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Today, ACA Boosts Voluntary Part-Time Employment Print
Written by Dean Baker   
Tuesday, 16 September 2014 10:49




Labor Market Policy Research Reports, August 22 - September 11 Print
Written by Janine Duffy   
Thursday, 11 September 2014 14:13

Labor Market Policy Research Reports, August 22 – September 11

The following reports on labor market policy were recently released:

Center for American Progress

Administrative Action on Immigration Reform: The Fiscal Benefits of Temporary Work Permits
Patrick Oakford

Center on Budget and Policy Priorities

House Bill Would Raise Small Business Premiums and Undercut Health Reform’s Consumer Protections
Edwin Park

State Earned Income Tax Credits and Minimum Wages Work Best Together
Erica Williams and Chris Mai




Wage Inequality: A Story of Policy Choices Print
Written by John Schmitt   
Thursday, 11 September 2014 10:09

The September 2014 issue of New Labor Forum includes an article(paywalled) by Larry Mishel (President of the Economic Policy Institute), Heidi Shierholz (until recently an economist at EPI, now Chief Economist at the Department of Labor), and me offering our explanation for the rise in wage inequality since the end of the 1970s.

From the introduction:

The mainstream of the economics profession offers one over-riding explanation for the rise in inequality: workers who have the skills needed for new technologies have done well, while those lacking those skills have fallen farther and farther behind. …We take a different view. We believe that it is possible to explain the entire rise of economic inequality since the late 1970s as the outcome of an array of economic policies that had the easy-to-predict effect of widening the gap between the top 1 percent and the rest.

Over each of the last three decades, macroeconomic policy (fiscal, exchange rate, monetary policies), trade agreements, deregulation of the financial sector, the legal environment governing unionization, the minimum wage, industry deregulation (in airlines, trucking, inter-state busing, and elsewhere), the privatization of state and local government functions, and other policies have had different effects on different kinds of workers, helping some and hurting others. … Together, we argue, these policies can explain changes in wage trends for workers—both men and women—across the wage distribution.


This post originally appeared on John Schmitt's blog, No Apparent Motive. September 11, 2014

DATA FLASH: Job Growth Slows Further in August Print
Written by Dean Baker   
Friday, 05 September 2014 07:39

The pace of job growth slowed sharply to 142,000 in August. Coupled with downward revisions to June's data, this brings the average rate of job growth over the last three months to 207,000. The sharp dropoff was due in part to flat employment in manufacturing after two months of healthy growth and a drop in employment of 8,400 in retail. Wage growth was little changed. Over the last three months, the average hourly wage has risen at a 2.3 percent annual rate, virtually identical to the 2.1 percent rate over the last year.

On the household side there was little change. The unemployment rate edged down slightly to 6.1 percent, but the employment-to-population ratio (EPOP) remained stable at 59.0 percent. By education level, college grads don't seem to be faring well at this point in the recovery. Their unemployment edged up to 3.2 percent, while their EPOP fell 0.2 percentage points to 72.2 percent. Over the the last year, their unemployment rate has fallen by just 0.3 percentage points, while the EPOP of college grads is actually down by 0.6 percentage points. By comparison, those with some college have seen a drop of 0.7 percentage points in their unemployment rate and a rise of 0.4 percentage points in their EPOP.

Patently Absurd: the Ice Bucket Challenge in Another Context Print
Written by Ben Wolcott   
Thursday, 28 August 2014 13:33

Social media and the commentariat are abuzz with updates and analysis on the Ice Bucket Challenge, an internet phenomenon where people do some combination of dumping cold water on themselves and donating money, raising over $90 million for the ALS Foundation so far.  While the ice bucket challenge has drawn support and criticism from various corners, it’s worth pointing out that foundations like the ALS Foundation, which fights “Lou Gehrig’s Disease on every front,” exist in their current imperfect form because of the structure of patent law.



Part 2: Returns to Whose College Degree? Print
Written by Ben Wolcott   
Wednesday, 27 August 2014 14:05

In a recent post, I argued that Avery and Turner’s research, cited by The New York Times' David Leonhardt, ignores the experiences of students of color. For a variety of reasons, such as labor market discrimination, workers’ outcomes diverge significantly based on race. Research from CEPR, for example, showed that in 2013, recent black college graduates had more than double the unemployment rate (12.4 percent) of recent college graduates in general (5.6 percent), and more than half (55.9 percent) worked in jobs that do not require a college degree. Against this background, simply looking at the average return to college does not cut it; the payoffs are smaller and less certain for some groups of students than the overall average suggests.



Part 1: Returns to Whose College Degree? Print
Written by Ben Wolcott   
Monday, 25 August 2014 09:49

As college students head back to school and costs rise faster than inflation even using a conservative measure, it’s worth revisiting the dispute about the value of a degree. In May, David Leonhardt declared the debate closed, citing a paper by David Autor and explaining that the total cost of college is about negative $500,000 over the course of someone’s lifetime. (As Leonhardt notes, the original source for this estimate is a 2012 journal article by Avery and Turner.) To calculate the return to college, researchers basically subtract the costs of tuition and forgone wages from the average additional lifetime earnings associated with a college degree.



