Media clips
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Courts for years have recognized the rights of unions to ask non-members to pay dues for union negotiating costs, but a group of home healthcare workers in Harris vs. Quinn are challenging dues they pay to a branch of the Service Employees International Union as a violation of free speech.
The case is pitting business groups and the National Right to Work Legal Defense Foundation against labor giants like the SEIU, which worry the court could rule broadly to prevent all non-members of public sector unions from being compelled to pay dues.
Such a decision from the court, which is expected to rule on Monday, could deliver a “kill shot” to organized labor at a time when it is already struggling with a declining membership.
Still, some labor supporters say they’re anticipating a loss.
“I expect the worst,” said Ross Eisenbrey, vice president of the progressive Economic Policy Institute.
The case was brought by Pamela Harris, who receives money from the state of Illinois to take care of her son.
The Hill June 30, 2014 -
At this stage in the recovery —f ive years after the U.S. officially emerged from recession, labor economists would like to see the “quits rate” rise. It’s a measure of the percentage of people voluntarily leaving their employment — rather than being laid off or having a contract end. Workers might leave a job if they’ve been recruited for another one, or even to look for another job without having one already lined up. Or, they might quit to go back to school, or retire, or take a break from work altogether.
“When the economy is strong, people are more likely to be able to quit the job they’re in,” says labor economist Heidi Shierholz at the Economic Policy Institute, “to take another job that has better opportunities for wage growth and advancement, perhaps it better matches their skills and interests.”
Since plummeting at the start of the Great Recession, the quits rate has been gradually rising. But (at 1.8 percent in April 2014, the most recent month for Bureau of Labor Statistics reporting), the quits rate is still nearly 20 percent below its pre-recession level, says Shierholz, and nowhere near what would be expected in a robust economy with plenty of job opportunities.
Marketplace June 30, 2014 -
Ikea had this very notion in mind when it announced that it would raise the minimum wage of its employees. The hourly wage for each store will be based on the cost of living in that particular area, ranging from $8.69 to $13.22.
Because most workers’ wages are lower in states where prices are relatively low, a $10.10 minimum wage will tend to reach a lot more workers in Alabama than in Connecticut. According to an analysis by David Cooper at the Economic Policy Institute, the proposed federal increase would lift the pay of 24 percent of Alabama’s work force, but only 14 percent of Connecticut’s.
Some states and cities have already taken this matter into their own hands, setting their own minimum wages above the federal level to account for price and wage differences. (They have also done this because the federal minimum wage has become a political football that is often fumbled.)
New York Times June 30, 2014 -
Our current brand of capitalism is an ersatz capitalism. For proof of this go back to our response to the Great Recession, where we socialized losses, even as we privatized gains. Perfect competition should drive profits to zero, at least theoretically, but we have monopolies and oligopolies making persistently high profits. C.E.O.s enjoy incomes that are on average 295 times that of the typical worker, a much higher ratio than in the past, without any evidence of a proportionate increase in productivity.
If it is not the inexorable laws of economics that have led to America’s great divide, what is it? The straightforward answer: our policies and our politics. People get tired of hearing about Scandinavian success stories, but the fact of the matter is that Sweden, Finland and Norway have all succeeded in having about as much or faster growth in per capita incomes than the United States and with far greater equality.
New York Times June 30, 2014 -
As Danny Vinik points out, compensation hasn’t risen with productivity for over 40 years. You can see that in the chart below from the Economic Policy Institute. Since 1973, inflation-adjusted wages and benefits have barely increased for most workers, despite increasing productivity.
This is two-card monte, because we’re still waiting for the last one to trickle down. Now, you start by saying that we shouldn’t tax the rich too much, because they’re smarter than everybody else and deserve their wealth. Never mind, as Noah Smith points out, that nobody “deserves” the brains they inherit. Or that, when it comes to IQ, we shouldn’t put too much weight on nature over nurture, since we know, for example, that growing up in poverty can hurt children’s neural development. No, then you admit that it doesn’t matter whether they deserve their money or not. That we still shouldn’t tax the rich too much even if they are layabout heirs. That’s because we need their savings to fund the investments today that will make us all more productive — and hence, better paid — tomorrow.The Washington Post June 27, 2014 -
Indeed, Detroit is the fifth most affordable city in the U.S. for real estate, according to HSH.com, a mortgage-information firm. Residents only need to earn $32,250 a year for a median-priced home — making Detroit more expensive than only Cleveland ($29,788), Pittsburgh ($30,177), St. Louis ($31,275) and Cincinnati ($31,850). (San Francisco was the least affordable; median-price-home buyers need to earn $137,129 a year there.) More than 80% of homes for sale in Detroit are within reach of the middle class, compared with only 20% in New York and Los Angeles and 14% in San Francisco, according to real-estate website Trulia.
