Corporate lobbyists have convinced legislators of both parties that America needs more guest workers in high-tech jobs. Leading the charge in Congress to do their bidding is Utah Sen. Orrin Hatch, who has introduced legislation to double or triple the number of non-immigrant tech workers who can be hired annually on H-1B visas. But his proposal won’t fix the H-1B program’s flaws, which allow American and foreign workers alike to be exploited and underpaid.

Continue reading the rest of this op-ed at the Salt Lake Tribune.

The National Retail Federation (NRF), a lobbying organization for department store corporations, sporting goods and  grocery chains,  and other large retailers, is opposed to the Department of Labor’s update of the rules governing the right of salaried workers to overtime pay. The reasons the NRF gives are somewhat contradictory and are sometimes surprising. But they boil down to this: the retail lobby doesn’t think businesses should have to pay for the overtime hours most of their employees work.

In March 2014, President Obama directed the Secretary of Labor to update the rules intended to exclude high-level employees like executives and professionals from overtime protections. The rules are currently so out of date that they define even workers earning below-poverty salaries as exempt, even though the pay of true executives and professionals like lawyers and CPAs has been soaring for decades. To fix this problem, the Labor Department is reportedly considering raising the threshold for exemption from $23,660 a year to $42,000 or more. Some advocates are calling for a threshold as high as $70,000 a year, which would protect the same share of the salaried workforce as was covered in 1975.

If the threshold is raised to $42,000, the NRF predicts significant changes in retail employment: while some employers will raise salaries for employees near the threshold to guarantee that they continue to be excluded from overtime protection, many salaried employees (some of whom work 60-70 hours a week for no extra pay) will have their hours reduced and as a result, 76,000 new jobs will be created averaging 30 hours per week. Altogether, half of the retail workforce that is currently excluded from coverage will be guaranteed coverage by the law’s overtime protections. That all sounds pretty good to me.

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Stung by the sudden derailment in the House of Representatives of their rush to pass the Trans-Pacific Partnership (TPP), the Washington establishment has wasted no time in warning us of the terrifying menace of a rising China, should the trade deal not be put back on track next week.

Echoing previous remarks by the president, House Speaker John Boehner warned “we’re allowing and inviting China to go right on setting the rules of the world economy.” Pro-TPP Democratic Congressman Jim Hines (D-Conn.) said that Friday’s vote, “told the world that we prefer that China set the rules and values that govern trade in the Pacific.”

These remarks are both fatuous and revealing of how weak the case for the TPP is, even among its own promoters.

As a matter of obvious fact, the rules of the world economy within which the Chinese have been taking the United States to the economic cleaners were not set in China. They were set in Washington, DC by our own American policymakers and fixers who in one way or another were, and still are, are in the pay of multinational corporate investors.

Under Ronald Reagan, the two Bushes, Bill Clinton and now Barack Obama the United States government designed and imposed the global model of  “free trade” which promoted the shift of investment from the United States to parts of the world where labor is cheap, the environment is unprotected, and the public interest is even more up for sale than it is here.

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Proponents of Trade Promotion Authority (aka fast-track trade negotiating authority), which the House of Representatives will likely vote on soon, have made an unequivocal promise that future trade agreements like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) will explicitly exclude any provisions that would require a change to U.S. immigration law, regulations, policy, or practices. Many members of Congress in both parties have expressed concern that trade agreements might limit America’s ability to set immigration policy. Republican congressmen Paul Ryan and Robert Goodlatte have responded by explicitly assuring members of their party that there will be no immigration provisions in any trade bill.

U.S. Trade Representative Michael Froman has stated in an interrogatory with Sen. Chuck Grassley (R-Iowa) and via letter that nothing is being negotiated in the TPP that “would require any modification to U.S. immigration law or policy or any changes to the U.S. visa system.”

