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Labor Market Policy Research Reports, August 24 - 30, 2013 Print
Written by Teresa Kroeger   
Friday, 30 August 2013 11:51

The following labor market policy research reports were recently released:


Ten Reasons Why Fast Food Workers deserve a Raise
Catherine Ruetschlin and Amy Traub

Joint Center for Political and Economic Studies

Confidence About Financial Security At Retirement: Perspectives Of African Americans and White Americans Employment Policy Research Center
Wilhelmina A. Leigh and Melissa R. Wells

The Numbers Are In: Obamacare Increased Percentage of People Working 26-29 Hours a Week Print
Written by Helene Jorgensen and Dean Baker   
Monday, 26 August 2013 13:27

Okay, all of you socialist nationalized health care loving Obama backers are going to have to own up to the evils of the Affordable Care Act (ACA). We now have the full six months of data for the first half of 2013. This is the period when employers thought they would be subject to sanctions for not covering workers who put in 30 hours a week or more. (The administration announced the suspension of this provision on July 2.) 

It turns out that the percentage of workers who are putting in 26-29 hours (just under the 30-hour cutoff) is up. The share went up from 0.61 percent of the workforce in 2012 to 0.64 percent of the workforce in 2013, an increase that corresponds to slightly more than 40,000 workers who have work schedules that put them just below the threshold as shown in the table below.

Usual Weekly Hours
  2012 2013
0 hr 0.07 0.07
1-19 hrs 8.97 8.69
20-24 hrs 1.39 1.37
25 hrs 1.78 1.81
26-29 hrs 0.61 0.64
30 hrs 3.03 3.12
31-34 hrs 1.78 1.79
35 hrs and up 75.37 75.79
hours varied 7.01 6.74

Source: Authors' analysis of Current Population Survey.

This may look like it is confirming exactly what opponents of the ACA warned against. Employers are responding to the threat of sanctions and cutting back workers’ hours, exactly as several prominent business owners had promised they would do.

However a closer examination shows that the data don’t quite support this story. The percentage of workers putting in 25-29 hours is up, but so is the percentage of the workforce that puts in 35 hours a week or more. In fact, the share of the workforce that reports working just over the limit, either at 30 hours a week or 31-34 hours a week, is up also.

It turns out that the big declines are in the percentage of workers who put in 1-19 hours a week, 20-24 hours a week, or who report that their hours typically vary. The data indicate that fewer workers are in these low or “hours varied” categories and more workers report falling into all the categories at 25 hours a week or above.

These changes are all small and mostly not statistically significant. They also reflect the influence of many factors other than Obamacare. But the data certainly provide no evidence supporting the claim that the shortening of workweeks has been a widespread phenomenon.

Just to be clear, it is likely that the 30-hour sanction cutoff will have a modest but measurable effect on hours through time as employers adjust schedules and new businesses open. And any movement away from employer-based insurance will eliminate an important overhead cost that discouraged firms from shortening hours and hiring more workers.

Some would view this as a positive development since the United States is currently an outlier in that workers put in far more hours on average than they do in other wealthy countries. Many workers would value more time off in the form paid vacations, family leave or paid sick days. However it was unreasonable to think that employers would suddenly move to restructure their workplace in large numbers just to avoid the relatively modest sanctions associated with the ACA. And the latest numbers indicate that the data agree with this assessment.

Notes on data:

1) Analysis of the Current Population Survey, Monthly Basic Data, Jan-Jun 2012 and Jan-Jun 2013.

