Media clips
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This is just quite delightful:
“Labor’s share of income measures the percentage of corporate profits that go to pay wages to employees – as opposed to enriching shareholders and other owners.”
In 2013, labor’s share of income fell to 72.7%, according to the Economic Policy Institute. In the first half of 2014, however, the number spiked up.
No, simply no. Labour’s share of income just isn’t the amount of corporate profit that flows to labour. That’s a gross misunderstanding of what is actually happening here. Labour is of course a cost to a corporation and in order to calculate profits we look at income, subtract all of the costs (so, subtract cost of goods sold, the cost of labour, the cost of rent and utilities and so on) and what’s left over is the profit. So, the labour share is that portion of corporate income that goes to wages. And no, the residual, after labour income, is not what flows to owners and shareholders either. Labour income plus corporate profits does not amount to 100% of the economy, nor even to 100% of the income of the corporate sector.
What makes this so lovely is that the source that Ms. Moore is using is very clear on this point. Here’s the EPI:
“The figure below shows a particularly stark measure: the share of corporate sector income accounted for by workers’ wages and benefits.”
Forbes September 5, 2014 -
The median value of all financial assets was also down, decreasing 8% to $21,000. Although markets soared from 2010 to 2013, only about a third of households have stock holdings of at least $10,000, according to the Economic Policy Institute.
The median value of stock holdings rose 26% to $27,000.
The share of Americans owning certificates of deposit fell sharply as bank interest rates remained meager, to 7.8% from 12.2%
The portion with retirement accounts fell below 50%, though their median value increased 25% to $59,000. “The growth is likely explained by resurgent stock markets and increased contributions by those who participated in retirement plans,” the report said.
The early years of the recovery also featured a welcome decline in household debt, with the share of families holding any type of debt falling to 74.5% from 74.9%. Only 42.9% had mortgages, down from 47% in 2010.
Twenty percent of households, however, had student loans, up from 19.2%, and their median value rose 15% to $16,000.
USA Today September 5, 2014 -
Yet Josh Bivens, research director at the liberal Economic Policy Institute, says America’s relatively low “headline unemployment rate is painting too rosy a picture of how the U.S. labor market is doing.”
Associated Press September 5, 2014 -
American workers’ wages fell in the first half of 2014 compared to the first half of 2013 with few exceptions, according to a report released this week by the Economic Policy Institute.
The falling wage trend goes back even further. When compared to the first half of 2007, for instance, wages in the first half of this year were flat or falling. In fact, the depressed wages pattern holds fast even when you compare 2014 wages to those in 1979 (after accounting for inflation).
Productivity from 1979 to 2013 grew 64.9% while hourly compensation of production and nonsupervisory workers, who account for 80% of the private sector workforce, grew by just 8%.
Fortune September 5, 2014 -
Economist Elise Gould at the Economic Policy Institute says that shows there’s still significant slack in the labor market. Employers don’t have to offer higher pay to attract and retain workers, and workers don’t have much bargaining power.
“Workers are really not seeing the growing productivity, the growing economy, in higher wages,” Gould said.
Marketplace September 5, 2014 -
For instance, new research from the Economic Policy Institute shows that from the first half of 2013 to the first half of 2014, hourly wages, adjusted for inflation, fell for nearly everyone. An exception was a small gain for the bottom 10 percent of wage earners, which was because of minimum-wage increases in 13 states this year.
That’s clear evidence that raising the federal minimum wage, while only a first step toward better pay, would have a powerful effect. A lift from the current $7.25 an hour to the modest $10.10 called for by President Obama and Democrats in Congress would put an estimated additional $35 billion in the pockets of affected workers over a three-year phase-in period.
The New York Times September 5, 2014 -
Veronique de Rugy and Lawrence Mishel talked about the state of the America worker and examined national trends in wages and productivity as well as the overall strength of the job market.
C-SPAN September 5, 2014 -
Chief among them would be power of the purse. With both the House and Senate appropriations committees under GOP control, Republicans could insert language in spending bills withholding federal funding for the implementation of any number of executive branch initiatives.
The targets could include forthcoming regulations that would update the parameters of overtime pay to cover millions more workers, a rule raising the minimum wage for federal contractors and forthcoming restrictions meant to protect against discrimination in the workplace.
“You can imagine riders that will be written into omnibus bills to block all of them,” said Ross Eisenbrey, vice president of the left-leaning Economic Policy Institute. “The Republicans are opposed to everything the Labor Department has announced.”
Wrapped into massive “must-pass” spending bills, the policy riders could present Obama with a difficult choice between keeping agencies funded and protecting his prized initiatives.
