Media clips
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But some liberal economists argue that the bursting of the dotcom bubble and later the great recession laid bare the legacy of NAFTA. According to a 2006report from the left-leaning Economic Policy Institute, the treaty led to the loss of an estimated one million American jobs in its first decade. A 2012 poll found that 53 percent of Americans wanted the government to “do whatever is necessary” to amend or leave NAFTA, while only 15 percent wanted to remain in NAFTA as-is.
The Atlantic February 21, 2014 -
The minimum wage has potent implications for our national discussion of inequality and upward mobility. Republicans have been paying lip service to the idea of reducing inequality and increasing upward mobility, but so far policy proposals have been sparse. The minimum wage is a perfect solution. It requires little government spending and is unlikely to have any significant effect on the deficit. It certainly doesn’t violate the “no new taxes” pledge. So a minimum wage hike would be the perfect conservative solution to inequality: targeted at working people (rather than the unemployed), minimal bureaucracy and no new revenue for the government. And studies show it would work. Larry Mishel of the Economic Policy Institute finds that the declining value of the minimum wage has been a major driver of increased inequality. Citing the work of David Autor, he finds that more than half of the growing divide between workers at the median and workers at the lowest 10% of the income distribution can be explained by a declining minimum wage.
Salon February 21, 2014 -
Sure, Davidoff is right that sky-high CEO pay deserves a broader look across the board. After all, it’s a big driver of income inequality. As the Economic Policy Institute has found, “Executives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005.” Not only that, but taxpayers are subsidizing these big pay packages thanks to a loophole allowing corporations to write off CEO pay that is “performance based.” (Rep. Lloyd Doggett, D-Texas, has introduced legislation to fix that particular problem, but given what the Republican-held House is interested in these days, I wouldn’t expect it to come up for a vote anytime soon.)
US News and World Report February 21, 2014 -
Since then, according to Doug Hall, director of the Economic Analysis and Research Network at the Economic Policy Institute, other economists have done similar studies at the state and county level when a minimum wage change makes labor more expensive in one jurisdiction than in a neighboring one.
The chart above shows the results of more than 1,400 different studies. The x-axis shows the size of the employment effect, and the y-axis shows that statistical power of the analysis.
The Fiscal Times February 21, 2014 -
Economist at the Economic Policy Institute Heidi Shierholz says that despite projecting job loss, the CBO’s latest report on the minimum wage hike also shows how lower wage workers will
The Hill February 21, 2014 -
On Thursday afternoon, the faculty senate will review this proposal to tie the president’s salary to that of the school’s lowest-paid employees. Such workers at the public liberal arts college currently make$24,500 a year, which would translate into a $245,000 salary cap for the president — roughly $80,000 less than Ian Newbould, the college’s interim president, presently makes.
The move comes at a time of budget difficulties for the college, which lost roughly $3.5 million in expected tuition this academic year when it failed to fill enrollment numbers for its freshman class. It also comes at a time when higher-ed costs are ballooning across the United States and when executive pay is under increased scrutiny. This fall, the Securities and Exchange Commission voted to propose a rule requiring companies to disclose the ratio of CEO pay compared to their median worker’s. In 2012, according to the Economic Policy Institute, that ratio was 273-1.
The Washington Post February 21, 2014 -
The United Auto Workers’ failure to organize the employees at Volkswagen’s plant in Chattanooga, Tenn., has been greeted with predictable hosannas from the sworn enemies of American unions. Survey their celebratory columns, though, and you won’t find the slightest consideration of most Americans’ primary economic problem: How do workers get a raise in today’s economy? With the rate of unionization so low that even unionized employees have trouble winning good contracts, how can workers profit from the gains in their productivity? What will it take for workers to regain the power to reap what they sow?
In recent decades, they’ve reaped precious little. Between 1947 and 1973 — roughly the one period of union strength in U.S. history — productivity increased by 97 percent and workers’ compensation (that’s wages plus benefits) by 95 percent. Since 1973, however, as unions have weakened, productivity has increased by 80 percent and compensation by just 11 percent, according to the Economic Policy Institute.
