In today’s world, understanding the relations between employers and workers in different national contexts means placing that relationship in the context of global financial and product markets, global production chains, and national and global employment institutions. A new textbook – "Comparative Employment Relations in the Global Economy," edited by Professors Carola Frege of the London School of Economics and John Kelly of Birkbeck, the University of London – does just that.
Eileen Appelbaum and John Schmitt contributed a chapter to this text book that examines Employment Relations and Macroeconomic Performance. The gap that opened up between the U.S. and other wealthy countries in job creation and unemployment has led economists to search for an explanation of this development. The standard explanation builds on the notion that labor market ‘rigidities’ prevent countries from achieving full employment and seeks the causes of variations in the unemployment rate in differences in labor market institutions. Eileen and John find this view unpersuasive. Their review of labor market institutions leads to two main conclusions: first, that constellations of labor market institutions matter, so that there is more than one path to good outcomes; and second, that differences in macroeconomic policies play an important role in determining labor market outcomes.
The book should be an important resource for those in the CEPR family who teach or are students in programs in employment relations, management, political economy, labor policy, industrial and economic sociology, regulation and social policy.
Today is the 20th anniversary of the implementation of the Family and Medical Leave Act (FMLA), the first day that people across the nation could to take time off from work to care for themselves and their families when faced with serious illness or welcoming a new child, without worrying that they may be fired from their jobs.
This is the latest milestone in a year-long celebration of the 20th anniversary of the FMLA. Earlier this year, the Department of Labor released new data about the FMLA, and CEPR senior economist Eileen Appelbaum wrote a series of blog posts to analyze these findings and discuss what to do next.
Overall, the FMLA has greatly helped those who are covered by it, giving them access to job-protected leave to care for themselves and their families, without unduly burdening employers. The FMLA has been used 100 million times in the last 20 years, benefiting workers and their families across the country.
But millions are not covered by the FMLA, so they can still be fired if they get sick, have a baby, or need to care for a seriously ill family member. Millions more are eligible but do not take advantage of the FMLA because they can’t afford to go without pay or don't know that they can take time off without fearing for their jobs.
The U.S. still lags behind other high-income countries in enabling people to take the sick and family leaves that they need, as shown in CEPR papers that compare American and other nations' policies on sick days and parental leave. Twenty years ago, the FMLA was huge first step, but there's plenty of space for the U.S. to do better.
Throughout all of the post-WWII recessions, the prevalence of involuntary part-time work has closely mirrored the unemployment rate (recessions are shaded in the chart below). This relationship has even held in the Great Recession. However, the latest recession was unique because the rise in involuntary part-time employment was so sharp and it has persisted for so long.
The increase of involuntary part-time workers in the most recent recession (99.78 percent) was more than double that of earlier recessions (about 40 percent on average). Also, at this point, in the five recessions before the Great Recession, the part-time rate had already returned to close to “normal.” In those recessions the number of part-time workers for economic reasons had dropped back to between 15 and 35 percent above the pre-recession levels.In this recovery, five and a half years after the recession began, the share of workers involuntarily working part-time remains more than 80 percent over the pre-recession rate.
In a recent report, we demonstrated that despite large increases over the last three decades in educational attainment, black workers are less likely to be in a good job than they were three decades ago. In this post, we compare outcomes over the same period for black and white workers.
Between 1979 and 2011, both black and white workers significantly increased their educational attainment. In proportional terms, black workers either matched or exceeded the improvements made by white workers. Between 1979 and 2011, for example, the share of black workers with less than a high school degree fell from 31.6 percent to 5.3 percent (an 83 percent decline), and the share with at least a four-year college degree increased from 10.4 percent to 26.2 percent (a 152 percent increase). At the same time, the share of white workers that did not graduate from high school also fell, from 16.9 percent to 3.1 percent (an 82 percent decline). The share of white workers with a college degree also rose, but at a slower rate than for blacks, from 21.2 percent to 39.3 percent (an 85 percent increase, see the tables below).
The following highlights CEPR's latest research, publications, events and much more.
