Media clips
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For the first time in years, talk of inflation fears has taken center stage in mainstream economic discourse. Inflation, an economic measure for increased prices in goods and services, accelerated noticeably in recent months, climbing 5.4 percent in July over the previous year. This spurred calls for the Federal Reserve, the nation’s central bank, to “cool off” the economy by raising interest rates. But doing so could cause a lot of collateral damage by stalling the still-nascent economic recovery.
“Cooling off” the economy sounds prudent, innocuous even. Yet, in practice, this monetary policy maneuver means that the Fed increases borrowing costs for businesses and pulls back on helping jobless Americans find work. So it’s worth breaking down this year’s inflation data in granular detail, then asking whether the price increases we’ve seen merit the very tough medicine — slower growth and higher unemployment — that would result from the stricter monetary policy that some financial commentators now recommend.
The ultimate answer most likely depends on how lasting this inflation acceleration will be, which, in turn, depends on how widespread the price growth American consumers have experienced becomes.
So far, the inflationary burst of 2021 has been overwhelmingly driven by a narrow group of sectors that were deeply affected by the shock of Covid-19 and last year’s accompanying shutdowns. In July, some of these sectors (used cars in particular) experienced a big deceleration in inflation, bolstering the argument — led by the Fed chair, Jerome Powell — that the inflationary surge might be “transitory,” or fade quickly on its own.
That would be good news for the economy and job-seekers: If inflation proves to be transitory then it’s likely that the Fed doesn’t need to reel back as much of its economic support out of fears of “overheating” the economy and sparking long-lasting inflation.
New York Times August 20, 2021 -
The decision was “seemingly rooted in simple-minded partisanship that demanded a Republican president replace a Democratic appointee as Fed chair,” Josh Bivens, research director at the typically liberal Economic Policy Institute, wrote in a statement at the time. “This decision breaks a longstanding norm of not elevating partisanship over competence when picking Fed chairs.”
Mr. Bivens, in an email last week, said that the norm “is pretty broken,” but that the decision to replace a Fed chair should still come down to whether the incumbent had done a good job. There’s a strong case for keeping Mr. Powell based on his monetary policymaking at a moment of fierce debate over the Fed’s policy direction, he thinks.
New York Times August 20, 2021 -
Data released by the economic policy institute clearly shows that since 1971, the United States’ net productivity growth stopped causing hourly wages to grow as well.
Up until that point, the lines representing the two metrics followed each other so closely that they nearly perfectly overlap.
After the dollar was detached from the gold standard, productivity more than doubled, but it didn’t reflect on wages.
Benzinga (via Yahoo! Finance) August 20, 2021 -
Besides Policy Matters, those filing the brief include the American Sustainable Business Council, the leading business organization serving the public policy interests of responsible companies; the National Employment Law Project, a nonprofit law and research organization that has advocated for the employment rights of unemployed workers for over 50 years; Professor William E. Spriggs of Howard University, a leading expert on U.S. social insurance programs and the implications for racial equity; the Economic Policy Institute, a nonprofit organization with over 30 years’ experience analyzing the effects of economic policy on the lives of America’s working families, and Andrew Stettner of the Century Foundation, an expert in policy research on U.S. social insurance programs.
Policy Matters Ohio August 20, 2021 -
After a lot of ups and downs, the Senate finally passed the Infrastructure Investment and Jobs Act (IIJA) last week. According to Moody’s Analytics, the bill could create roughly 650,000 jobs. Many of these would be good-paying jobs, with excellent wages and benefits, especially for non-college-educated workers in manufacturing and construction.
We at the Economic Policy Institute agree with this assessment — and believe these new jobs will pay substantially more than positions in service industries, especially for women as well as Black, Hispanic, and other workers of color.
These jobs are urgently needed. Wage inequality in the United States has been growing since the late 1970s, and there’s a critical need to create new middle-class employment. In particular, failed international economic policies — including those which led to growing trade deficits that displaced more than 5 million manufacturing jobs since 1998 — can explain a significant share of growing wage inequality. As a result, millions of Americans who have lost productive jobs have simply been forced into lower-paying service industry positions.
The Hill August 20, 2021 -
Last week, the Economic Policy Institute, a nonpartisan thinktank, released a report on the increasing pay gap between chief executives and workers. This research tells a familiar story with updated figures. When taking into account stocks, which now make up more than 80% of the average CEO’s compensation package, the report found that chief-executive pay has risen by an astounding 1,322% since 1978. That’s more than six times more than the top 0.1% of wage earners and more than 73 times higher than the growth of the typical worker’s pay, which grew by only 18% in the same time period. Most remarkable, however, is the 18.9% increase in CEO compensation between 2019 and 2020 alone.
CEO compensation outpacing that of the 0.1% is a clear indication that this growth is not the product of a competitive race for skills or increased productivity, the EPI report explains, so much as the “power of CEOs to extract concessions. Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on the economy’s output or on employment,” the report concludes.
This report joins a slew of data sounding an alarm on a massive upward transfer of wealth to the top 1% over the course of the pandemic. One estimate by the Institute for Policy Studies puts this figure as high as $4tn, or a 54% increase in fortunes for the world’s 2,365 billionaires.
Today in the US, the CEO-to-worker pay gap stands at a staggering 351 to one, an unacceptable increase from 15 to one in 1965. In other words, the average CEO makes nearly nine times what the average person will earn over a lifetime in just one year.
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The EPI is correct. A wealth tax on the 1% would not hinder the economy nor employment, so much as rein in the excesses of the billionaire space race and luxury doomsday bunkers that stand in stark relief to the floods, fires, famine and pestilence that have currently taken hold.
The Guardian August 20, 2021 -
As Richard Rothstein, a fellow at the Economic Policy Institute, a worker-focused think tank, argues in his history of segregation, The Color of Law, because Richmond was essentially all White before the war, the federal government’s role in housing directly established segregation in the city.
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Rothstein writes that in Richmond, this meant when White families moved to newly built suburbs like Rollingwood, Black people were left in the same public housing built for the war, closer to pollution from industry and without federal money to help them buy their own homes. By 1950, the war projects housed more than 75 percent of Richmond’s Black population.
Mother Jones August 20, 2021 -
Low-earning Americans get the least paid time off, according to the Economic Policy Institute. Nearly half of people who have not received a vaccine jab told KFF they are concerned about getting paid time off to get a shot and to deal with adverse side effects.
Business Insider August 20, 2021 -
Indigenous farmworkers were also much more likely to work for a farm labor contractor. Farm labor contractors are the fastest-growing segment of farm employment and made up one-quarter of federal employment law violations in agriculture, according to the Economic Policy Institute, a think tank that examines the economic conditions of low and middle-income workers.
Statesman Journal August 20, 2021 -
As Richard Rothstein, a fellow at the Economic Policy Institute, a worker-focused think tank, argues in his history of segregation, “The Color of Law,” because Richmond was essentially all White before the war, the federal government’s role in housing directly established segregation in the city.
Undark August 20, 2021