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USA Today Says It's Time to Tax Wall Street Print
Written by Nicole Woo   
Thursday, 27 September 2012 12:45

The financial transaction tax has truly gone mainstream, with the nation's widest-circulation print newspaper, USA Today, endorsing it as a way to tamp down on dangerous high-speed trading. Their editorial, High-frequency trading insanity, states:

Slap a small transaction tax on rapid trades, impeding the practice and returning markets to their core purpose.
That would be a big win for small investors, and the only people harmed would be those now putting everyone else at risk.

USA Today joins other leading editorial boards, including the Boston Globe and New York Times, in calling for a taxes of a fraction of a percent on Wall Street trades.

Dean Baker of CEPR was credited soon after the financial crises of 2008 as "the most vocal proponent of the tax." With Robert Pollin of the University of Massachusetts-Amherst, he's helped build an academic case for the tax over the past decade.  And they're joined by fellow prominent economists, including Nobel Laureates Joseph Stiglitz and Paul Krugman.

Even financial industry players have stepped up and supported the idea, such as John Bogle, the founder of the Vanguard Group; Bill Gates, Chairman of Microsoft; Mark Cuban, billionaire investor; and over 50 financial experts who signed this open letter in support of financial transaction taxes.

Currently there are 15 bills before Congress that include some form of the financial transaction tax.  So far, the non-partisan Joint Committee on Taxation has provided an official revenue estimate for the Wall Street Trading and Speculators Tax Act: over $350 billion over 9 years from a tax of 3/100 of a percent on Wall Street trades. This swamps the amounts that could be collected from many other options that are being debated. 

The list of supporters of a tax on financial speculation is diverse and growing.  In a time of cuts to vital programs and services, as well frightening flash crashes on Wall Street, the financial transaction tax certainly deserves serious consideration by the media, the public, and our leaders.

Billing for Bad Bills Print
Written by Dean Baker   
Thursday, 27 September 2012 07:27

Virtually everyone has had the experience of paying a penalty for not paying a bill correctly. Making a credit card payment a day late or accidentally writing a check to the phone company for a dollar too little can cost consumers twenty or thirty dollars. And overdraft fees on checking account or debit accounts make even the most trivial adding err quite costly. But what happens when the mistake is on the other side?

Suppose the bank wrongly charges a $20 fee for having an insufficient balance in your account or the phone company charges you for services that you didn’t receive? Usually, if you can document your case and take the time to work your way through the maze of computer messages (press “1” for billing, press “2” for sales, etc.) to talk to a real human being  you can get the company to  remove the charge.

This requires both that consumers catch the error and then use a considerable amount of their time to correct the company’s mistake. At the end of the process they have just managed to break even, both the consumer and the company are in the same situation as if the mistake had never been made.

Notice the asymmetry in this story? If a consumer is a day late or a dollar short in their payment, they face big penalties. When the bank, the phone company, or the insurance company makes what could be a very large error, they face no downside risk, if the mistake is caught.

The last part of this story is important. Undoubtedly many errors made against consumers are not caught. Many people don’t review their bills closely enough to ensure that they are accurate. That becomes more likely as bills become more complicated. (Companies do make errors that favor consumers, but these are under their control.)

This creates a warped system where companies effectively have an incentive to mistakenly bill people for services that they did not provide or for fees they do not owe. Insofar as these billings go undetected this is free money for the company. Imagine sending letters telling people they owe you $30 for some non-existent service. In effect this is what companies are doing when they send out erroneous bills, but they get to save the postage and handling costs since they were sending out the bills anyhow.

There is an easy way to change the incentives. Suppose companies had to pay a penalty for improper bills. What if the law required that they pay a fee equal to 20 percent of any excess charges that appear on a bill? If the bank wrongly charges you $20 for an insufficient balance, then they have to credit you with an extra $4 as a result of the error. Or, if the insurer charges $200 for a procedure that was supposed to be covered under your policy, then they would owe you $40.

This would both give people more incentive to look at their bills closely and more importantly give companies incentive to get the bills right. Erring against consumers would not offer them the same opportunity for a free lunch as it does today.  

