJRsz

— Hillary Clinton (@HillaryClinton) July 13, 2015

The chart compares the growth of average productivity since 1948 with the growth of the hourly compensation (all wages and benefits) of production/nonsupervisory workers, a group comprising 82 percent of payroll employment (blue collar workers in manufacturing and non-managers in services).

The point is to show that the pay of a typical worker has not grown along with productivity in recent decades, even though it did just that in the early post-war period. That is, it shows a substantial disconnect between workers’ pay and overall productivity—a disconnect that has not always existed. We use data on production/nonsupervisory workers because there is no other data series on the pay of a typical worker that goes back to the early post-war period. The point of the chart is to show not only the current divergence but also that it was not always present—also, these data tend to move with the economy-wide median wage.

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(This is the fifth of six blog posts on disability.)

Earlier blog posts in this series questioned Stanford economist Mark Duggan’s Senate testimony that disability incidence is rising because low-wage workers have an increasing incentive to apply for benefits instead of working or looking for work. This post considers a related claim made by Duggan: that an increase in the share of beneficiaries with mental health disorders and musculoskeletal conditions reflects “the liberalization of the program’s medical eligibility criteria that occurred in the mid-1980s” and is problematic because “the employment potential of SSDI applicants with these more subjective conditions is substantial and it is often difficult to verify the severity of these conditions.”

The first part of Duggan’s claim is true, but somewhat misleading with respect to mental health. After Congress expanded and clarified eligibility criteria in 1984 in response to an ill-conceived effort by the Reagan Administration to reduce disability rolls, there was a rebound in disabled worker awards for mental health and other conditions. But the share of awards for mental health conditions declined as the baby boomers approached retirement because mental health problems don’t increase with age as much as other conditions.

On the other hand, the share of awards due to musculoskeletal conditions has grown steadily, more than offsetting declines in the shares due to mental health, cancer, and cardiovascular disease (see Figure 1). As discussed in earlier blog posts, there has been no upward trend in overall disability incidence over the past 20 years. Moreover, the employment potential of disability applicants is very low, even among those denied benefits. Nevertheless, it is reasonable to ask why there has been an increase in the share of awards for musculoskeletal conditions, and why increases in life expectancy due to such factors as a steep decline in smoking and advances in the treatment of cardiovascular disease haven’t led to a decline in overall disability, especially since fewer jobs now require hard physical labor.

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(This is the fourth of six blog posts on disability.)

In Senate testimony earlier this year, Stanford economist Mark Duggan claimed that Social Security Disability Insurance (SSDI) was an “important factor” in the decline in labor force participation in the United States relative to other industrialized countries. In an earlier blog post, I showed that even research cited by Duggan found that disability receipt had a negligible impact on overall employment. Is it still possible that SSDI has a noticeable impact on labor force participation, a measure that includes unemployed workers actively looking for work? It might, if you believe—as Duggan does—that the process of applying for benefits is enough to make people stop looking for work. But as will be detailed in this blog post, there are more likely explanations for the relative decline in labor force participation in the United States compared to Europe, including more supportive labor market policies in Europe.

In his testimony, Duggan points to an increase since 1990 in the prime-age (25-54) labor force participation rate for the EU-15 countries (countries that belonged to the European Union before it expanded into Eastern Europe) and a decline in the same measure in the United States. (Note that Duggan focuses on a measure that excludes older workers who have higher disability rates. The labor force participation of older workers is higher in the United States than in Europe, a fact that does not support Duggan’s claim that disability insurance is keeping Americans out of the labor force.)

Research that considers multiple causes for recent declines in participation in the United States generally finds that an aging workforce and unemployment—especially long-term unemployment—have been the main drivers (see, for example, research from the Council of Economic Advisors and Harvard University). The question is whether SSDI caused some unemployed workers to exit the labor force, or whether they would have exited regardless.

Looking at longer-term trends, the biggest difference between the United States and the EU-15 has been an increase in female employment and labor force participation in Europe, in which the adoption of family-friendly labor policies likely played a role. Prime-age employment rates in Europe are now similar to the United States (solid lines in the figures below) though they remain lower for older workers (dashed lines).

