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Labor Market Policy Research Reports, July 18 – July 31 Print
Written by Ben Wolcott   
Friday, 01 August 2014 13:44

The following reports on labor market policy were recently released:

Economic Policy Institute

What Is Manufacturing and Where Does it happen?  The U.S. Should Reconsider Plans to mask Trade Deficit by Reclassifying Factoryless Production and Contract Manufacturing
Robert E. Scott

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DATA FLASH: Job Growth Slows in July Print
Written by Dean Baker   
Friday, 01 August 2014 07:48

The economy added 209,000 jobs in July, a sharp slowing from its 277,000 average over the prior three months. The slowdown was widely spread across sectors, although temporary help, which added just 8,500 jobs and health care, which added just 7,000 were notable weak. Construction, which added 22,000 jobs and manufacturing, which added 30,000 jobs, were surprisingly strong.

The unemployment rate was essentially unchanged at 6.2 percent, as there was little change in either the size of the labor force or the number of unemployed. Involuntary part-time employment edged down slightly reversing part of a jump in June. It still stands 669,000 below its year-ago level. Voluntary part-time employment decreased modestly but is still 502,000 above its-year ago level. This would be consistent with some workers opting to work part-time now that they no longer need to get health insurance through their job.

This report provides little evidence of any pick-up in wage growth. The average hourly wage rose at a 1.82 percent annual rate over the last three months compared with the prior three months. While a tightening labor market should eventually allow workers to see some gains in real wages, the economy does not appear to be at this point yet. 

 
Economy Rebounds in Second Quarter Based on Inventories and Cars Print
Written by Dean Baker   
Wednesday, 30 July 2014 08:04

GDP grew at a 4.0 percent annual rate in the second quarter after shrinking at a 2.1 percent rate in the first quarter. Much of the shift was due to a considerably more rapid pace of inventory accumulation. Inventory changes which had subtracted 1.16 percentage points from first quarter growth added 1.66 percentage points to growth in the second quarter. New car sales added another 0.42 percentage points to growth, after adding just 0.13 percentage points in the first
quarter. Equipment investment, which grew at a 7.0 percent rate, added another 0.4 percentage points to growth for the quarter.

Another positive item in this report was continued slow growth in health care costs. After a reported drop in the first quarter, health care costs grew at a 2.6 percent annual rate. They stand just 3.0 percent above their year-ago level.

On the negative side, the trade deficit expanded again last quarter rising to an annual rate of $564.0 billion. It subtracted 0.61 percentage points from growth in the quarter.

While the 4.0 percent growth is a sharp turnaround, it was very much in line with expectations. It means that for the first half of the year, the economy the economy grew at less than a 1.0 percent annual rate. The economy will have to sustain a growth rate of more than 3.0 percent over the second half of the year just to reach 2.0 percent growth for the year as a whole. This means 2014 will likely be another disappointing year for growth.

 
Private Equity at Work: Perhaps it’s Not Private Equity’s Image that’s the Problem Print
Written by Eileen Appelbaum   
Monday, 28 July 2014 10:29

The theme of this year’s European Private Equity and Venture Capital Association (EVCA) symposium held in Vienna in June was “Private Equity as a Transformational Force.” Speakers emphasized the industry’s need to develop partnerships with the companies it acquires and deliver value for all stakeholders. EVCA is concerned that the private equity industry has an image problem: it is seen as focusing on investor returns with a callous disregard for the jobs of workers and the interests of the company and its other stakeholders. EVCA wants to tell the public that PE delivers economic growth and jobs. It wants to  “Encourag[e] the private equity industry to look beyond returns and recognize its role as a global influencer and agent for progress …”.

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Private Equity at Work: Private Equity’s Excessive Use of Debt Endangers Main Street Firms and Workers Print
Written by Eileen Appelbaum   
Friday, 25 July 2014 08:35

One of the lessons learned from the financial crisis of 2008 is that the excessive use of debt – referred to as leverage – undermines the stability of the financial system and poses a threat to the sustainability of companies and the jobs of workers. As we discussed in an earlier post banking regulators have taken steps to limit risky bank loans to companies.