The Washington Post February 21, 2014 -
But that’s all water under the bridge. The important point is that U.S. fiscal policy went completely in the wrong direction after 2010. With the stimulus perceived as a failure, job creation almost disappeared from inside-the-Beltway discourse, replaced with obsessive concern over budget deficits. Government spending, which had been temporarily boosted both by the Recovery Act and by safety-net programs like food stamps and unemployment benefits, began falling, with public investment hit worst. And this anti-stimulus has destroyed millions of jobs.
The New York Times February 21, 2014 -
A new non-partisan report has set off a storm of dueling arguments over the perennially testy question of raising the minimum hourly wage.
The proposal, by Democrats, to raise the minimum wage to $10.10 per hour would bring some 900,000 families above the poverty line and boost the income of an additional 16.5 million workers, but any such pay increase could also cost the jobs of as many as 500,000 workers, an analysis by the Congressional Budget Office found.
Almost as soon as the report was released Tuesday, opponents began to cite the report in an effort to torpedo any Congressional vote to hike the federal minimum from $7.25 per hour to $10.10 by 2016.
CNNMoney February 21, 2014 -
Further, some teens need to work to help earn their way through college. When jobs become scarce, education can become inaccessible, said Heidi Shierholz, an economist at the Economic Policy Institute, a Washington research group funded in part by labor unions.
“Teen jobs matter a lot less if you go to college, but having a work history may be the difference between putting yourself through school or not,” she said.
Carnevale, former chairman of the National Commission on Employment Policy, said as entry-level jobs have become higher-skilled and harder for teens to get, it has most disadvantaged those in lower-income households.
“It’s a Catch-22: You can’t get the job because you don’t have the skills, and if you can’t get the job, you can’t get the skills,” he said. “The work experience issue gets more and more severe as you move down the income distribution.”
Bloomberg Politics February 20, 2014 -
Wal-Mart has a total of 1.3 million U.S. employees. About 300,000 of those employees earn an average of $8.75 an hour, according to Berkeley’s Labor Research Center. Boosting the federal minimum to $10.10 an hour from the current $7.25, which is the proposal from President Obama and Senate Democrats, could have a big impact just from the store’s own employees.
Some economists are on board with the idea. “If suddenly all these low-wage workers have more income, they are likely to spend that money right away,” David Cooper of the left-leaning Economic Policy Institute told The Huffington Post last fall. “If an employee at McDonald’s or Pizza Hut suddenly has additional income,” he said, “they could spend it at Walmart.”
National Journal February 20, 2014 -
It’s a two-part problem. First, there is opportunity hoarding at the top, wherein the wealthy invest heavily in their children’s education and job prospects, while also passing their wealth on to their children. Then there is stagnation at the bottom, caused largely by reverse trends, economic and racial segregation, awful schools, and poor parents without much money to invest in children.
Why does the “land of opportunity” have such low mobility? Laissez-faire economic policies—massive tax breaks, untrammeled free markets, unregulated free trade, deep cuts to the safety net—have widened the income gap. While Republicans have tried to sever the link between mobility and inequality, research shows that the two issues are intimately connected: Societies and communities with high inequality have low levels of upward mobility. Josh Bivens of the Economic Policy Institute estimates that had income growth risen proportionally between 1979 and 2007, the median income would be $19,000 higher.
The New Republic February 20, 2014 -
It hasn’t always been the case, though. As the GIF above and graph below both show, the top 1 percent saw its share of all income shrink between 1928 and 1979. Over that half-century, the income pie was shared a little more equally. But since 1979, that trend reversed in every state, according to a new study from the Economic Policy Institute, a think tank that focuses on the needs of low- and middle-income workers.
The Washington Post February 20, 2014 -
While the report didn’t delve into why income inequality has increased, it more than hinted at the reasons for the gap.