It’s also possible to live large in Detroit. “The duplex house I lived in 35 years ago on Detroit’s east side is still a beauty,” says Ross Eisenbrey, vice president of the Economic Policy Institute and a resident of Washington, D.C. He recently revisited it: The home has two units, each with leaded-glass windows, fireplace, Florida room, walk-in pantry, two bedrooms and kitchen. It sold for less than $50,000 two years ago. The lot next door can be bought for $1,000. “Once Detroit gets through the bankruptcy, restores city services, and makes progress on job creation, it will be an amazing value,” he adds.
Wall Street Journal June 27, 2014 -
Also, the evidence doesn’t entirely support the idea that policies that encourage businesses to invest more will actually help the average worker. This chart from the Economic Policy Institute shows how worker productivity–which increases when firms invest in equipment that makes workers efficient–has diverged from median pay.
As you can see, over the past 30 years, the growth in productivity and wages have decoupled, giving the middle class voter much less reason to care about whether the wealthy are encouraged to invest in their businesses through the tax code.
Fortune June 24, 2014 -
It’s not until the final three paragraphs that Mankiw explains his economic theory for why inherited wealth is good for the economy. Allowing parents to bequest wealth to their kids, he argues, incentivizes them to save. Those savings are then put to productive use. “Because capital is subject to diminishing returns, an increase in its supply causes each unit of capital to earn less,” he writes. “And because increased capital raises labor productivity, workers enjoy higher wages.” This could be a legitimate argument if workers had actually been reaping the reward from increased labor productivity. But as a report from the Economic Policy Institute shows, workers have seen their compensation barely rise over the past 40 years, despite significant gains in productivity:
The New Republic June 24, 2014 -
The Ed Show June 24, 2014 -
MSNBC June 24, 2014 -
A separate paper, from left-leaning economist Dean Baker, argues that the trade deficit is a significant impediment to full employment. U.S. imports exceeded exports by $500 billion in 2013—that is, $500 billion of American demand for goods and services supported jobs overseas. In response, Baker proposes lowering the value of the dollar and cracking down on currency manipulators like China who artificially lower the value of their currency so that their goods and services are cheaper, boosting exports. Yet, trade policy is not an exciting or accessible issue to most voters. A candidate could include it as part of their economic platform, but it cannot form the backbone of it.
Bernstein and Larry Mishel, the president of the Economic Policy Institute, have both proposed a monetary policy regime that prioritizes low unemployment along with low inflation. Given the Federal Reserve’s independence from the federal government, though, it’s hard to imagine how better monetary policy could become a focal point of a campaign, as it hardly energizes voters. “You are basically getting at the fundamental problem for Democrats in terms of their economic agenda, in terms of the relationship between what they can run on and what they can actually do,” Teixeira said. “The public is not Keynesians or anything close to it. They don’t understand the relationship between spending, debt and growth. And, therefore, it’s the hardest sell.” Republicans, as the minority party, can simply promise a change from the Democratic agenda, regardless of voters’ understanding of their actual economic proposals.
New Republic June 24, 2014 -
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 -
(also in Morningstar)
“One not surprising result is that employees are more satisfied in metro areas with very low unemployment,” says Lawrence Mishel, president of the Economic Policy Institute, a think tank in Washington, D.C. “These cities have unemployment at least one percentage point below the national average.” And all of Glassdoor’s five most popular cities for employee satisfaction are also on the 10 highest ranking cities for social mobility, according to a separate survey by the National Bureau of Economic Research in Washington, D.C.Market Watch June 17, 2014 -
According to Valerie Wilson of the Economic Policy Institute, this was the biggest discrepancy since 2007. Her explanation for this? African Americans don’t give up. Yes, African American employment has not recovered at the rate of White employment, but that’s not all.