CEPR on Snowden, the NSA and Latin America CEPR continued to monitor the developments in the national security whistle-blower case in July. Co-Directors Mark Weisbrot and Dean Baker wrote several op-eds, including this one by Mark for The Guardian on Edward Snowden's applications for asylum and this one in Folha de São Paulo (Brazil) on the revelation that Brazil has been the NSA’s largest target of U.S. spying in the hemisphere after the United States. Dean weighed in with this piece for Yahoo! Finance's The Exchange on the privatization of national security. Dean also wrote this op-ed for Truthout, which prompted the following tweet by the journalist Sarah Jaffe: “Only @DeanBaker13 can connect the hunt for Snowden to the need for a financial transactions tax.”
CEPR staff wrote numerous posts for The Americas Blogincluding this one by CEPR Research Assistant Stephan Lefebvre on a Latin American scholars’ open letter to the media regarding the supposed “irony” of Edward Snowden’s request for asylum in Ecuador, and acceptance of asylum in Venezuela. Stephan also penned this post on UNASUR’s statement on the forced landing of Bolivia’s President Evo Morales’ plane, as well as this review of Guardian journalist Rory Carroll's reporting on Ecuador and Snowden. CEPR Research Associate Jake Johnston wrote this post on how the U.S. government pressured Latin American governments to not offer asylum to Snowden. International Communications Director Dan Beeton penned this post on the U.S. government’s double standard on extraditions, while Senior Associate for International Policy Alex Main noted in this post that the OAS Resolution supporting Bolivia was rejected by the U.S. More CEPR analysis on the Snowden situation and revelations of U.S. government surveillance can be found here.
In a recent report, John Schmitt and I demonstrated that despite large increases over the last three decades in educational attainment, black workers are less likely to be in a “good job” than they were three decades ago. We define a good job as one with good pay, health insurance, and a retirement plan. Even with our limited definition of a good job, this disheartening pattern holds true for both black men and black women.
Between 1979 and 2011, the share of black men with a high school degree or less fell almost by half (from 72.6 percent to 43.4 percent), and the share with a college degree nearly tripled (from 8.1 percent to 23.4 percent). Despite this massive improvement at both ends of the education spectrum, black men overall and at every education level – less than high school, high school, some college but short of a four-year degree, and at least a four-year degree – are less likely to be in a good job today than three decades ago.
Over this same time period, black women have made even more educational progress. Between 1979 and 2011, the share of black women with no more than a high school degree fell from about two-thirds (66.7 percent) to about one third (34.9 percent), and the share with at least a four-year degree more than doubled (from 12.9 percent to 28.5 percent). As a result, in 2011, a higher share of black women had a college degree than black men. However, similar to black men, black women were less likely to be a good job in 2011 than in 1979 at every education level.
Opponents of the ACA have labeled the health care bill a “jobs killer.” It is unlikely, however, that the bill could have much impact on employment except among the relatively small number of firms that are near the 50-worker cutoff. In a post for the Roosevelt Institute's Econobytes, economists Helene Jorgensen and Dean Baker respond to the claim that firms will reduce the number of hours per week that employees work to below thirty so that they fall under the cutoff, thereby incurring a penalty under the ACA:
An analysis of data from the Current Population Survey shows that only a small number (0.6 percent of the workforce) of workers report working just below the 30 hour cutoff in the range of 26-29 hours per week. Furthermore, the number of workers who fall in this category was actually lower in 2013 than in 2012, the year before the sanctions would have applied. This suggests that employers do not appear to be changing hours in large numbers in response to the sanctions in the ACA.
There have been numerous accounts of employers claiming to reduce employment or adjust hours in order to avoid the obligations of the ACA.
If this is the case, we should have first begun to see evidence of the impact of ACA in January of 2013, since under the original law employment in 2013 would serve as the basis for assessing penalties in 2014.
The Obama administration announced on July 2, 2013 that they would not enforce sanctions in 2014 based on 2013 employment, but employers would not have known that sanctions would not be enforced prior to this date. Therefore we can assume that they would have behaved as though they expect to be subject to the sanctions and acted accordingly.
