Blog postings by CEPR staff and updates on the latest briefings and activities at the Center for Economic and Policy Research.

The following reports on labor market policy were recently released:


Economic Policy Institute
Disney H-1B Scandal in Spotlight Again: Meet the American Workers Whose Jobs and Careers Were Destroyed by the H-1B Program
Ron Hira

Center for Economic and Policy Research
Rising Disability Payments: Are Cuts to Workers’ Compensation Part of the Story?
Nick Buffie, Dean Baker

National Employment Law Project
Minimum Wage Basics: Employment and Business Effects of Minimum Wage Increases
NELP

Unemployment Insurance Policy Advocate’s Toolkit
Rick McHugh, Rebecca Dixon, Claire McKenna, George Wentworth

NYC ‘Fair Chance’ Hiring Law Takes Effect Today
NELP

Add a comment

Last week CEPR released a report titled Rising Disability Payments: Are Cuts to Workers’ Compensation Part of the Story? The report examined the extent to which cuts in state-level workers’ compensation programs have led to increased expenditures for the Social Security Disability Insurance (SSDI) program. The findings showed that up to a fifth of the increase in SSDI awards between 2001 and 2011 could be attributed to cuts in workers’ compensation programs.

Another obvious source of rising SSDI costs is the increase in Social Security’s full retirement age. The Social Security program maintains two distinct insurance systems: Old-Age and Survivors Insurance (OASI) for retired workers and their families, and Disability Insurance (DI) for workers who become disabled and can no longer work. Once someone on DI hits “full retirement age,” or the age at which retirees can begin receiving full OASI benefits, he is immediately transferred from the DI rolls to the OASI rolls.

Add a comment

The economy grew at a 1.5 percent annual rate in the third quarter, a sharp slowing from the 3.9 percent rate reported for the second quarter. The falloff was largely due to slower inventory growth. Inventories subtracted 1.44 percentage points from the growth rate in the quarter after adding 0.02 percentage points in the second quarter. Final demand for the quarter grew a 3.0 percent annual rate. For the first three quarters of the year GDP has risen at a 2.0 percent annual rate.

There were few surprises in the report. Consumption grew at a 3.2 percent rate, driven by a 6.5 percent growth rate in durable good consumption. Non-residential investment grew at a weak 2.1 percent rate. All components of investment were weak, but structures declined at a 4.0 percent rate after rising 6.2 percent in the second quarter. Housing grew at a modest 6.1 percent rate, down from an average of 9.8 percent in the prior three quarters. Exports and imports grew at almost the same rate, having little net effect on growth. Government expenditures grew at a 1.7 percent annual rate, adding 0.3 percentage points to growth.

There continues to be no evidence of inflationary pressures in any sector. The core PCE grew at just a 1.2 percent rate in the quarter. The basic story continues to be one of modest growth with very little inflation.

Add a comment

In January 2001, the nonfarm quits rate — the percentage of the nonfarm workforce deciding to leave their jobs in a given month — stood at 2.6 percent. During the recession, the quits rate fell to 1.3 percent; since then, it has mostly but not fully recovered to its pre-recession peak, which itself was lower than the rates seen in the early 2000s:

Add a comment

The Social Security Disability Insurance (SSDI) program is expected to completely deplete its trust fund by late 2016. If the program’s funding isn’t increased, benefit cuts of about 20 percent will automatically go into place.

In the past, Congress has reallocated revenues between Social Security’s Disability Insurance fund and its Old Age and Survivors Insurance (OASI) fund when one program was facing financial difficulties. Reallocating funding from the OASI fund to the DI fund would not significantly impact the solvency of the OASI fund: while the OASI trust fund has a projected reserve depletion date of 2035, the combined Old Age and Survivors Insurance and Disability Insurance (OASDI) trust fund has an expected depletion date of 2034. This means that keeping the DI trust fund solvent for another 18 years would decrease the solvency of the OASI fund from 20 years to 19 years.

Add a comment

Does competition from immigrants lower the pay of less-educated native born workers? On its face, the obvious answer would be yes — competition lowers prices, and the price of labor is not special. However, the macroeconomy is not quite that simple. For one, immigration brings with it demand for labor as well as supply. For another, native workers and immigrants may compete for different jobs.