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Hillary Clinton appropriately defines her economic policy goal as raising “incomes for hardworking Americans so they can afford a middle-class life” rather than “hitting some arbitrary growth target untethered to people’s lives and livelihoods.” The object of economic policy, in other words, is not growth or redistribution but higher living standards for the vast majority! Bravo. Equally important is that one of her three pillars of growth—fair growth—focuses on ending the wage stagnation that has limited median incomes for the past generation. America “needs a raise” and we need to reward “actually building and selling things.” As Clinton said, “If you work hard, you ought to be paid fairly.” So, if there was any doubt that addressing wage stagnation would be the central economic policy issue debated in the upcoming Presidential election then Hillary Clinton’s economic vision speech ended it.

Clinton’s speech sets the foundation for the emerging debate on wages by asserting that: (1) wage stagnation is the result of policy choices (it should be added, “on behalf of those with the most income, wealth and power”); and (2) ending wage stagnation is the “core economic challenge” to boosting middle class incomes and lifting more households into the middle class. Let the debate begin. We look forward to hearing from other candidates not only how they plan to obtain growth, but also how such growth will translate to higher pay for the vast majority. That generally hasn’t happened since 1979.

This is, of course, exactly the debate we hoped for when the Economic Policy Institute launched its Raising America’s Pay initiative in June 2014, and it is also how we framed the debate in our initial paper (“Raising America’s Pay: Why It’s Our Central Economic Policy Challenge”) and in our Raising America’s Pay policy agenda. In fact, making wage growth the central economic issue has been a key conclusion of every State of Working America published since its inception in 1988. Thanks are due to the fast-food and Walmart workers and their allies for establishing that wage growth for the vast majority is the immediate and central economic policy issue. Let the debate begin among the Democrats, among the Republicans, and then between the parties in the general election.

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(This is the third of six blog posts on disability.)

In two earlier blog posts, I look at evidence compiled in Senate testimony by Stanford economist Mark Duggan arguing that financial incentives are driving a growth in disability rolls. I cite research showing that disability benefits aren’t growing relative to earnings and that age-adjusted disability incidence isn’t rising, though there has been a modest increase for women offset by a modest decline for men.

This isn’t surprising, because as we’ll see in today’s blog post, even research cited by Duggan and other critics shows that disability receipt has a negligible impact on work effort. Very few beneficiaries would be able to support themselves by working if they weren’t receiving benefits, based on the dismal employment prospects of rejected applicants who were on the margin of being accepted.

Though Duggan and other critics claim disability insurance reduces employment, the Social Security Disability Insurance (SSDI) program creates strong incentives for beneficiaries to stay in, or return to, the workforce. Beneficiaries are allowed to earn up to $1090 a month (the current threshold for “substantial gainful activity”) with no reduction in benefits. Since most disabled beneficiaries rely on modest government benefits for most of their incomes (see the Center on Budget and Policy Priority’s informative chartbook), the fact that fewer than 10 percent avail themselves of this opportunity suggests that for most, even part-time or intermittent work isn’t an option. Another 4 percent are able to resume “substantial gainful activity” as their health and job prospects improve. Though the latter will forgo cash benefits if they remain gainfully employed above the SGA threshold for more than 12 months, they retain health benefits regardless of earnings for a longer period and are eligible for expedited reinstatement of cash benefits if their earnings drop. In short, the SSDI program is designed to encourage beneficiaries to return to or stay in the workforce.

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In June, Supreme Court decisions on Obamacare and same-sex marriage overshadowed another important decision, this one on housing discrimination, confirming that the Fair Housing Act not only prohibits actions or policies that are intentionally bigoted, but also those that have the effect of disadvantaging minorities, even where no racist intent can be proven.

The decision, whose background and implications I have discussed in more detail for The American Prospect in “The Supreme Court’s Challenge to Housing Segregation,” was widely interpreted as a civil rights victory, but yesterday a New York Times editorial disagreed. Supreme Court experts on Scotusblog, the excellent independent journalistic enterprise devoted to covering the court and its decisions, had in the moments after the court’s opinion was handed down, also denied that the decision was an advance for civil rights. On closer examination, however, the Times/Scotusblog theory doesn’t hold up.

