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Economic Growth

Workers

Data Flash: January Jobs Report Show Big Jump in EPOPs

The January employment report showed the employment-to-population ratio (EPOP) rising from 58.6 percent to 58.8 percent. This matches the previous high for the recovery in October of 2012. The household survey showed employment rising by 638,000 after increasing just 101,000 over the prior two months. Interestingly the growth was concentrated among younger workers. Employment for workers between the ages of 25-34 rose by 230,000, while employment for workers between the ages of 44-54 rose by 318,000, a one month increase of more than 1.0 percent. Whites disproportionately benefited from the rise in employment with the  EPOP for both white men and white women rising by 0.4 percentage points.

The establishment survey was not nearly as positive, showing an increase of just 113,000 workers following last month's weak 75,000 gain.

Dean Baker / February 07, 2014

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Martelly to Meet with Obama in Washington Today, Elections Top Agenda

The Associated Press reports today:

President Barack Obama is hosting Haitian President Michel Martelly for talks on Haiti’s economic and political future.

Martelly will be at the White House on Thursday, a day after he met with Secretary of State John Kerry. It’s the first official sit-down between Obama and Martelly.

As the AP and Miami Herald report, Martelly met yesterday with Secretary of State John Kerry as well as with key members of the House of Representatives. At the top of the agenda, reports the Miami Herald, is the holding of long overdue legislative and local elections, originally scheduled to take place in April 2011 and May 2012. White House Assistant Press Secretary Jonathan Lalley told reporters that the U.S. wants to see elections “that are free, fair and transparent, that allow Haitians to express their views as part of the political process, and that provide the political stability that is critical for Haiti’s continued progress.”

Kerry, meanwhile, praised Martelly for “the enormous commitment that he has made to transition from reconstruction into a long-term development program. And under his leadership, elections are now on the horizon, which could for the first time provide the filling out of all of the electoral positions to Haiti.”

2014 is now the third straight year that the Haitian government has pledged to hold elections, with similar pledges in 2012 and 2013 proving hollow. The last election in Haiti, conducted within the first year after the devastating 2010 earthquake, was plagued by low turnout, political parties being prevented from participating and serious problems with voter registration, among other issues. On election day, 12 of the 19 presidential candidates called a press conference to denounce the election and call for their annulment. Mirlande Manigat, a constitutional law professor and Martelly, the two highest profile candidates to denounce the election each received a call the day afterward from the head of the U.N. military contingent in Haiti (MINUSTAH), Edmond Mulet. Mulet, desperately trying to keep the electoral process moving, told each of them that they were ahead in the race. They both quickly walked back from their statements from the previous day.

Jake Johnston / February 06, 2014

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Charles Lane is Wrong on NAFTA and the Trans-Pacific Partnership

Charles Lane is wrong, as usual, in arguing that the Trans-Pacific Partnership (TPP), like its predecessor NAFTA, is good for U.S. workers. However, the piece is useful in providing an opportunity to explain some basic economics.

Most of the piece is dedicated to saying that NAFTA, which to some extent is a model for the TPP, was really good for the country. Lane starts by disputing that NAFTA contributed to the $181 billion trade deficit that the United States ran with Canada and Mexico. He tells readers:

"But $100.7 billion of this deficit is because of oil imports, according to U.S. government trade statistics. NAFTA has nothing to do with this; Canadian and Mexican oil imports always flowed freely."

Nope, that's not how it is supposed to work. The United States is a net importer of oil and derivative products. That does not mean that the United States is supposed to run a trade deficit. According to good old econ 101, a deficit on oil trade is supposed to mean that the dollar falls, which then leads us to increase exports and reduce imports of other items. This adjustment would not take place over night, but we would expect it to take place over a long enough period of time. So pointing to oil imports and saying that we really don't have a trade deficit with these countries really is silly. (This doesn't mean the deficit is due to NAFTA, but it certainly doesn't preclude the possibility.)

Then Lane gives us a head scratcher. He tells us this trade figure doesn't include, "almost $90 billion worth of goods that entered this country from elsewhere and then got re-exported to Mexico or Canada." He then points out that re-exports create jobs in the U.S. in shipping and other areas. Incredibly, Lane then adds in the full $90 billion value of the re-exports, telling readers:

"Eliminating oil and including re-exports produces a U.S.-NAFTA surplus of roughly $7 billion in the goods trade."

Wow, so we get just as many jobs from having one million cars pass through ports in Oakland and Los Angeles on their way to Mexico and Canada as we do from building one million cars and exporting them to Mexico and Canada? Apparently we do on the Post's opinion page. Remember these are the folks, who in NAFTA boosterism, claimed Mexico's economy quadrupled from 1987 to 2007. (The actual increase was 83 percent.)

Dean Baker / February 04, 2014

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Workers

Deflators and the Purchasing Power of the Minimum Wage

Recently some opponents of an increase in the minimum wage have argued that we are using an inaccurate measure of inflation when we say the 1968 minimum wage would be equal to about $10.00 an hour in today’s prices. They argue that if we use the Personal Consumption Expenditures Deflator (PCE) to measure inflation --instead of the Consumer Price Index (CPI-U, modified slightly to reflect current methods back as far as 1968-- we would need a minimum wage of just $8.50 an hour to have the same purchasing power as in 1968. Furthermore, if we take the average value of the minimum wage over the years 1960-1980, the current minimum wage of $7.25 would already be roughly equivalent in purchasing power.

Dean Baker / February 03, 2014