“Does he want to shut down the government over these issues?” questioned Eisenbrey. “I don’t know.”
GOP control of both chambers of Congress could also allow Republicans to pass legislation aimed at beating back labor’s agenda, said Michael Lotito, an employment and labor attorney and co-chairman of Littler Mendelson’s Workplace Policy Institute.
The Hill September 3, 2014 -
Last month, the Conference Board’s consumer confidence index rose to its highest reading since October 2007, two months before the Great Recession began. But a survey released last week by Rutgers University found that Americans are more anxious about the economy now than they were right after the recession ended.
Among the still negative signs:
— The number of people unemployed for 27 weeks or more remains elevated, accounting for nearly 33 percent of the 9.7 million jobless workers.
— Real hourly wages fell from the first half of 2013 to the first half of 2014 for all income groups, except for a small 2-cent increase for the lowest income level, according to the liberal Economic Policy Institute. That minor increase was attributed to minimum wage increases in states where 40 percent of workers live.
Both parties are seeking to exploit those weaknesses and draw contrasts for voters. Republicans argue that the long-term unemployed and the flat wages are the result of Obama administration policies, ranging from health care to the environment.
Obama and Democrats are pointing to the lack of wage growth as a reason to push for a higher federal minimum wage.
“Until we’ve got a Congress that cares about raising working folks’ wages, it’s up to the rest of us to make it happen,” Obama said in his radio and Internet address Saturday.
Politico September 3, 2014 -
Why it feels like the recession didn’t end: Christopher Ingraham reports on a new study from the Economic Policy Institute that finds limited wage growth for the average American since the financial crisis. (Washington Post)
Stories we’re watching:
Not much. Shaping up to be a pretty slow pre-Labor Day Friday.
At QED:
Amy Cohn, an expert on the airline industry, explains why airlines screw you over—and how to avoid it. And the Ninth Circuit Court of Appeals gave a big victory to some FedEx drivers Wednesday.
The New Republic September 3, 2014 -
Another report by the Economic Policy Institute, a Washington, D.C-based policy research group, issued in time for the Labor Day holiday found American workers haven’t had a pay raise in 35 years. A look at wages since 1947 found that, from 1947 to 1979, annual family incomes grew across the board between 2.2 percent and 2.5 percent.
Then, from 1979 to 2007, those in the bottom fifth of household income saw no change, adjusted for inflation. The second, third and fourth-fifths saw their income grow at less than 1 percent a year.
Meanwhile, those in the top fifth saw an increase of 1.5 percent, or more than twice that of people in the middle. Those at the top 5 percent experienced growth of more than 2 percent a year during that time.
But, from 2007 to 2012, every group lost income, except the top 5 percent, which experienced a slight increase. The poorest Americans lost ground at a rate of 2.7 percent a year, with almost everyone else losing a slower rate.
Carl Van Horn, one of the authors of the Rutgers study, said the two independently produced reports reinforce each other. “One is the economic reality as portrayed by wages and the other is how people feel,” he said.
McClatchy September 3, 2014 -
Also in The News Tribune, The Daily News Online, The Columbus Dispatch, abq journal
Gains are also reflected in cheerier (or less gloomy) popular attitudes, says public opinion expert Karlyn Bowman of the conservative American Enterprise Institute. A year ago, Gallup found that 29 percent of workers feared being laid off; that’s now 19 percent. (Millennials are exceptions; their unemployment fears rose slightly.) In March 2010, 85 percent of Americans judged jobs “difficult to find,” a Pew survey reported. In July this year, the figure was 62 percent. Although confidence hasn’t returned to pre-recession levels, there’s been a genuine improvement in mood, says Bowman.What’s missing are wage increases. Since late 2009, hourly earnings have risen at an annual rate of about 2 percent, but when corrected for inflation, “real” wage increases vanish, reports the Economic Policy Institute, a liberal think tank. The EPI says that median hourly wages were actually 0.4 percent lower in the first half of 2014 than in 2007. Using a different inflation adjustment (the “deflator” for personal consumption expenditures instead of the consumer price index) produces a 1.7 percent gain over the same period, says Scott Winship of the Manhattan Institute. Either way, wages are basically flat.
We should do better.
Washington Post September 3, 2014 -
When Jamaad Reed started his job as a cashier at a Walmart near Cincinnati, he made $8.15 an hour. That was two years ago. Since then, he has seen a couple of raises, which have meant his wage has kept up with inflation — but just barely. As of March of this year, Reed was making $9.05 an hour.