“This might seem to be a ‘liberal’ result”, the Times wrote, “except that 11 federal appeals courts had agreed on this reading for decades. There was no legal dispute, in other words, only the persistent efforts of some justices to reverse accepted law because they didn’t like it.” The Scotusblog experts also noted that although Justice Kennedy’s majority opinion endorsed a prohibition on policies that have a discriminatory effect, it also described so many conditions required for proof of discriminatory effects that it seemed to make it more difficult to win cases where only such effects, not intent, have been proven. In sum, the argument went, the fact that this case was heard at all was a civil rights defeat–it is quite unusual for the court to take up a case where all lower courts are in agreement–and although the civil rights opponents lost the case, it gave these opponents tools to narrow, if not eviscerate, the power of the Fair Housing Act.

Justice Kennedy’s warnings about the narrow circumstances in which policies can be prohibited because of their effects, without provable intent, were generally warnings that were already present in appellate and previous Supreme Court decisions–for example, that a policy does not violate civil rights laws simply because there are statistical differences in how it impacts minorities; it also must be “arbitrary, artificial, and unnecessary”.

In important ways, Justice Kennedy’s opinion may have breathed life into the Fair Housing Law that the law had not previously possessed. The opinion did so by effectively acknowledging that the “Fair Housing Act” is a euphemism–it is not really about “fair” housing, whatever that may mean, but about desegregated housing, which is what the Act was intended to roll back when it was adopted in 1968.

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How to combat the wage stagnation that has afflicted the vast majority of American workers has emerged as a key economic issue addressed in speeches and policy deliberations by politicians and candidates in both parties. This is a very positive development–as we at EPI have been saying for quite a while, wage stagnation ranks beside addressing global climate change as the key economic challenge of our time.

A New York Times editorial points out, however, that Glenn Hubbard, a leading conservative economist and key adviser to GOP candidate Jeb Bush, does not seem to believe there is a wage stagnation problem. As an earlier New York Times article pointed out: “Mr. Hubbard argued that ‘compensation didn’t stagnate,’ citing large increases that employers have paid out in health and pension benefits.”

Hubbard is definitely mistaken, as the New York Times indicates and as I demonstrate below by examining actual wage and benefit trends. Shifting the discussion from wages to compensation (wages and benefits) does not alter any of the salient facts about stagnant pay in recent years, especially for the typical worker or for low-wage workers, and not even for the ‘average’ worker (including high wage as well as low and middle-wage workers). In fact, there has been an even greater growth of inequality in total compensation than there has been in wages alone.

The intuition behind Hubbard’s claim is that the costs of benefits provided by employers–especially those for health care insurance–have risen rapidly, suggesting that compensation has risen far more quickly than wages. What this ignores, of course, is that many workers in the bottom half receive very few health or pension benefits and employers provide fewer and fewer workers with health insurance and pension benefits each year. Hubbard’s intuition also ignores that employers have actually cut back on some benefits, particularly pensions, with a concomitant decline in the quality of those benefits (such as by providing defined contribution rather than defined benefit plans).

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This post originally ran in the Wall Street Journal’s Think Tank blog.

The overtime rules the Obama administration announced Tuesday target genuine problems that middle-wage households face. They also do not require approval from Congress.

American workers’ hourly wage growth has nearly stagnated in recent decades. While this broad-based stagnation affects essentially thebottom 70% of the U.S. workforce, policy proposals to boost wage growth too often begin and end with increasing legislated minimum wages. Such minimum-wage increases, while important policies, generally will not filter up to most middle-class households.

One specific change that could help these middle-class households was proposed Tuesday: raising the salary threshold that determines eligibility for overtime pay.

This wonky-sounding change could have large ramifications: potentially giving 15 million workers rights to higher pay.

