EPI News

Sluggish GDP is a major cause of stubbornly high unemployment

EPI at 25: Celebrating a
Quarter Century of Success

Less than a week away from EPI’s silver anniversary, we continue to spotlight our finest moments.  In the past month, we highlighted State of Working America, our work to raise the minimum wage, and our advocacy of a Broader, Bolder Approach to Education.  Today, we focus on EPI’s work to reform unemployment insurance (UI).

In 2001, EPI began to monitor, analyze, and propose changes to the UI system.  EPI’s research helped persuade Congress to enact Emergency Unemployment Compensation in 2002 and 2003.  More recently, during and in the aftermath of the Great Recession, EPI has remained a pivotal voice in the fight to extend unemployment insurance for the millions of out of work Americans.

Sluggish GDP is a major cause of stubbornly high unemployment

The Gross Domestic Product (GDP) report released yesterday by the Bureau of Economic Analysis showed an economy still on life support.  In his analysis of the report, EPI macroeconomist Josh Bivens noted “that the economy grew by 2.5% in the most recent quarter, meaning that it has grown by only 1.6% over the last full year.”  Growth rates need to be significantly higher than 2.5% to begin putting any downward pressure on the unemployment rate. Bivens explained that “sluggish growth is the root cause of the stubbornly high unemployment rate we’ve seen,” and although “a double-dip recession does not seem to be in the cards, this does not by a longshot mean that the economy is healthy.”

In a guest commentary piece for U.S. News and World Report,Inflation Could Help Flagging Economy,” Bivens explained why and how the Federal Reserve should use inflation and other policies to help grow the economy and reduce unemployment.

Bivens’ analysis of the state of the nation’s economy was also cited by McClatchy, CNNMoney, and Politico.

Occupy Wall Street is right about nation’s skewed economic rewards

The Occupy Wall Street protestors are right in their assessment of how skewed the nation’s economic rewards have become.

In Occupy Wall Streeters are right about skewed economic rewards in the United States, EPI president Lawrence Mishel and economist Josh Bivens present 12 charts—detailing trends in income, wages, capital income and  wealth—that highlight the economic inequality that developed between 1979 and 2007, pre-dating the recession.

The paper’s findings include the following:

  • Between 1979 and 2007, the incomes of the top 0.1% of households grew 390% and incomes of the top 1% grew 224%, while incomes of the bottom 90% saw gains over that whole period of just 5%.
  • Between 1979 and 2006, the annual wages of the top 0.1% grew 324% and those of the top 1% grew 144%, while the bottom 90% saw gains over that whole period of just 15%.
  • The ratio of the wealth held by the wealthiest 1% of households to the wealth held by the median household was 225-to-1 in 2009, up from 131-to-1 in 1983.

This week’s Economic Snapshot further illustrates the sobering fact that the top 1 percent captured almost 60 percent of all income gains between 1979 and 2007 while the bottom 90 percent of income-earning households captured less than 9 percent of all income gains over this same period.

EPI’s data and analysis of the nation’s startling income growth disparity between the highest earners and the vast majority of working Americans has been cited by multiple major media outlets, including the New Yorker, MSNBC,and the Atlanta Journal Constitution.

EPI around Town

  • On Friday, October 21, Daniel Costa, EPI immigration policy analyst, together with Ana Avendaño, Director of Immigration and Community Action at the AFL-CIO,  Mary Bauer of the Southern Poverty Law Center, and Tanya Clay House of the Lawyer Committee for Civil Rights briefed Congressional staff on problems with the H-2B visa program and the benefits of a new Labor Department rule that lifts wages for U.S. workers and guest workers alike.
  • On Wednesday, October 26, EPI president Lawrence Mishel discussed the paper’s findings when he joined The Economist for the Buttonwood Gathering, the magazine’s annual finance and economics event. Mishel described the economy as “a huge skimming operation for the top 1% over the last three decades” and decried the establishment’s lack of urgency about the jobs crisis.  “America’s powerful people are, in effect, saying ‘We’re ok, America, you are just going to have to tough it out,’” said Mishel.After completing his talk, Mishel walked just a few blocks to Zuccotti Square and witnessed the Occupy Wall Street protestors’ fervent calls for economic justice.

The protestors keep a copy of EPI’s
State of Working America in their library.

EPI on the Hill

On Wednesday, October 26, Isaac Shapiro, EPI’s director of regulatory policy research, was one of the speakers for a Coalition for Sensible Safeguards briefing on the ramifications of the Regulatory Accountability Act and other proposed anti-regulatory measures introduced this session.  This briefing was open to all staff of the Senate Democratic Caucus.  During the discussion, “Preserving Our System of Public Protections,” Shapiro examined arguments concerning the economics of regulations, past and present.

What’s Happening at 1333 H St?

On Monday, October 31, Ray Marshall (Former U.S. Secretary of Labor, and Professor Emeritus, University of Texas at Austin) will release his new book Value-Added Immigration.  Marshall will discuss the book’s findings with fellow immigration policy experts Philip Martin (Professor, University of California, Davis, and Chair, U.C. Comparative Immigration & Integration Program), Ron Hira, (Associate Professor, Rochester Institute of Technology, and EPI Research Associate), and Michael Teitelbaum, (Senior Advisor, Alfred P. Sloan Foundation, and Wertheim Fellow at the Labor Worklife Program at Harvard Law School).

This event is free and open to the public.  Click here to RSVP.

EPI in the News

In the past week, EPI’s experts have been cited by more than 700 television, radio, and print media outlet.  In addition to previously noted articles, some of the highlights include, Reuters, the Huffington Post, and USA Today.

  • In “Underpaid women and their men,” Reuters’ writer David Cay Johnston described the social costs families experience due to  lower wages. “Married couples with children in 2009 worked 492 more hours than in 1979, a 15 percent increase, census data analyzed by the Economic Policy Institute shows. The extra money comes at a price: less time for the joys of parenting, coupling and community engagement.”
  • When speaking to The Huffington Post, Josh Bivens described today’s income growth disparity as “stunning” and likened it to “Gilded Age levels of inequality.”
  • Labor economist Heidi Shierholz spoke to USA Today about the shrinking middle class and explained the Great Recession’s lingering effect on working families. Shierholz explained that families are still “taking substantial losses,” in terms of cut work hours, frozen salaries, and imposed layoffs. “The really scary thing is,” she said “there’s no relief in sight.”
  •  In a guest piece for the Baltimore Sun, “Jobs and fairness: ‘prevailing wage’ rule good for Marylanders,” EPI vice president Ross Eisenbrey explained the benefits implementing the Obama Labor Department’s prevailing wage rule would have on the Maryland economy and state labor market.  Unlike prior regulation under which employers could offer substantially lower wages to U.S. workers and then recruit for guest workers outside the country, Obama’s rules would lead to a significant number of Maryland workers getting jobs at fair wages.