Media clips
-
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 -
The unemployment rate doesn’t reflect “discouraged workers” — people who want a job and are available to work and have actually looked for work in the past year, but who have given up looking in the past month because they don’t think any jobs are available or they don’t qualify for the ones that are. Because they’re no longer “actively seeking work,” they’re no longer considered out of work even though they aren’t working. And they’re no longer in the labor force because they’re no longer considered unemployed.
Taking into account all of the people who aren’t working changes the picture. Economist Heidi Shierholz at the Economic Policy Institute estimates that the unemployment rate would be 9.9 percent instead of 6.6 percent if what she calls “missing workers” were included in the official unemployment rate.
The Washington Post February 11, 2014 -
What all of this suggests is that the long-term unemployed are mainly victims of circumstances — ordinary American workers who had the bad luck to lose their jobs (which can happen to anyone) at a time of extraordinary labor market weakness, with three times as many people seeking jobs as there are job openings. Once that happened, the very fact of their unemployment made it very hard to find a new job.
So how can politicians justify cutting off modest financial aid to their unlucky fellow citizens?
New York Times February 11, 2014 -
Finally, much of the debate relies on elusive accounting. Ultimately, the argument turns on things that are difficult to value, especially retirement benefits. Most public employees are guaranteed a pension and have access to retirement health insurance – benefits that are disappearing from the private sector. What is this worth?
A lot more than federal surveys show, said Andrew G. Biggs of the American Enterprise Institute, because state and local governments are putting away far lessthan they should to finance their obligations, especially in some heavily unionized states. But Jeffrey H. Keefe, a Rutgers professor who studies the issue for the liberal Economic Policy Institute, disputes this and argues that the cost of defined benefit pensions is overestimated in federal surveys.
The Washington Post February 11, 2014 -
DOES IT KILL JOBS? The minimum wage is one of the most thoroughly researched issues in economics. Studies in the last 20 years have been especially informative, as economists have been able to compare states that raised the wage above the federal level with those that did not.
The weight of the evidence shows that increases in the minimum wage have lifted pay without hurting employment, a point that was driven home in arecent letter to Mr. Obama and congressional leaders, signed by more than 600 economists, among them Nobel laureates and past presidents of the American Economic Association.
That economic conclusion dovetails with a recent comprehensive study, which found that minimum wage increases resulted in “strong earnings effects” — that is, higher pay — “and no employment effects” — that is, zero job loss.
New York Times February 11, 2014 -
On an economy-wide basis, the fact that the trade deficit narrowed was a prop to growth. As a share of overall economic output, the gap between imports and exports fell from 3.3 percent of gross domestic product in 2012 to 2.8 percent last year, meaning the deficit was less of a drag on the economy as a whole.
“In terms of the macro impact and the impact on growth, what matters is the narrowing of the deficit. That is helping growth in the U.S., and it is what would help job growth,” said Nariman Behravesh, chief economist with the IHS Global Insight consulting firm.
But from there, the debate gets messier. 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.
The Washington Post February 7, 2014 -
The money would be invested in a government-backed bond with a yield pegged to the Government Securities Investment Fund offered to federal employees through the government’s Thrift Savings Plan, a retirement program. That low-risk, low-return fund yielded 1.47% over the last year and an average 2.24% over the last three years. Like Series EE savings bonds, the myRA bonds wouldn’t lose face value, which means the investments would be protected from market losses. But with such low yields they might barely keep up with inflation.
Once the accounts reach $15,000 in value, they would have to be rolled over into a conventional Individual Investment Account. That’s a sop to the financial services industry, which makes billions from managing IRAS. And that’s bad news, says economist Monique Morrissey of the Economic Policy Institute. “The president’s plan may serve to channel more savings into a high-risk, high-fee system without first addressing its failings,” she wrote on EPI’s blog.
Los Angeles Times February 6, 2014 -
Economists who see the minimum wage having negative consequences subscribe to classic pricing theories. If the price of a commodity increases, be it apples or low-wage labor, demand for that good should decline. Purchasers may instead choose a banana and businesses may turn to a self-checkout machine.