“I’m stuck,” he told me recently. “You know what I’m saying? I feel like I’m stuck in the same spot.”
“Stuck” is a pretty good word to describe wages for most American workers over the last few decades. Not just in the case of lower-wage workers like Reed, but all along most of the income spectrum, except for those at the very very top.
In fact, most American workers have seen little to no growth since the late 1970s, if you adjust for inflation, according to Elise Gould. She’s an economist with the Economic Policy Institute and author of a new study that analyzes wage data from census surveys over the last several decades.
That’s not to say that individual workers haven’t seen gains. But, says Gould, “as productivity has continued to rise, typical workers’ wages simply have not.”
That’s a very different economic picture from a half century ago. In the first few decades after World War II, as the nation’s productivity grew, so did wages. So what happened?
Marketplace September 3, 2014 -
Does your wallet feel lighter? You’re not alone.
American workers’ wages fell in the first half of 2014 compared to the first half of 2013 with few exceptions, according to a report released this week by the Economic Policy Institute.
The falling wage trend goes back even further. When compared to the first half of 2007, for instance, wages in the first half of this year were flat or falling. In fact, the depressed wages pattern holds fast even when you compare 2014 wages to those in 1979 (after accounting for inflation).
Productivity from 1979 to 2013 grew 64.9% while hourly compensation of production and nonsupervisory workers, who account for 80% of the private sector workforce, grew by just 8%.
Fortune September 3, 2014 -
For instance, new research from the Economic Policy Institute shows that from the first half of 2013 to the first half of 2014, hourly wages, adjusted for inflation, fell for nearly everyone. An exception was a small gain for the bottom 10 percent of wage earners, which was because of minimum-wage increases in 13 states this year.
That’s clear evidence that raising the federal minimum wage, while only a first step toward better pay, would have a powerful effect. A lift from the current $7.25 an hour to the modest $10.10 called for by President Obama and Democrats in Congress would put an estimated additional $35 billion in the pockets of affected workers over a three-year phase-in period.
Unionization is also associated with higher wages and benefits, especially for low-wage workers, which argues for greater legal enforcement of the right to organize without retaliation.
New York Times September 3, 2014 -
The White House is encouraging Democrats to draw attention to the recovery as they head into the November mid-term elections.
In an August memo to House and Senate Democrats, Obama’s top two economic advisers underscored the positive news: more than 200,000 jobs created per month for six consecutive months, a six-year high in auto sales, second-quarter economic growth that exceeded expectations and an expanding manufacturing sector.
The unemployment rate stands at 6.2 percent, dropping 1.1 points over the past year, and the stock market has nearly tripled in five years.
Even so, there is still significant weakness in the labor market, underscored by the long-term unemployed. Labor participation has dropped. As well, real hourly wages fell from the first half of 2013 to the first half of 2014 for all income groups, except for a 2-cent increase for the lowest income level, according to the liberal Economic Policy Institute.
Americans seem caught between confidence and worry.
In July, the Conference Board’s consumer confidence index rose to its highest reading since October 2007, two months before the Great Recession began. But a new survey by Rutgers University found that Americans are more anxious about the economy now than they were right after the recession ended.
Associated Press September 3, 2014 -
Veronique de Rugy and Lawrence Mishel talked about the state of the America worker and examined national trends in wages and productivity as well as the overall strength of the job market.
C-SPAN September 3, 2014 -
“That’s something that is really missing in today’s workforce,” says Judy Conti, federal advocacy coordinator for the National Employment Law Project. “People of all economic levels increasingly feel like cogs in the wheel, that they don’t matter, that they’re expendable.”
The sense of appreciation Market Basket offered its workers became threatened when one of the board members began siding with Arthur D. Demoulas’s side of the family, changing the balance of power. In June, Arthur T. was pushed out as president and his responsibilities were handed over to co-executives Felicia Thornton and James F. Gooch. The assumption was that Market Basket’s business model would be changed to allow more profits to flow to the top at the expense of its workers, upsetting not only low-level employees, but their mid-level bosses — managers of 68 stores at one point said they would work for no one but Arthur T. — and even customers who boycotted the chain in the last 10 weeks.
“The management was really looking out for the workers leading up to this battle, so when the fight happened, you had workers sticking up for management,” says David Cooper, an economic analyst at the liberal-leaning Economic Policy Institute.