2) Looks at everyone who reported usually working, including 'hours varied' and '0 hours'

3) Calculated only for main job

4) Excludes self-employed who are not incorporated and people working without pay

Labor Market Policy Research Reports, July 27-August 23, 2013 Print
Written by Sheva Diagne   
Friday, 23 August 2013 13:45

The following labor market policy research reports were recently released: 

Center for American Progress

American Retirement Savings Could Be Much Better
Rowland Davis and David Madland

Center on Budget and Policy Priorities

SNAP Enrollment Remains High Because Job Market Remains Weak
Chad Stone, Jared Bernstein, Arloc Sherman and Dottie Rosenbaum

Economic Policy Institute

A Decade of Flat Wages: The Key Barrier to Shared Prosperity and a Rising Middle Class
Lawrence Mishel and Heidi Shierholz

The Unfinished March: An Overview
Algernon Austin



States of Recession Print
Written by Colin Gordon   
Thursday, 22 August 2013 10:15

The graphic below plots monthly jobs for every state, for the last four business cycles. The lines start 3 months prior to the onset of the recessions beginning in 1981, 1990, 2001 and 2007. Job losses or gains are indexed at "1" for the starting month of each national recession, and then run forward for 70 months (67 months, through July 2013, for the 2007 recession). The states are in blue (you can mouse over the lines to identify them) and the national numbers are in red. The dropdown menu allows you to narrow in on any combination of states.

First, and perhaps most starkly, it illustrates the uniformity of the 2007 downturn. While there are sharp state and regional differences (especially after 1981 and 1990) in the earlier recessions, 2007 was an equal opportunity crash. The states are clustered together as the descend into the recession, and as they climb slowly through the recovery. Only the energy boom outliers (the Dakotas, Texas, West Virginia, and Alaska) and Washington, DC escape the full brunt of the downturn. And only a few states hit hard by the housing crash (Florida, Arizona, Nevada) or the collapse in demand for consumer durables (Michigan) do significantly worse than the rest.

Second, it underscores the depth and duration of the latest downturn. In the earlier recessions, most states are "above water" after 24 or 30 months. Fully four years (48 months) after the 2007 crash, only the outliers noted above (ND, SD, TX, AK, WV and DC) had returned to their pre-recession job numbers. Five years in, only these and six others (UT, NY, OK, LA, MA) had reached that point. At 67 months (July 2013), only four more (IA, OK, NE, MT) had struggled above the line—leaving 35 states with fewer jobs than they had when Mike Huckabee was the Republican frontrunner to succeed George W. Bush.

Colin Gordon is a professor and director of Undergraduate Studies, 20th Century U.S. History, at the University of Iowa.

'Structural Unemployment?' Why Not Throw Money at the Problem? Print
Written by Dean Baker   
Monday, 19 August 2013 08:41

In a post for PBS NewsHour's The Business Desk, Dean Baker takes on Paul Solman on what the government can do to address unemployment. Solman responded to Dean here, and Dean responded this morning on Beat the Press.

Paul Solman takes me and my grumpy friend Paul Krugman to task for insisting that there is a growing consensus within the economics profession that we are not suffering from structural unemployment. Krugman and I used our blogs to complain about Aug. 2's segment in which Brooks suggested structural unemployment was the economy's main problem and that there was little that could be done about it.

The United States currently has about 9 million fewer people working than if it had continued on its trend of growth from 2002 to 2007.

The question is whether the unemployment problem is a lack of demand due to a loss of $8 trillion in housing bubble wealth, or whether there are structural problems that would prevent most of these 9 million people from being re-employed even if the demand were there. Krugman and I support the former idea; those who see unemployment as structural are in the latter camp. Here's another way to think about the problem. Imagine someone found a $1 trillion bill in the street and decided that, as a public service, she would spend the money over the next 12 months to boost the economy. For simplicity, let's assume that she decides to divide her $1 trillion so that it is spent in exactly the same way that the economy's current $16 trillion in annual spending is spent.

In my view, this $1 trillion of new spending would cause output to increase by roughly 6 percent. (I'm ignoring multiplier effects to keep things simple.) Employment would also rise by roughly the same amount, filling the bulk of the 9-million-jobs hole. In other words, this would be great news for the country.



Mindless Budget Reporting: Fooling Some of the People All of the Time Print
Written by Dean Baker   
Wednesday, 14 August 2013 11:04

In a post for PBS NewsHour's The Business Desk, Dean Baker takes on on the economics media for their budgetary transgressions.