Here’s some of the recent research from economists on both sides of the debate:
“Under current labor market conditions, where tepid consumer demand is a major factor holding businesses back from expanding their payrolls, raising the minimum wage can provide a catalyst for new hiring. Economists generally agree that low-wage workers are more likely than any other income group to spend any additional earnings they receive, largely because they must in order to meet their basic needs. Higher-income individuals, corporations, and beneficiaries of corporate profits are more likely to save at least a portion of any additional income. Thus, in a period of depressed consumer demand, raising the minimum wage can provide a modest boost to overall economic activity because it shifts income to workers who are very likely to spend it immediately.” –David Cooper, Economic Policy Institute “Raising the Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide a Modest Economic Boost,” Dec. 19, 2013.Wall Street Journal February 6, 2014 -
Politically, the question is whether a less-than-inspiring talking point—sure, most Americans don’t feel great about America right now, but we should feel better than everyone else!—can be a path to Democratic electoral success in 2016. Touting America as No. 1 probably won’t do much to rally the Democratic base, especially since a central part of the administration’s strategy is to push hard for free-trade agreements with Europe and Asia that may only heighten income inequality at home. Liberals are already suspicious of Obama’s centrism and are somewhat concerned that the party’s potential standard-bearer, Hillary Clinton, may be more inclined to follow her husband’s moderate, Democratic Leadership Council-led path than go progressive. (Nonetheless, Bill Clinton’s appeals to globalization during the faster-growth ’90s were the basis of two successful presidential campaigns.)
In the end, Obama’s quixotic call to American businesses to “join us” and “do what you can to raise your employees’ wages” will probably make as little headway as the president’s ceaseless appeals to the Republican-led House. “The reason businesses are not hiring or raising wages is not because they’re acting badly and hating America. It’s because they’re not seeing enough demand for their stuff,” says economist Heidi Shierholz of the progressive Economic Policy Institute.
National Journal February 6, 2014 -
Technically, a correction is a change of 10 percent or more, so the Dow would need to lose around 650 more points and the S&P 500 would need to drop by another 100.
“The S&p 500 has averaged a correction, that is a drop of 10 percent of more, every 18 months and currently we haven’t had one since 2011, so we’re about 28 months overdue,” says Alec Young, Global Equity Strategist at S&P Capital IQ.
Plus, many key economic indicators like manufacturing and unemployment indicate stocks should be a little lower says Bill Stone, Chief Investment Strategist at PNC Wealth Management. “We will get a 10 percent pullback sometime. Whether this is it or not is hard to say, but you ought to a be ready for it.”
Still, we’re probably not talking about a crash, because companies’ profits are pretty much in line with current stock values.
“The best measures of long run stock market fundamentals, the price to earnings ratio, is not in bubble territory,” says economist Heidi Shierholz, with the Economic Policy Institute in Washington DC.
Marketplace February 6, 2014 -
The blue line on the chart above is derived from this assumption. It shows the sustainable level of employment expressed as a share of working-age adults. The red line shows the share of adults who actually had jobs. The implication is that, in effect, there were too many jobs before the recession – that the labor market was overheating – and, as a result, that some of the recent losses should be seen as a return to health.
But as Josh Bivens of the Economic Policy Institute noted Monday, the Fed in recent decades has actually tolerated higher unemployment for long periods because it was focused primarily on controlling inflation. The methodology of the new study, in effect, is basically using the Fed’s long history of allowing unnecessary unemployment as a justification for continuing the same policy.
New York Times February 6, 2014 -
Still, the structure of the Obamacare subsidies makes it less likely that workers would make that choice at all, according to Elise Gould, the director of health policy research at the left-leaning Economic Policy Institute.
An extra $100 in income doesn’t directly translate into $100 less in subsidies, meaning that for many low-income workers, there would probably be more of an incentive to make more money than to get the government breaks.
