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A young person’s guide to Social Security
A young person’s guide to Social Security
Source: Economic Policy Institute
Many young people don’t think Social Security will be there for them when they retire. Coupled with the doubt about Social Security’s longevity is a general apathy toward learning its basic functions and how it operates. Young people are uninformed and therefore misinformed. They do not understand how Social Security works, who it affects, and how it fits into their future plans.
Yet, Social Security is the nation’s most successful anti-poverty program and it remains a fundamental pillar of the American economy—one that is critical to the long-term economic security of today’s young people. The new edition of A Young Person’s Guide to Social Security, released by the Economic Policy Institute and the National Academy of Social Insurance, gives young adults the information they need to participate in debates about Social Security’s future. The 60-page guide is written by young authors for students and young workers and explains why Social Security is not in grave danger as oft-reported.
The new edition coincides with the seminar for Washington interns, “Demystifying Social Security,” sponsored by NASI, and reflects the latest official estimates for Social Security in the 2012 Social Security Trustees’ report.
Roughly two-thirds of labor force participation rate’s drop due to cyclical changes, new EPI paper finds
Roughly two-thirds of labor force participation rate’s drop due to cyclical changes, new EPI paper finds
Source: Economic Policy Institute
The labor force participation rate – the share of working-age people who either have a job or are jobless but actively seeking work – has dropped more than two percentage points since 2007. Roughly two-thirds of this drop is due to the weak job opportunities in the Great Recession and its aftermath, a new Economic Policy Institute paper finds. The remainder is the result of long-run demographic trends. In other words, two-thirds of the labor force participation rate’s recent decline is cyclical, and one-third of it is structural.
In Labor force participation: Cyclical versus structural changes since the start of the Great Recession, EPI economist Heidi Shierholz explains that the cyclical decline in the labor force participation rate means that there are nearly four million workers “missing” from the labor force. These missing workers would be in the labor market if job prospects were strong.
Women and African Americans hit hardest by job losses in state and local governments
Women and African Americans hit hardest by job losses in state and local governments
Source: Economic Policy Institute
While the private sector has experienced some job growth since the Great Recession officially ended in 2009, the public sector has continued to shed jobs. In fact, in 2011, state and local governments experienced the worst job decline on record. That decline is the topic of a new report, The public-sector jobs crisis, released today by the Economic Policy Institute, which finds that public-sector job losses have been particularly damaging for women and African Americans.
The public-sector jobs crisis: Women and African Americans hit hardest by job losses in state and local governments, by EPI experts David Cooper, Mary Gable, and Algernon Austin, explains the particular importance of public-sector jobs for women and African Americans, the progress that state and local governments have made in reducing wage and employment disparities, and how cuts to state and local budgets have disproportionately hurt these groups.
Key findings of the report include:
- Historically, the state and local public sectors have provided more equitable opportunities for women and people of color. As a result, women and African Americans constitute a disproportionately large share of the state and local public-sector workforce.
- Overall, the wage gap across genders is similar in the state and local public sectors and in the private sector. However, it is smaller for highly educated women employed in state and local government.
- State and local public-sector workers of color face smaller wage disparities across racial lines, and at some levels of education actually enjoy a wage premium over similarly educated white workers.
- The disproportionate share of women and African Americans working in state and local government has translated into higher rates of job loss for both groups in these sectors. Between 2007 (before the recession) and 2011, state and local governments shed about 765,000 jobs. Women and African Americans comprised about 70 percent and 20 percent, respectively, of those losses. Conversely, Hispanic employment in state and local public-sector jobs increased during this period (although most of that increase likely occurred in the lowest-paid jobs).
- Job losses in the state and local public sectors stand in contrast to the jobs recovery in the private sector. From February 2010 (the month the labor market “bottomed out”) to January 2012, the United States experienced a net increase in total nonfarm employment of more than 3.2 million jobs, while state and local government employment fell by 438,000. Over this period, every major sector of the economy experienced net growth in jobs except the public sector.
CEOs made 231 times more than workers did in 2011
CEOs made 231 times more than workers did in 2011
Source: Economic Policy Institute
CEOs were paid, on average, 231 times more than workers in 2011, a new EPI analysis shows. This CEO-to-worker compensation ratio includes the value of stock options exercised by executives. An alternative measure of CEO compensation that includes the value of stock options granted in a given year yields a CEO-to-worker compensation ratio of 209.4-to-1. By comparison, the CEO-to-worker compensation ratio was roughly 20-to-1 in 1965.