“Today, unionization and collective bargaining levels are at historic lows not seen since before 1928,” the report said. “The federal minimum wage purchases fewer goods and services than it did in 1968. And executives in (some) companies … think nothing of demanding bonuses after bankrupting their companies and receiving multi-billion dollar taxpayer bailouts.”
The report indirectly singles out the financial sector for helping to fueling rising inequality. It says that four of the 10 states with the steepest in incomes among the one percent between 1979 and 2007 had large financial sectors, including New York, Connecticut, New Jersey and Illinois.
The liberal, Washington, D.C.-based Economic Policy Institute published the report for EARN. Conservative groups often disagree with EPI’s views on income inequality.
The Plain Dealer February 19, 2014 -
On the other end, however, are the 16.5 million Americans who would receive higher wages as a result of an increase to the minimum wage, as well as the 900,000 Americans (out of 45 million) who would be lifted out of poverty. What’s more, it’s possible that—by increasing the income of so many workers—you offset the immediate job losses. To wit, here is the Economic Policy Institute with an analysis of the minimum wage and its impact on employment:
Based on the economic multiplier effect that results from putting additional income in the hands of lower-income workers, raising the minimum wage will likely have a modest but positive impact on job creation, leading to an additional 85,000 net new jobs when fully phased in.
Lower-income earners spend their income more immediately, more completely, and more locally, than do higher income earners, and therefore generate more economic activity. Increasing the wages of 27.8 million workers by $35 billion over the phase-in period generates an additional GDP impact of $22 billion.
The Daily Beast February 19, 2014 -
According to Economic Policy Institute research cited by living-wage backers, Los Angeles stands to gain more than $70 million in economic activity from raising the pay of hotel workers, giving them more disposable income to spend.
“Study after study tells us that poverty, unemployment, and income disparity are plaguing Los Angeles,” said Price, who chairs the Economic Development Committee, which will vote next week on the motion for a study.
“The folks who are going to be earning these additional wages aren’t going to be investing them on Wall Street,” Price said. “They’re going to be getting groceries and shoes and furniture, their tires repaired.”
Reuters February 19, 2014 -
“Today’s Congressional Budget Office report is an outlier that flies in the face of overwhelming empirical evidence,” Christine Owens, executive director of the National Employment Law Project, said in a statement. “The effect of raising the minimum wage is one of the most thoroughly studied topics in modern economics, and the vast majority of the more than 1,000 estimates contained in studies dating back to 1972 show no significant adverse effects on employment.”
One December study from the Economic Policy Institute, a left-leaning think tank, found that a minimum wage hike to $10.10 would result in a net gain of 85,000 new jobs by 2016.
US News and World Report February 19, 2014 -
Senate Health, Education, Labor and Pensions Chairman Tom Harkin, D-Iowa, the sponsor of legislation to raise the wage to $10.10, issued a lengthy critique of the CBO report.
“More than 600 economists, including seven Nobel Prize laureates, recently affirmed the growing consensus that low-wage workers benefit from modest increases in the minimum wage without negative consequences for the low-wage job market,” Harkin said, adding that his legislation would increase wages for 28 million workers, and create 85,000 new jobs.USA Today February 19, 2014 -
But that’s part of the point, supporters argue. ”Yes, it does come at expense of upper-income individuals. But in general given how well those at the top have done in the last 30 years, it is only rectifying the growth of inequality,” said Columbia University economist Joseph Stiglitz on a Tuesday conference call of economists who support a $10.10 minimum wage.
Republicans immediately seized upon the CBO report to lobby against a higher minimum wage. ”This report confirms what we’ve long known: while helping some, mandating higher wages has real costs, including fewer people working. With unemployment Americans’ top concern, our focus should be creating—not destroying—jobs for those who need them most,” Brendan Buck, a spokesman for House Speaker John Boehner, said in a statement.
But economists like Stiglitz dispute the GOP’s main takeaway from the report, arguing that the bulk of the academic literature indicates a far more benign impact of a higher wage on employment. “What the CBO did—they took a lot of off the shelf estimates, and they probably went a bit higher with what I would call the lower-quality studies,” Harvard economist Lawrence Katz said on the conference call.