“It’s hard to imagine that people don’t want to move up the wage scale and do better in that way,” Gould said. “It’s not unreasonable, but if you’re the only wage earner in your house, then you’re going to be making very different decisions than if you are a second wage earner.”
Huffington Post February 6, 2014 -
Hilary Wething and Daniel Costa are featured on the “Young and the Guest List” in Washington Life magazine.
See page 45.Washington Life Magazine February 6, 2014 -
For some time now, there has been a debate about why the labor-force participation rate has fallen so far. Some analysts point to demographics: the aging of baby boomers. Others blame low levels of demand and hiring, which have prompted some of the unemployed to give up on looking for work. The C.B.O. study splits things down the middle. Of the roughly three-percentage-point fall in the participation rate since 2007, the study attributes 1.5 percentage points to “long term trends (particularly the aging of the population)” and the other 1.5 percentage points to “weak employment prospects” and other “unusual aspects of the slow recovery.”
One can quibble with these figures. At least one other study, by the Economic Policy Institute, found that weak demand accounted for two-thirds of the fall in the participation rate. But, even if we accept the C.B.O.’s conclusions, they imply that about three million Americans who should be working have vanished from the labor force.
The New Yorker February 6, 2014 -
Elaine Weiss of the Economic Policy Institute in Washington speaks at a Tennesseans Reclaiming Educational Excellence event at the legislative office complex in Nashville, Tenn., on Monday, Jan. 27, 2014. The event was the first of a series scheduled from supporters and opponents of creating a school voucher program and expanding charter schools in the state.
AP January 30, 2014 -
Today, newly-formed education advocacy group TREE (Tennesseans Reclaiming Educational Excellence) hosted a presentation by Elaine Weiss of the Broader, Bolder Approach to Education.
Weiss discussed recent Tennessee education policy in the context of the drivers of educational inequality. She pointed to research suggesting that poverty is a significant contributor to student outcomes and noted other research that suggests as much as 2/3 of student outcomes are predicted by factors outside of school.
Later in the day, SCORE (Statewide Collaborative on Reforming Education) released its annual State of Education in Tennessee Report.
Tennessee Education Report January 30, 2014 -
With education the burning issue driving policy on the local, state and federal level, the presentation across the street inside Legislative Plaza was a horse of a different color.
Tennesseans Reclaiming Education Excellence, TREE, held its first-ever press conference in a packed small legislative committee room Monday, examining how the state’s approach to addressing achievement gaps drive policies that are hurting public schools.
“The state of education for Tennessee is it has a lot of potential to do the right things and is not doing them,” said Elaine Weiss, a TREE presenter and national coordinator for Washington, D.C.-based Broader, Bolder Approach to Education. Nearby, Democratic Rep. Mike Stewart bumped his fists together like a boxer, congratulating her for taking on the state.
Nashville Scene January 30, 2014 -
On Tuesday, we wrote about some good-sounding news: unemployment rates in 29 states are at post-recession lows. We alluded to some caveats, however, including the historically huge share of people out of work for prolonged periods —six months or more. On Wednesday, the Economic Policy Institute’s David Cooper provided the state-level data.
Before the Great Recession hit, the national share of the jobless who were long-term unemployed peaked at 26 percent, in June 1983, as you can see in the graph below:
Last year, long-term unemployment was above that level in 41 states and D.C., according to EPI, a think tank whose research focuses on low- and middle-income workers. Long-term unemployment is lowest in the Dakotas, where less than a fifth of the jobless have been out of work for long stretches. It’s highest in D.C., New Jersey and Florida, where more than 45 percent of the jobless are long-term unemployed.
Head on over to EPI’s site for an interactive version of the map above, or scroll down to view state-by-state data. Below that is a series of survey responses from people who are long-term unemployed.
The Washington Post January 30, 2014 -
This morning, President Obama visited a Costco in suburban Maryland to reemphasize the theme of income inequality he sounded in the State of the Union speech last night. Our calculator shows why Obama chose the home of the giant pickle jar and behemoth TP package: Even at the relatively low wages paid by big-box retailers, slightly better pay can mean the difference between inescapable poverty and a modest living.
