Media clips
-
Pedro’s Op-Ed, which ran in the WSJ. You can find it online here. Thanks so much to Danyoung and Erica for quick acquisition of key points, both included in this final version
Wall Street Journal June 24, 2014 -
Third, and perhaps most important, the distribution of wages has spread out drastically. According to compilations by the Economic Policy Institute, the median real wage—that is, the real wage earned exactly in the middle of the wage distribution—rose by a mere 5% over the years 1979-2012. The implied annual rate of increase is close enough to zero that you can taste it. By contrast, the wage at the 95th percentile rose a healthy 39% over those same 33 years. And the rewards for work grew vastly faster in the top 1%—that’s the top 1% in wage earnings, not in total incomes—where the increase was 154% over this period. Let’s remember that the top 1% now comprises roughly 1.35 million workers. So we are not only talking about CEOs, movie stars and hedge-fund operators here—though their earnings have shot off the charts.
At the bottom, things have been truly dismal. At the 20th percentile of the wage distribution, real wages were essentially flat over the 33 years; at the 10th percentile, they fell 6%. And this is for people who have jobs. Most of the poor do not.
Wall Street Journal June 24, 2014 -
The national jobless rate was 6.3% in May, down from 7.5% a year earlier, and nonfarm employers added more than 200,000 jobs for a fourth straight month. Most states saw their jobless rates fall or hold steady in May from the prior month, and the unemployment rates in 49 states fell from a year earlier. (Alabama was the only exception.)
But the U.S. labor force participation rate has dropped in recent years, in part because unemployed workers stopped looking for jobs and dropped out of the labor force. “There’s been so many exits from the labor force in the last few years that, at this point, we’re seeing exits slowing,” said David Cooper, senior economic analyst at the Economic Policy Institute, a left-leaning Washington think tank. “But so many people are on the sidelines, and we’re not seeing them resume their job searches.”
Below is a sortable chart for all 50 U.S. states, plus the District of Columbia, Puerto Rico and the Virgin Islands, showing their peaks for payroll employment before or after the recession and where they stood in May.
Wall Street Journal June 24, 2014 -
Josh Bivens, director of research and policy at the left-leaning Economic Policy Institute, said economic conditions in recent years had few precedents, making it hard to predict the pace of the recovery. Traditional models assume the Fed can restore growth by cutting interest rates, but the Fed has held interest rates near zero since late 2008, and that has proved insufficient. That has left forecasters guessing, he said.
“You can definitely be sympathetic with them,” he said. “We’re just in uncharted territory.”
The New York Times June 20, 2014 -
The latest head-scratcher when it comes to matching policymaking with rhetoric about the evils of deficits came last week, when the idea was floated to finance the rapidly emptying Highway Trust Fund not by raising the gasoline tax, its only dedicated source of revenue, but by . . . cutting corporate taxes. Arithmetic sticklers among us should think that’s odd to imagine that spending can be “paid for” by cutting taxes. More precisely, the proposal would allow U.S. corporations to bring back profits currently being held overseas and to pay a temporary preferential tax rate on these repatriated profits. Because the U.S. corporate tax code allows deferral of corporate income taxes until the money is repatriated, large amounts of profits sit offshore in lower-tax jurisdictions. By offering a preferential tax rate in the short term, the thinking goes, a flood of profits from U.S. multinationals will come into this country and boost tax collections. Read column here.
Wall Street Journal June 20, 2014 -
It would be a huge mistake for the Fed to prematurely raise rates. A new report from the Economic Policy Institute titled “Raising America’s Pay” finds that wage growth for the bottom 20 percent of hourly workers was -0.4 percent per year from 2000 to 2013. For the bottom 50 percent, it was just 0.1 percent per year. In other words, for half of Americans, their wages have been nearly stagnant.
But just as we have seen hints of slightly higher inflation in the past few months, we have also seen anecdotal evidence of slightly higher wages. A major staffing agency for temporary workers, Robert Half International, recently increased their rate 2.6 percent, a sign that workers are both scarcer and in higher demand. Business Insider’s Joe Weisenthal also reports on two other indicators—the job opening rate and a survey of businesses that intend to increase compensation in the next three months—that suggest wage growth may be around the corner.
The New Republic June 20, 2014 -
Josh Bivens, director of research and policy at the left-leaning Economic Policy Institute, said economic conditions in recent years had few precedents, making it hard to predict the pace of the recovery. Traditional models assume the Fed can restore growth by cutting interest rates, but the Fed has held interest rates near zero since late 2008, and that has proved insufficient. That has left forecasters guessing, he said.
“You can definitely be sympathetic with them,” he said. “We’re just in uncharted territory.”
New York Times June 20, 2014 -
This is especially true for African-American and Latino workers who generally have fewer assets and rely almost exclusively on their paychecks to support themselves and their families. Therefore, anyone concerned about eliminating economic inequality—everything from disparities in income and wealth to gulfs in opportunity and mobility—must also be concerned about wage growth and eliminating racial wage gaps. Granted, broad-based wage growth is not a complete panacea for all racial disparities in economic outcomes. Wealth, the value of cash and assets that a household owns after accounting for debt, is lower for the vast majority of black and Latino workers even when compared with white households with similar incomes. But broad-based wage growth would help to narrow persistent wealth, opportunity, and mobility gaps.
A report released by the Economic Policy Institute this month documents the fact that since 1979, wages have grown slower than productivity for everyone except the top 5 percent of workers. That means a very large majority of workers have reaped fewer of the economic rewards they helped to produce over the last 34 years. Most of it has gone to those at the very top of the wage scale. As there has been an ever-shrinking share of the pie for the majority of workers to divide, African-Americans and Latinos have gotten only crumbs and racial wage gaps have remained stubbornly hard to close.
National Journal June 20, 2014 -
Members of Congress have a plan to get major corporations to bring profits they have stashed overseas back into the U.S.: offer them an 84 percent discount on the taxes they owe on that money.
The lawmakers’ stated goal is to generate enough revenue to preserve the federal Highway Trust Fund, which is expected to run out of money later this summer. But economists and analysts from multiple organizations in Washington are baffled by the idea that Congress wants to resurrect a program that failed miserably its first time around, and doesn’t promise anything better in the future.
“In politics, bad ideas never go away, even after being shown to be bad,” wrote Thomas L. Hungerford, of the Economic Policy Institute. “A repatriation tax holiday is a case in point.”
The Fiscal Times June 20, 2014 -
Yet the Golden State is also coming up with some of the most forward-thinking ideas. De León’s approach, called the California Secure Choice Retirement Savings Program (CSC), was signed into law in 2012 by Governor Jerry Brown. It aims to combine the best of old-style defined-benefit plans (traditional pensions that guarantee workers a set level of yearly income in retirement) with the flexibility and mobility of a 401(k). CSC will cover workers in California who don’t currently have access to formal retirement savings via their work. “I’m a big fan,” says Monique Morrissey, an economist with the liberal Economic Policy Institute who recently testified before Congress on retirement security. “It’s probably the farthest along of all the retirement-reform ideas in terms of practical implementation.”
Time Magazine June 20, 2014