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

Workers in the United States trail other high-income countries in the Organization for Economic Co-operation and Development (OECD) in terms of work-life balance. The U.S. tops the list in terms of yearly hours worked and falls significantly behind other countries when looking at efforts to improve work-life balance.

The European Union (EU) explicitly forbids an employer to hire workers for a regular workweek of more than 48 hours. There is no equivalent restriction in the United States. While this restriction doesn’t limit hours of workers who hold more than one job or are self-employed, it is indicative of the general attitude on work-life balance in the EU.

 

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The following reports on labor market policy were recently released:


Center for American Progress

A Fair Shot for Millennial Women and Families
Sunny Frothingham


Institute for Women’s Policy Research

Supportive Services in Job Training and Education: A Research Review
Cynthia Hess, Yana Mayayeva, Lindsey Reichlin, Mala Thakur


Urban Institute

Validation of the Employment Retention Inventory
Jennifer Yahner, Ellen Paddock, Janeen Buck Willison

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The October jobs report provides solid evidence that the labor market is improving for most of the labor force. While the pace of job growth slowed slightly to 161,000, there was an increase in the prime-age employment rate (ages 25-54) and an uptick in the pace of wage growth. It appears that workers are taking advantage of a tighter labor market to move into better paying jobs.

The employment-to-population (EPOP) ratio for prime age workers rose 0.2 percentage points to 78.2 percent. This is the highest it has been in the recovery, although it is still 2.0 percentage points below the pre-recession peak and 3.7 percentage points below its 2000 peak.

Other data in the report were clearly positive. Wage growth appears to have accelerated modestly. The average hourly wage over the last three months increased at a 2.9 percent annual rate compared to its average over the prior three months. Over the last year, the average hourly wage is up 2.8 percent.

This is consistent with a story where workers are looking for better paying jobs. In this respect, it is worth noting that the share of unemployment due to voluntary quits rose 0.9 percentage points to 12.1 percent. This is the highest level for the recovery and comparable to the pre-recession rates, although still more than 3.0 percentage points below the 2000 peaks.

Also consistent with this view is the fact that lower paying industries were not sources of big job gains in October. Restaurants added just 9,900 jobs in October, compared to an average of 21,000 over the last year. Retail actually lost 1,100 jobs in the month.

On the whole, this report indicates that the labor market is getting into a situation where most workers can benefit from the economy's growth.

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With open enrollment for health insurance exchanges for 2017 starting soon, the news has been saturated with articles on exploding rates. However, after accounting for the subsidies individuals are eligible for through the Affordable Care Act, a close look at the actual cost for individuals purchasing insurance on the marketplace paints a very different picture.

The Kaiser foundation created a calculator that uses insurance premiums from exchanges in each state, along with available subsidies to estimate the actual costs for those buying insurance. These costs depend on age, family size, income, and location.

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

Dean’s New Book

CEPR Co-Director Dean Baker’s new book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, is now available! His book shows that upward redistribution was not the result of globalization and the natural workings of the market. Rather, it was the result of conscious policies that were designed to put downward pressure on the wages of ordinary workers while protecting and enhancing the incomes of those at the top. Dean explains how rules on trade, patents, copyrights, corporate governance, and macroeconomic policy were rigged to make income flow upward.

Dean wrote a piece for the Institute for New Economic Thinking (INET)’s blog that elaborates on the central theme of the book, and the first chapter was featured in Naked Capitalism. He also wrote for PBS NewsHour how intellectual property rules help the rich and hurt the poor. Dean was interviewed on the Thom Hartman show twice, first by Alex Lawson (Social Security Works) and then by Thom himself, and Dean’s views were cited in this op-ed in the Toronto Star on the Comprehensive Economic and Trade Agreement (CETA).

CEPR on Trade

Dean wrote this op-ed on the Trans-Pacific Partnership (TPP) and “free” trade. Dean also wrote numerous posts for his blog, "Beat the Press," on the media’s coverage of trade issues, including this one that clarifies a piece on (“the usually excellent”) NPR show This American Life on NAFTA. Dean also took The New York Times to task for pushing NAFTA and for promoting protectionism for doctors, dentists, pharma and the entertainment industry. He also analyzed an NYT piece on the trends in trade.

