Josh Bivens

For the past six months the Federal Reserve has been soliciting input to guide a reassessment of its “monetary policy framework.” This reassessment has been pegged to the 10-year anniversaries surrounding the financial crisis of 2008–09 and the Great Recession. While the Fed’s policy framework deserves much scrutiny, focusing too narrowly on what it could have done differently during the crisis and its aftermath would be a bad mistake.

The Fed failure that inflicted real damage on low- and middle-wage workers over recent decades was generally not insufficient effort in fighting recessions. Instead, the mistake was cutting short recoveries before they had maximized opportunities for employment and wage growth. In short, the time to worry about Fed actions that do not protect the interests of low- and middle-wage workers is during economic booms, not during slumps.

This newsletter explains why the Fed should keep the following points in mind as it undertakes its reassessment:Read more

The teacher shortage is real and it exists for many reasons. The question is why do we lose so many young educators? What causes them to not enter teaching? Why do many leave their chosen field after just a few years? And how can we make teaching as financially rewarding as other fields when the reality is many localities do not have the funds to raise salaries?

Many colleges and universities now require educators to have a Bachelor’s degree prior to entering an education program. After getting a Bachelor’s degree future teachers have one more year to get teaching credentials or in many cases they can spend two more years getting a Master’s degree.

In other words: teachers face the unenviable choice of incurring greater debt prior to entering the workforce or changing majors and entering the workforce after only four years with less debt but also less credentials. This is a significant problem since students average $30,000 in college debt. Some of my colleagues owe something closer to $60,000 in debt. It is the passion, the call of teaching, the desire to make a difference that leads people into education not the paychecks.

When you consider teacher’s salaries you have to ponder how someone with this much debt can afford to take a starting position with the national average starting salary less than $40,000 in 2017! Why would anyone become a teacher?

It is not surprising that education programs are now considering changing course in Virginia to make education once again a four-year degree program. If we want the best people in education we need to make it affordable to get a degree. We also need to consider the portability of that degree. Some states work with surrounding states for reciprocity of licensure, however; a teacher usually has to take additional courses if he/she relocates too far away. This presents yet another drawback.

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The world’s climate is changing at an alarming rate, and at the same time, investments to address the problem are some of the most promising opportunities to boost the economy—both immediately and in the face of any future recession.

However, if today’s investments fail to address climate change or align with the clean technologies of the future, we cannot build a competitive, prosperous, or fair economy for the long term. And it is equally true that if our climate solutions ignore working people and only reinforce today’s inequality, they will neither be lastingly effective, nor will we have any chance of building the support and momentum we need to see them become reality.

By contrast, acting on climate in ways that are focused on the needs, concerns and aspirations of working people and communities can bridge division, galvanize action, and drive sustained climate and economic progress.

This starts at all levels—local, state and national—with having working people, including labor, community, environmental, equity, and justice advocates, at the table. It requires a bold, inclusive worker-centered agenda that not only addresses our climate and environmental crises at the scale that science and equity demand but also addresses the underlying issues that leave so many Americans struggling paycheck to paycheck, and bearing the disproportionate costs of economic disruption and technological change.

We need to act now, and we also have powerful opportunities to respond to recession and economic distress.

We have the need and opportunity to act at scale. The urgency and breadth of the climate challenge has the potential to mobilize trillions in public and private investment across multiple sectors of the economy: energy, transportation, infrastructure, technology, and community resilience—just to name a few. Any one of these has the potential to be economically transformative, and could provide a major—or targeted—stimulus to the economy.

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Healthcare in the United States, unlike in other rich nations, is sadly and dangerously tied to the business cycle—because most workers receive insurance coverage through their employers, job losses can be doubly devastating. That’s why it’s important to think about an eventual next recession as an opportunity to redefine the federal government role in the economy, and in the healthcare sector in particular.

It’s remarkable how far the healthcare debate has come in just a few short years and it’s not accidental. The last time Americans saw this level of public dialogue about changing the healthcare system was back in 2008, when Democratic candidates all vowed to reform the system and cover the growing masses of uninsured leading up to the historic election of President Barack Obama in 2008, as well as political trifecta for Democrats in Washington.