Labor Market Policy Research Reports, August 15 - August 21 Print
Written by Ben Wolcott   
Friday, 22 August 2014 13:52

The following reports on labor market policy were recently released:

Institute for Women’s Policy Research

Women in Construction and the Economic Recovery: Results from the 2013 IWPR Tradeswomen Survey
Ariane Hegewisch and Brigid O’Farrell

Economic Policy Institute

Lagging Demand, Not Unemployability, Is Why Long-Term Unemployment Remains So High
Josh Bivens and Heidi Shierholz

Low Wages and Few Benefits Mean Many Restaurant Workers Can’t Make Ends Meet
Heidi Shierholz

Farmer’s Folly: The Sequel Print
Written by David Rosnick   
Wednesday, 20 August 2014 14:16

In a new working paper, UCLA’s Roger Farmer responds to last year’s investigation into his claim that declines in the stock market caused the Great Recession. Farmer apparently failed to grasp the nature of the critique.

In his original paper, Farmer claimed to have found a stable relationship between the movements in S&P 500 and unemployment rates, and that the data “leads me to stress asset market intervention as a potential policy resolution to the problem of high and persistent unemployment.”  In other words, the government should deliberately prop up the stock market as a way of boosting the economy. Farmer appealed to the apparent forecasting power of his model to support his policy preference.



Labor Market Policy Research Reports, August 1 - August 14 Print
Written by Ben Wolcott   
Friday, 15 August 2014 14:45

Labor Market Policy Research Reports, August 1  – August 14

The following reports on labor market policy were recently released:

Economic Policy Institute

Wage Inequality: A Story of Policy Choices
Heidi Shierholz, Lawrence Mishel, and John Schmitt

Facts About immigration and the U.S. Economy: Answers to Frequently Asked Questions
Daniel Costa, David Cooper, and Heidi Shierholz

Correction and Update on Bain and Blackstone’s Recent IPO for Michael’s Stores Print
Written by Eileen Appelbaum   
Thursday, 14 August 2014 13:04

Michael’s Stores was taken private in a leveraged buyout on October 31, 2006. At the time of LBO, Highfields Capital Partners, which owned shares in the specialty retailer, was allowed to retain its interest – worth about $200 million. Funds of two private equity firms, Bain and Blackstone, purchased the remaining shares for $5.8 billion (PitchBook Michael’s Stores company profile 7-1-14 behind a paywall). Michael’s Stores had very little long-term debt at the time it was acquired. The specialty retail chain had an enterprise value (EV) of $6.025 billion. Michael’s Stores had 2005 earnings (EBITDA) of about $550 million. The multiple at which it was acquired (EV/EBITDA) was 11.



How Old Will Social Security Be When the Rich Pay the Same Rate as the Rest of Us? Print
Written by Nicole Woo   
Thursday, 14 August 2014 12:35

Today is Social Security's 79th birthday, a good time to celebrate the nation's most effective anti-poverty program, which, especially after the housing crash and Great Recession, is crucial to the retirement security of middle- and working-class Americans.

But in about 20 years, Social Security will likely be able to pay only about 3/4 of promised benefits to retirees (if nothing's done to change the program). One way to make sure that this drop doesn't happen is to have our nation's wealthiest folks pay the same Social Security payroll tax rate as the rest of us.



What's 35 Grand to Marco Rubio? Apparently Not Much Print
Written by Alan Barber   
Thursday, 07 August 2014 00:00

Writing in the National Review recently, Sen. Marco Rubio of Florida claims that Social Security will be insolvent by the time he retires. He goes on to make a few suggestions to fix the program. Each of these ‘fixes’ is problematic. The flaws with the Rubio fixes have been and will be repeated many times (for example, raising the retirement age can be problematic for workers in physically demanding jobs). But before getting to the fixes, there should be a full stop after the paragraph:



Update on the Thirteen States that Raised their Minimum Wage Print
Written by Ben Wolcott   
Wednesday, 06 August 2014 09:55

In a series of recent blogposts, we updated a methodology used by Goldman Sachs to evaluate the impact of minimum-wage increases in 13 states at the beginning of this year. A number of publications, including USA Today and The New York Times, cited these blog posts in pieces on the minimum wage.

As we noted at the time, the Goldman Sachs’ methodology is not ideal for a number of reasons. Now, economists Saul Hoffman and Wai-Kit (Ricky) Shum from the University of Delaware have done a more formal analysis of these 13 states and found qualitatively similar results to the pieces using the Goldman Sachs method. Specifically, all of the analyses have found no evidence of negative employment impacts. If anything, the results have indicated that minimum wage increases are associated with more rapid employment growth, although this relationship is not statistically significant.



CEPR News July 2014 Print
Written by Dawn Lobell   
Friday, 01 August 2014 14:57

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

CEPR on the Minimum Wage
To mark the fifth anniversary of the last increase in the minimum wage, CEPR released its Minimum-Wage Pay-Cut Clock that demonstrates how much, down to the second, minimum wage workers continue to lose as long as the wage remains frozen at its current level. CEPR’s Pay Cut Clock was featured in a press conference held by U.S. Senator Tom Harkin (D-IA), U.S. Representative George Miller (D-CA), and U.S. Senator Al Franken (D-MN) commemorating the anniversary.



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



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 …”.



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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