Many of CEPR’s analyses of the TPP and other trade deals were written in the context of the presidential race. Dean wrote an op-ed for The Hankyoreh called “Apologies for Trump” that discussed Donald Trump’s position on trade, and he was cited in this Think Progress piece that looked at Trump’s proposals. In this post for Beat the Press, Dean says that Trump is not all wrong on trade, while in this one he notes that Trump is closer to the mark than CNN.

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The following reports on labor market policy were recently released:


Economic Policy Institute

Black Workers’ Wages Have Been Harmed by both Widening Racial Wage Gaps and the Widening Productivity-Pay Gap
Valerie Wilson


The Century Foundation

Organizing’s Business Model Problem
Shayna Strom


National Employment Law Project

The Case for Phasing out Maine’s Subminimum Wage for Tipped Workers

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The economy grew at a 2.9 percent annual rate, the strongest growth rate since the third quarter of 2014. Most forecasts had put growth for the quarter at just over 2.0 percent. While this number is better than expected, a big factor was an increase in inventory accumulation, which added 0.61 percentage points to growth. Accumulation was actually negative in the second quarter, so the rate of accumulation is likely to be even higher in the fourth quarter.

Most categories of final demand were relatively weak. Consumption grew at a modest 2.1 percent annual rate. Residential investment fell at a 6.2 percent annual rate, its second consecutive decline. Non-residential fixed investment grew at a 1.2 percent rate, roughly the same pace as in the second quarter. This follows two quarters of decline. The collapse of energy prices and the increase in the trade deficit in manufacturing are the major factors behind the weakness in this component.

Government expenditures increased at a 0.5 percent annual rate, with a 2.5 percent increase in federal spending offsetting a 0.7 percent decline at the state and local level. This is the second consecutive quarter of decline at the state and local level.

Exports were a source of strength in the quarter, rising at a 10.0 percent annual rate, the strongest performance since the fourth quarter of 2013. As a result of this increase, net exports added 0.83 percentage points to growth for the quarter.

One striking figure in this report is the slower pace of inflation shown in the core personal consumption expenditure deflator (PCE). This rose at just a 1.7 percent annual rate in the third quarter. The rate of inflation shown in the core PCE has been trailing off throughout the year, rising at a 2.1 percent annual pace in the first quarter and a 1.8 percent rate in the second quarter. While there are enough erratic movements in the quarterly data to avoid treating this as evidence of deceleration, it is certainly hard to make a case for acceleration with these data.

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Japan is not exactly the country that comes to mind as a model of gender equality and high labor force participation for women. In 1995, the OECD estimated women’s employment rate in Japan at 56.5 percent, almost 10 percentage points lower than in the U.S., which had an employment rate of 66 percent for women at the time. Between 1995 and 1999, the employment rate for Japanese women grew by less than half a percentage point, while for women in the U.S. it grew by almost 3 percentage points.

However, since 2000 this trend completely reversed. Between 2000 and 2015, the employment rate for women in Japan increased by almost 14 percentage points, while in the U.S. it dropped by over 6 percentage points. Japan’s employment rate for women surpassed the U.S. in 2014. Currently, almost 65 percent of Japanese women are employed, while only about 63 percent of women in the US are employed.

In recent years, Japan has launched extensive campaigns to encourage labor force participation by women. The government took various steps such as increasing allowances given to new parents, subsidizing daycare, and ensuring both mothers and fathers benefit from paid parental leave.

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The following reports on labor market policy were recently released:


Economic Policy Institute


What is the gender pay gap and is it real?
Elise Gould, Jessica Schieder, Kathleen Geier


Center for American Progress


A Progressive Agenda for Inclusive and Diverse Entrepreneurship
Kate Bahn, Regina Willensky, Annie McGrew


Center for Law and Social Policy

How States Can Protect Workers with Irregular Schedules from Losing SNAP Benefits
Nune Phillips









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Government jobs are often thought to be highly desirable, with high levels of job security and generous benefits. In fact, research shows that the greater generosity of benefits is offset by lower pay. Adjusting for education and experience, compensation levels for government workers is comparable to compensation levels for private sector workers. In the last decade, there have been efforts at all levels of government to reduce the pay and benefits of government employees, which have been motivated in part by the argument that government workers are overpaid.