Mother Jones January 30, 2014 -
Ariane Hegewisch, study director at the Institute for Women’s Policy Research. “If you look at who is poor and who is likely to remain poor, women are the majority.”
The Institute for Women’s Policy Research estimates that the poverty rate for working women would be cut in half if women earned as much as men.
The pay gap appears narrower in lower-wage jobs than in higher wage jobs, said Heidi Shierholz, an economist at the Economic Policy Institute. But she noted that the reason is not because women are doing better, but because men in lower wage jobs are doing worse.
“That’s not the kind of improvement women want,” Shierholz said. “If you could solve inequality overall, you’d have helped a lot of women.”
Reuters January 30, 2014 -
Obama says expanded trade will generate high-paying jobs for an economy that’s still more than 1 million paychecks short of its pre-recession peak. His critics in the labor movement and some economists say previous deals, such as the North American Free Trade Agreement, destroyed millions of factory jobs.
“It has absolutely been a contributor to the rise in inequality,” said economist Josh Bivens of the Economic Policy Institute, a Washington research group partially funded by labor groups. “We would have a different country, with less inequality, had we not seen the developments in the global economy that we’ve had over the last 15 to 20 years.”
The concern that Obama is fanning over the income gap could boomerang on his plans. Five fellow Democrats on the Senate Finance Committee this month said they won’t vote for giving the president “fast track” authority to speed trade deals through Congress, citing in part the risk to jobs.
Bloomberg Politics January 30, 2014 -
As Obama follows up on a State of the Union speech Tuesday that focused on increasing economic opportunity, census tracts at opposite ends of the spectrum help paint the picture. Data from 2010 showed a median family income of just $8,831 in the Napier-Sudekum area. In Belle Meade, the median family income was more than 20 times higher at $183,047.
The same stories can be found across the state. Incomes for the bottom 20 percent of Tennessee households fell by 12 percent over the course of nearly a decade, a 2012 report by the Center on Budget and Policy Priorities and the Economic Policy Institute found.
USA Today January 30, 2014 -
Account holders would be able to make hardship withdrawals without facing significant tax penalties. And while the plan is aimed at low-income people, anyone in a household earning up to $191,000 a year is eligible to invest.
“The plan has the advantage that it helps people who do not have the ability right now to save easily through payroll deduction,” said David C. John, a senior policy advisor at AARP who added that it steers people around financial institutions that discourage investors with small accounts. “It helps get people into the habit of saving.”
But others said Obama’s new initiative is so modest that it does nothing to address the larger problem of eroding retirement security for Americans.
“At best, it is a distraction from the bigger issue of what we need to do to shore up retirement,” said Monique Morrissey, an economist at the Economic Policy Institute. “It is a very, very modest tweak, and it is not likely to have much of a substantive impact.”
The Washington Post January 30, 2014 -
The plan, as the President outlined it in his address and the White House fleshed out a bit more Wednesday, aims to give lower-income workers a way to start building retirement nest eggs in tax-deferred accounts, through regular payroll deductions made by their employers. The employers would have to agree to offer the service to employees.
The accounts would be available to those earning less than $191,000, but the minimum initial contribution would be $25 and subsequent contributions could be as little as $5.
The money would be invested in a government-backed bond with a yield pegged to the Government Securities Investment Fund offered to federal employees through the government’s Thrift Savings Plan, a retirement program. That low-risk, low-return fund yielded 1.47% over the last year and an average 2.24% over the last three years. Like Series EE savings bonds, the myRA bonds wouldn’t lose face value, which means the investments would be protected from market losses. But with such low yields they might barely keep up with inflation.
Once the accounts reach $15,000 in value, they would have to be rolled over into a conventional Individual Investment Account. That’s a sop to the financial services industry, which makes billions from managing IRAS. And that’s bad news, says economist Monique Morrissey of the Economic Policy Institute. “The president’s plan may serve to channel more savings into a high-risk, high-fee system without first addressing its failings,” she wrote on EPI’s blog.