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Summer is typically the time of year when we see the highest rates of employment for teens — young people between the ages of 16 and 19.  This group includes new high school graduates along with others in search of an opportunity to earn a few extra dollars while out of school for the summer.  Based on this month’s jobs report, the 2015 summer job market for teens is off to a better start than last year.  According to seasonally unadjusted teen employment-to-population (EPOP) ratios, 32.1 percent of all teens found employment in June 2015, compared to 30.9 percent in June 2014 (Figure A).  However, this may actually be an understatement of the June 2015 increase.  The White House suggests that an earlier-than-normal reference week for this year’s survey is capturing a smaller share of the usual June gains.  June teen employment rates were essentially flat between June 2012 and June 2014.

Racial differences in teen employment rates mirror those of adults – 35.5 percent of white teens were employed in June, compared to 26.7 percent of Hispanic teens and 20.8 percent of black teens.

The relatively improved June 2015 numbers reflect the fact that this summer teens are entering a stronger job market than the last several years.  The average rate of job growth during the 12 months preceding June 2015 (July 2014-June 2015) was 245,000 jobs/month compared to 221,000 jobs/month during the 12 months preceding June 2014 and 175,000 jobs/month during the 12 months leading up to June 2012 (Table 1).  Also, the adult unemployment rate (age 20 and older) is lower heading into the summer of 2015 than in previous years – 5.0 percent in May.

Despite the uptick in teen employment this June, employment rates for teens and prime age adults (age 25 to 54) remain well below pre-Great Recession levels.  The longer-term pattern in June teen employment rates is consistent with the sharp decline in average annual teen employment rates since 2000.  This partly reflects an ongoing increase in college enrollment (except for a post-2012 decline), but is also the result of relatively weaker labor markets that have persisted since 2000.  Based on a recent EPI report, the share of young high school graduates, age 17 to 20, who are not working and not enrolled in school is also well above the 2000 rate.

(This is the second of six blog posts on disability.)

In my previous blog post, I questioned Stanford economist Mark Duggan’s Senate testimony that workers’ financial incentives are driving a growth in Social Security Disability Insurance (SSDI) rolls. I showed that there had been no upward trend in age-adjusted disability incidence over the past 20 years, though there had been a modest increase for women offset by a modest decline for men.

Though age-adjusted incidence isn’t rising, it’s possible that financial incentives have prevented it from falling. This blog post will focus on Duggan and Massachusetts Institute of Technology economist David Autor’s claim that disability benefits are replacing a rising share of low-wage workers’ earnings. Though this is a plausible and widely accepted hypothesis, there is surprisingly little evidence to back it up. In any case, this assumes workers are weighing the costs and benefits of working versus applying for disability benefits–a lengthy and difficult process that results in nearly two out of three applicants being denied–even though it’s doubtful that many applicants could instead choose to work.

Are disability benefits becoming more generous? The average benefit awarded is roughly a third of the average wage, a ratio that has remained essentially unchanged since 1985. And as Harvard economist Jeffrey Liebman points out, rising inequality and other factors have reduced the value of disability benefits relative to productivity per worker. As a result, program costs increased only modestly over the three decades preceding the Great Recession as a share of GDP (from 0.55 to 0.68 percent) despite a much faster growth in enrollment.

Though benefits have just kept pace with wage growth and lagged productivity growth, Duggan and Autor (2006) hypothesize that benefits have risen relative to lower-wage workers’ earnings due to rising inequality and a progressive benefit formula. Lower-wage workers are more likely to apply for disability benefits because they tend to be in worse health, are more likely to be in physically demanding or dangerous occupations, and qualify for fewer jobs that accommodate disabilities.

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A lot has changed since 1975. The Soviet Union collapsed, we fought (and are fighting still) several wars in the Middle East, same-sex marriage is now legal across the United States, we have our first African-American President, we have the internet. But what has changed only minimally is the salary level for determining which “salaried’ workers are entitled to overtime. Seriously. While the Bush Administration made a minuscule adjustment in 2004, essentially a political smokescreen to avoid a real increase, that number is finally going to increase in a meaningful way – the Economic Policy Institute deserves a lot of credit for pushing for this long-overdue update. The Department of Labor is announcing a significant increase in the threshold – from $23,660 to approximately double that amount. What that means is that workers earning up to the new level, even if they are not called “hourly,” will get overtime pay for their hours worked over 40 in a work week. In 1975, the salary basis test captured 60 percent of salaried workers; in 2015, only 8 percent of salaried workers fall below this level and earn overtime. While writing my book, Under The Bus: How Working Women Are Being Run Over, I discovered (with help from EPI’s economists) just how much this change will help workers, particularly women of color.