The other factor to consider, Wilson wrote last month, is that unemployed African Americans are more resilient and less likely to give up their job searches.
Ebony June 17, 2014 -
A study conducted by Valerie Wilson of the Economic Policy Institute found that the discrepancy between Black and white unemployment is the highest it has been since 2007, and that Black resiliency is to blame.
Over the past year, without fail, African-American unemployment has exceeded white unemployment by at least 200 percent. In the past two months, the Black unemployment rate was 2.2 times greater than the overall rate.
Researchers say that part of the disparity is a result of African-Americans being “less likely to give up the search for a job than other unemployed workers.”
Explained simply, there are more unemployed Blacks who continue to seek work, stay in the labor force and are labeled as “unemployed.”
“Discouraged workers” aren’t calculated in the unemployment rate. These workers are “those persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”
BET June 17, 2014 -
The average pay for a Starbucks barista is about $8.80 an hour, according to employment site Glassdoor. Store managers earn about $45,000 a year, on average.
Many U.S. workers are struggling to stay ahead, with six out of 10 respondents in a recent CNNMoney poll saying they no longer believe the American dream is achievable. For most Americans, wages either fell or flatlined from 2000 to 2013, according to a recent study from the liberal-leaning Economic Policy Institute.
About half of college students fail to finish their degrees because of debt, lack of support or challenges with balancing life and work, Starbucks said in a statement.
Schultz said he had encountered cynicism since announcing the plan, including about the lack of a requirement that employees remain with the company after they graduate.
CBS Moneywatch June 17, 2014 -
That means the pay gap between employees and their bosses continues to widen, according to the Economic Policy Institute’s latest report released Thursday.
Average CEO compensation came in at $15.2 million in 2013, according to the left-leaning think tank. That includes salary, bonus, restricted stock grants, options exercised and long-term incentive payouts for chiefs at the top 350 U.S. firms by sales.
Private-sector, non-supervisory workers, meanwhile, earned an average of $52,100.
CNNMoney June 13, 2014 -
Last month, the unemployment rate for white Americans was 5.4 percent. For black Americans, it was more than twice that, at 11.5. Why?
Writing in The Guardian, Jana Kasperkevic points to a compelling theory advanced by Valerie Wilson at the Economic Policy Institute. Black unemployment is high, Wilson suggests, not only because black joblessness is high (for reasons well documented in Ta-Nehisi Coates’s recent Atlantic cover story), but because black people are more resilient when it comes to sticking to their job search.
The key to understanding Wilson’s point is knowing that unemployment doesn’t measure the number of people who are, well, “unemployed” in a conventional sense of the word—without a job. What the unemployment rate measures is how many people are actively looking for work. If someone gives up on his or her search, he or she is no longer counted as unemployed. In May, Kasperkevic writes, “there were over seven million Americans who want a job but were not counted as part of the labor force.”
The Atlantic June 13, 2014 -
College-educated workers still earn much more than less-educated ones, but landing a good job at rising pay is made even more difficult as each new group of graduates joins a backlog of unemployed and underemployed college and high school graduates, dating back to the class of 2008.
Over the last six years, one of the economy’s biggest problems has been faulty fiscal policy, with the federal government underestimating the need for economic aid or withholding and reducing help prematurely. Another drag has been lack of business investment, even as financial markets have prospered with the help of loose monetary policy.
The New York Times June 13, 2014 -
Sources: Bureau of Labor Statistics; Steven G. Cochrane, Moody’s Analytics; Doug Hall, Economic Policy Institute
The New York Times June 12, 2014 -
There has also been a massive exodus from the labor force. Since late 2007, the number of people 16 and over “not in the labor force” has increased by almost 13 million. Studies suggest that at least half of the loss reflects natural causes: older workers retiring; spouses — men and women — staying at home with children. Adding the remaining labor-force dropouts to the officially unemployed would boost the jobless rate to 9.7 percent, estimates the Economic Policy Institute, a left-leaning research and advocacy group.
So the job market straddles good news and bad. The open question is whether the economy is approaching “full employment” — often estimated between 5 percent and 6 percent unemployed — or whether stronger job creation will pull many recent dropouts back into the labor market. If full employment approaches, that could put upward pressure on wages and inflation. But if dropouts re-enter the labor market, the numbers of both the employed and the unemployed might rise.
The Washington Post June 12, 2014