It would be interesting to see the counterargument against such legislation from the industry side. Undoubtedly the Chamber of Commerce will produce a study showing that such a rule would cost businesses trillions of dollars in penalties. (And the media would no doubt report the findings uncritically.)

Fans of logic would point out that such a rule would only be costly if businesses are currently ripping off consumers for large amounts of money by billing them more than they owe. In this case we should want these businesses to pay lots of money. After all, what is the argument for businesses that rip off their customers? This rule would also work to the advantage of businesses that can figure out proper billing.

So that’s the cheap thought for the day. We can bill businesses that improperly bill their customers. It’s simple and fun will make for better markets, with no undeserving losers. In other words, it’s the sort of proposal that is a complete non-starter in Washington.

David Brooks Thinks Sweden Is More Chaotic than Syria Print
Written by Shawn Fremstad   
Wednesday, 26 September 2012 11:15

What I've called the "disorganized single-parent" meme reappeared earlier this week in David Brooks' column: "There are very few [conservatives] willing to use government to actively intervene in chaotic neighborhoods, even when 40 percent of American kids are born out of wedlock."

As in other appearances, the basic formulation of the meme is as follows: (Women + Children) - Men = Disorganization = Chaos.

Here are some other countries in which chaos reigns because 40 percent or more of children are born to parents who are not married:

% of Children Born to Unmarried Parents in 2010
Iceland 64.3
Estonia 59.1
Slovenia 55.7
France 55.0
Norway 54.8
Sweden 54.2
Bulgaria 54.1
France 54.1
Denmark 47.3
United Kingdom 46.9
Belgium 46.2
Netherlands 44.3
Latvia 44.1
Portugal 41.3
Finland 41.1
Hungary 40.8
Czech Republic 40.3
Austria 40.1

By contrast, in a more orderly and less chaotic society like Syria, marriage is valued so highly that the share of children born to unmarried parents is nearly 0 percent.

That said, the only data on nonmarital childbirth I could find for Syria was from the 1990s. I've heard things have gotten more disorganized there lately. If this is the case, it must be because they let things slip on the marriage front. Memo to Syrian conservatives: take David Brooks' advice, you need to be more "willing to use government to actively intervene in chaotic neighborhoods"! If you don't act soon, it will be too late and you'll end up like Sweden.

Labor Market Policy Research Reports, September 15 – September 21, 2012 Print
Written by Mark Azic   
Friday, 21 September 2012 15:23

Here’s a roundup of labor market research reports released in the past week:


Center for American Progress

Comprehensive Paid Family and Medical Leave for Today’s Families and Workplaces

Heather Boushey and Sarah Jane Glynn

The Repeal of Don’t Ask, Don’t Tell – 1 Year Later

Crosby Burns and Alex Rothman

Making Saving for Retirement Easier, Cheaper, and More Secure

David Madland


Center on Budget and Policy Priorities

Misconceptions and Realities About Who Pays Taxes

Chuck Marr and Chye-Ching Huang

2011’s Decline in Uninsured is Largest in 13 Years, but Median Income Fell, Inequality Widened, and Poverty Stayed Flat

Arloc Sherman and Danilo Trisi

National Women’s Law Center

Insecure and Unequal: Poverty and Income Among Women and Families, 2000-2011


Political Economy Research Institute

The Employment Impacts of a Low-Carbon Fuel Standard for Minnesota

Heidi Garrett-Peltier

Low Pay, Employment and Labor Market Regulation: Lessons from France?

David R. Howell, Bert M. Azizoglu, and Anna Okatenko

Don't Let Them Tweak Social Security Print
Written by CEPR   
Friday, 21 September 2012 14:13


Social Security is the country’s most important social program. It has kept tens of millions of retired and disabled workers and their families out of poverty over the last seven decades. It is also an enormously popular program, with overwhelming majorities of people across the political and ideological spectrum telling pollsters they support the program and don’t want to see it cut.

This is why politicians who want to cut Social Security try to find backdoor ways to reduce benefits. The favorite in Washington these days is a plan to reduce the annual cost of living adjustment by 0.3 percentage points. This cut would be done by using a different index for measuring inflation.