Furthermore, just a few weeks ago, the Senate Finance Committee released a statement titled “TPA Drives High-Quality Trade Agreements, Not Immigration Law: The Administration Has No Authority Under TPA or Any Pending Trade Agreement to Unilaterally Change U.S. Immigration Laws,” and the committee’s May 12 report on the Fast Track bill that was eventually passed by the full Senate contained this relevant language:

For many years, Congress has made it abundantly clear that international trade agreements should not change, nor require any change, to U.S. immigration law and practice…

The Committee continues to believe that it is not appropriate to negotiate in a trade agreement any provision that would (1) require changes to U.S. immigration law, regulations, policy, or practice; (2) accord immigration-related benefits to parties to trade agreements; (3) commit the United States to keep unchanged, with respect to nationals of parties to trade agreements, one or more existing provisions of U.S. immigration law, policy, or practice; or (4) expand to additional countries immigration-related commitments already made by the United States in earlier trade agreements.

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The House is expected to vote this week on fast track authority to negotiate two massive trade deals, including the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). The Wall Street Journal noted on Sunday that “the decade’s old argument that major trade agreements boost both exports and jobs at home is losing its political punch, even in some of the country’s most export-heavy Congressional Districts.” One reason is that counting exports is less than half the story. While it’s true that exports support domestic jobs, imports reduce demand for domestic output and cost jobs.

As I’ve written before, trade is a two-way street, and talking about exports without considering imports is like keeping score in a baseball game by counting only the runs scored by the home team. It might make you feel good, but it won’t tell you who’s winning the game. The Journal story included a table showing the ten congressional districts with the biggest gains in exports since 2006. The authors expressed surprise that only three of the ten members representing these districts have announced support for fast track (trade promotion authority, or TPA).

Looking at jobs supported and displaced by trade in these districts provides a very different picture, which helps explain why supporters of fast track are having trouble rounding up votes in the House. In a recent study, I estimated the number of jobs supported and displaced by China trade between 2001 and 2013. We used the results of this study to examine the impacts of China trade on jobs by congressional district between 2006 and 2013—the period covered in the Wall Street Journal story. The results for the top ten districts identified by the Journal are shown in the following table.

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I testified last week in Harrisburg on a 410-page public pension “reform” bill (SB1) that neither I nor my fellow witnesses had read. Normally, we would have been able to rely on actuarial reports, but the actuaries weren’t given enough time to read the bill either. This didn’t stop 28 state senators from passing the bill on a party-line vote without even bothering to hold a hearing (the two I attended—one as a witness—were held by House committees after the Senate vote).

At the first hearing, supporters claimed the bill would help repair Pennsylvania’s credit rating and ensure intergenerational equity. You would never know that the bill actually delays paying down legacy costs. As a result, even the Manhattan Institute’s Richard Dreyfuss (the public pension scourge, not Jaws hero), couldn’t bring himself to support it.

Supporters also claim the bill “preserves current employee retirement benefits,” despite the fact that $13 billion of the projected $16 billion in cost savings comes from changes affecting current employees. At least one of these changes—removing a subsidy for lump sum distributions—might be a good idea in the abstract. But all cuts affecting mid-career workers will inevitably (and probably successfully) be challenged in court, as Dreyfuss pointed out.

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Last week, I wrote about how high school graduates will face significant economic challenges when they graduate this spring. High school graduates almost always experience higher levels of unemployment and lower wages than their counterparts with a college degree, and their labor market difficulties were particularly exacerbated by the Great Recession. Despite officially ending in June 2009, the recession left millions unemployed for prolonged spells, with recent workforce entrants such as young high school grads being particularly vulnerable.

Underemployment is one of the major problems that young workers currently face. Approximately 19.5 percent of young high school graduates (those ages 17–20) are unemployed and about 37.0 percent are underemployed. For young college graduates (those ages 21–24) the unemployment rate is 7.2 percent and the underemployment rate is 14.9 percent. Our measure of underemployment is the U-6 measure from the BLS, which includes not only unemployed workers but also those who are part-time for economic reasons and those who are marginally attached to the labor force.

When we look at the underemployment data by race, we often see an even worse situation. As shown in the charts below, 23.0 percent of young black college graduates are currently underemployed, compared with 22.4 percent of young Hispanic college grads and 12.9 percent of white college grads. And as elevated as these rates are, the picture is bleakest for young high school graduates, who are majority of young workers.