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Dodd-Frank and Subprime Auto Loan Market Print
Written by Dean Baker   
Monday, 21 July 2014 13:18

Four years out from the passage of Dodd-Frank it is pretty clear that the bill did not lead to an fundamental restructuring of our financial system, as many had hoped. The too-big-too-fail Wall Street banks are bigger than ever and operating pretty much as they always did. Many of the highest earners in the country are still traders, hedge fund, and private equity types who are quite adept at shuffling paper, even if it provides no service to the productive economy.

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'Are We There Yet?' Moving Beyond the Recovery Question Print
Written by Ben Wolcott   
Monday, 21 July 2014 10:02

Jason Furman, who chairs the Council of Economic Advisers, spoke at Brookings on Thursday about the significant progress of the labor market since the Great Recession and the challenges ahead. While Chairman Furman spoke mostly about aggregate trends, he also highlighted specific groups that are struggling disproportionately in the recovery, such as young black males. In discussing the labor market, particularly unemployment rates, Furman repeatedly used the “Average in the Last Recovery” (which he defines as the average rates from December 2001 to December 2007) as a benchmark to judge the progress of the current recovery.

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Labor Market Policy Research Reports, June 8 – July 17 Print
Written by Ben Wolcott   
Friday, 18 July 2014 09:58

The following reports on labor market policy were recently released:

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Private Equity at Work: CalPERS Private Equity Returns: Good, But Not Good Enough Print
Written by Eileen Appelbaum   
Wednesday, 16 July 2014 13:39

As we noted in a recent post:

Private equity investors are flush with cash distributions. Now that money is finally rolling in, many seem blithely unaware that the typical PE fund launched since 2005 has failed to beat the stock market. Investors would have been better off putting their money in an index fund that tracked the market than in these PE funds – and would have had less risk and more liquidity to boot. Yet PE investors are ploughing cash back into new PE funds. According to private equity data research firm PitchBook, 2013 was the best year for private equity fundraising since the financial crisis struck in 2008, and the pace has continued into 2014.

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Quick Thoughts on the New CBO Projections Print
Written by Dean Baker   
Tuesday, 15 July 2014 20:38

The deficit hawks will undoubtedly find much to hype in the latest long-term projections from the Congressional Budget Office (CBO). After all, they move forward by a year to 2030 the date of the Social Security trust fund's depletion. That should be worth a quick war dance down at the Peter G. Peterson Foundation, but there are a few items worth noting for more serious folks.

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Private Equity at Work: PE Firms Are Busy Making Hay While the Sun Shines Print
Written by Eileen Appelbaum   
Wednesday, 09 July 2014 13:49

Driven by the strong bull market in stocks and facilitated by low interest rates, private equity firms have been heeding the advice of Apollo Global Management head Leon Black to sell everything that isn’t nailed down. It was slow going for PE exits in 2009-2012 and many funds were stuck holding mature investments in their portfolios far longer than their preferred three to five years. But exit activity finally picked up in the second quarter of 2013 as PE firms that needed to divest portfolio companies took advantage of a rising stock market to sell these companies and return capital to investors.

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House Republicans Ignore Unemployment to Keep Inflation Low Print
Written by Dean Baker   
Wednesday, 09 July 2014 08:16

Remember when Treasury Secretary Hank Paulson, Fed Chair Ben Bernanke, and Timothy Geithner, then President of the N.Y. Fed, were running around yelling that the world was about to end? Yeah, that was back in the fall of 2008 when Lehman went under and this trio demanded that Congress immediately cough up $700 billion to bail out the banks or the economy would collapse.

