EPI News

The story behind America’s broken economy

EPI this week unveiled its State of Working America Web site—featuring a comprehensive set of charts on income, jobs, poverty, and other economic data—along with the book Failure By Design, which explains the economic policies that laid the foundation for the Great Recession. Together, the Web site and book offer a detailed picture of the state of the economy and the economic challenges facing many working families.

New EPI Web site makes data more accessible

For the first time this year, EPI has published The State of Working America as a Web site, presenting  more than 200 accessible charts on topics including jobs, income, wages and poverty, economic mobility, health, and wealth. The online format helps users search by topic and demography and also offers an interactive feature, When Income Grows, Who Gains, that tracks income trends from 1917 through 2008 and lets users compare patterns of income distribution for any period within that 91-year time frame. Between 1986 and 2000, for example, the richest 10% of Americans saw 77% of the country’s average income growth, but in recent years they have captured much more. Between 2000 and 2007, all of the country’s income growth went to the top 10%, while average incomes for the lower 90% actually declined.

Economic policy did what it was designed to do

In Failure By Design—The Story Behind America’s Broken Economy, Economist Josh Bivens argues that this growing economic inequality was no accident, but rather resulted from economic policies that weakened labor unions, allowed the value of the minimum wage to erode, and promoted trade agreements that protected corporate interests over worker interests. Bivens also outlines how the Federal Reserve in recent decades shifted its focus from targeting low unemployment to targeting low inflation, which resulted in higher rates of unemployment, even during periods of economic growth.

“The good news is that policy does what it is designed to do,” says Bivens. “The bad news is that we designed it to funnel lots of money to the very rich.”

The Great Recession Three Years Later

December 2010 marked the third anniversary of The Great Recession, and the latest national and state unemployment data for that month offer another clear indication that the job loss of this historic downturn has been larger and more persistent than in any other recession since the Great Depression. A new report, The Recession’s Long Tail, by Policy Analyst Rebecca Thiess, analyzes the recession three years after it began – and a year and a half after it officially ended.

Three years after the start of the recession, the labor market still has 5.2% fewer jobs than when the downturn started. That marks a larger decline than at any other single point in any post-war recession. Unemployment has been above 9% every month since the recession officially ended in June 2009, and the economy today is short 11 million jobs compared to its pre-recession peak (when factoring in working-age population growth). Records for long-term unemployment have also been shattered by the Great Recession. In December 2010, 44.3% of unemployed workers had been out of work for six months or longer.

EPI in the news

The Economist cited EPI data in a story about growing economic inequality.

New York Times columnist Bob Herbert cited EPI research in a piece about Social Security and why it is not the cause of the federal government’s long-term deficit.

–A Washington Post op-ed by Harold Myerson cited data from The State of Working America on growing income inequality.  The Post also cited EPI research showing how proposed austerity measures to reduce domestic spending to 2008 levels would trim domestic programs to their lowest level as a share of the economy in more than 30 years, endangering as many as 600,000 jobs.

The Kansas City Star cited data from the new State of Working America for a story on the sluggish economic recovery.

Paul Ryan, the new House Budget Committee Chairman, has presented “A Roadmap for America’s Future,” containing proposals that would enrich the wealthy at the expense of the middle class. A new EPI Briefing Paper by Policy Analyst Andrew Fieldhouse outlines how the dismantling of social insurance programs combined with the middle-class tax hikes Ryan proposes would lead to “an unprecedented reversal of progressive U.S. tax policy.”