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Three separate sources have recently “fact-checked” claims that Martin O’Malley made about American wages in his recent speech announcing his candidacy for the Democratic nomination. The precise O’Malley quote was:

Today in America, 70 percent of us are earning the same or less than we were 12 years ago, and this is the first time that that has happened this side of World War II.

O’Malley has said that our research on wages provided a basis for his claim (examples can be found here and here).

First, let’s be clear on what our claim is and then I’ll talk about the fact checkers’ assessments of O’Malley’s use of the data.

We have data on hourly wages by decile since 1973. Between 2002 and 2014, inflation-adjusted hourly wages for the bottom 7 deciles (i.e., 70 percent of the American workforce) fell. This is a remarkable economic fact and one that O’Malley is clearly right to highlight.

Further, between 1947 and 1973 there is almost certainly no 12-year period when the bottom 70 percent of wage earners saw hourly wage declines. Precise wage data by decile is sketchy over this period, but the circumstantial evidence on this is overwhelming. Just look at this graph, which shows hourly pay for a grouping reflecting the bottom 80 percent of the workforce rising sharply until the early 1970s.

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When Canada joined the Trans-Pacific Partnership talks in 2012 it did so somewhat reluctantly and, like Mexico, with strings attached. One of them was that Canadian negotiators could not reopen any closed text. So, in this sense, it’s been a bit of a raw deal for the Obama administration’s NAFTA partners from the beginning. Canada’s bigger business lobbies called it a defensive move, to “secure” NAFTA supply chains rather than offering any meaningful market access elsewhere. The Canadian public have almost no idea what’s going on. But as TPP countries appear to be close to the end game, people here are starting to ask the obvious questions: what’s in it for us, and what will we have to give up to get it. The answers are equally obvious if you look past the hype: not much, and quite a lot.

To begin with, Canada already has free trade deals in place with four of the larger TPP countries (Peru, Chile, the United States, and Mexico), and tariffs on trade with the others—representing 3 percent of imports and 5 percent of exports—are very low. Canada has a trade deficit with these non-FTA countries of $5 to $8 billion annually, and 80 percent of Canada’s top exports to these countries are raw or semi-processed goods (e.g., beef, coal, lumber), while 85 percent of imports are of higher value-added goods (e.g., autos, machinery, computer and electrical components). This Canadian trade deficit will likely widen if the TPP is ratified, as the United States found two years into its FTA with South Korea.

Tariff removal through the TPP is therefore likely to worsen the erosion of the Canadian manufacturing sector and jobs that has been taking place since NAFTA—a result, in part, of the limits free trade deals place on performance requirements and production-sharing arrangements. NAFTA-driven restructuring did not even have the promised effect of raising Canadian productivity levels, which languish at 70 percent of U.S. levels twenty years into the agreement. Instead, Canada has experienced greater corporate concentration, a significant decline in investment in new production, and rising inequality.

In short, there is little trade expansion up­side for Canada in this negotiation. And yet the Canadian public will eventually be asked to make considerable public policy concessions to see the TPP through. As many U.S. commentators have argued, the trade impacts of TPP are far less important than the serious concerns it raises about excessive intellectual property rights, regulatory harmonization, and the perpetuation of a controversial investor-state dispute settlement (ISDS) regime that has been extremely damaging to democratic governance globally, not to mention quite humiliating for Canada.

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There was a lot to celebrate in the Magic Kingdom this year. The Disney Corporation had its most profitable year ever, with profits of $7.5 billion—up 22 percent from the previous year. Disney’s stock price is up approximately 150 percent over the past three years. These kinds of results have paid off handsomely for its CEO Bob Iger, who took home $46 million in compensation last year.

Disney prides itself on its recipe for “delighting customers,” a recipe it says includes putting employees first. They tout this as a key to their success in creating “a culture where going the extra mile for customers comes naturally” for employees. One method of creating this culture is referring to its employees as “cast members.” In fact, Disney is so proud of its organizational culture that it’s even created an institute to share its magic with other businesses (for a consulting fee, of course).

So, you would expect a firm that puts its employees first to share the vast prosperity that’s been created with the very employees who went above and beyond to help generate those record profits.