As of today, it's been four years since the last increase in the federal minimum wage, to $7.25 per hour, or $15,000 per year for full-time work.
In the lead-up to this anniversary, CEPR has released four blog posts with infographics that illustrate many different ways to look at the minimum wage at both the federal and state levels -- and they all find that the current level, by all measures, is just too low.
Two of the posts compare the current minimum wage against various benchmarks, such as inflation and workers' average productivity, age and education. For example, if it had kept up with inflation since its peak in 1968, the federal minimum wage would now be $10.75 an hour. And if the minimum wage had grown along with workers' productivity, it would be as high as $17.19 today.
Also, today's low-wage workers are older and better educated than in the past, and all else equal, older and better-educated workers earn more than younger and less-educated workers. Had the minimum wage kept pace with low-wage workers’ age and educational attainment, it would be at least 9 to 14 percent higher than if it were adjusted just to rise in step with inflation.
The other two posts look at how states have taken matters into their own hands, featuring color-coded maps and tables showing the different minimum wages for regular and tipped workers in the states. For the regular minimum wage, 19 states have raised theirs above the federal level, and 10 of them decided to make their state minimum wages automatically keep pace with inflation, something that federal level doesn't do.
The final post focuses on the much-lower minimum wage for tipped workers. The federal minimum for these workers (such as waitstaff, hair stylists and car washers) is only $2.13 an hour, a level that hasn't been increased in 21 years. However, 31 states have higher minimum wages for tipped workers, and seven have set the tipped worker minimum at the same level as that for non-tipped workers.
CEPR's also put together a couple of printable flyers summarizing these posts: one looking at the federal minimum wage and the other focusing on the states (and including bar graphs of the state minimum wages that aren't seen in the blog posts).
Click here for a list of all of our most recent research on the minimum wage.
For cheap thrills on a beautiful summer evening in our nation's capital, we can see that concerns over hyperinflation seem to have fallen back to their pre-recession level, as measured by Google searches. Good news at last!
In her June 2013 paper, “The Capitalist Machine: Computerization, Workers’ Power, and the Decline in Labor’s Share within U.S. Industries,” social scientist Tali Kristal focuses on the role unions play in this phenomenon. Kristal introduces the theory of “class-biased technological change,” which states that decades of technological change precipitated the decline of labor unions and weakened workers’ ability to bargain for a larger piece of the economic pie. First, new technologies lead to job losses in previously highly unionized sectors, like manufacturing, as work becomes more mechanized and production moves to lower-wage regions around the world. New technologies require new skills, a fact which can create a wedge between workers with and without those skills, polarize wages, and degrade workplace solidarity. Moreover, Kristal argues, new technologies empower employers to exert greater “technocratic control” over employees and engage in union-busting tactics. Drawing on the belief that class struggle drives the income distribution process, Kristal concludes that a shift in the class’ relative power leads to a shift in relative income.
Alternative theories attribute labor’s declining income share to factor-biased technological change: as new technologies improve a firm’s productive capabilities, the returns on equipment grow relative to the returns on labor, incentivizing producers to substitute labor for equipment. Using data on capital investment, compensation, unionization, and import penetration by low-wage countries, Kristal finds some evidence to support this.
As we documented in an earlier post, the current value of the minimum wage is too low by every available historical benchmark. But, given the age and educational upgrading of the average low-wage worker over the last three decades, the level of the minimum wage is positively awful.
Economists generally believe that older, better-educated workers should earn higher wages than younger, less-educated workers. An older worker typically has more experience and on-the-job training, both of which increase skills. Education – whether it is a high school degree, an associate’s degree, a bachelor’s degree, or more – also increases workers’ skills and should be rewarded in the labor market. The falling value of the federal minimum wage, however, has failed to recognize substantial increases in the education and training of the workforce.
Table 1 summarizes the characteristics of low-wage workers by age and education, which we define as those earning less than or equal to $10.10 per hour (in inflation-adjusted 2012 dollars), the level of the minimum wage proposed by the Fair Minimum Wage Act of 2013.