In CEO pay and the top 1%: How executive compensation and financial-sector pay have fueled income inequality, EPI President Lawrence Mishel and research assistant Natalie Sabadish find that CEO compensation has grown exponentially in recent decades, while worker compensation has been relatively stagnant: from 1978 to 2011, CEO compensation increased more than 725 percent, compared to an increase in compensation for workers of only 5.7 percent.
CEOs’ growing compensation, along with compensation for highly-paid workers in the financial sector, has been the primary driver of the more than doubling of the income share of the top 1 percent over the past three decades. Executives and workers in finance accounted for 58 percent of the expansion of income for the top 1 percent from 1979 to 2005. They accounted for 67 percent of the increase in income for the top 0.1 percent over the same time period.
Ryan plan to slash Medicaid would cost the economy about 862,000 jobs
The budget proposed by Wisconsin Rep. Paul Ryan for fiscal year 2013 would cut Medicaid by $544 billion over the next five years. In a new report, EPI policy analyst Ethan Pollack documents how these cuts would weaken the economy and cost jobs. Using standard macroeconomic estimates that are consistent with private- and public-sector forecasts, Pollack finds that Ryan’s proposal would cost 862,000 jobs in 2014 and would continue to drag on job-growth in later years. These jobs losses would be mostly in the private sector and would impact every state.
A jobs-centered approach to African American community development: The crisis of African American unemployment requires federal intervention
A jobs-centered approach to African American community development: The crisis of African American unemployment requires federal intervention
Source: Economic Policy Institute
Millions of African Americans live in communities that lack access to good jobs and good schools and suffer from high crime rates. African American adults are about twice as likely to be unemployed as whites, black students lag their white peers in educational attainment and achievement, and African American communities tend to have higher than average crime rates. These issues have been persistent problems.
Jobs are essential to improving African American communities. Increased employment would help people in these communities lift themselves out of poverty. In addition, because poor economic conditions are an important causal factor behind poor educational outcomes and high crime rates are correlated with high unemployment rates, creating job opportunities would help improve educational outcomes and reduce crime.
This paper outlines a plan for significantly increasing the number of jobs available to African Americans. The plan, which targets communities with persistently high unemployment, includes three main components: creation of public sector jobs, job training with job-placement programs, and wage subsidies for employers. Although the plan is constructed with African Americans in mind, it would also provide benefits to Latino, American Indian, and white communities in which unemployment has remained high.
News from EPI: Poorly-researched estimate of OSHA regulations leads to vastly overstated costs
News from EPI: Poorly-researched estimate of OSHA regulations leads to vastly overstated costs
Source: Economic Policy Institute
The estimate by Nicole V. Crain and W. Mark Crain that Occupational Safety and Health Act (OSHA) regulations cost businesses $65 billion a year is vastly overstated, a new Economic Policy Institute (EPI) Issue Brief finds. Crain and Crain conducted a study of the cost of government regulations for the Small Business Administration’s Office of Advocacy in 2010 that included this estimate.
Crain and Crain attribute more than 99 percent of the $65-billion estimate to regulations adopted in the 1970s, 1980s and 1990s. Deconstructing Crain and Crain: Estimated cost of OSHA regulations is way off base, by EPI Vice President Ross Eisenbrey and Director of Regulatory Policy Research Isaac Shapiro, explains that the Crains’ estimate is problematic for three reasons. First, pre-issuance cost estimates of regulations more than 10 years old are unreliable because different methodologies have been used in different time periods. Moreover, businesses have adjusted to changes they were required to make due to new regulations, and the cost estimates do not account for these changes.
Second, Crain and Crain base their estimate on a series of studies that trace back to a 1974 National Association of Manufacturers (NAM) survey. Not only is NAM traditionally opposed to regulations, their archives center is unable to find the 1974 survey, so researchers are unable to evaluate whether it was accurate. The Crains arbitrarily inflate the cost of OSHA regulations to match the costs supposedly found in the never-published 1974 survey of NAM members.
Finally, the Crain and Crain estimate counts fines as a regulatory cost. Because estimates of compliance costs assume all firms comply completely with new rules, Crain and Crain are effectively double-counting. Fines actually paid by employers are, in any event, a negligible cost.