Well, how did Mr. Iger repay his workers—sorry, I mean cast members—for creating all this profit? Not with bonuses and a big raises. Instead, as the New York Times just detailed in a major report, he forced hundreds of them to train their own replacements—temporary foreign workers here on H-1B guestworker visas—before he laid them off.

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Last week, we released  The Class of 2015, our annual report examining the job and wage prospects for newly-minted high school and college graduates. When we release this study, the media tend to focus on the chances college graduates have for snagging a job. But I want to submit a humble plea: don’t forget about the high school grads. After all, they make up the majority of young people.

Only 9.7 percent of young people between the ages of 17 and 24 have a college degree or more. 52.7 percent, meanwhile, have a high school degree or less (as shown in Table 1), and another 37.6 percent have only some college experience. And this trend isn’t unique to young people—even when you look at workers who are a little bit older, college graduates are still a minority. A significant share of workers age 24–29 have only a high school degree (26.4 percent) or some college experience (30.7 percent) and only 34.1 percent have a bachelor’s or advanced degree.

When you look at the wages that young people with a high school degree are making, they are far less than what college grads can expect. The average young high school graduate who does not enroll in further schooling makes $10.40 an hour, which has declined 5.5 percent from the $11.01 they were making in 2000. $10.40 an hour translates to an average full-time, full-year worker salary of just $21,632 for high school graduates. To put that in perspective, that is less than is needed to lift a four-person family above the poverty line and less than the amount needed for a one adult, one child family to get by in every area in the United States.

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A new paper, Firming up Inequality, has been receiving substantial attention in the media for its claim that wage inequality is not occurring within firms but only occurs between firms. The authors claim that their results disprove the claim made by me and others, such as Thomas Piketty and Emmanuel Saez, that the growth of top 1 percent incomes was driven by the pay of executives and those in the financial sector. Though the authors present valuable new data, which offers the possibility of great insights, their current analysis does not disprove that executive pay has fueled top 1 percent income growth. In fact, the study neither examines nor rebuts claims about executive pay.

The authors also offer a “we live in the best possible world” interpretation of their findings—inequality is due to high productivity growth of “superfirms.” This is pure speculation and is completely disconnected from their actual empirical work. A similar study examined productivity trends and contradicts their narrative about superfirms.

Last, there are reasons to be skeptical of their findings because they imply huge wage disparities have opened up between median workers across firms within an industry that are implausible.

1. The paper neither examines nor rebuts the claim that executive pay was a major factor in the doubling of the income share of the top 1 percent.

The paper characterizes itself as a critique of the findings that executive pay (and financial sector pay) has fueled the growth of top 1 percent incomes, citing my work with Natalie Sabadish, as well as Piketty’s:

In the absence of comprehensive evidence on wages paid by firms, it is frequently asserted that inequality within the firm is a driving force leading to an increase in overall inequality. For example, according to Mishel and Sabadish (2014), “a key driver of wage inequality is the growth of chief executive officer earnings and compensation.” Piketty (2013) (p. 315) agrees, noting that “the primary reason for increased income inequality in recent decades is the rise of the supermanager.”

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Last week, we published Broad-Based Wage Growth Is a Key Tool in the Fight Against Poverty, which argued that our fight against poverty over the last few decades has been missing a key element: strong wage growth for the majority of workers. To substantiate this claim, we simulated the impacts on poverty rates in a few scenarios in which wages grew across the board according to different benchmarks (e.g., average wage growth, productivity, and productivity and full employment).

Judging by a recent blog post, Matt Bruenig seems unimpressed. He spends a large part of the first part of his post suggesting that efforts to boost market incomes (i.e., wages) will necessarily fall short because the majority of those who are in poverty (namely, the elderly, children, the disabled, and caregivers) do not work. He ends by assessing the result of our simulation as uninspiring largely because the “employable” poor make up only a minority of those in poverty. Given the alleged ineffectiveness of wage-growth, he calls for increased transfers to fight poverty.