The New York Times budget reporters must have been celebrating this week. After all, they managed to confuse Paul Krugman, the New York Times columnist and Nobel Prize-winning economist, with their own budget reporting. That's quite an accomplishment. For those who missed it, Krugman wrote a column criticizing House Republicans for their plan to cut the food stamp program in half by trimming $40 billion from its budget. He might have gotten this information from an article like this one in the Times, whose first sentence told readers:

"A plan by House leaders to cut $40 billion from the food stamp program -- twice the amount of cuts proposed in a House bill that failed in June -- threatens to derail efforts by the House and Senate to work together to complete a farm bill before agriculture programs expire on Sept. 30."

The problem with this description of the Republican plan is that the proposed cut of $40 billion is supposed to be over a 10-year budget window, not a single year. (The Republicans want to cut the food stamp budget by 5 percent, not 50 percent.) This information is not reported anywhere in the article. As a result, even a very intelligent and extremely knowledgeable person like Krugman could read through the piece and be off by a factor of 10 in his understanding of the size of the proposed cuts.

While Krugman was quick to catch and apologize for his mistake, this episode should prompt some new thinking among budget reporters and editors. If the New York Times is flunking accurately conveying information to Krugman, whom exactly do they think they are informing with their budget reporting?



Help CEPR Get Too Big to Fail Print
Written by Dawn Lobell   
Wednesday, 07 August 2013 10:30


Despite renewed interest by some in breaking up the large banks, thanks to government bailouts most of the large financial institutions responsible for the financial crisis are bigger - and more profitable - than ever. And, as CEPR showed , their too-big-to-fail (TBTF) status means that they will get subsidies on an ongoing basis by getting funds at below market interest rates.

Meanwhile here at CEPR we continue to scrape along, relying on the generosity of individuals - many of whom are suffering themselves because of the shoddy practices of the large banks – to fund our work. We do receive funding from some foundations and we are very grateful for that support. But many of our supporting foundations have also seen their funds cut, and changes to corporate boards of other foundations mean that many progressive organizations like CEPR are left out in the cold. We make do with what we’ve got – quite effectively we might add – but still, every year it becomes more and more difficult to meet our budget. This year has been particularly hard as we’ve lost some major sources of support. 

So, we give up. We decided that if you can’t beat ‘em, join ‘em. We’ve decided to adopt a TBTF policy of our own. The CEPR-TBTF Subsidy.  And we need your help to get it up and running. Please give what you can. Help CEPR become too big to fail. Help us to continue to be able to call out the people responsible:

“The Wall Street gang must really be partying these days. Profits and bonuses are as high as ever as these super-rich takers were able to use trillions of dollars of below-market government loans to get themselves through the crisis they created. The rest of the country is still struggling with high unemployment, stagnant wages, underwater mortgages and hollowed-out retirement accounts, but life is good again on Wall Street” (Dean Baker, 2013).

Not only do we call out those responsible, we also back up what we say with numbers and facts and solid research. If we’re silenced, progressives will lose a valuable ally in the fight against growing inequality. 

But if we get too big to fail, we can continue to publish research and analysis and blog posts and op-eds and articles and press releases showing how the bloated financial system is a source of instability, while also offering policy solutions that will bring about a recovery that truly benefits the people and not the bankers. A CEPR that is TBTF might just begin to help level the playing field. Won’t you help us?

P.S. We’re also following in the banks’ footsteps by offering a FREE PRIZE for “opening” your CEPR TBTF “account”. Everyone who donates $75 or more will receive an advance chapter of Dean Baker and Jared Bernstein’s upcoming book on the benefits of full employment. The book won’t be available to the general public until the fall. Donate and get yours today!

Slow Progress for Fast-Food Workers Print
Written by John Schmitt and Janelle Jones   
Tuesday, 06 August 2013 14:00

In recent weeks, fast-food workers have gone on strike in seven U.S. cities. Their demand for a $15-per-hour minimum wage in their industry – about $30,000 per year for a full-time worker, typically with no benefits – has underscored just how low the $7.25 federal minimum wage is relative to what workers need to get by.