The evidence is that these efforts have accomplished their goal. The quit rates for government sector workers have risen substantially relative to the quit rates for their counterparts in the private sector.

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Some may see evidence of domestic violence as a visible mark on the body — a bruised face, perhaps a broken arm, or much worse for many victims. However, what we may not see are the economic consequences suffered by those who have been abused: how many days of work a victim has missed due to domestic abuse, or how many jobs she or he may have lost due to their abuser’s actions. Domestic violence isn’t limited only to acts of physical violence; abuse may result in financial and economic consequences that take away a survivors autonomy. Public policy can help mitigate these devastating effects of domestic violence. A key policy that can help is paid sick days that cover time off to deal with legal and health consequences of abuse. If implemented, such paid sick days laws would positively impact all workers, and also benefit domestic violence survivors.

Paid sick days laws are starting to sweep the country there are now 37 jurisdictions that have paid sick day laws in effect or where such laws will be implemented soon. Paid sick days provide economic security for victims of domestic violence so that taking time off to deal with domestic violence issues court appearances, doctors appointments, meetings with social workers, or healing wouldn’t mean survivors have to forfeit income or put their employment in jeopardy. All five states that have passed paid sick days laws Connecticut, California, Massachusetts, Oregon, and Vermont include provisions where sick time can be used for specific “safe time” purposes. This allows workers to take time off for purposes related to domestic violence. However, not all city jurisdictions with paid sick days include this provision, an oversight that needs to be corrected. Paid sick days would allow victims time to seek lifesaving services from local domestic violence programs.

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The following reports on labor market policy were recently released:


Economic Policy Institute

Black-white wage gaps expand with rising wage inequality
Valerie Wilson and William M. Rodgers III 


Urban Institute

Women’s Economic Empowerment: A Review of Evidence on Enablers and Barriers
H. Elizabeth Peters, Nan Marie Astone, Ammar A. Malik, Fenohasina Maret Rakotondrazaka, Caroline Heller


Institute for Women’s Policy Research

Job Growth Among Women Continues to Climb: 65 percent of Jobs Added in the 3rd Quarter of 2016 Went to Women


National Woman’s Law Center

Progress in the States for Equal Pay

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In many narrow economic indicators, such as wealth, income, and housing, the United States ranks near the top of countries in the Organization for Economic Cooperation and Development (OECD). However, when it comes to broader measures focused of well-being, the U.S. does not perform very well. In terms of life-work balance, the OECD ranks the U.S. 30th out of the 38 countries included in its index. As also pointed out by the OECD, the U.S. is the only member country, which fails to offer any type of nationally mandated paid leave policies. While some states, or cities, provide paid family and sick leave, at a national level no such policy exists. Furthermore, most OECD members also mandate paid vacation, a concept foreign to many American workers.

The Washington Center for Equitable Growth used data from the Bureau of Labor Statistics Current Population Survey to show that the problem of overwork in America is present in all types of professions. Working over 40 hours a week is fairly common for workers regardless of education level or profession. For example, over 40 percent of those in management positions and over 30 percent of those in farming, fishing, and forestry work over 40 hours a week.

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Last month, the Census Bureau released its annual report on income and poverty in the United States. The report indicated that although lower- and middle-income Americans had seen significant income growth in 2015, those at the top of the income distribution had seen the strongest growth over the past forty years.

The Census Bureau’s most widely-cited statistics on inequality come from data on household income. Various commentators have questioned the validity of citing household income, arguing that the definition of “household” doesn’t take into account differences in factors such as family size. If this is true, it could mean that the rise of economic inequality is more of a statistical aberration than a real phenomenon.

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The Labor Department reported that the economy added 156,000 jobs in September, somewhat less than most economists had projected. The job growth figures were also on net revised down slightly for the prior two months, so that the average for the last three months stands at 192,000. The unemployment rate edged up to 5.0 percent, but this was due to a large number of people entering the workforce, as the employment-to-population ratio (EPOP) also rose by 0.1 percentage point to 59.8 percent. The EPOP for prime age workers reversed its decline last month and stood at 78.0 percent. However, this is still more than two full percentage points below its pre-recession peak.