We think Bruenig overlooks two key aspects of the role of wages in reducing overall poverty. First, we believe he ignores the extent to which children would benefit from the spillover of increased wages for their parents. Second, he ignores the fact that people move in and out of poverty—by raising the income floor for many families, broad-based wage growth plays an important role in preventing more of them from falling under the poverty line.

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The issue of currency management by U.S. trading partners that increases U.S. trade deficits has become a front-burner issue in debates over the proposed Trans-Pacific Partnership (TPP). The discussion about whether or not trade deficits can really affect U.S. employment, however, occasionally gets very muddled. Here’s a quick attempt to un-muddle a couple different issues.

Trade deficits and overall employment

Trade deficits occurring when the U.S. economy is stuck below full employment and at the zero lower bound (ZLB) on short-term interest rates are a drag on economic growth and overall employment, period. And this describes the U.S. economy today, so a reduction in the trade deficit in the next couple of years spurred by a reversal of trading partners’ currency management would boost growth and jobs.

The logic is simple—exports boost demand for U.S. output while imports reduce demand for U.S. output. When net exports (exports minus imports) fall, then aggregate demand is reduced. Trade deficits are the mirror image of capital inflows into the U.S. economy, and there are times when these capital inflows can reduce domestic interest rates and boost economic activity, providing an offset to the demand-drag caused by trade flows. Today is not one of those times—further downward pressure on already rock-bottom interest rates (particularly since most of these inflows go into U.S. Treasuries) do very little to boost domestic investment to counteract the demand drag from trade flows.

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‘Tis the season to be a graduate and members of the class of 2015 may be wondering: what are my chances in this job market?

The class of 2015 is entering an economy still in recovery from the Great Recession. Job prospects for the class of 2015 are better than for the several classes that graduated before them, but young graduates today still face many economic challenges, including stagnant wages and high levels of unemployment and underemployment. The class of 2015 joins the six classes before it in graduating into an acutely weak labor market and competing with more experienced workers for a limited amount of job opportunities.

Although unemployment rates of young graduates have come down in recent years after skyrocketing during the Great Recession, they still remain elevated compared to where they were before the recession began. Underemployment rates for the class of 2015 also remain high. This means that many young graduates either want a job but have recently given up looking for work, or have a job that does not provide the hours they need.

Among young college graduates who are employed, many are working in a job that does not require a college degree at all. This is another sign of continued slack in the labor market, and a sign that young graduates’ high unemployment is not because they lack the right skills, but because of a continued lack of economy-wide demand for workers.

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This week marks the 50th anniversary of Head Start, a Great Society program that despite spotty funding has brightened the lives of millions of preschoolers. My daughter is one of them.

Like three-quarters of the public schools here in Washington DC, my daughter’s school is a Title I school, where 40 percent or more of the students are from low-income families. Her pre-K program is funded in part by Head Start, even though my daughter and some of her classmates don’t qualify as low income. As it happens, my daughter’s school, HD Cooke Elementary, helped pioneer the Head Start program in 1965 (see cute picture below).

DC has a cutting-edge universal pre-K program and also participates in a pilot program where all kids eat free thanks to a U.S. Department of Agriculture grant. So my daughter not only started attending a great public school at age 3, but eats two nutritious meals a day with her buddies, starting with a meet-and-greet breakfast, the social highlight of her day (and often mine).

DC is somewhat atypical in that there has been an influx of upper-income taxpayers, yet the school system still serves a heavily low-income student body. DC public schools were “majority-minority” before this was true for the United States as a whole.

The growing tax base helped pay to retrofit my daughter’s school to add more natural lighting, a beautiful library and gym, and great playgrounds. In 2010, the school, built in 1909 with an extension dating to 1960, became the first school in DC and one of the oldest in the country to be certified green. Projects like these show how infrastructure and human capital investment can combine with job creation and energy efficiency—a win-win-win unless your name is Koch.

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When assigning blame for our nation’s persistent poverty problem, many policymakers tend to focus on underlying demographics or behavior of the poor—factors like racial background or the rise of single parent households, instead of the stark economic reality the poorest Americans have to contend with. While demographics and individual behavior have a place in the policy discussion, growing inequality is the primary reason the poverty rate has remained elevated over the last several decades.