One argument frequently made against higher wages for fast-food workers is that the industry is dominated by teenagers and workers with less than a high school degree, who somehow “deserve” the low wages they receive.

An analysis of government data on fast-food workers, however, tells a different story.

First of all, only about 30 percent of fast-food workers are teenagers. Another 30 percent are between the ages of 20 and 24. The remaining 40 percent are 25 and older. (All the data we present here are from the government’s Current Population Survey, where we have combined data for the years 2010 through 2012 in order to provide a large enough sample for analysis.) Half of fast-food workers are 23 or older. Many teenagers do work in fast-food, but the majority of fast-food workers are not teenagers.


Given the age structure of fast-food workers, it shouldn’t be surprising that the same government data show that more than one-fourth are raising at least one child. Among those age 20 and older, more than one-third are raising children.



New Book on Employment Relations in the Global Economy Print
Written by CEPR   
Monday, 05 August 2013 15:30

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.

Taking Time Off to Care for Your Family? Thank the Family and Medical Leave Act #FMLA20 Print
Written by Nicole Woo   
Monday, 05 August 2013 13:00

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.

(Click on the image below for a larger version.)


Full-on Recession, Part-time Boom Print
Written by Milla Sanes   
Friday, 02 August 2013 10:55

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.



Education and Good Jobs: Black vs White Workers Print
Written by Janelle Jones and John Schmitt   
Thursday, 01 August 2013 11:55

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).



CEPR News July 2013 Print
Written by Dawn Lobell   
Wednesday, 31 July 2013 15:15

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.



Has Education Paid Off for Black Workers? Print
Written by Janelle Jones   
Monday, 29 July 2013 09:32

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.



Labor Market Policy Research Reports, July 20 - 26, 2013 Print
Written by Sheva Diagne   
Friday, 26 July 2013 15:06

The following labor market policy research reports were released this week: 

Center for American Progress
All-In Nation: An America That Works for All
Vanessa Cárdenas and Sarah Treuhaft

Center for Economic and Policy Research  
The ACA: A Hidden Job Killer?
Helene Jorgensen and Dean Baker

Institute for Research on Labor and Employment
Minimum Wage Shocks, Employment Flows, and Labor Market Friction
Arindrajit Dube, T. William Lester, and Michael Reich

National Employment Law Project
Winning Wage Justice: A Summary of Research on Wage and Hour Violations in the United States

Winning Wage Justice: A Summary of Criminal Prosecutions of Wage Theft in the United States

Going Nowhere Fast: Limited Occupational Mobility in the Fast Food Industry

Is the Affordable Care Act a Hidden Jobs Killer? Print
Written by Helene Jorgensen and Dean Baker   
Wednesday, 24 July 2013 12:40

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.


No Matter How You Look At It, the Minimum Wage is Much Too Low Print
Written by Nicole Woo   
Wednesday, 24 July 2013 09:10

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.

Concerns Over Hyperinflation Dwindle Print
Written by Dean Baker   
Tuesday, 23 July 2013 20:32

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!

Class Power and Labor’s Falling Income Share Print
Written by Sheva Diagne   
Tuesday, 23 July 2013 10:00

Between 1979 and 2007, the share of national income going to the top one-percent of wealthy households grew from 9.6 percent to 20 percent. This shouldn’t surprise even the most casual consumer of economic news. Many scholars attribute this upward redistribution of wealth in part to a decline in labor’s share of national private sector income and an increase in capital’s share. Labor’s share of income, which has historically hovered slightly above 50 percent, has fallen 6 percentage points across the U.S. private sector since the late 1970s. Since capital income is concentrated among wealthier households, a relative increase in capital income benefits the richest households most of all.

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.



Low-wage Workers: Smarter, Older and Underpaid Print
Written by Janelle Jones and John Schmitt   
Monday, 22 July 2013 14:45

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.




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