The Fair Labor Standards Act (FLSA) established the requirement of minimum wage and overtime, but in a provision known as the “salary test,” the law provides that employers need not pay either the minimum wage or overtime to workers they designate as “bona fide executive, administrative, professional and outside sales employees,” so long as their daily tasks meet the DOL definition and they make more than $455 per week – which is how $23,660 breaks down as a weekly wage. Clearly, outdated level has given unscrupulous employers a way to avoid paying low-paid staff overtime by calling them “salaried.” Workers have had to challenge their denial of overtime when their employers tried to get out of the requirement by adding “manager” or “leader” to their title when their actual work consisted of serving fast food, shelving merchandise, or ringing up customers’ purchases.

Contrary to the statute’s original purpose, many workers put in the “salaried” category do little if any supervisory work. While in theory, “their duties must include managing a part of the enterprise and supervising other employees or exercising independent judgment on significant matters or require advanced knowledge,” the reality is quite different. This loophole has allowed employers to tell women that as a receptionist or typist they are administrative or professional, while in fact they have little or no supervisory responsibilities. But what they do get, in addition to a nicer title, is the right to work overtime without overtime pay. The Bush administration used regulatory black magic to push more workers into this category in 2004. That DOL rule cost an additional 8 million employees their overtime pay. Even without chicanery, the rules have become so lax that many employees are called “salaried” who should be earning overtime under the FLSA’s original purpose. According to EPI’s Ross Eisenbrey, “under current rules, it literally means that you can spend 95 percent of the time sweeping floors and stocking shelves, and if you’re responsible for supervising people 5 percent of the time, you can then be considered executive and be exempt.”

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In 2014, President Obama directed the Department of Labor to update the threshold under which all workers are eligible for overtime pay. Today, the Department of Labor announced that it will raise the overtime salary threshold from $23,660 to $50,440 by 2016. The threshold will also be indexed, guaranteeing that the law’s important protections will not be diminished by inflation.

We applaud President Obama and Secretary Perez for this bold action. The new threshold will protect more workers from being taken advantage of by their employers, giving some higher pay for working overtime and others reduced hours without any reduction in pay. This is a significant victory for American workers and will ensure that they get paid for the work they do.

This higher threshold will guarantee 15 million more workers overtime pay on the basis of their salary alone, in addition to the 3.4 million workers who are already guaranteed overtime pay. It will boost wages, which have been largely stagnant for the past 35 years, create hundreds of thousands of jobs, and give more family time to millions of working parents. Overall, 3.1 million mothers and 3.2 million fathers will be guaranteed overtime pay under the new threshold, and 12.1 million children will benefit from their parents’ overtime coverage.

In 1975, the overtime salary threshold covered about 62 percent of all salaried workers–today, it only protects 8 percent. Had overtime kept pace with the 1975 level, it would be about $52,000 today adjusted for inflation, about equal to the U.S. median household income. The new salary threshold puts us back on track to reconnect workers’ wages with gains in productivity.

With today’s announcement, the DOL is opening a comment period that will give workers an opportunity to express their support of the proposed rule change. FixOvertime.org allows workers to use their voice and submit their comment for consideration as the Department of Labor decides whether or not to actually boost overtime in accordance with the proposed rule changes. It also lets workers calculate how much extra they can earn per week under the new overtime rules.

(This is the first of six blog posts on disability insurance.)

The Social Security Disability Insurance (SSDI) program is set to be the next big battle in Republicans’ long campaign to dismantle Social Security. Congressional Republicans are trying to block a routine reallocation of funds to the SSDI Trust Fund, insisting that they will only allow reallocation if “reforms” to SSDI are implemented. The intellectual underpinning for their demands is that there is an unfolding fiscal crisis caused by workers who are able to earn a living but are instead choosing to claim disability benefits. A chief proponent of this view, Stanford economist Mark Duggan, testified before the Senate Budget Committee earlier this year, claiming that disability benefits are increasingly attractive to lower-wage workers, who respond by leaving the labor force. According to Duggan, a key piece of evidence supporting this claim is an increase in the share of beneficiaries suffering from musculoskeletal disorders and other “subjective” health conditions who have a “substantial” employment potential.