For over a year, advocates labored to pass the new law that would eventually expand coverage to 25 million more people, bringing the number of uninsured Americans to a historic low and ushering in the largest expansion of government healthcare since the passage of Medicare and Medicaid in 1965. Yet, despite its accomplishments and the popularity of individual provisions like pre-existing conditions protections and Medicaid expansion, the Affordable Care Act never reached consistent majority support from voters until President Donald Trump tried to repeal it in 2016.

The fight to save the ACA validated what healtchare advocates have known for years: when it comes to healthcare, most voters don’t like big change—especially changes that would take away healthcare or give the insurance industry more power to jack up prices, deny benefits and discriminate against the sickest people.

Trump’s relentless attacks on the Affordable Care Act and Medicaid turned healthcare into a key election issue in 2018, as well as a driver of Democratic success in regaining a majority in the House of Representatives. The tremendous attention to healthcare in the first two years of the Trump era opened a window into a much larger healthcare debate that serves as a proxy for an alternative vision of the economy and our democracy—one that challenges trickle-down economics and the supremacy of free market ideology.

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Let’s start with the ending: It can be done. And, spoiler: It works.

“It,” in the new book Broader, Bolder, Better (Harvard Education Press, June 2019), is Integrated Student Supports (ISS), or “initiatives that provide wraparound services that attend to the early-childhood years along with nutritional support, physical and mental health care, and enriching after-school and summer activities in children’s K-12 years” (p.24). Authors Elaine Weiss and Paul Reville are devoted to decipher this “it”, or ISS, in a manner that can only be of help for all communities in the country, especially for those confronting similar challenges. They explain that ISS are not unique, but diverse in most respects. They exist in communities that are small and large, new and old, southern and northern, rural and urban, progressive and conservative. The 12 initiatives—working in school districts such as Joplin, Missouri; Kalamazoo, Michigan; Montgomery County, Maryland; Pea Ridge, Arkansas; or Vancouver, Washington; in part of them, including Austin, Texas; Durham, North Carolina; Boston, Massachusetts; Minneapolis, Minnesota; New York City, New York; or Orlando, Florida; or across multiple school districts, such as Eastern (Appalachian) Kentucky—that are described in the book in a systematic, transparent, cohesive, and constructive manner are success cases—models that can be used to create “whole-child systems of education” (p.24). The book classifies the cases by their various types of ISS strategy they employ, including community schools, Promise Neighborhoods, Bright Futures USA, and PROMISE Scholarships. They tailored the services and supports they needed to tackle their specific unmet needs, and found the components, wisdom, resources, and agreements needed to offer those services.

The 12 cases exemplify that these practices can be adopted elsewhere, provided certain commonalities are found. What the successful cases share includes, in the first place, that all communities deeply care about the root problem: poverty in any of its shapes and manifestations (pp. 3-21, and others). There’s no question that all of the communities want to break the vicious cycle that promises to link today’s merit and education performance with future wellbeing, but gluing students’ current social class to their educational opportunities and their progress in school really works more backwards than forward. The 12 communities also show a serious understanding of what it takes to redress the consequences of being born in poverty, i.e., that the efforts need to be holistic, continued, sufficient, and shared. The communities also present ISS provided as surpluses, not as deficits, helping overcome the old belief that poverty was sort of an excuse, sidelining it as the core driver of achievement gaps, as Elaine Weiss explained in the release event of the book at EPI. In addition, these communities, which heavily rely on evidence-based effective solutions, implemented systems to monitor the interventions—including systems that allowed for developmental, individualized, inputs, and outcomes. This information is essential because it is what demonstrates the success and the continuous benefits of doing this right. Lastly, knowledge and creativity are also typical as they can help trim down the exact menu of supports and services, as well as the ideal ISS strategy, that each community needs. Though the authors acknowledge that “no single system can serve as a template,” (p. 43), another view of this is that any could become such template for a given community, or that certainly all validate ISS as a model that works and can be implemented.

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Today EPI is participating in the Peter G. Peterson Foundation’s “Solutions Initiative,” along with several other research and policy institutions. For this project, we submitted a model tax and budget plan. The revenues were scored by the Tax Policy Center (TPC) and the spending was scored by former officials of the Congressional Budget Office (CBO).