Los Angeles Times January 30, 2014 -
Lawrence Mishel, the president of the Economic Policy Institute, responded to my email asking for his take on Piketty:
“We’d take the perspective that this phenomenon is related to the suppression of wage growth so that policies which generate broad-based wage growth are an antidote. The political economy is such that the political power to enact those taxes also requires a mobilized citizenry and institutional power, such as a robust labor movement.”
The New York Times January 29, 2014 -
Many owners who supported a wage hike say they don’t believe their workers can live on minimum wage and already pay them more. About 95% of respondents agreed that $7.25 is not a living wage and only 7% said they pay any of their workers that hourly rate or the minimum set by their state, which can be higher.
But more than 20% said they pay some employees between $7.25 and $10.10 an hour. That means if a federal wage hike is passed, these small business owners would have to raise wages for employees in that range.
There are currently 1.6 million workers who earn the federal minimum wage, according to the Congressional Research Service. And the liberal-leaning Economic Policy Institute estimates that an additional 17 million make between $7.25 and $10.10 and would see wages increase as well.
CNNMoney January 29, 2014 -
It’s about time to raise the minimum wage, at least according to 600 economists.
The group, which includes seven Nobel laureates, attached their name to a letter released earlier this month by the Economic Policy Institute urging lawmakers to raise the minimum wage to $10.10 an hour. In the two weeks since the left-leaning think tank first published the letter, the list of signatories has grown from 75 to more than 600.
President Obama is expected to push for an increase in the minimum wage during his State of the Union address Tuesday. In his speech last year, Obama called on Congress to boost the federal minimum wage from $7.25 an hour to $9 an hour. Senate Democrats proposed increasing the minimum wage to $10.10 — a measure Obama later said he backed — but the bill is still stalled in Congress.
The Huffington Post January 29, 2014 -
The simple economic theory of wage formation would argue that workers must be getting increasingly unproductive. That is, if you’ve studied this corner of economics, you may recall the assertion that your hourly wage is equal to your “marginal product,” meaning the dollar value your work adds to the firm’s output. Now, this theory applies to the average worker, so it entertains differences in real wage trends across the wage scale, explaining them by referring to differences in the marginal product of the losers versus the winners.
But there are a lot of problems with the theory. First, even at the average, in recent years real compensation has grown more slowly than productivity. This dynamic, by the way, is behind the historically large decline in labor’s share of national income, a trend that is wholly inconsistent with conventional marginal product theory (which assumes constant income shares for labor and capital or profits).
Second, as the Economic Policy Institute recently pointed out — and it has carefully tracked the “real” wage story for decades — even in the lowest fifth of the wage scale, workers have become more highly educated. The institute’s analysis reveals that since the late 1960s, the share of low-wage workers with at least some college has increased from 17 percent to 46 percent.
The New York Times January 29, 2014 -
Labor advocates are agitating for a boost to that lower wage, but they’re facing off against a more influential restaurant lobby, which paints a pretty bleak picture of the impact a wage hike would have on its industry. According to the National Restaurant Association, an increase in the subminimum wage would raise menu prices and cause restaurants to cut service jobs. Plus, the group says a pay raise couldn’t come at a worse time as businesses struggle to recover from the recession.
But there is evidence—from states that don’t have a separate, lower wage for tip-earning workers—that the restaurant owners are wrong to make such a dire and definitive case.
Seven states—Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington—don’t have a tipped wage at all: The minimum wage is the minimum wage for everyone. (Nineteen states follow the federal subminimum wage, and the rest are somewhere in between).
“You can … look anecdotally to the experiences of California and Washington and Oregon, where the restaurant industry is doing very well, even though those states don’t even have a tipped minimum wage,” said David Cooper, an economic analyst at the left-leaning Economic Policy Institute.
National Journal January 29, 2014