A reduction of 0.3 percentage points might sound trivial, but it adds up over time. After 10 years, peoples’ benefits would be reduced by 3 percent; after 20 years, the reduction would be 6 percent. For an elderly population that is already living pretty close to the poverty line, this is a serious issue.

But, here in Washington, the popular line among politicians and others is that the proposed cuts would simply amount to a “change.” In fact, the Washington Post recently ran an editorial in which they described this proposed cut as a “tweak [to] the inflation calculator.” Ironically, this comment appeared in an editorial that condemned Vice President Joe Biden for a lack of courage because he opposed cuts to Social Security.

Perhaps there are valid arguments to be made as to why Social Security benefits should be reduced. But the people who support cuts should be forced to make these arguments and win their case in public debate. They should not be allowed to go behind everyone’s back and make their cuts in the dark of night.

This is where CEPR comes in. In this case, as in so many other areas, CEPR will be shining its flashlight so that no one is allowed to “tweak” Social Security. And this is where you come in - we need your help to do so. Please click below and donate to CEPR to make sure we have the battery power necessary for the job. It’s crucial that our voice is heard. We’re up against a powerful elite. With your help, we can stand strong and shine the light in their eyes.

Thanks for your support,
Dean, Mark and CEPR Staff

The Poverty Rate is Higher than the Federal Government Says It Is Print
Written by Shawn Fremstad   
Friday, 21 September 2012 09:59

Citing a new paper by Bruce Meyer and James Sullivan, a Bloomberg editorial opines that “poverty isn’t as high as the U.S. government says it is.” The reason according to Bloomberg is that the current official measure: 1) doesn’t count the EITC and certain other means-tested benefits, and 2) sets the poverty line too high by “ignoring discount prices at big-box outlets such as Wal-Mart Stores Inc., where many low-income families shop.”

The current measure is deeply flawed. It should use a more comprehensive after-tax measure of income, so Bloomberg critique number 1 is mostly right.

But critique number 2 is completely off base: the problem with the current poverty threshold—about $22,000 for a family of four in 2010—is that it is much too low to serve as a measure of a minimally decent living standard in today’s economy. 

If we fixed both of these problems, the poverty rate would be higher than currently reported, not lower. And, in fact, this is confirmed by the Meyer-Sullivan paper, which finds that the poverty rate is around 17 percent if we used a modern poverty threhsold.

The current threshold is too low because it was set in the early 1960s using late-1950s data, and has only been adjusted for inflation since then, and not for the general increase in average living standards over the last half-century. A “base-1959” poverty measure made sense in the early 1960s. It’s absurd and indefensible half a century later.

If you're not sure you agree with me on this, ask yourself if you should only receive “base-1959” Social Security benefits, i.e., the 1959 benefit level adjusted for inflation. The Social Security benefits we receive when we retire are initially adjusted for the increase in the national average wage index, which ensures, as SSA explains, that “a worker's future benefits reflect the general rise in the standard of living that occurred during his or her working lifetime.” I’m guessing most Americans think this is a sound approach.

Meyer and Sullivan exacerbate the base-1959 problem with the FPL by adjusting the poverty threshold down further using the CPI-U-RS, a research version of the CPI. There are times to use the CPI-U-RS to show trends, but this is not one of them. The main effect of using the CPI-U-RS here is to lower an already too-low poverty threshold by even more—so, for example, the threshold for a family of four, is cut by about $2,500 or 11 percent. One of the results: the Meyer-Sullivan-adjusted poverty threshold falls from 55 percent of median income for a family of four in 1959 to only one-third of it in 2009. In essence, deprivation is defined even further down that it is using the current base-1959 FPL.

That said, the Meyer-Sullivan paper does include some useful information and analyses. In particular, they also calculate income poverty rates since 1960 using a threshold set at 50 percent of median income, roughly the level at which our current FPL was set at initially. This measure tells a much different story: the poverty rate ends up being about 17 percent in 2010, rather than 11.7 percent (both figures here use a comprehensive measure of income that includes the EITC, SNAP, etc). In other words, when poverty is measured in a completely reasonable fashion—using the same measure used in most other wealthy Western nations—it is higher than the official measure suggests. 