The chart below breaks down the poverty rate and shows how demographic and economic factors affected the poverty rate between 1979 and 2013. Since 1979, increasing inequality has been the largest poverty-boosting factor, outweighing racial identity and family structure and completely eclipsing the effects of overall economic growth and educational attainment in driving down the poverty rate. Despite our growing economy and the fact that poor workers are now more educated than ever, rising inequality has worked to keep low-income people in poverty. This increase in inequality was driven by stagnating wages for low- and middle-income households (for example, 10^th percentile real wages were actually lower in 2013 than they were in 1979).

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The New York Times’ Binyamin Appelbaum wrote an excellent piece yesterday on the costs and benefits of globalization. But because I’ve thought a lot about this topic, I have some hobby-horse issues concerning how economists characterize how large the gains from trade are and how its gains and losses are distributed. Put simply, the overall net benefits of trade are much smaller than commonly advertised, but the regressive redistribution trade causes is considerable.

First, on the gains from trade policy (i.e., how much we should expect national income to rise if we sign trade agreements), Appelbaum refers to a piece from the Peterson Institute of International Economics claiming that trade liberalization added 7.3 percent of GDP to American incomes by 2005—about $9000-10,000 per American household. This is just not true. It’s a wildly inflated number that should not be in the policy debate (and if you need much smarter and better-credentialed people making the some point—here’s Dani Rodrik). This number is an effort to bully people into going along with today’s trade agreements by making them think the stakes are utterly enormous. In fact, even if it was correct (again, it’s not) this study would be irrelevant to today’s trade policy debates because the sum total of economic gains from all post-1982 trade agreements (this includes NAFTA, the completion of the General Agreement on Tariffs and Trade, the formation of the WTO, and the permanent normal trading relations with China) is estimated to be just $9 per household, meaning that  99.9 percent of the gains from trade estimated in the study happened before 1982. So even if trade liberalization really did spur mammoth gains at some point in the (distant) past, the effects were over by the early 1980s.

Second, on the distribution of gains and losses from trade, it is striking to me that so many economists who favor signing every trade agreement that comes down the pike can still feign surprise that expanded trade seems to be bad for most workers’ wages. Put simply, it is completely predicted in textbook trade economics that wages for most workers will fall and inequality will rise when the United States trades more with poorer trading partners. Yes, expanded trade is predicted to lead to higher overall national income, but it is also predicted to redistribute enough income within the United that it can (and is likely to) make most workers worse-off. This should not be a surprise to anyone familiar with the topic.

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The common wisdom on Capitol Hill, carefully nurtured by corporate lobbyists and campaign cash, is that America needs more high-tech guestworkers, requiring a big increase in the number of H-1B guestworker visas made available each year. A number of senators, including Amy Klobuchar and Orrin Hatch, have introduced legislation to double or triple the number of non-immigrant tech workers who can be imported each year, despite evidence from the U.S. Government Accountability Office, independent researchers, and various media reports that the H-1B is used to lower wages and displace U.S. workers.

The senators endlessly proclaim that H-1B employees are good for our economy, that businesses can’t find enough talent here, that the H-1Bs are innovative, the “best and the brightest,” and that importing them leads to more job creation. In support, they cite a paper by Agnes Scott College researcher Madeline Zavodny, which found that hiring H-1Bs creates jobs for Americans: specifically, that “adding 100 H-1B workers results in an additional 183 jobs among U.S. natives.”

The problem is that it isn’t true. Zavodny’s research couldn’t discern whether the H-1Bs were hired because the economy was growing and jobs were being created—for natives and guestworkers alike—or whether the H-1Bs were responsible for the job growth. (The weakness of her results is demonstrated by another, completely implausible finding she reports, that H-2B unskilled guestworkers are associated with two-and-a-half times greater job creation than the college-educated H-1Bs: 464 jobs for every 100 H-2B guestworkers. The notion that hiring low-wage-earning landscapers and groundskeepers, hotel maids and dishwashers—most of whom have little or no college education—spurs spectacular job growth is ludicrous on its face.)