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Labor Market Policy Research Reports, June 21 – July 7 Print
Written by Ben Wolcott   
Monday, 07 July 2014 13:11

The following reports on labor market policy were recently released:

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Data Flash: Strong Job Growth Continues in June Print
Written by Dean Baker   
Thursday, 03 July 2014 07:39

The economy added 288,000 jobs in June, making it the fifth consecutive month in which the economy added over 200,000 jobs. This is the longest stretch of 200,000 plus job growth since before the recession. The job gains were broadly based. Retail was the biggest gainer, adding 40,200 jobs, with professional and technical services adding 30,100 jobs. Manufacturing added 17,000 jobs for the second month in a row.

The news was also positive in the household survey with the unemployment rate falling to 6.1 percent, a new low for the recovery. This was due to people entering the labor force and finding jobs; the employment-to-population ratio rose to 59.0 percent. This is a new high for the recovery, but still 4.0 percentage points below its pre-recession level. Another piece of positive news is that the percentage of people who are unemployed because they voluntarily quit their jobs rose to 9.0 percent, the highest since the collapse of Lehman. This is a sign of growing confidence in the labor market.

 
CEPR News June 2014 Print
Written by Dawn Lobell   
Wednesday, 02 July 2014 15:16

The following newsletter highlights CEPR's latest research, publications, events and much more.

CEPR on Women and Unions
Just in time for the June 23rd White House Summit on Working Families, CEPR released a new report that explores the role unions play in addressing the challenges facing working women and families in balancing their work and family responsibilities. The paper,  “Women, Working Families, and Unions” by CEPR Research Associate Janelle Jones, CEPR Senior Economist John Schmitt and CEPR Director of Domestic Policy Nicole Woo, looks at trends in unionization for women; the impact of unions on wages, benefits and access to family and medical leave; and the role of unions in addressing work-life balance issues.

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By the time Hillary Clinton leaves the White House, China's economy could be 50 percent larger than the US economy Print
Written by Ben Wolcott   
Wednesday, 02 July 2014 14:35

The World Bank’s updated estimates of GDP based on purchasing power parity (PPP) show a sharp upward revision to the numbers for China. As a result of these revisions, the Chinese economy is now larger than the U.S. economy by this measure. 

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2014 Job Creation Faster in States that Raised the Minimum Wage Print
Written by Ben Wolcott   
Monday, 30 June 2014 14:21

The experience of the 13 states that increased their minimum wage on January 1st of this year might provide some guidance for what to expect here in Washington, DC when the city-wide minimum wage increases to $9.50 on July 1.

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Private Equity at Work: Too Much of a Good Thing? Print
Written by Eileen Appelbaum   
Thursday, 26 June 2014 08:57

The run-up in the stock market over the last two years has been good to private equity funds. The U.S. stock market has more than doubled from its 2009 lows, and the Dow and S&P 500 were both in record territory on Friday. High valuations commanded by publicly traded companies have enabled private equity firms at last to exit many of the ‘mature’ investments in companies acquired at heady prices in the 2005 -2007 boom years. Apollo CEO Leon Black told participants at a Milken Institute conference in April that the rising stock market has created “a fabulous environment to be selling.” Apollo, he noted, sold about $13 billion in assets since the beginning of 2013. “We’re selling everything that’s not nailed down,” he told the audience.

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Vacation as a Job Creator Print
Written by Ben Wolcott   
Wednesday, 25 June 2014 09:33

Basic economic logic predicts that an increase in the productivity of American workers should lead to some reduction in work time, the logic being that workers would take some of the benefits of higher income in the form of more leisure. Despite substantial productivity growth over the last four decades, time-use studies show the opposite trend, average hours worked in a year have actually risen somewhat over this period. It is worth noting that the United States is very much an outlier in this respect. Average hours worked have declined sharply in other wealthy countries over this period, with workers in countries like the Netherlands and Germany now putting in 20 percent fewer hours than workers in the United States.

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Labor Market Policy Research Reports, June 14 – June 20 Print
Written by Ben Wolcott   
Friday, 20 June 2014 14:58

The following reports on labor market policy were recently released:

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