Finally, Meyer-Sullivan think that poverty should be measured using consumption data rather than income data, and that doing so would, again, show that poverty rates are much lower than official data show. Consumption vs. income is a complex issue that merits a post of its own when I get the chance. I think consumption poverty measures might play a useful supplementary role some day, but they're not ready for prime time. Here it is worth noting that the Meyer-Sullivan consumption poverty estimates show a steep and implausible decline in poverty in the 2000s during the Bush Administration, one that diverges from the trend we see using income data (and other hardship data, such as food insecurity). In this area, I find more plausible this new working paper by Jonathan Fisher, David Johnson, and Tim Smeeding, which finds that that both consumption inequality and income inequality trends track each other fairly closely between 1985 and 2005. 

"Challenge" Publishes CEPR Private Equity Primer Print
Written by Nicole Woo   
Thursday, 20 September 2012 10:18

"A Primer on Private Equity at Work," by Eileen Appelbaum of CEPR and Rosemary Batt of Cornell University, has been published in the September-October issue of Challenge: The Magazine of Economic Affairs (behind a paywall here).

Based on this February 2012 CEPR working paper, the primer pulls from a widely-cited body of research to illuminate some of the major controversies surrounding private equity, including whether private equity creates or destroys jobs, whether it provides better returns than the broad stock market to investors, and whether the debt burden assumed by firms acquired by private equity substantially increases the risk of bankruptcy. 

It finds that targets of private equity usually have faster job growth than other companies before they are taken over. On average they also have higher rates of profitability. The claim that private equity mostly helps struggling companies is not borne out by the facts. Moreover, the investors who provide private equity firms with the capital typically make less money than if they had invested in a stock market index. It is a much-needed primer on what private equity firms actually do.

Labor Market Policy Research Reports, September 8 – 14, 2012 Print
Written by Mark Azic   
Friday, 14 September 2012 15:45

Here’s a roundup of labor market research reports released in the past week:

Center on Budget and Policy Priorities

Number of Uninsured Fell in 2011, Largely Due to Health Reform and Public Programs
Matt Broaddus and Edwin Park

Declines in Unemployment Benefits and Government Employment Shaped Poverty Trends in 2011, Preliminary Data Suggest
Arloc Sherman and Danilo Trisi

Employment Policy Research Network

The Changing Contours of Long-Term Unemployment
Oren M. Levin-Waldman

Institute for Women’s Policy Research

The Gender Wage Gap: 2011
Ariane Hegewisch and Angela Edwards

National Employment Law Project

10 Ways to Rebuild the Middle Class for Hardworking Americans

10 Ways to Rebuild the Middle Class Print
Written by CEPR   
Friday, 14 September 2012 15:00

This week, a coalition of 24 progressive organizations released a report proposing "Ten Ways to Rebuild the Middle Class for Hard Working Americans" (pdf).

The 10 sensible proposals:

  1. Make Every Job a Good Job

  2. Fix the Minimum Wage

  3. Save Good Public and Private Jobs

  4. Ensure Health and Retirement Security

  5. Uphold the Freedom to Join a Union

  6. Make the Modern Workplace Pro-Family

  7. Stop Wage Theft

  8. Require That Your Boss Be Your Employer

  9. Give Unemployed Workers a Real, Fresh Start

  10. Toughen Laws Protecting Workers’ Safety and Health

CEPR has worked on many of these issues, including job quality, the minimum wage, public-sector employment, health coverage, retirement security, union rights, work-life balance issues, and modernizing our unemployment insurance system. The report also highlights areas that deserve much more attention than they typically get, including wage theft, misclassification of workers (as "independent contractors," rather than employees), and improving worker health and safety standards.

Download and read the whole thing here (pdf).

Growing Together, Growing Apart Print
Written by Colin Gordon   
Friday, 14 September 2012 12:25

The basic trajectory of income growth since World War II is now pretty familiar. The Economic Policy Institute’s State of Working America series has tirelessly underscored the sharp divide between shared prosperity before 1979 and skewed prosperity since 1979.   And a recent report from the Pew Research charts this out decade by decade to make the same point.  This graphic runs those same numbers, charting income growth by quintile, for four different chronological metrics. 


Arranged by decade, the results are stark and unsurprising.  Two decades of shared prosperity—followed by a decade of slow income growth, two decades of skewed income growth, and a decade (the most recent) of unrelenting recessionary losses. 