By now everyone has heard about Detroit's bankruptcy. One of the big bills in the city's payable box is the $3.5 billion in unfunded pension obligations. The story in many people's minds is that overly generous public sector wage and benefit packages pushed the city over the brink.
It's worth looking at this one a bit more closely. According to the city, the average retiree gets a pension of $18,275. That's better than many workers, but $1,500 a month in pension benefits will not put anyone on the Riviera. That's coupled with pay that averages less than $42,000 for active city workers. (They accepted a 10 percent pay cut last year.)
It's often difficult to get a sense of the meaning of numbers without a base of comparison. In order to know whether Detroit pensions are a lot or a little we can compare them to the pay at an organization that gets substantial support from the government, Goldman Sachs.
If people didn't realize that their tax dollars were going to boost the profits and pay at Goldman that's probably because it is not an explicit line in the budget. The way the government supports Goldman in its various activities (it was in the news yesterday for jacking up aluminum prices through market manipulations) is by providing it implicit insurance.
This insurance takes the form of the famous "too big to fail" guarantee. There is a widely held belief among investors that if Goldman's deals threatened to put the bank into bankruptcy, as happened in 2008, the government would step in to bail them out, as it did in 2008. As a result, investors are willing to lend banks like Goldman Sachs money at below market interest rates.
Bloomberg News estimated the size of this subsidy to the banks at $83 billion a year. This money translates into higher profits for banks like Goldman Sachs and higher pay for its top executives.
This sets up an interesting comparison, the subsidized pay of top executives at Goldman Sachs with the pensions of Detroit public employees. The graph shows the hourly wage of Goldman Sachs CEO, Lloyd Blankfein, based on his reported 2012 compensation of $13.3 million. (It was $16.2 million in 2011.) Assuming a 40 hour workweek (I know that Mr. Blankfein must work more than this), his compensation comes to $6,650 an hour. This means that in three hours he will earn more than a typical Detroit retiree gets in a year.
We can also make the comparison of Detroit pensions to Goldman Sachs more generally. Goldman Sachs profits in the last quarter were $1.93 billion. This means that if the bank sustains this rate of profitability its profits over two quarters would exceed the $3.5 billion unfunded liability of the Detroit pension system. It seems that there is much more money in being a government subsidized too big to fail bank than in being a declining industrial city.
While four years have passed since the last increase in the federal minimum wage (July 24, 2009), tipped workers (for example, restaurant servers, hair stylists, manicurists, car washers and casino workers) are looking at 21 years at the same mandated federal minimum.
Under the federal Fair Labor Standards Act (FLSA) “tipped employees” are entitled to a minimum wage of just $2.13 per hour – less than one-third of the $7.25 per hour federal minimum wage for non-tipped employees. Thirty-one states, however, have passed higher minimum-wage laws for tipped workers. And seven of these states (AK, CA, MN, MT, NV, OR, and WA) require employers to pay the same state minimum wage to tipped and non-tipped employees. With the exception of Minnesota, all of these states also have set their state minimum wage above the federal level.
Tipped workers are concentrated in industries that have the fewest job protections and the lowest incomes. Steps at the state level provide a glimmer of hope for tipped workers, but tipped workers everywhere would benefit from an increase in the federal minimum wage for tipped workers.
Corporate profits have done well in the lopsided recovery and the stock market is hovering near record highs. Working women and men have been left behind, however, as companies have failed to translate these improvements into robust job growth, rising wages or improvements in the quality of jobs. Income gains since the economy bottomed out in July 2009 have all gone to the top 1 percent of households.
Women lost fewer jobs than men in the recession; the slow recovery in men’s jobs requires far more attention from policy makers than it has received. But women have also fared poorly as job creation has predominantly occurred in low wage jobs as retail sales clerks, restaurant wait staff, child care workers, cashiers and food service. Protracted problems facing women workers that preceded the recession have only been exacerbated by slow employment growth.