A new brief by Maria E. Enchautegui of the Urban Institute (via National Journal, via Noah Smith) suggests that the latter holds. To support this contention, Enchautegui presents several occupations in which immigrants or native workers are overrepresented. According to the brief, natives represent 56 percent of the workforce that lack high-school diplomas, yet (for example) native workers hold 86 percent of the jobs as counter attendants while immigrants hold 87 percent of the jobs as personal appearance workers. This is interesting, but the piece doesn’t tell us the share of employment accounted for by these occupations.

Add a comment

Health researchers have noted an oddity in the relationship between healthcare spending and life expectancy: while greater spending is generally associated with greater life expectancy, average life expectancy in the U.S. isn’t even close to what we’d predict given its level of healthcare spending. As can be seen in Figure 1, which depicts life expectancy and healthcare spending for all OECD countries and countries counted as “advanced economies” by the IMF, the U.S. is a clear outlier when it comes to healthcare spending and life expectancy (the U.S. is highlighted in red):

Add a comment

The Federal Reserve’s Federal Open Market Committee will meet on October 27 and 28, and one of the discussion topics will be whether to raise the federal funds interest rate, the short-term rate banks pay on overnight loans. This rate has been close to zero since the beginning of the Great Recession to promote economic expansion. When the rate is higher, the economy slows, because the rates for things like car loans and mortgages will generally rise as well. The Fed would want to raise interest rates if it wants to slow the economy to prevent inflation, but the cost is that in a slower economy fewer people have jobs and workers have less bargaining power to demand higher wages.

Low inflation and an incomplete recovery are strong arguments for keeping the interest rate near zero in the hope of supporting more rapid growth. With stronger growth we will see more and better jobs. In a tighter labor market, more workers will enter the labor force, involuntary part-time employment will shift to full-time employment, and workers will have the opportunity to move to higher-paying jobs.

Another reason the Fed should keep interest rates low is that the benefits of lower unemployment will disproportionately go to groups that are marginalized and disadvantaged. One way to look at this is to look at how drops in white unemployment affect black unemployment.

Add a comment

With the costs of college tuition skyrocketing, the affordability of higher education is becoming a major issue in the 2016 presidential campaign. Some commentators have argued that the proper solution to rising costs is putting more money in the pockets of students. Specifically, they argue that colleges should expand their work-study programs so that students can get jobs and pay their tuition.

If students want to work full- or part-time jobs to pay for their textbooks, housing, tuition, etc., it would be unfair to deny them that opportunity. However, it should be noted that asking students to work their way through college is unlikely to have a large effect on college affordability, for one simple reason: most college students are already employed.

Add a comment

In recent months, members of the Federal Reserve (“Fed”) have been weighting the idea of raising interest rates. This is a tremendously important decision that can affect the labor market prospects for thousands or even millions of workers.

Some members of the Fed have been citing the low unemployment rate, which fell to 5.14 percent last quarter, as the main impetus for raising rates. These members argue that the labor market is nearing the “non-accelerating inflation rate of unemployment,” (NAIRU) at which unemployment becomes so low that it triggers accelerating inflation.

However, if the NAIRU is even lower than 5 percent, then a decision to raise interest rates based on a mistaken estimate of the NAIRU would needlessly throw many Americans out of work.

The drop in the estimates of the NAIRU from the Congressional Budget Office (CBO) should give us some cause for concern. The table below shows the history of CBO NAIRU estimates since the start of 2012.

Add a comment

This post was originally published at Girl w/ Pen.

Here’s what we know: Even with a college degree, young blacks still face lower employment rates and higher unemployment rates than their white counterparts. I’ve shown previously that young blacks are entering and completing college at higher rates than in the past. The third report of my Young Black America series examined the employment and unemployment rates of young blacks and whites from 1979 to 2014, and I made a striking discovery: Employment gaps between blacks and whites have become worse since the onset of the Great Recession. The jobs recovery, apparently, is not colorblind.

Add a comment

In December 2007, the Congressional Budget Office (CBO) released an update to its Long-Term Budget Outlook. The 2007 edition indicated that greater spending on Medicare and Medicaid would lead to a substantial increase in federal spending over the coming decades, as shown in Figure 1:

Add a comment

In November 2014, over one hundred women were elected to the United States Congress for the first time in history. While this may be a historically significant event, women are still far less likely than men to ever work in Congress.