Arranged by Presidential Administration, we see a similar picture.  Again it is striking how strong the income growth is across the board through the end of the Johnson Administration, and how dramatically that collapses into either uneven growth or net losses.  The sole exception here is the two Clinton Administrations, in which we see broad, Eisenhower-like income growth.  It is easy to make too much of the patterns by Administration, since occupancy of the White House doesn’t necessarily translate into control over policy.   But the summary “by party” numbers are revealing.  Incomes for the poorest 20 percent grew 80 percent across seven Democratic Administration, and just 7 percent across nine Republican terms.

Arranged by business cycle, the pattern is especially striking.  Most of the postwar gains for low- to median-income families are crammed into the single long cycle from April 1960 to December 1969.  The pattern of growth across the Reagan (July 1981 to July 1990) and Clinton (July 1990 to March 2001) cycles are essentially similar—as are the pattern of losses across the last two business cycles.

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

More Work, Less Income in 2011 Print
Written by Shawn Fremstad   
Wednesday, 12 September 2012 13:30

Today's Census release on Health, Income, Poverty, and Inequality in 2011—what I like to call the annual HIPI report—was not particularly surprising. The best news was that the number of people without health insurance declined by 1.3 million, with the largest gain among adults ages 19-25. The credit here largely goes to the Affordable Care Act.

The bad news was that median household income declined 1.5 percent in real terms from 2010. However, the poverty rate and numbers didn't really change. It may seem odd that they didn't move in the same direction—but the big story here was more Americans working full-time, year-round in jobs that don't pay so hot.

The table below shows what happened. Almost 2.2 million more Americans were working year-round, full-time in 2011 than in 2010. But full-time workers were more likely to be working in poorly compensated jobs. As a result, median income for all year-round, full-time workers fell by a stunning 2.5 percent. 

Number and Incomes of Full-Time, Year-Round Workers: 2010 and 2011
 Number (Thousands)
2010 2011 Difference Percentage Change
Men 56283 57993 1710 3.0%
Women 43179 43663 484 1.1%
 Median Income ($)
2010 2011 Difference Percentage Change
Men  $49,463  $48,202  $(1,261) -2.5%
Women  $38,052  $37,118  $(934) -2.5%

The chart below, from David Johnson's presentation at the Census news conference, shows the change in number of YRFT workers by income quintile.

YR-FT Workers by Quintile-10-11

As this shows, the growth in full-time, year-round workers happened mostly at the bottom (a 17.3 percent increase) and at the top.

Things would be very different, and much more positive for the middle class and working class, if Congress had passed the American Jobs Act proposed by President Obama in 2011. The Jobs Act would have, among other things, created 1.3 million jobs by the end of 2012, including for several hundred thousand construction workers, teachers, and first responders.

PS: Some economists have argued that basic social insurance programs, like the Supplemental Nutritional Assistance Program (SNAP), have operated as a work discincentive. But that claim isn't supported by the data—the increase in FTYR work came even though more low-income families got help making ends meet from SNAP last year.


Bad Jobs, Infographic Edition! Print
Written by Janelle Jones and John Schmitt   
Monday, 10 September 2012 13:45

Our recent CEPR report “Bad Jobs on the Rise” found that between 1979 and 2010, the share of workers in a “bad job” increased from about 18 percent to about 24 percent. (In that report, we defined a bad job as one that pays less than $37,000 a year, lacks employer-provided health insurance, and lacks an employer-sponsored retirement plan.  (For more details, see the report or this earlier post.)

The report emphasizes that the increase in bad jobs was especially disconcerting because the U.S. workforce was older and much better educated in 2010 than it had been in 1979. In the figure below, prepared by our CEPR colleague, Milla Sanes, we ask: What would the bad-jobs rate have been in 2010 without this age and educational upgrading of the workforce? The middle line shows the actual path of the bad-jobs rate over the period. The top line traces out the path the economy would have followed had we kept the same age and educational characteristics of the 1979 workforce, combined with the same losses in the economy’s ability to create good jobs. Under these assumptions, about one in three jobs (33.9 percent) would have been a bad job in 2010. The distance between the top two lines represents how much age and educational upgrading of the workforce helped to lower the bad-jobs rate.