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Nominal wage growth’s failure to significantly increase over the last several months (and years) is evidence enough that there’s sufficient labor market slack to convince the Federal Reserve to keep its foot off the economic brakes and not increase short-term interest rates. Nominal hourly wages have grown at only around 2.0-2.3 percent annually, far below wage growth that would be consistent with the Fed’s own 2 percent inflation target, 1.5 percent trend productivity growth, and a stable labor share of income. It’s clear from the evidence that the Fed should not even consider raising interest rates to forestall inflation until wage growth is consistently above this target.

One of the leading forces (besides the 30+ year trend in workers losing bargaining power ) behind sluggish wage growth is the fact that there’s still much labor market slack left in the economy today. The headline unemployment rate underestimates this slack because some of it shows up as cyclically depressed rates of labor force participation instead of elevated unemployment. Over the last couple of years, we’ve been tracking what we call “missing workers”—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted in the labor force if they are actively seeking work, these missing workers are not included in the labor force and hence are not classified as officially unemployed.

While it’s clear that some structural forces (aging of the Baby Boomers, for example) are putting downward pressure on labor force participation rates, it’s clear that some of the depressed participation rate is still reflecting cyclical weakness. New evidence released today backs up our “missing worker” interpretation that the unemployment rate is underestimating the true degree of labor market slack because labor force participation remains cyclically depressed. The Goldman Sachs Global Macro Research US Daily (sorry, no link: paywall) points out that research from the New York Fed implies that the overall “jobs gap” may be 3 million, even while the Fed’s estimates of the ”unemployment gap”—the gap between today’s unemployment rate and the rate consistent with stable inflation— is much lower. In short, the headline unemployment rate does indeed continue to obscure how much labor market slack remains. The Goldman team draws out the policy implications:

“This implies much less urgency to start normalizing monetary policy . . . and it is an important reason why we think it would be better for the FOMC to wait until 2016 before starting the normalization process.”

I couldn’t agree more. Sluggish wage growth and depressed labor force participation continue to show signs of a weak economy and the Fed should continue staying the course until the economy is considerably stronger. Acting too soon, would be a mistake for the economy and the people in it.

As Jeff Faux notes, we seem to have reached the part of the debate over the TPP when facts and evidence have largely given way to table-pounding. But given that this is still a live debate and that silly arguments continue to proliferate, here are a couple of clarifications that might be helpful to the debate:

First, a vote for the TPP is a vote to reduce the wages of most American workers and increase inequality. Yes, policies that boost U.S. imports (like the TPP) raise total national income in the United States, but they also redistribute so much more income within the United States that most workers are made worse off. And to be clear about this, the losses are not just the workers directly displaced by trade. Instead, it’s the wages of all workers in the economy who compete with the trade-displaced workers for other jobs—about 100 million workers in all. The way to think of it is that landscapers and waitresses don’t lose their jobs to trade, but their wages suffer from having to compete with laid-off apparel workers looking for work elsewhere.

Now, it’s true that the TPP would reduce wages for most Americans and increase inequality just a little bit. But that’s the direction. And it’s also true that expanded trade can potentially benefit everybody if the winners compensate the losers, but that would require complementary compensatory policies, and ones on a scale much, much larger than the Trade Adjustment Assistance (TAA) often throws in with trade agreements.

And while TPP proponents low-ball the wage-suppressing effect of TPP, they often exaggerate the overall benefits for national income. But the source of both gains and losses from trade are the same: domestic reshuffling of production that sees importable sectors shrink and export sectors expand. So how big are the TPP’s estimated income benefits? Not very big—it’s estimated to increase U.S. GDP by about 0.4 percent cumulatively over the next 12 years, according to a paper by Petri and Plummer (2012) for the Peterson Institute for International Economics (PIIE). Yesterday, the normally-sharp Adam Posen (President of PIIE) put these benefits in an interview at a few tenths of a percent of GDP each year. That’s clearly wrong, even by his own shop’s estimates (roughly ten times higher than what the Petri and Plummer (2012) paper shows). Posen claimed on Twitter that this 0.4-percent-over-12-years estimate was “a lower bound” that “doesn’t show dynamic gains from productivity growth thru competition”. But that’s not right—the Petri and Plummer (2012) PIIE estimate is actually a significant increase relative to an earlier estimate by the same authors, and they justify the newer higher estimate exactly by saying they’re now incorporating estimates of productivity gains stemming from more-competitive firms gaining market share after TPP’s passage.*