US News and World Report August 29, 2014 -
Also in Herald Net
The median hourly wage paid to women is less than it is for men in all but one of the eleven jobs surveyed in a report by the Economic Policy Institute. In some cases, the gap is slight—for cashiers, dishwashers, food preparation workers, and hosts and hostesses, it’s a matter of cents. But in others, including supervisors and bartenders, the difference is well over a dollar. For managers, the highest earning occupation, the disparity was nearly three dollars per hour.“This is what we identify as pay discrimination,” said Valerie Wilson, an economist at the Economic Policy Institute. “The work women are doing is being valued at less than the work men do in the same job.”
Washington Post August 29, 2014 -
Real hourly wages are down for workers at all education levels in the first half of this year compared to the first half of 2013, according to the Economic Policy Institute paper. Pay fell by 1.1 percent for people with high school diplomas, by 1 percent for people with some college, 1.6 percent for people with college degrees and by 2.7 percent for people with advanced degrees. “The last year has been a poor one for American workers’ wages,” writes Elise Gould, an economist with the institute, in the report.
Gould notes the pay decreases seen over the last year are part of a longer trend: Wages have pretty much been flat or on the decline since the start of the recession. In fact, the only group that hasn’t seen a drop in real wages since 2007 is workers with advanced degrees, for which wages are basically flat.
Washington Post August 29, 2014 -
Giving overtime a healthy raise
A March presidential memorandum called for raising the threshold for salaried workers who can’t claim overtime pay, currently about $23,000. More than 6 million people would benefit from a roughly $50,000 cap, according to a recent report by the Economic Policy Institute.
Business groups and conservatives say that the action will increase costs for employers and force them to more closely track white-collar workers’ hours, which could curb telecommuting and other flexible work options. “My concern is that this overtime initiative will have the unintentional but quite destructive effect of making sure that anyone who makes less than the overtime threshold will be unable to work remotely,” says James Sherk, a senior policy analyst in labor economics for the Heritage Foundation, a conservative think tank.
Fortune August 29, 2014 -
From 1979 to 2007—we look to 2007 because it was the economic high point before the most recent downturn and the deep recession—median household income in the United States grew by a paltry 18 percent. Meanwhile, productivity grew by roughly 65 percent. Moreover, the 18 percent household income growth was not because workers were being paid more, a just reward for that increased productivity. Instead, that 18 percent gain happened almost entirely due to women in American households working more hours. Annual work hours for married women increased over that time period by more than 45 percent, according to an Economic Policy Institute analysis of federal labor data. For married women in the middle of the nation’s income scale , the increase was nearly 60 percent. (For comparison, married men’s hours grew by 1.7 percent in total, 2.6 percent for men in the middle of the income scale.)
A 2013 study by the Pew Research Center found that in 40 percent of U.S. households with children, women are the sole or primary earners of income. This share has grown fourfold since 1960. Yet despite their increasingly central role as breadwinners in U.S. families, too many women continue to be paid far too little. Women still make only 83 percent of what men earn at the median; women are disproportionately represented in low-wage occupations; and nearly one in every three working women earns a poverty-level wage—far too little to support a family, White House and Economic Policy Institute analyses of federal data have found.
National Journal August 29, 2014 -
The rich have gotten richer at the expense of the rest of us.
The rise in income inequality of the past few decades has taken money from the pockets of the lower and middle class and added it to the coffers of the rich, according to a new paper from the Economic Policy Institute, a think tank focused on worker issues.
There was income inequality 30 years ago, to be sure. But inequality has widened dramatically since then, not because the top 1 percent have suddenly gotten more talented or lucky, but because of economic policies designed to help the top 1 percent suck up more of the value being created in the economy by higher productivity. Meanwhile, the wages of average workers — the ones who keep producing more and generating much of that extra wealth — have stagnated.
Huffington Post August 28, 2014 -
Here’s a number to remember for those who feel that their financial prospects have hit a wall: $18,000.
That’s how much the Economic Policy Institute (EPI) says middle-class Americans are losing in annual wages because of rising income inequality.
The liberal-leaning think-tank estimates missing wages by considering real average annual household income, which rose by 53.4 percent from 1979 to 2007. While that might seem healthy, the increase was mostly due to huge gains by the country’s wealthiest earners. For 90 percent of American households, income growth was actually below that average rate.
If inequality hadn’t worsened during those years, middle-class households would have had annual incomes that were $18,000 higher by 2007, the study notes.
“This growing inequality of income has a real effect on everyday people,” said Elise Gould, author of a new study and director of health policy research at EPI. “The top 1 percent and top 1/10th of 1 percent have grown so much that it pulls up average wages” but that fails to reflect the reality for most Americans, who have suffered from stagnating wage growth.
