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Article Artículo

The Median Wage for Black Workers: Why Isn't It Rising?

One of the main reasons that I and others have given for leaning on the Fed to keep interest rates down is that low unemployment disproportionately benefits those at the bottom. While we can and should try to help the disadvantaged through increased education, training, child care and other programs necessary to give them a foothold in the labor market, the easiest thing is allow them to get jobs.

When the Fed raises rates it is deliberately slowing the economy and thereby reducing the number of jobs available. The people who are then denied jobs are disproportionately the most disadvantaged groups, such as blacks, Hispanics, and less educated workers. These workers are hurt not only because fewer have jobs, but also because the bargaining position of those employed weakens when there is higher unemployment. In this telling of the story, wage gains for those at the bottom should be strongest during periods of low unemployment, as we have been seeing in the last few years.

For this reason, the latest data on median wages for black workers is somewhat surprising. The Bureau of Labor Statistics Usual Weekly Earnings series showed real median weekly earnings for full-time black workers in the first quarter of 2018 were up just 0.6 percent from the first quarter of 2017. Furthermore, taking the last three years together, it showed real weekly earnings for blacks were up by a meager 1.1, trailing the 2.8 percent rise in real earnings for the median white worker. The racial gap seems to be increasing even in this period of relatively low unemployment.

CEPR / April 15, 2018

Article Artículo

The War on Pensions Continues

There has been an ongoing battle in major media outlets against public sector pensions. Papers like The New York Times and The Washington Post have regularly featured pieces telling readers that these pensions are unaffordable.

This crusade, carried on mostly in the news pages, has often taken bizarre twists. Back in 2011 the Washington Post had a front page article complaining about generous pensions that highlighted the story of former employer who was getting a pension of $520,000 a year. People who read through the article discovered that this former employee was a former administrator who was under indictment for fraud at the time, not the typical California employee.

In this vein, The New York Times had a piece on pensions in Oregon that highlighted the pension of an eye surgeon who had formerly been employed by the government who receives a pension of $76,000 a month. It then goes on to discuss the $46,000 a month pension of a former University of Oregon football coach.

While these pensions do sound exorbitant, there are two important points to keep in mind. First, pensions are part of worker's pay, just like their health care insurance and the money they get in their paycheck every month. The second is that these pensions are far from typical for either Oregon or public sector employees in general.

CEPR / April 15, 2018

Article Artículo

Why the Government's $1 Trillion Deficit Is Not a Big Problem for You, but Rich People Complaining About It Might Be

The Washington Post is trying to scare people about budget deficits. Okay, that is not exactly news, it has been trying to scare people about deficits to justify cuts to Social Security and Medicare benefits and other programs for decades, but they are redoubling their efforts now. (In fairness, the Republican tax cut gave them more material.)

Heather Long gives us the classic story:

"The United States is able to run such high deficits because the U.S. Treasury turns around and sells U.S. debt to investors around the world. Right now, a lot of people want to buy U.S. government bonds, even though America already has $15 trillion in debt owned by the public. But the problem is no one knows when people might say enough is enough and stop buying U.S. debt — or demand much higher rates of return.

"Even if the nightmare scenario doesn’t materialize, deficits are a drag on the economy. Investors opt to buy government debt instead of making the type of private investments that create jobs or raise wages, economists warn."

Okay, so the bad story is that the large amount of bonds issued to finance the deficit will lead to high interest rates. (This actually skips a step. The Fed could buy these bonds, ensuring rates don't rise, as it did in its quantitative easing days. Its ability to buy bonds is limited by inflation concerns.) But Long tells us that even if interest rates don't rise, government borrowing is still crowding out investment. Really?

CEPR / April 10, 2018

Article Artículo

Globalization and Trade

Pro-Corporate Trade Pacts Let Mark Zuckerberg Hide His Face

This might not be the best time to be alive if you worry about things like racism or climate change, but 2018 is undeniably a great time to run a multinational corporation. Ironically, Facebook’s Mark Zuckerberg helps illustrate why life is great for CEO’s of multinationals, even as the corporate behemoth he founded is experiencing a public relations crisis and a falling stock price.

Why? Because in 2018, basically the only international rules that apply to corporations are those that benefit them.

For years, pragmatic observers of international trade have worked to illuminate the intentionally boringly titled process known as “Investor-State Dispute Settlement,” or ISDS, that is embedded in modern trade deals. ISDS creates extrajudicial panels whereby multinational corporations can seek to invalidate a country’s laws by a shadowy and opaque process.

In other words, under contemporary trade deals, corporations like Facebook have the right to challenge laws or regulations that Facebook doesn’t like in countries where Facebook is not headquartered.

CEPR and Jeff Hauser / April 09, 2018