(Click for larger version)


We can also ask a related question: What would the bad-jobs rate have been in 2010 if the economy had not lost any of its capacity to generate good jobs between 1979 and 2010? The bottom line in the figure traces out this path. If the economy had sustained the same capacity to produce good jobs that it had in 1979, and the workforce upgrading proceeded as it actually did between 1979 and 2010, the overall bad-jobs rate would have fallen to 14.1 percent in 2010. The distance between this line and the actual bad jobs rate captures just how much the economy has shifted against workers.

Obtaining a Contract after Unionization in the United States and Canada Print
Written by Kris Warner   
Monday, 10 September 2012 11:30

Last week, I highlighted what I see as one of the two key labor policy differences between the United States and Canada – the process by which unions are formed.  Today, I’d like to look at the other – how each country deals with the breakdown of first contract negotiations. (Both of these are discussed in greater detail in my recent report, “Protecting Fundamental Labor Rights: Lessons from Canada for the United States.”)

After employees at a workplace form a union, their work is really only half-done. The reasons for forming unions vary, but typically include improving working conditions, increasing pay and benefits, or simply having more say in the work environment. The way to do this is by negotiating a legally binding contract that spells these things out. Unfortunately, for those U.S. workers who are able to overcome the obstacles that employers place in front of them when they try to unionize, obtaining a contract appears to be getting more and more difficult.

Though both unions and employers are required to negotiate “in good faith,” the penalties for not doing so are minimal. Usually, of the two parties it’s the employer who drags their feet in negotiations and refuses to bargain in good faith, as can be seen by the filings of “unfair labor practices.” If these charges are found to have merit, the employer is typically just ordered back to negotiations, with no real punishment handed down for breaking the law. With union density – and thus workers’ bargaining power – at its lowest point in the past century, it should come as no surprise that research has shown that nearly half of newly formed unions are unable to negotiate a contract two years after they unionized. U.S. labor law, after doing little to help workers fight strong – and often illegal – employer opposition to their efforts to form unions, also does little to ensure that they are able to obtain a contract.

Canada, on the other hand, has a policy called “first contract arbitration” that provides a way through bargaining impasse. First enacted in 1974, first contract arbitration is now law in most Canadian provinces and covers approximately 85 percent of the workforce. Though researchers have identified four different models, the basic premise is simple: if negotiations have broken down between an employer and a union, either party can apply to the first contract arbitration process. If conciliation and mediation are unable to reach a voluntarily agreed-upon contract, an arbitrator (or arbitration panel) will impose one.

The Employee Free Choice Act would have brought first contract arbitration to the United States. Despite concerns from critics – that it would have discouraged voluntary collective bargaining or resulted in onerous conditions that would have put employers out of business – the experience of first contract arbitration in Canada has shown it to be a successful policy. In addition to workers getting contracts where they might otherwise not, research has shown that first contract arbitration is rarely sought and first contracts are even more rarely imposed, that it results in fewer work stoppages, and that there is no effect on business success or failure. Canadian employers – who first opposed FCA on similar grounds to U.S. employers today – no longer find it to be a controversial policy and often apply to the process themselves. If U.S. policy makers wanted to do something about the decline of the middle class, first contract arbitration would be a good example to follow.

Labor Market Policy Research Reports, September 1 – 7, 2012 Print
Written by Mark Azic   
Friday, 07 September 2012 14:55

Here’s a roundup of labor market research reports released in the past week:

Center for Economic and Policy Research

Bad Jobs on the Rise
John Schmitt, Janelle Jones

Institute for Women’s Policy Research

Job Growth and Unemployment for Men and Women in Pennsylvania, 2007 to 2011
Ariane Hegewisch, Anlan Zhang, Jeffrey Hayes, Heidi Hartmann,

Recommendations for an Evaluation of the District of Columbia’s Paid Sick Days Law
Kevin Miller

National Employment Law Project

When Unemployment Insurance Runs Out: An Action Plan to Help America’s Long-Term Unemployed
Rebecca Dixon, Maurice Emsellem

Bad Jobs, Bad Jobs, Whatcha Gonna Do? Print
Written by Janelle Jones   
Friday, 07 September 2012 12:20

Earlier this week, John Schmitt and I released a CEPR report on the rise of "bad jobs" over the past three decades. The new report is a follow-up to "Where Have All the Good Jobs Gone?", which CEPR released in July. Together, the two papers are like looking at two sides of the same, depressing coin.