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Despite officially ending in June 2009, the Great Recession and its aftermath continues to have a damaging effect on the labor market prospects of young adults. The depth of the recession and the slow pace of recovery since it ended means that seven classes of students have now graduated into a weak labor market and have had to compete with more experienced workers for a limited and slowly growing pool of job opportunities. Recent improvements in economic conditions have begun to finally translate into better job prospects for young graduates, but there is a long way to go before we return to the labor market health of the pre-recession period.

Although the labor market is slowly recovering, unemployment remains elevated for both young high school and college graduates; underemployment rates for these groups are also unusually high. As seen in the charts below, the unemployment rate is 7.2 percent for young college graduates and 19.5 percent for young high school graduates. Although these rates have come down from the peaks after the Great Recession, they are still elevated above their 2007 levels (5.5 percent for college grads and 15.9 percent for high school grads), which were already high compared to the more favorable rates seen in 1995-2000. The Class of 2015 joins a sizable backlog of unemployed college graduates from the last six graduating classes (the classes of 2009–2014) in a difficult job market.

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An eye-opening story published last week by the New York Times revealed how manicurists in New York’s booming nail salon industry are subject to brazen exploitation. Workers are exposed to dangerous chemicals, expected to work excessively long hours, subject to racial and ethnic discrimination and verbal abuse, and regularly paid less than the minimum wage—if they’re paid at all. New hires are even forced to pay their employers a “training fee,” before working unpaid for weeks until their employer arbitrarily deems them worthy of getting paid.

The good news is that New York Governor Andrew Cuomo has already ordered emergency measures to investigate and combat these abuses. The bad news is that what’s happened in New York is the product of national policy failures that almost guarantee these same practices are not unique to the Empire State, or to the nail salon industry.

Many of the manicurists described in the piece are undocumented immigrants. Failure to protect any group of workers—even those without lawful immigration status—is damaging to all workers. When businesses can exploit immigrant workers who cannot speak out for fear of deportation, it lowers the wages of other workers in the same or similar fields—whether they are authorized to work or not. Regardless of how someone has entered the country, if they are engaged in employment, they should have some practical and accessible recourse against exploitative labor practices. Legalization would, by itself, raise labor standards for tens of millions of Americans, along with the immigrants most directly affected.

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This post originally appeared on The Huffington Post.

Barack Obama’s petulant criticism last Friday of Democrats who do not support his proposed Trans-Pacific Partnership reminds me of the old tongue-in-cheek advice to young lawyers: “If the facts are on your side, pound the facts. If the law is on your side, pound the law. If neither is on your side, pound the other lawyer.”

The facts are definitely not on the president’s side. For two decades the trade deals negotiated by the last three presidents have lowered U.S. wages, lost jobs and generated a chronic trade deficit that requires our country to borrow more money every year in order to pay for imports. The president’s main argument that exports have risen, without mentioning that imports have risen much faster, is now transparently deceitful to anyone who can add and subtract.

Neither is the law in his corner. As did his predecessors, Bill Clinton and George Bush, he assures Americans that this deal will be different because, you see, it will protect workers. But the secret draft, which had to be revealed to Americans by Wikileaks, shows that once again a trade agreement will be used to enhance the power of multinational corporate investors over people who have to work for a living. As AFL-CIO President Richard Trumka pointed out recently, the Office of the U.S. Trade Representative, which is charged with negotiating and enforcing the deal, does not even believe that murder and other brutal acts committed against labor union activists violate the “worker-protection” clauses to trade agreements.

So, like a lawyer trained to defend the indefensible, Obama is desperately pounding the opposition. They are “just wrong,” he says, without showing us why. He accuses them of “making stuff up”—that is, that they are liars. He whines that they are “whupping on me.” He charges, nonsensically, that they “want to pull up the drawbridge and isolate themselves.”

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