Regulation and tax uncertainty not responsible for lack of jobs, new EPI report finds
Regulation and tax uncertainty not responsible for lack of jobs, new EPI report finds
Source: Economic Policy Institute
Uncertainty about regulation and taxes is not responsible for the slow pace of job growth in the United States, a new briefing paper by Economic Policy Institute (EPI) President Lawrence Mishel finds. Instead, the primary economic problem in the U.S. continues to be depressed demand for goods and services.
Though businesses have substantial cash on hand and are now a third more profitable than they were prior to the Great Recession, they are not using this money for new hires or for investments. Some politicians and business trade associations have argued that uncertainty about future regulations is discouraging businesses from hiring and investing. Regulatory uncertainty: A phony explanation for our jobs problem examines what employers are doing in terms of investments and hiring and what employers are saying in surveys and finds the results do not support the uncertainty story.
A comparison of investment and private sector job growth between this recovery and the most recent recoveries suggests that future regulations and taxes are not the problem. Investment in the current recovery has increased more than in it had at the same time period in the prior two recoveries and roughly the same as it did during the 1980s recovery. In other words, this recovery is far more investment-led than the recovery under the pro-deregulation George W. Bush administration. Similarly, private sector job growth in this recovery looks much like job growth in recent recoveries, suggesting that businesses are not reacting to a new threat of potential regulations and taxes (the difference with this recovery is actually the loss of public sector jobs).
Furthermore, weekly work hours for private sector workers averaged 34.6 in 2007. In August 2011, they averaged 34.2, suggesting that businesses have access to readily available staffing without making new hires. The fact that weekly work hours are lower than pre-recession levels is more likely the result of low demand than uncertainty about regulations and taxes.
The combined effect of the Obama EPA rules
The combined effect of the Obama EPA rules
Source: Economic Policy Institute
The Combined Effect of the Obama EPA Rules, the only comprehensive tally of the combined costs and benefits of the new major Environmental Protection Agency (EPA) rules, debunks arguments that their cumulative impact would harm the struggling economy. The paper, by Economic Policy Institute (EPI) Director of Regulatory Policy Research Isaac Shapiro, released today by EPI, shows the regulations formulated by the Obama Administration will be of tremendous benefit to public health, and the combined compliance cost of the rules – both finalized and proposed – amounts to only about 0.1 percent of the economy, and thus are not a significant factor in the overall economy’s direction.
House Majority Leader Eric Cantor has characterized many of these new EPA rules as “regulatory burdens to job creators” and has scheduled a series of votes, beginning this week, aimed at halting them. This latest research from EPI explains that Cantor’s characterization of these rules is inaccurate. EPI’s research finds that the dollar value of the benefits of the major rules finalized or proposed by the EPA so far during the Obama administration exceeds the rules’ costs by an exceptionally wide margin. Health benefits in terms of lives saved and illnesses avoided will be enormous. EPI also finds that the costs of all finalized and proposed rules total to a tiny sliver of the overall economy, suggesting that fears that these rules together will deter economic progress are unjustified.
+ Full Report (PDF)
Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010
Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010
Source: Economic Policy Institute
The U.S.-China trade deficit has eliminated or displaced nearly 2.8 million U.S. jobs since 2001, a new Economic Policy Institute (EPI) briefing paper finds. Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010 by Robert Scott, EPI’s Director of Trade and Manufacturing Policy Research, finds that all 50 states, the District of Columbia and Puerto Rico suffered jobs lost or displaced as a result of the growing U.S.-China trade deficit.
The trade deficit with China grew from $84 billion in 2001, when China entered the WTO, to $278 billion in 2010. It eliminated or displaced 2,790,100 jobs, or about 2% of total U.S. employment over that period. The biggest net losses, in terms of the total number of jobs displaced, occurred in California, Texas, New York, Illinois, Florida, North Carolina, Pennsylvania, Ohio, Massachusetts and Georgia. In ten states, the jobs lost or displaced exceeded 2.2% of total employment. These states are New Hampshire, California, Massachusetts, Oregon, North Carolina, Minnesota, Idaho, Vermont, Colorado and Rhode Island.