We define a bad job as one that pays less than $37,000 per year, lacks employer-provided health insurance, and has no employer-sponsored retirement plan. In 2010, the most recently available data, about 24 percent of U.S. workers were in a bad job, up from 18 percent of workers in 1979. The share of women in bad jobs only increased about 1 percentage point between 1979 and 2010; for men, there was a 10 percentage-point increase over the same period. But, at every point in the last 30 years, women were still more likely than men to be in a bad job.


The increase in bad jobs occurred even as the workforce, on average, became more educated and experienced --just the opposite of what we would not just hope for, but expect, from the economy.

96,000 Jobs Added in August, Unemployment Drops to 8.1 Percent Print
Written by Dean Baker   
Friday, 07 September 2012 10:00

The economy added 96,000 jobs in August, roughly the pace needed to keep even with the growth of the labor force, according to the Bureau of Labor Statistics' latest employment report. The unemployment rate also dropped to 8.1 percent, but this was entirely due to a drop in the labor force as the reported employment in the household survey edged downward. There was more negative news in the household survey: The jobs numbers for June and July were also both revised down by roughly 20,000 bringing the three month average to 94,000, and the employment-to-population ratio (EPOP) dropped 0.2 percentage points to 58.3 percent.

But there were a couple of bright spots. The percentage of unemployment due to people voluntarily quitting their jobs, a measure of workers’ confidence in the labor market, rose to 7.5 percent, putting it near the winter levels. Also, the number of workers involuntarily working part-time, as well as the number of discouraged workers, both fell, pushing the broad U-6 measure of labor market slack to its lowest point since January of 2009. Undoubtedly some seasonal factors depressed August’s job number. While September will likely show a better story, job growth is barely fast enough to keep pace with the growth of labor force.

For a more in-depth analysis, check out the latest Jobs Byte.

(Employer Opposition to) Forming Unions in the United States and Canada Print
Written by Kris Warner   
Thursday, 06 September 2012 12:00

My colleague John Schmitt provided an excellent overview of my recent paper about organized labor in the United States and Canada, “Protecting Fundamental Labor Rights: Lessons from Canada for the United States.” In that post, John laid out the basic argument – that there are two key differences between the United States and Canada that have allowed the unionization rate in Canada to remain stable over the past half century while it has plummeted in the United States. The first of these differences is the process by which workers form unions in the two countries, which is what I want to take a closer look at in this blog post. In a second post in the days to come, I'll look at the other key difference – how bargaining impasses are handled after the initial formation of a union.

Both the U.S. and Canada have two different processes for forming unions – mandatory elections and card check. Under mandatory elections, unless an employer voluntarily recognizes a union, employees who want to form a union at their workplace must file a petition for an election with the labor board – a government agency that enforces the collective bargaining laws – showing support of at least 35 percent of the workforce. (It's 35 percent in the United States and 35-45 percent in Canada depending upon the province.) This is usually done with signed authorization cards, and employees or unions on their behalf will typically gather much more support than this before filing the petition, usually around 65 percent. The labor board, after verifying the cards against payroll records of the employer, will schedule and hold an election in which employees can vote on whether or not to form a union.

Under card check, the process is more streamlined. If employees are able to show majority support (ranging from 50-65 percent), the labor board will simply verify the signed authorization cards, and, if there is the required majority of the proposed bargaining unit, the board will certify the union. If there is less than the required level of support, the labor board will schedule and hold an election. In both mandatory elections and card check, once a union has been certified by the labor board, the employer is required to recognize the union and both the employer and the union are required to “bargain in good faith.”



The Minimum Wage as an Anti-Inequality Policy Print
Written by John Schmitt   
Thursday, 06 September 2012 09:00

I am a big fan of the kind of journalistic exercise that David Leonhardt recently launched at the New York Times Economix blog. He has decided to take a long, detailed look, in multiple installments, at “The 14 Potential Causes of the Income Slump.” Yesterday, Leonhardt had a long post in this series with the headline “Why the Minimum Wage Doesn't Explain Stagnant Wages.”