MSNBC February 19, 2014 -
These are all interesting ideas, but they are definitely putting a thumb on the scale towards an estimate of job losses that is, as Harvard University’s Lawrence Katz told me, “higher than the consensus.” The CBO, in effect, is trying to referee a debate among economists, but the report doesn’t quite convey the level of debate and the ambiguity when it comes to these numbers. Instead, it gives a narrow, and headline grabbing, result.
New Republic February 19, 2014 -
The CBO of course found a slightly higher number. Nobel Prize–winning economist Joseph Stiglitz told reporters on a Tuesday afternoon conference call held by the Economic Policy Institute that he would quibble with the heft CBO gave to some studies versus others. “When you do a meta-analysis, the question is how do you weight different studies. Some of the studies come closer to being controlled experiments, and therefore have more credibility with most economists,” he said. “The CBO analysis I think underestimated the benefits and overestimated the costs in several respects.”
The Nation February 19, 2014 -
Several top labor economists said on Tuesday that the budget office was overstating the proposal’s effect on the job market. Lawrence Katz of Harvard, for instance, said that the budget office had used “a lot of off-the-shelf estimates” of the jobs effect, and that if it had emphasized findings from higher-quality studies, it would have found a smaller or negligible impact on total employment.
More conservative economists said that the profession had long viewed raising the minimum wage, like any increase in price, as having an effect on the demand for jobs.
“The Congressional Budget Office confirms the president proposes an unprecedented increase in the minimum wage that will cost hundreds of thousands of jobs,” said James Sherk, who analyzes the labor markets for the Heritage Foundation, a right-of-center research group.
The New York Times February 19, 2014 -
The current minimum of $7.25 an hour is indefensibly low. So, obviously, $10.10 an hour by 2016 — the goal of President Obama and congressional Democrats — would be an improvement.
But “$10.10 tomorrow” is still inadequate.
It is low compared to relevant economic benchmarks, including purchasing power, wage growth and productivity growth, as explained here.
It is also a low-ball proposal in historical perspective. The Economic Policy Institute ran the numbers in this report. Here’s what stands out:
• The average of all previous increases, dating back to 1939, is 13 percent in inflation-adjusted terms. The average of the proposed yearly increases to $10.10 is just 9.5 percent. (The comparison looks even worse when unadjusted for inflation, at 17.5 percent for previous increases, versus 11.7 percent for the proposed increase.)
• The proposed increases are smaller than the historical average even excluding the particularly large increase in 1950, when the minimum was raised by 87.5 percent.
The New York Times February 19, 2014 -
Management has always been overrepresented among top earners, of course. What has changed is what they are paid. About 70 percent of the increase in income going to the top 0.1 percent from 1979 to 2005 comes from increasing pay for executives and financial services professionals, researchers estimate.
One study by the Economic Policy Institute, a left-of-center research group based in Washington, found that compensation for chief executives swelled about 725 percent in real terms from 1978 to 2011. At the same time, worker compensation increased just 5.7 percent. The ratio of chief executive compensation to worker compensation has grown to 209-to-1 in 2011 from 18-to-1 in 1965. By just about any measure, earnings for executives are near their highs, achieved during the stock-market bubble that occurred around the millennium.
The New York Times February 18, 2014 -
Bill Maher, pay attention.
To begin with, almost all the government dollars spent on children comes from state and local governments, mostly for education. State and local per capita spending on kids swamps the federal government’s spending 8 to 1. And there are twice as many children 18 and under as seniors 65 and over (this 2008 figure comes from the Urban Institute, the source of the federal spending comparison).
Add up everything, and spending by governments at all levels in 2008 came to about $1 trillion on seniors and $936 billion on children. In other words, virtually 1 to 1.
Henry Aaron, a leading expert on social insurance at the Brookings Institution, demolished the argument about generational theft here, and Monique Morrissey of the Economic Policy Institute took a credulous Washington press corps to task here.