Of the nearly 2.8 million jobs lost or displaced, 1.9 million of them were in manufacturing. These jobs represent nearly half of all U.S. manufacturing jobs lost between 2001 and 2010. The largest share of manufacturing jobs lost or displaced were in computer and electronic parts, at 909,400 jobs, or 32% of all jobs lost or displaced. Other hard-hit sectors of the manufacturing industry were apparel and accessories, textile fabrics and products, fabricated metal products, plastic and rubber products and motor vehicles and parts. Service industries, including administrative, support and waste management services experienced significant job displacement.
+ Full Report (PDF)
Four in ten state economies heading in wrong direction
Four in ten state economies heading in wrong direction
Source: Economic Policy Institute
State employment data released today by the Bureau of Labor Statistics shows that in many states, the economic engine is either stalled or in reverse, losing jobs rather than gaining them. The continued weak recovery is still crippling the economy and scarring working families throughout the nation.
In August, 20 states and the District of Columbia continued to have unemployment rates of 9 percent or higher, and unemployment surpassed 10 percent in 9 states and the District of Columbia. Even more troubling is the trend over the past three months. Since May 2011, 20 states and the District of Columbia have lost jobs.
When accounting for population growth since the beginning of the recession, every state except North Dakota has a jobs deficit (jobs needed to get back to pre-recession unemployment rate). The states with the largest jobs deficits are California (1,807,000), Florida (986,000) and Texas (634,000).
Too many states are seeing the harmful effects of meeting revenue shortfalls by cutting budgets. Recently unemployed teachers, police officers and firefighters aren’t able to contribute to a sound economic recovery. Workers in every state need the federal government to pass a substantial jobs bill as soon as possible.
News from EPI: A plan to put hundreds of thousands of people back to work now: “FAST!” Fix America’s Schools Today
News from EPI: A plan to put hundreds of thousands of people back to work now: “FAST!” Fix America’s Schools Today
Source: Economic Policy Institute
A national infrastructure project designed to improve public schools and facilities would benefit students and teachers and put hundreds of thousands of people back to work. In a new proposal released today, Mary Filardo of the 21st Century School Fund, Jared Bernstein of the Center on Budget and Policy Priorities, and Ross Eisenbrey of the Economic Policy Institute propose the enactment of a new program, Fix America’s Schools Today, or FAST!, designed to fund the maintenance and repair of public schools in the United States.
The current backlogs of school maintenance and repair projects are worth between $270 billion and $500 billion—at a time when state and local governments and school districts are facing unprecedented budget crunches. At the same time, the U.S. is facing an unemployment crisis; within the construction industry alone, 1.5 million workers are unemployed. Maintenance and repair of school buildings and facilities would provide students with an educational environment both safer and more conducive to learning and enable school districts to attract and retain quality teachers while simultaneously enabling hundreds of thousands of unemployed workers to find good-quality jobs in their communities.
News from EPI: Slow economic growth raising unemployment rate
News from EPI: Slow economic growth raising unemployment rate
Source: Economic Policy Institute
Today’s Bureau of Economic Analysis report shows that the last six months have seen an average growth rate of less than 1%, a rate of growth that fully explains why the previously declining unemployment rate reversed course in the past six months.
After hitting a low of 8.8% earlier in 2011, the unemployment rate in June reached 9.2%. Today’s GDP Picture explains why: because of the lack of spending, growth has markedly decelerated in 2011. While the economy is not in recession, a growth rate of 0.9% (the average for the first half of 2011), if sustained for the entire year, would result in an unemployment rate rising by almost a full percentage point over that time, all else equal.
We’re not broke nor will we be
We’re not broke nor will we be
Source: Economic Policy Institute
Many policymakers and pundits claim “we’re broke”1 and “can’t afford”2 public investments and policies that support workers. These claims are meant to justify efforts to scale back government programs and public sector workers’ wages and benefits. The “we’re broke” theme also implies that America’s working families should be satisfied with the status quo in terms of wages that have been stagnant for 30 years.
Despite the rhetoric, it is clear that “we” as a nation are not broke. While the recession has led to job loss and shrinking incomes in recent years, the economy has produced substantial gains in average incomes and wealth over the last three decades, and economists agree that we can expect comparable growth over the next three decades as well. Between 1980 and 2010, income per capita grew 66.4%, and wealth per capita grew 73.2%. Over the next 30 years, per capita income is projected to grow by a comparable 60.6%. In other words, “we” are much richer as a nation than we used to be and can expect those riches
to rise substantially in the future.So who is the we in the “we’re broke” mantra? The recession has certainly been a rough patch of road for many families, but the output produced by corporations in the private sector has already recovered to pre-recession levels, and these firms’ profits were 21.7% higher overall, driven largely by the 60% jump in pre-tax profits enjoyed by firms in the financial sector.