Perhaps the most meaningful measure of women’s economic opportunity is the share of women between the ages of 25 and 54 – the prime years for both motherhood and employment – that actually have jobs. In 1990, the U.S. was a leader in terms of employment opportunities for women. Today, it is a laggard. In the years preceding the recession, 72.5 percent of prime age women in the U.S. held jobs. Now it is 69.2 percent – barely above its post-recession low of 69.0% in 2011 and the same as the employment rate of women in Japan, a country not known for providing women with economic opportunities. In fact, the U.S. ranks 24th out of 34 industrialized countries, behind not only the Nordic countries and the major countries of continental Europe, but behind the rest of the English-speaking world (Australia, Canada, Ireland, New Zealand and the U.K.).
July 24th will mark four years since the last increase in the federal minimum wage. By the most commonly used benchmarks – inflation, average wages and average productivity – the current $7.25-an-hour rate is well below the peak it hit five decades ago.
According to these benchmarks, the federal minimum wage peaked in 1968. If it had been indexed to the official Consumer Price Index (CPI-U) from that point forward, the minimum wage in 2013 would be $10.75 — $3.50 per hour higher than it actually is. If we measure inflation from 1968 forward using the same procedure we use today (the way we calculate inflation has been updated several times since the late 1960s), the 2013 value of the minimum wage would be $9.42 (see the figure below) — almost $2.25 higher than it is today.
During much of the 1960s, the minimum wage was close to 50 percent of the average production worker’s earnings. At its 1968 peak, the minimum wage was equal to 53 percent of what the average production worker made. If the minimum wage were at 50 percent of the production worker wage in 2013 (using a projection of the 2012 level to produce a full-year 2013 estimate), the federal minimum would be $10.06 per hour.
Next week marks four years since the last time that there was an increase in the federal minimum wage (currently $7.25 per hour). While we have argued here, here and here that the federal minimum-wage rate is too low, 19* states have taken matters into their own hands. These states have passed legislation to raise their minimum wage above the level set by the federal Fair Labor Standards Act (FLSA). The state of Washington has the highest state minimum wage at $9.19 (with the future level indexed to inflation). Oregon follows closely behind at $8.95 (also indexed). Ten of the 19 states have also linked their state minimum wage to the consumer price index, so that the rate automatically keeps pace with inflation each year (AZ, CO, FL, MO, MT, NV, OH, OR, VT, and WA).
State legislation has set a standard for higher minimum-wage rates linked to cost-of-living increases. It is past time for the federal government to follow suit.
Last night after watching my weekly fix of dancing contests on TV, I clicked around the channels and found myself engrossed in a new Frontline documentary hosted by Bill Moyers, "Two American Families." It's a fascinating profile of two Milwaukee families, one black and one white, struggling to stay in the middle class over 20-plus years. It brings to life -- with human faces and heartbreaking stories -- many of the statistics and analyses that CEPR produces about working people in this country.
My CEPR colleagues' frequent work work to define and examine the decline of "good" jobs in America came to mind throughout the film, as these families' stories mirror what the data indicates. In CEPR's reports, a "good" job is defined as $19 per hour with employer-provided health insurance and an employer-sponsored retirement plan. When we first meet the families in the early 1990s, three of the four parents have lost "good" union jobs in manufacturing (close to $20 per hour and benefits).
The film documents their struggles over the next two decades to find similar jobs to replace the ones they lost, and after watching them all bounce from one insecure, low-wage job to another, it appears that none of the parents ever manage to do so. They work days, nights, and multiple jobs -- usually manual labor -- and yet continually face financial hardship, even foreclosure and divorce.
By the end of the film, we get to see how the eight children across the two families have turned out as adults. From the descriptions of their work situations, it appears that only one (the eldest son in the Stanley family) definitely has a "good" job -- $45,000 per year assisting the Milwaukee common council president. Two of his siblings may have "good" jobs (we don't learn enough to know for sure) -- a sister who's working at a county clerk's office in Virgina, and a brother who, after failing to find work in Milwaukee, is in Afghanistan working for a military contractor.