“I think that it’s really important to know where the inflation is coming from. It’s not coming from the labor market,” she said. “Wage growth has not been beating inflation. So if anything, wage growth is actually pulling down on inflation.”
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As the country debates the merits of “quiet quitting,” it’s another phenomenon — “quiet fleecing” — that should have workers’ attention.
Coined by the Economic Policy Institute, “quiet fleecing” describes decades of stagnant wage growth in the US despite rising productivity and costs of living. In theory, workers’ wages rise in tandem with their productivity, or the output they provide to a company. And for workers to benefit from those raises, they should outpace inflation. Up until the 1970s, that was roughly the case in the US. But then something changed. The wages of the 1% began to outpace economic growth and inflation, while the pay of the average worker fell behind.
“For much of the last 40, 50 years it’s been close to zero wage growth or compensation growth for typical workers,” EPI economist Elise Gould told Insider. “Those trends in hourly wage growth have profound consequences for American living standards and how well people in this country are able to make ends meet. And I think that the growing economy has not universally translated into broadly shared prosperity.”
“Workers have had to work more hours to get ahead because their hourly wage has grown very slowly over this longer time period,” she said. “I think that there’s been a reevaluation for some workers in the pandemic of what they wanted from their jobs.”
“When it becomes so hard to make ends meet on the wages that they have, some people are seeing, maybe there’s a better way.”
Gould attributes several factors to the rise of “quiet fleecing” over the past decades — including stagnant minimum wages, the decline of unions, and the growing pay gap between CEOs and their employees.
“Smaller and smaller pieces of the pie are coming to the vast majority of workers and their families in this country,” she said.
She also points to the Federal Reserve’s past prioritization of low inflation and its allowance of excess unemployment, both of which have hurt workers’ bargaining power. As the Federal Reserve raises interest rates to combat today’s surge in inflation, she’s concerned that a resulting economic slowdown would ultimately have the same effect.
“One of the threats of allowing the unemployment rate to rise is that not only you could have millions of people lose their jobs, but also workers — even who have their jobs — lose some of that leverage to be able to build up their wages, because they’re less scarce,” she said.
While many low income workers have received pay bumps over the past few years, they could be disproportionately impacted by a weakened labor market. These workers are not only the most likely to see job losses when unemployment ticks up, Gould says, but the most likely to “require a very tight labor market” to see wage growth.
While the Federal Reserve is aware of these risks, it may think some of this “pain” is needed to slow inflation. But Gould thinks directing this pain at the labor market would be counterproductive.
Business Insider September 23, 2022 -
Even as America’s large grocery chains boomed during the COVID-19 pandemic, their essential workers who held the frontlines have continued to earn low wages under poor working conditions. Some of the largest, most profitable grocery stores—including Aldi, Kroger, Safeway and Walmart—pay many of their workers less than $15 an hour, according to a company wage tracker published by the Economic Policy Institute and the Shift Project in April.
Newsweek September 23, 2022 -
“I think there may be some labor hoarding,” says Elise Gould, a senior economist at the Economic Policy Institute. “Employers are holding on to workers because they had such a hard time rehiring, so they’re thinking ‘let’s not move too quickly,’ even if they expect weakness coming.”
While the tech industry has made headlines for laying off workers, it’s not the only one that will feel the sting of rising rates. Gould says that the Fed’s aggressive monetary policy will hit different industries harder and sooner because of their sensitivity to rate fluctuations.
“Construction–commercial or housing construction, will take longer to slow down because those lead times are 5 to 6 months away,” Gould says. “We’ll see a faster drop-off on things that people might get a loan for because they’re looking at much higher interest rates which are hitting their pockets now.”
Forbes September 23, 2022 -
But job cuts do affect some groups more than others, said Valerie Wilson at the Economic Policy Institute.
“We know that the Black unemployment rate is typically double the white unemployment rate. And we see that it rises faster, rises sooner, rises higher.” She added that this disparity raises questions about how companies conduct layoffs.
Marketplace September 23, 2022 -
The group shared an Economic Policy Institute analysis from 2019 indicating that increasing the minimum wage to $15 an hour would help 150,000 Nebraska workers.
Nebraska Examiner September 23, 2022 -
September 23, 2022
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But part-time work doesn’t just reduce your earnings in proportion to full-time work. Part-time positions tend to pay nearly 30% less per hour than equivalent full-time roles, according to a report published by the Economic Policy Institute. That has a ripple effect on finances—whether that be emergency funds, retirement contributions, or overall financial security. Part-time work can also potentially stall women’s career trajectories.
Fast Company September 21, 2022 -
Josh Bivens of the Economic Policy Institute notes that the U.S. economy is already contracting, with housing starts plummeting, which will cause construction jobs to decline. At the same time, the unusually strong dollar — at or around par with the euro for the first time in years — is reducing demand for U.S. exports. Continuing to raise rates could be “really damaging,” he says.
Salon September 21, 2022 -
Many states have loosened the job criteria throughout the years to try to solve the shortage, but critics are alert to the consequences these actions may bring. A research study from the Economic Policy Institute shows that high-poverty schools have less-experienced and less-qualified teachers than wealthier ones, meaning that teacher shortages are more acute in high-poverty schools. Much more than just a teaching crisis, this situation is also a racial and ethnic matter.
Al Dia News September 21, 2022 -
Last week, the Private Equity Stakeholder Project in conjunction with Americans for Financial Reform Education Fund, two nonprofit organizations, released a “private equity scorecard,” a report that listed and graded the top eight private equity buyout firms invested in oil and gas. The Private Equity Stakeholder Project puts out information and data related to private equity’s impact on housing, healthcare, climate and energy, and civil rights. Americans for Financial Reform Education Fund is an activist group focusing on developing a “fair and just” financial system. It is a coalition of over 200 national organizations, including the American Sustainable Business Council, Economic Policy Institute, and the Center for Economic Progress.
Institutional Investor September 21, 2022