Other news in the household survey was mostly positive. The number of people involuntarily working part-time hit a new low for the recovery. It is now down by more than 3.3 million from the recession peak, although it is still well above the pre-recession level. The duration measures of unemployment all fell, with the share of long-term unemployed dropping by 1.2 percentage points, a new low for the recovery. One negative was a modest decline in the share of unemployment due to voluntary job leavers, which remains more than a full percentage point below its pre-recession peak.

On the establishment side, professional business services, which added 67,000 jobs, construction, which added 23,000, and retail which added 22,000 were big job gainers, along with health care, 32,700 and restaurants, 29,700. Manufacturing lost 13,000 jobs and government lost 11,000. There was a modest increase in average weekly hours, reversing last month's decline. Wages grew at a 2.6 percent annual rate over the last three months, compared with the prior three, the same as their pace in August.

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When the Bureau of Labor Statistics released its newest jobs report a little over three weeks ago, economic forecasters and analysts received some welcome news: the unemployment rate had held steady at 4.9 percent for the month of August. Not long after the release, several members of the Federal Reserve’s Federal Open Market Committee (FOMC) began talking about an imminent interest rate hike, noting that the economy was operating at close to full employment.

A recent report from CEPR challenges this narrative. The report — titled The Case for a Weak Labor Market argues that a large number of non-employed workers who want jobs simply aren’t being counted in the unemployment rate.

In 2007, there were approximately 7.1 million unemployed Americans. There were also an additional 4.7 million Americans not in the labor force the “labor force” being defined as the number of people who are either employed or unemployed who said they wanted to work. These 4.7 million people weren’t counted as “unemployed” because they hadn’t searched for work during the previous four weeks. But in total, there were about 11.8 million non-employed Americans who wanted to find jobs.

The most recent labor market data show that there are currently about 7.8 million unemployed workers. Given demographic shifts and moderate population growth, this isn’t dramatically out of line with the number of workers unemployed in 2007. However, there are now almost six million Americans out of the labor force who say they want a job meaning that the number of non-employed people looking for work is far higher than the unemployment rate implies.

The aging of the population does not explain this trend. In the year leading up to the recession, just 9.7 percent of prime-age (25–54) Americans not in the labor force said they wanted a job. Over the past year, it’s been 10.5 percent. The increase is nearly identical for older workers. Between September 2015 and August 2016, 3.0 percent of Americans aged 55 and older not in the labor force said they wanted a job, compared to just 2.2 percent in 2007. A far more likely culprit is the lingering economic weakness from the 2008 recession. Table 1 below shows the percentages of all people that want a job broken into three broad categories for 2007 compared to the past year.

buffie mcinnis 2016 10 table

While the economy has improved significantly over the past eight years, the experiences of being employed and unemployed today are much different than in 2007. Take for example the share of workers employed sufficient hours, which is down 1.7 percentage points relative to 2007.[1] This indicates that fewer workers are working the amount of hours they’d like to be. On the other hand, the share of workers who are underemployed, or working part-time involuntarily, is up nearly one percentage point. These workers are still counted as being employed; however, they are working part time hours because they are unable to find full time positions. In other words, these workers are still experiencing economic hardship.

In terms of the unemployed, long-term unemployment is up 0.5 percentage points and accounts for over 100 percent of the increase in unemployment, while short term unemployment is down relative to 2007. This indicates that being unemployed today is worse than being unemployed in 2007, since many individuals are staying out of a job much longer. Long-term unemployment brings a slew of hardships not necessarily experienced for those who are short-term unemployed, including depression, suicidal thoughts, and other problems. While the unemployment rate is near its 2007 average, those who are unemployed are experiencing more hardship than in 2007 since a larger share of them are experiencing long-term unemployment.

Looking at the bigger picture, “employed sufficient hours” and short-term unemployment are down nearly two percentage points, meaning the other four groups — the under-employed, the long-term unemployed, marginally attached workers, and other job wanters — are up nearly two percentage points. Job wanters include individuals who say they want a job and have searched for a job within the past 12 months, but not the past four weeks (also known as marginally attached workers) and people who say they want a job but haven’t searched within the past 12 months (also known as other job wanters). These individuals, who account for 3.6 percent of everyone who wants a job, are not captured in the unemployment rate. However, many of these people would likely return to work if there were more opportunities in the labor market.