Normally in DC policymaking discussions, model tax and budget plans are constructed near-solely for the purpose of showing how a mix of tax increases and spending cuts can lead to lower budget deficits. But, while bending revenues closer to spending in a spreadsheet is a fairly trivial exercise, the real-world effects of changes in taxes and spending are often not trivial at all. To take just one example, the poverty rate of elderly households fell extraordinarily rapidly as Social Security spending rose in the mid-20th century. Ignoring this tremendous progressive achievement and instead seeing Social Security as just a budget line-item that can be trimmed to move expenditures and revenues closer together would be an extraordinarily myopic way to think about economic policy.

To ensure that we were keeping the big picture in mind while constructing our plan, we began by undertaking a diagnosis of the most-pressing economic problems facing the vast majority of U.S. households. We identified them as follows:

• Economic growth has been slow for almost two decades. The roots of this slow growth are too-slack aggregate demand for most of this period and anemic growth in productivity caused largely by weak private investment.

• Slow growth in recent decades has not been accompanied by any progress at all in reversing the huge upward redistribution of income that characterized previous decades—in fact, by many measures inequality has continued to rise.

• Taxes and spending in the United States are far smaller than in most other rich countries around the world. We expend far less fiscal effort in income support programs that fight poverty, social insurance programs that provide broad-based economic security, and public investments that spur growth.

• The most-glaring outcome of the small fiscal footprint in the U.S. economy is a health sector that is inefficient and unfair. Our health care system provides coverage to a smaller share of our population, delivers less health care, obtains worse health outcomes, and yet places a far greater economic burden on households than in almost any other rich country.

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We recently wrote a piece in the American Prospect analyzing a recent report on arbitration by the U.S. Chamber Institute for Legal Reform—an affiliate of the U.S. Chamber of Commerce—that we found to be misleading and riddled with errors. In this blog post, written especially for those policy wonks who can’t get enough, we share more details about what’s wrong with the report.

The report—touting arbitration’s supposed benefits for workers—arrived just in time to be cited at a House hearing last month. That’s unlikely to be the last of it. The report will surely be presented by corporate lobbyists to a coterie of undecided legislators—legislators who care about access to justice and who are genuinely concerned about the impact of forced arbitration, but who also want to be responsive to the concerns raised by businesses that use it. The danger is that these legislators will believe the report’s spurious conclusion that arbitration is better for workers and vote accordingly.

Some initial skepticism is obviously in order. With its history of opposing reforms like paid family leave, a higher minimum wage, and strong overtime protections, the U.S. Chamber of Commerce is not an institution that is generally known as a champion of workers’ rights. And the report (entitled “Fairer, Faster, Better”) was written by a consulting firm that’s published previous reports like “Regulations: the more is not the merrier” and “The Regulatory Impact on Small Business: Complex. Cumbersome. Costly.”

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After decades of advocacy, New York stands at the brink of potentially passing the Farmworker Fair Labor Practices Act, a bill that would extend to the agricultural sector the right to organize and the right to overtime pay that most workers in other industries enjoy. Governor Cuomo has said he will sign the measure if it passes.

Democrats recently took leadership of the state senate and have a longstanding majority in the state assembly. Both chambers have an opportunity to take advantage of those majorities in a way that results in a historic improvement for the lives of workers who toil in difficult conditions for low pay in New York’s fields and dairies.

But victory is far from certain: plenty could happen between now and June 19, when New York’s legislative session ends. The New York Farm Bureau, unsurprisingly, is saying the bill “could dramatically change agriculture and hurt our rural economy.”

A new report from the Fiscal Policy Institute (FPI) shows how the bill will help farmworkers, be manageable for farm owners, and offer tangible benefits to local communities.

The bill will most obviously be a gain for farmworkers in New York. On average, it will increase weekly earnings by between $34 and $95 per week. That’s money that will also be spent in the local economy, helping boost local businesses (and adding to sales tax revenues).

Other states have enacted laws requiring that at least some overtime be paid to farmworkers after a certain number of hours. In California—the largest agricultural state by far with over $50 billion in cash receipts going to farms and ranches—the legislature and governor enacted a law in late 2016 that gradually phases in overtime pay for farmworkers beginning this year.

The law will eventually require that farmworkers be paid overtime after eight hours per day or 40 hours per week in 2022. While agribusiness has complained and fought against passage of the law for years, after five months of being the law in the state, there have not been any major negative impacts on business or production reported in California. If overtime for farmworkers can work in California, it can work in New York.