Claims like these have become a mainstay of attacks on the disability program. However, a closer look at the evidence shows that SSDI benefits have become, if anything, less generous. Moreover, even research cited by critics shows SSDI receipt has a negligible impact on work effort because few applicants, including marginal applicants who were denied benefits, are able to earn a living afterward. Meanwhile, there are good explanations for the increase in the share of beneficiaries suffering from musculoskeletal disorders, including an aging population, rising obesity rates, and fewer workers able to retire early when their health deteriorates.

These topics will be discussed in later blog posts. This post will focus on whether disability incidence has increased in the first place. The evidence shows that while “raw” or unadjusted incidence–the number of new awards per thousand insured persons–increased as the large baby boomer cohort aged into the peak disability years before retirement, age-adjusted incidence hasn’t trended upward over the past 20 years, though it increased during periods of high unemployment. However, incidence has fallen in the wake of the Great Recession and as older baby boomers become eligible for Social Security retirement benefits, including disabled boomers who automatically transition to retirement benefits as they reach the normal retirement age.

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If salaried employees are paid less than the overtime salary threshold  (currently $23,660 in annual salary), they are entitled to overtime pay when they work more than 40 hours in a week. If however, they make more than the salary threshold, they are entitled to overtime pay only if their primary duty is not executive, administrative, or professional.

In a 2014 analysis, former EPI economist Heidi Shierholz estimated the share of salaried workers who were covered by the overtime salary threshold in 1975 and in 2013. She found that, despite an increase in the threshold in 2004, the share of the workforce covered by the threshold declined from 65 percent in 1975 to just 11 percent in 2013. This is because most of the value of the threshold was eliminated between 1975 and today due to inflation. As a result of Shierholz’s findings, EPI recommended that the overtime salary threshold be increased to the 1975 threshold in today’s dollars (in 2013, this was $51,168), which would have covered 47 percent of the workforce.

Because the analysis focused solely on the salary threshold test–i.e., because the analysis focused on just the salary of workers without regard for the duties of their occupation[1]–increasing the threshold to reflect an amount into today’s dollars wouldn’t mean that all of the workers who fell in between $23,660 and $51,168 would gain overtime protections. Many of these workers would already have been entitled to this protection because their primary job duty was not executive, administrative, or professional.

Now, in updating this analysis, we want to be as precise as possible in identifying the workers who will be affected by the updated salary threshold rule. To do this, we narrowed the sample to those workers who are full-time workers (usually work 35 hours or more at their primary job), expanded the age of the population to all workers 18 years or older (previously limited to those 18-64), and removed certain occupations that are automatically exempt from overtime protections (e.g., medical professionals, lawyers, judges, teachers of all levels, and religious workers).

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On World Refugee Day, The Hill published a Contributors piece by the libertarian Cato Institute’s immigration policy analyst, Alex Nowrasteh, headlined, “The US should be a home for refugees.” In it, he offers a brief history of refugee policy and flows into the United States over the past century and suggests that the United States “should … allow more to settle here.” That’s a noble sentiment, but the headline is misleading because it leaves out the substance of what Nowrasteh proposes in order to help make this happen. In short, Nowrasteh wants to welcome more refugees to the United States but proposes abandoning them and letting them fend for themselves once they get here…

Continue reading the rest of this op-ed at the Hill.

A new EPI study of the academic preparation of kindergartners by social class and race ended up being less about absolute preparation of children at the beginning of school and more about how prepared they are relative to one another. In short, children do not start school as equals. According to Inequalities at the Starting Gate: Cognitive and Noncognitive Skills Gaps between 2010–2011 Kindergarten Classmates, children’s school preparation is highly unequal, and what determines being better or worse off is a student’s social class.