CBS Moneywatch August 28, 2014 -
Wages for workers at every pay level except the bottom 10 percent declined from the second half of 2013 through the second half of 2014, according to a report from the Economic Policy Institute released Wednesday. Furthermore, there’s no sign of wage acceleration that might prompt the Federal Reserve to raise interest rates.
For 70 percent of the workforce, inflation-adjusted hourly wages are still lower than they were in 2007, and wages for all groups are lower than they were at the end of the recession in 2009.
This year’s trend isn’t new. Overall median hourly wages rose 6.1 percent over the entire 1979 and 2013 period, but for those in the bottom 10 percent of the income scale, hourly pay fell 5.3 percent over that time. Meanwhile, the richest 5 percent of Americans experienced hourly pay growth of 40.6 percent. The late 1990s were the only period when wage growth was broad-based, and even strongest for the lowest-income earners.
US News and World Report August 28, 2014 -
Inflation-adjusted wages have fallen for every income group in the past year except very low-paid workers, says an Economic Policy Institute study out Wednesday.
The report casts doubt on the perception that more educated, highly skilled employees are experiencing sharper-than-average pay increases and that low-paid workers are stuck in the deepest earnings rut.
Median U.S. hourly wages in the first half of 2014 were $16.59, down 0.9% the past year after figuring inflation, the study says.
But pay was also lower for other income groups, including a 0.7% drop for workers at the 95th wage percentile who earn $52.23 an hour — meaning they make more than 95% of workers and less than 5%.
USA Today August 28, 2014 -
Wage growth for most workers remains stagnant and will need to pick up pace for the economy to hit full recovery mode, a new report said on Wednesday.
During the first half of 2014 year inflation-adjusted hourly wages fell for the majority of workers, even for those with a bachelor’s or advanced degrees, compared with the same period in 2013, according to a new study from the Economic Policy Institute’s Raising America’s Pay initiative.
The wage stagnation is evidence that the economy is far from full employment and shows that the Federal Reserve should not consider raising interest rates, the report said.
“Despite a recovering economy and growing productivity, employers are not putting anything more in their employees’ paychecks,” said report author EPI economist Elise Gould.
The Hill August 28, 2014 -
By now, anyone following the debate over income inequality in the U.S. has likely seen the rise of income inequality charted over the years or over decades. But how about income inequality hour by hour?
A new study by the Economic Policy Institute, a left-leaning think tank, breaks down Labor Department data on hourly earnings to show income disparity even at the level of hourly wages. Someone earning $8.38 an hour is in the 10th percentile, meaning they earn more than 10% of workers, but less than 90%. At the 50th percentile, workers have been earning $16.59. At the top of the distribution, workers at the 90th percentile earn $40 an hour and those at the 95th percentile earn $52.23.
And since the recession began, wages have only been growing (and even then only modestly) for those at the top, according to the analysis by EPI economist Elise Gould.
Wall Street Journal August 28, 2014 -
Real hourly wages declined for almost every segment of the U.S. workforce in the first half of 2014, according to a briefing paper released Wednesday morning by the Economic Policy Institute, a liberal think tank.
“The last year has been a poor one for American workers’ wages,” economist Elise Gould, who directs EPI’s health policy research, writes in the report. Analyzing data from the government’s Current Population Survey, Gould found that workers at the 20th, 30th, 40th, 50th, 60th, 70th, 80th, 90th, and 95th percentiles all experienced declines (ranging from 0.5 percent to 2.0 percent) in their real wages in the first half of 2014 compared with the same period last year. Real wages declined among workers with no high school degree (0.6 percent), with just a high school degree (1.1 percent), with some college (1.0 percent), with a college degree (1.6 percent), and with an advanced degree, too (2.7 percent).
Bloomberg BusinessWeek August 28, 2014 -
Consumer spending accounts for more than two-thirds of the economy, and although businesses have added more than 200,000 jobs a month for the past six months, incomes have remained stagnant.
“Many consumers still have very tight budgets,” says Jack Kleinhenz, chief economist at the National Retail Federation. “Wages haven’t increased as fast as we would like them to. At that end, it puts more pressure on them for making purchases and certainly it’s expected that they’re going to trade off purchases from time to time.”
Kleinhenz says cheaper prices at the pump could start freeing up spending power for Americans with cars. At $3.45 a gallon, the national average price of gas on Monday was the cheapest it’s been since February and was the lowest August price since 2010, according to AAA.
“You could definitely say the desire to find the cheapest prices possible is a coping mechanism people use when economic times are tough, and they certainly have been for most Americans, let alone those at the bottom half of the wage distribution and labor market,” says Josh Bivens, research and policy director at the Economic Policy Institute.
US News and World Report August 22, 2014