+ Full Paper (PDF)
The low wages of black immigrants: Wage penalties for U.S.-born and foreign-born black workers
The low wages of black immigrants: Wage penalties for U.S.-born and foreign-born black workers
Source: Economic Policy Institute
The popular discussion of black immigrants often exaggerates their achievements and denigrates U.S.-born blacks. One regularly hears asked, “Why do black immigrants do better than native blacks?” (Coates 2009). In these discussions, black immigrants usually are presented as hard working, valuing education, entrepreneurial, and family-oriented. U.S.-born blacks are often presented as lacking all of these characteristics, and sometimes even described as carrying “victimhood baggage” (Coates 2009; Marshall 2006). Many such discussions are driven by anecdotes, and even when these issues are explored using actual data, rarely are comparisons based on more than one measure; rarer still is there a comparison of how black immigrants fare in comparison with native whites.
This report aims to deepen the public discussion by conducting a broader, more careful examination of the socio- economic standing of black immigrants relative to U.S.-born blacks and whites. Its main findings are:
- After taking into account the effect of 15 wage-related characteristics, all black male populations are found to earn less than similar U.S.-born non-Hispanic white men. U.S.-born black men earn 19.1% less. West Indian men, that is, black immigrants from English-speaking Caribbean countries, do slightly worse, earning 20.7% less.
Haitian men and African men do substantially worse than U.S.-born black men. Haitian men earn 33.8% less, and African men earn 34.7% less than similar native white men.
- All groups of black women have lower weekly wages than similar U.S.-born non-Hispanic white women, but the size of the wage gaps is smaller for women than it is for men. West Indian women do somewhat better than U.S.-born black women. West Indian women earn 8.3% less than U.S.-born white women. U.S.-born black women earn 10.1% less than U.S.-born white women. African women also earn 10.1% less. Haitian women are the worst off, earning 18.6% less.
- Analyses of unemployment and poverty rates show that U.S.-born and foreign-born black populations are also worse off than U.S.-born whites on these measures.
- Economically, U.S.-born and foreign-born blacks have common problems that need to be addressed.
+ Full Briefing Paper (PDF)
Waiting for Change: The $2.13 Federal Subminimum Wage
Waiting for Change: The $2.13 Federal Subminimum Wage
Source: Economic Policy Institute
The minimum wage has been one of the most investigated and debated labor market topics among economists, politicians, business entities, and the public. Much less attention has been paid to the subminimum wage received by tipped workers (referred to as the “tipped minimum wage”). The two-tiered minimum wage system is unknown to many and the existence of the subminimum wage is often a surprise. Did you know that a waiter at a restaurant in Indiana probably earns a base wage of $2.13 per hour; $4.34 for a server in the Colorado Rockies; and $8.67 for wait staff near Olympia National Park in the state of Washington? These pay disparities are created by an obscure and often misunderstood federal provision called a ‘tip credit,’ which allows employers to pay tipped workers below the binding federal or state minimum wage.
This brief seeks to shed light on the subminimum wage, its wide differences from state to state, and its impact on workers and labor markets. First, we present the history and mechanics of the subminimum wage and the tip credit provision along with state-level variations. Second, we provide a demographic portrait of waiters and other workers in tipped occupations, who are subjected to the subminimum wage floor. Finally, we analyze labor market outcomes, such as wages and poverty rates, for the country overall and by state; in the latter case focusing on policy differences regarding each state’s allowable tip credit.
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Getting the facts straight about state and local pay
Getting the facts straight about state and local pay
Source: Economic Policy Institute
State and local workers have not seen their wages and compensation (including all benefits) grow any faster than that of private-sector workers. According to the data, the wages of state and local employees grew 0.6% annually from 1990 to 2010 (after adjusting for inflation), which was actually slightly slower than the 0.7% rate for private-sector workers.1 Both groups saw their inflation-adjusted hourly compensation grow at an identical 0.9% annual rate. Claims that state and local workers make exorbitant wages and compensation almost always fail to consider the occupation or education levels of the workers being compared. Studies which make an apple-to-apple comparison (controlling for education and other worker characteristics) show that state and local workers are not overpaid.
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