While inequalities in the cognitive abilities of our young people have been documented by previous research (see EPI’s Inequality at the Starting Gate study from 2002 and Robert Putnam’s new book, Our Kids: The American Dream in Crisis), our study uses a dataset that allowed for examining how prepared children are in both cognitive (reading and math) and noncognitive domains (social skills, persistence, and creativity, among others). The data set (the National Center for Education’s Early Childhood Longitudinal Study of the Kindergarten Class of 2010-2011) also offers information on individual and family demographic characteristics and various enrichment activities that parents undertake with their children, enabling assessment of the importance of these variables for children’s preparation. All in all, the data allowed us to understand the broad school readiness of a recent generation of students. These students were born after—and thus presumably benefited from—the spread of prekindergarten education and other advances in school preparedness research and policymaking. But these children were also raised in a context of economic stagnation.

Consistently, results showed that having less money puts children at a relative disadvantage, in terms of the cognitive and noncognitive skills developed by the age of 5, while having more money benefits them, as skill levels increase along with social class. Most gaps are striking in size and appear for all the examined cognitive, noncognitive, and executive function skills. For example, children in the highest socioeconomic group have reading and math scores that are a full standard deviation larger than the scores of their peers in the lowest socioeconomic group. To give a sense of how large this gap is, it would take up to four independent, “substantively important,” education interventions to close the gap, according to a “classification of effects” from the U.S. Department of Education’s What Works Clearinghouse. The social-class-based gaps in other skills such as working memory, persistence in completing tasks, and self-control are 0.7, 0.4, and 0.5 standard deviations, respectively.

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Fast-track trade legislation is the first step in the process of greasing the skids for the proposed Trans-Pacific Partnership (TPP), and any other trade deal proposed by this president or any other for the next six years. Last month, the 13 democrats listed in the table below voted to end debate on fast track (Trade Promotion Authority, or TPA), allowing a final vote to take place. There are strong arguments against the TPP, which will increase inequality and hurt the middle class.

These 13 democrats come from 10 states that lost 996,200 jobs due to growing trade deficits with China between 2001 and 2013, nearly one-third of the 3.2 million jobs eliminated by China trade in the United States in that period. States like Oregon, California, and Colorado were among the hardest hit states in the country. But they are also home or host to Nike (Oregon), Lockheed-Martin (Colorado), and Apple, Google, Intel and other Goliaths of Silicon Valley (California). New Hampshire serve as a bedroom community for many electronics industry workers in nearby Massachusetts, and has lost hundreds of thousands of jobs in recent decades in textiles, shoemaking and small machine making.Read more

Our new study shows the average compensation of CEOs in the largest firms was $16.3 million in 2014, up 3.9 percent since 2013 and 54.3 percent since the recovery began in 2009. More impressively, from 1978 to 2014, inflation-adjusted CEO compensation increased 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s annual compensation over the same period. Consequently, the CEO-to-worker compensation ratio was 303-to-1 in 2014, lower than the 376-to-1 ratio in 2000 but far higher than the 20-to-1 in 1965 and any time in the 1960s, 1970s, 1980s, or 1990s, as the Figure shows.

Our measure of CEO pay covers chief executives of the top 350 U.S. firms and includes the value of stock options exercised in a given year plus salary, bonuses, restricted stock grants, and long-term incentive payouts. (Full methodological details here)

Our analysis, which shows that CEO pay grew far faster than pay of the top 0.1 percent of wage earners (those earning more than 99.9 percent of wage earners), indicates that CEO compensation growth does not simply reflect the increased value of highly paid professionals in a competitive race for skills (the so-called “market for talent”). CEO compensation in 2013 (the latest year for data on top wage earners) was 5.84 times greater than wages of the top 0.1 percent of wage earners, a ratio 2.66 points higher than the 3.18 ratio that prevailed over the 1947–1979 period. The compensation gains of top CEOs were therefore equivalent to the wages of 2.66 very-high-wage earners.

Don’t worry about all this, says American Enterprise Institute scholar Mark Perry, because our sample, and those used by the Associated Press and the Wall Street Journal, is misleading. Looking at the compensation of CEOs in the largest firms, according to Perry, is not “very representative of the average U.S. company or the average U.S. CEO,” because “the samples of 300–350 firms for CEO pay represent only one of about every 21,500 private firms in the U.S., or about 1/200 of 1 percent of the total number of U.S. firms.” Perry notes, “According to both the BLS and the Census Bureau, there are more than 7 million private firms in the U.S.”