Los Angeles Times February 18, 2014 -
Here’s the fine print: If a worker — not necessarily a restaurant worker, but again, most in this category are — earns $30 or more from tips per month, her employer (most tipped workers are women; we’ll get to that) may pay $2.13 per hour, assuming that their earnings equal or exceed the federal minimum wage, currently a whopping $7.25 an hour. It’s not the same in every state, as David Cooper explains in this excellent Economic Policy Institute post: “There are 18 states where the tipped minimum wage is $2.13, seven states where the tipped minimum wage is equal to the regular minimum wage.” Many states have tipped minimum wages greater than $2.13, but not by much; 22 states still allow employers to pay tipped workers less than $3 per hour.
The New York Times February 18, 2014 -
It’s an ambitious target, $10.10: Correctly adjusting for inflation using the Bureau of Labor Statistics’ best historical data series, it would be the highest minimum wage ever—more potent in buying power than the $1.60 mandated wage in 1968, when middle-class jobs were plentiful, factories hummed, and labor unions ruled. It’s just more than half of the $19.55 median wage for full-time workers, which would put the U.S. minimum-to-median ratio back in sync with that of other rich, industrialized countries.
Bumping up the base over two years, as suggested by the Obama-endorsed bill by Representative George Miller (D-Calif.) and Senator Tom Harkin (D-Iowa), would directly affect 17 million workers and indirectly benefit an additional 11 million near-minimum workers who’d probably be given raises to preserve pay ladders, estimates the Economic Policy Institute, which favors the increase. Those 28 million workers make up a fifth of the labor force, and an almost 40 percent raise would meaningfully relieve their economic anxiety. (On Feb. 12, Obama signed an executive order raising the floor for federal contractor workers to $10.10 starting next year.)
Bloomberg BusinessWeek February 18, 2014 -
A study released Monday that was commissioned by the pro-business group the Maryland Foundation for Research and Economic Education, predicted that raising the minimum wage to $10 an hour would result in the loss of 11,502 jobs, increase the price of consumer goods and weaken the state’s competitive position.
But Douglas Hall, an economist with the liberal Economic Policy Institute, who testified alongside O’Malley on Tuesday, questioned the methodology of the study. He argued that a minimum-wage increase would strengthen Maryland’s economy because low-wage workers would have more money to spend on goods and services.
About 67,000 workers in Maryland earned the minimum wage or less in 2012, according to the U.S. Bureau of Labor Statistics.
The bill would affect a far greater number of workers, however, since many more earn less than $10.10 an hour. An analysis by the Economic Policy Institute that was cited by Maryland legislative analysts put that figure at 304,000.
The Washington Post February 12, 2014 -
According to data from the Bureau of Labor Statistics the unemployment rate for 20 to 24-year-olds was 11.9% in January, up from 11.1% the month prior(compared to 6.6% for population at large,which was down slightly from December). And that’s just unemployment, not underemployment. An April 2013 survey by consulting firm Accenture found that 41% of 2011 and 2012 college graduates have a job that does not require their degree. In 2011, the Economic Policy Institute found that entry-level wages for males with college degrees were only 5% higher adjusted for inflation than in 1979. Female wages were 15% higher, but still 9% below what a man earned in 1979. Meanwhile, the Consumer Financial Protection Bureau estimates that outstanding student loan debt is near $1.2 trillion and growing at an astounding rate.
Forbes February 12, 2014 -
The good (and maybe bad) of the declining U.S. trade deficit. “Much of the improvement in U.S. trade accounts came from the displacement of imported oil with domestically produced energy. The folks at the Economic Policy Institute and the Alliance for American Manufacturing were quick to note that, once oil is factored out, the deficit in manufactured goods grew wider over the year, while the gap with China stood at over $318 billion. That makes a single country responsible for two-thirds of the total U.S. goods and services trade deficit of $471 billion. Are we swapping our role as an industrial giant to become a resource economy? Not quite – the trade accounts were also supported by the country’s large surplus in services.” Howard Schneider in The Washington Post.
The Washington Post February 11, 2014