I largely agree with Leonhardt's conclusion as stated: “If you’re trying to understand why every income group except for the affluent has taken an income cut over the last decade, you probably shouldn’t put the minimum wage at the top of your list of causes.”

But, I worry that much of the piece will give readers the wrong impression about the minimum wage as a policy to fight inequality.

(1) That the minimum wage is not *at the top* of the list for explaining inequality does not mean that it is not an *important* determinant of inequality.

The minimum wage is just one of a constellation of policies that have pushed inequality up over the last three decades --high unemployment (not just the Great Recession, but most of the last 30 years excluding 1996 to 2000), declining unionization rates, pro-corporate trade deals, deregulation of many previously well-paying industries, privatization of many state-and-local government jobs, a dysfunctional immigration system, poor enforcement of existing labor laws, and others. The common thread running through all of these policies is that they have all served to undermine the bargaining power of workers relative to their employers. Different policies have had effects on different parts of the workforce (by wage level or race or gender) at different times. But, they have uniformly acted to pull the bottom out of the labor market.

Given all these forces pushing in the same direction, it would be odd that the minimum wage was at the top of the list.



Labor Day Lessons From Canada Print
Written by John Schmitt   
Tuesday, 04 September 2012 11:00

My CEPR colleague, Kris Warner, has a new paper on what we can learn about labor law here in the United States from the experience of our neighbors in Canada. The whole paper is worth a read, but I particularly like two of the graphs. The first shows that Canada and the United States were on a very similar unionization path from about 1920 through the 1960s. At that point, unionization rates in the two countries diverged sharply.

The second graph presents the overall union coverage rates in each of the U.S. states and Canadian provinces. All but one of the Canadian provinces lie entirely above all of the U.S. states. Only New York and Alaska edge out the least unionized Canadian province of Alberta.

Kris emphasizes two important differences between the Canada and the United States. The first is that, in the private sector, it is generally much easier for workers to form a union in Canada, primarily because most workers there can form a legally recognized union based on collecting verified signatures. In the United States, of course, even after workers sign cards asking for recognition, they then face a second hurdle in the form of a National Labor Relations Board election (unless the employer decides to recognize the union based on the collected cards). As John Logan and others have documented (pdf), an entire “union avoidance” industry of consultants and lawyers has arisen in the United States over the last several decades to intimidate workers during the NLRB election process, and this industry has generally been highly effective.

The second key structural difference between Canada and the United States, says Kris, is that Canadian workers can rely on first-contract arbitration to ensure that they will secure a contract after legal recognition. In the United States, even after workers win an election, they only reach a contract in a bit over half cases (see John-Paul Ferguson excellent paper (pdf)).

This post originally appeared on John Schmitt's blog, No Apparent Motive.

The Erskine Bowles Stock Index Print
Written by Dean Baker and Eric Hoyt   
Tuesday, 04 September 2012 10:00

Along with former Senator Alan Simpson, Erskine Bowles has become known to much of the public as the co-chair of President Obama’s deficit commission. The two of them produced a report that is viewed by many in the media and leading Democrats in Congress as providing the basis for a “Grand Bargain” on a long-term deficit reduction package.

However, in addition to his duties on President Obama’s deficit commission, Erskine Bowles also has a day job. In fact he has many of them. Over the last decade, Mr. Bowles has sat on a large number of corporate boards. This is in addition to serving as the President of the University of North Carolina from 2005 to 2010 and unsuccessful runs for a U.S. Senate seat in North Carolina in 2002 and 2004.

Some of the companies for which Mr. Bowles served as a director have gained considerable notoriety in recent years. He served on the board of Krispy Kreme, the upstart doughnut company that was briefly a Wall Street darling. He also sat on the board of General Motors from June of 2005 until it went into bankruptcy in the spring of 2009. He joined the board of Morgan Stanley, the Wall Street investment bank, near the peak of the housing bubble in December of 2005. He remains on its board today. He also joined the board of Facebook in September of last year.



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