Farm owners have had some tough years, to be sure. But treating workers properly is a way of aligning interests so that legislators and New Yorkers can all feel good about supporting New York farms. The cost of providing overtime to farmworkers in New York is manageable. It would amount to 9 percent of net farm income if all of the costs came out of the bottom line. And, that’s not what would happen. In fact, the farm owners would see some benefits that would offset the costs, including decreased training and recruiting costs, and higher productivity.

A few people have worried that this would push up prices. Not so. In fact, FPI is not predicting that costs will go up at all: Farm owners say they can’t control prices, and we accept that idea in general, even if it may be an overstatement. But even if all of the costs were passed along to consumers, prices would increase just 2 percent.

And for those who do worry about price increases—even if there are no savings from increased productivity and even if the farm owners take no loss in profit—the increase in prices would be the equivalent of raising the price of apples at the farmer’s market from $1.50 to $1.53 per pound. Hardly a devastating difference.

It’s worth taking a moment to think about why farmworkers are currently exempted from the labor regulations that apply to other workers in the state. The history goes back to Jim Crow, and a time when most hired farmworkers were African American, as a recent report from the National Employment Law Project explains.

Today, the workers hired are also predominantly people of color, often immigrants, many are Latinos and Latinas, and some work without documentation. Increasing numbers are also temporary migrant “guest” workers in the H-2A visa program: in New York H-2A jobs certified went from 4,699 in 2013 up to 7,634 in 2018, accounting for about 14 percent of the 56,000 hired farm laborers in the state.

Why was it, again, that the rules that apply to other workers in New York State shouldn’t also apply to people who work on farms?

There are only two weeks left in New York’s legislative session and the living standards and labor standards of the state’s farmworkers hang in the balance. The legislature and governor should enact the Farmworker Fair Labor Practices Act, so New Yorkers can all feel good about buying local and supporting New York’s farms.

This week, ADP estimated that private sector employment increased by only 27,000 in May. The Bureau of Labor Statistics (BLS) will release their estimates of May job growth this Friday morning, and the extremely slow pace of hiring reported by ADP will have many people paying attention. The obvious question following the ADP numbers is just how worried should we be that a substantial economic slowdown is upon us?

While any single monthly data indicator should be taken with a large grain of salt, there are some real signs that the economy may be slowing a bit. The weak ADP report isn’t the first big hiccup in employment estimates in recent months. The BLS estimated just 56,000 jobs were created in February (46,000 for the private sector). The last three months of payroll employment showed an average increase of only 169,000 (154,000 private) compared to a much stronger 245,000 (240,000 private) in the previous three months.

EPI’s nominal wage tracker shows a distinct leveling off as well in very recent months. After pretty sharp and steady improvements in year-over-year wage growth between 2017 and 2018, wage growth gains seem to have tapered off. On average, wages grew 2.6 percent in both 2016 and 2017. In 2018, they grew an average of 3.0 percent over the year. Wages continued to rise in the latter half of 2018, and averaged 3.3 percent in the last quarter of the year. Wage growth has remained at 3.3 percent for the first four months of this year. In a stronger economy wage growth would be above 3.5 percent and if the recovery continues on course, I expect we will get there. To be at genuine full employment, wage growth would have to be at least 3.5 percent for a consistent period of time to allow labor share of corporate sector income to recover.

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There is no shortage of creativity in the American economy—as long as we get away from the myth that denigrates public investments and puts private business on a pedestal.

That’s the message from MIT Sloan Economist Simon Johnson’s new book, “Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream,” which he presented during a talk and Q&A here at EPI this week.

Johnson, in a book co-authored with his colleague Jonathan Gruber, traces the history of America’s rapid economic ascent after World War II in part to heavy doses of public spending and incentives for scientific discovery and technological innovation.

He says the government’s abandonment of this commitment has not only chipped away at America’s economic and cultural leadership globally but also cost workers and firms enormously in terms of lost productivity, wages, and profits.

Johnson highlighted a decline in federal spending on research and development from a 1964 peak of 2 percent of gross domestic product (GDP) to just 0.7 percent today.

“Converted to the same fraction of GDP today, that decline represents roughly $240 billion per year that we no longer spend on creating the next generation of good jobs,” Gruber and Johnson write in the book.

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