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In a jointly authored statement, former EPI board members and U.S. Labor Secretaries F. Ray Marshall and Robert Reich called on Congress to reject Trade Promotion Authority and the Trans-Pacific Partnership because that deal will “harm America’s working people.”  Despite this statement, the House today approved a truncated version of Fast Track (TPA) that excludes funding for Trade Adjustment Assistance for displaced workers.  But passing TPA without TAA is a risky gamble because many Democrats have demanded that the two move simultaneously.

In their letter to Congress, Marshall and Reich conclude that “Trade can work for working Americans, but only when Americans can effectively know about what is in a trade deal, and only when a trade deal is effectively designed to create more good jobs in America. This Fast Track mechanism toward the Trans Pacific Partnership is a bad deal for America.”

We learned of some welcome news when Computerworld and the New York Times reported that Disney had reversed a decision to replace 35 American information technology (IT) workers with cheaper H-1B guestworkers at its ABC broadcasting offices in New York City and Burbank, CA. The news comes after a significant spotlight was shined on Disney’s recent replacement of 250 technology workers with H-1B guestworkers at Disney’s Theme Parks division. This is good news for the 35 workers who will keep their jobs for now, and at least in the short term, will not have to train their foreign guestworker replacements. However, this decision by Disney executives does nothing for the 250 workers who have already lost their jobs to workers they were forced to train and who will earn roughly $40,000 less for doing the same job. Nor does it help the approximately 225 Northeast Utilities workers, or the 400 at Southern California Edison (SCE), or the 600 at Xerox, or 900 at Cargill, or 100 at Fossil Group, or tens of thousands of workers who likely suffered a similar fate at hundreds of other places that have never been reported.

It appears that the media attention has shamed Disney into reversing its decision to force more of its American workers out in favor of cheaper guestworkers. Clearly, Disney’s own sense of social responsibility wasn’t enough to convince its executives to do the right thing in the first place. While the reversal of Disney’s layoffs is good news, it hardly makes us sanguine about the future of the H-1B visa program. The payoff for replacing American workers with indentured and underpaid H-1B guestworkers is simply too high: as much as a 49 percent wage savings in some cases. Relying solely on the media to shame firms is insufficient. Simply put, the government must immediately make changes to the program.

We would also like to emphasize two important points about the H-1B that have not been highlighted enough in the recent media coverage. First, the temporary foreign workers employed by the firms hired to replace American workers are blameless in all of these situations, as one American IT worker who was recently replaced by an H-1B at SCE attested to in a recent interview. The blame should be placed squarely on the corporate profiteering that leaves Americans out of a job and foreign workers vastly underpaid for the work they are hired to do. The H-1B workers are simply seeking to advance their careers and to make better lives for themselves in the United States, and are often placed in working situations where they are vulnerable and can be easily exploited.

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This piece was originally published in the New York Times “Room for Debate” section on May 12, 2015.

The true costs of goods and services is a secondary issue to stagnant and exploitative wages: The cost of certain goods might go up, but more people would be able to afford them with better compensation. The current price of low-cost goods and services in the United States is low-income, exploited workers living in poverty. But the country as a whole isn’t broke, only its workers are — while corporations and C.E.O.s are richer than ever.

The value of the federal minimum wage has declined 24 percent since 1968. If we re-established the relationship between the minimum wage and the overall median wage to its 1968 level, we would raise wages for 35 million people, a full quarter of the workforce.

The situation is even worse for those earning tips, such as nail salon workers. Their pay is set at $2.13 an hour by the federal government. If tips don’t supplement these workers’ paycheck to the regular minimum, they have to ask their employers for the difference. (And good luck with that.)

But low and stagnant wages are not the result of benign, abstract economic forces. They reflect conscious policy choices by lawmakers influenced by powerful corporate lobby groups like the Chamber of Commerce and the National Restaurant Association.

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