For these reasons, the unemployment rate is not as accurate a measure of labor market tightness as it was in prior years.


[1] Those working full time or voluntarily working part time.

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During tonight’s vice-presidential debate, Republican candidate Mike Pence will likely discuss his track record as governor of Indiana. However, Pence will likely leave out a few important facts about that record — including unsuccessful healthcare, tax, and labor market policies. Let’s look at each of these in turn.

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

CEPR on New York Paid Sick Days

“New York City Passed Paid Sick Leave, and Guess What? It Didn’t Kill Any Jobs.” That was the headline of a recent article in Slate magazine on CEPR’s report “No Big Deal: The Impact of New York City’s Paid Sick Days Law on Employers.” The report, by CEPR Senior Economist Eileen Appelbaum and Ruth Milkman of CUNY, shows that the standard arguments against the City’s paid sick days law were unfounded. They found that not only was the new law a “non-event” for most employers, it also extended paid sick days to millions of workers in the City who previously lacked access to them. 

President Obama was asked about Eileen’s paper in an interview, and he responded with a reference to Eileen’s previous research on Connecticut’s paid sick days law: “It’s pretty telling that only about one in 10 businesses self-reported any increased costs because of the new requirement. We’ve seen a similar trend in other places. Many businesses initially opposed the first state paid sick days law in Connecticut, yet within a few years a survey showed a similar result — that an overwhelming majority of businesses reported only small or no effects on their bottom line, and three-quarters now report being supportive of the new policy.”

The report was shared by many groups working on expanding paid leave. Eileen was interviewed on the paper by NPR’s Marketplace and Eileen and Ruth penned this op-ed for the Huffington Post, while Media Matters wrote on the study as did Next City.

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Since the main provisions of the Affordable Care Act (ACA) were implemented in 2014, the uninsured rate has declined precipitously. This was on full display in the Census Bureau’s 2015 health insurance report, which showed that the share of Americans lacking coverage declined 5.1 percentage points between 2013 and 2015. According to the data from the American Community Survey (ACS), the share of the population without insurance fell from 14.5 to 9.4 percent (pp. 24-25).

Due to its large sample size, the ACS allows us to look at the change in the uninsured rate at the state level. And when looking at the state-by-state data, a clear pattern emerges: states with Democratic governors have seen far more significant gains in coverage than states with Republican ones.

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On September 26, Apollo Global Management and TPG Capital reached an agreement with disgruntled creditors that is expected to allow bankrupt casino operator, Caesars Entertainment, to emerge from bankruptcy. The private equity firms gave up their battle to salvage something from their $30 billion investment in the casino company. Creditors claimed that the PE firms had shifted assets from Caesars Entertainment to its parent company, which is publicly traded and not bankrupt. The bankruptcy settlement originally proposed by Caesars did not require any contribution from the parent company to the restructuring of its bankrupt chief operating unit.

In the new proposed settlement, Apollo and TPG will give up their 14 percent stake in the parent company, worth $950 million. What caused the change of heart and led the two companies to give up their investment? Shades of Donald Trump! The bankruptcy judge ruled that Apollo co-founder Marc Rowan and TPG co-founder David Bonderman would have to hand over details of their personal finances to the creditors. It was worth nearly $1 billion not to make their personal finances available. But who actually pays?

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In 2013, Congress failed to pass continuing a resolution to fund the government by the end of the fiscal year, leading to a 16-day shutdown of the government. During these 16 days, all routine government functions were interrupted, leading to the furlough of federal government employees and contract workers and the closing of federal agencies and national parks.

This disruption had a considerable economic cost. While estimates on the exact price tag of the shutdown differ, they range from an optimistic estimate of $2 to $6 billion by the Council of Economic Advisors, to an estimated loss of $24 billion by Standard & Poor’s. Furthermore, the Council of Economic Advisors claims about 120,000 jobs were not added to the economy in October due to the shutdown.

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