In many ways, what is happening in Congress illustrates what is happening in the economy more generally. While the gender employment gap has been shrinking for decades, significant disparities remain. The most recent data from the Bureau of Labor Statistics indicate that the employment rate of prime-age men is about 14 percentage points higher than the employment rate of prime-age women. (“Prime-age” refers to the ages 25 to 54. These are the years in which people are the most likely to be employed.)

Add a comment

The following reports on labor market policy were recently released:


Economic Policy Institute

High Quality Child Care is Out of Reach for Working Families
Elise Gould, Tanyell Cooke


National Women’s Law Center
Chartbook: Women’s Overrepresentation in Low-Wage Jobs
Anne Morrison, Katherine Gallagher Robbins


Institute for Women’s Policy Research

Amidst Disappointing Job Growth, Men Gain 3 of 5 Jobs Added in September
IWPR


CLASP
Using Post-College Labor Market Outcomes
Anna Cielinski


National Employment Law Project

U.S. Department of Labor Home Care Rule: What’s Next?
NELP

Federal Minimum Wage & Overtime Protections for Home Care Workers
NELP


Roosevelt Institute

Local and State Business Registration Schemes: An Enforcement Lever to Strengthen Employer Compliance with Labor Standards and to Facilitate Worker Organizing
Haeyoung Yoon


Schwartz Center for Economic Policy Analysis the New School

Confronting Low Pay: Minimum Wage Policy and Employment in the U.S. and France
David R. Howell, Bert M. Azizoglu, Anna Okatenko

Add a comment

A previous CEPR blog post titled “The U.S.A. as Number 1?” raised the question of whether the U.S. has the biggest economy in the world.

In terms of national income, the United States is no longer number one—that title now belongs to China, which surpassed the U.S. for the first time last year. Many commentators have noted, correctly, that the U.S. still has a much greater level of per capita GDP (income per person) than China. But if we are to judge economies by this standard, the U.S. still isn’t number one.

Add a comment

On August 2, 2011, Congress passed the Budget Control Act, which aimed to reduce federal spending through 2021. In the months preceding passage of the Act, members of Congress debated what percentage of spending cuts should come from the military. Implicit in this debate was a subtler question: how do we determine what level of military spending is appropriate?

In determining how to best answer this question, the U.S. may want to learn from the answers provided by other countries. We can compare military spending in the U.S. with military spending throughout the rest of the world to determine if our military spending is abnormally high, abnormally low, or about what we’d expect given our national income.

Add a comment

In his 2014 State of the Union address, President Obama discussed the fact that women workers are paid far less than their male colleagues: “That is wrong. And in 2014, it’s an embarrassment. Women deserve equal pay for equal work!”

Some commentators have criticized President Obama’s statement, arguing that the gender pay gap doesn’t account for occupational choices or differences in hours worked. Consider the critique about occupational choices: if women choose to work in low-paying occupations, a substantial gender pay gap can exist even if women are paid the same as men in every occupation. If this is true, we can’t honestly argue that women are being treated worse than men.

Add a comment

Over at the White House blog, Council of Economic Advisers Chairman Jason Furman posted an interesting graph on the latest job numbers. It depicts manufacturing employment, with the number of jobs indexed to 100 during the last month for each of three different recessions:

Add a comment

The Labor Department reported the economy created just 142,000 jobs in September, well below most forecasts. Furthermore, the prior two months' numbers were revised down as well, bringing the average for the last three months to 167,000. In addition, there was a drop in the length of the average workweek of 0.1 hour causing the index of aggregate hours to decline by 0.2 percent. This drop, combined with a modest fall in the average hourly wage, led to a 0.3 percent decline in the average weekly wage.

The household survey also showed a weak picture of the labor market. While the unemployment rate was unchanged there was a drop of 0.2 percentage points in both the labor force participation rate and the employment to population ratio. The share of unemployment due to people who voluntarily quit their jobs remained at the low 9.8 percent rate of August, a level typically seen in recessions. The one piece of clear good news in the survey was a drop of 447,000 in the number of people working part-time for economic reasons. This number is erratic, but this is an unusually large one-month decline.

On the whole this report suggests the labor market is considerably weaker than had been generally believed. It is likely to make it much more difficult for the Federal Reserve Board to raise rates this year.

Add a comment

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

Add a comment