Media clips
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Radical and rising economic inequality is no secret — and now, thanks to new research from the Economic Policy Institute, neither is its price tag nor its cause. There’s never been a study quite like this — one which places specific, real dollar amounts on every trickle-down policy American politicians have embraced. The study’s authors, Larry Mishel and Josh Bivens, explain how their work reveals that the massive upward redistribution of income our nation has suffered these past four decades can largely be attributed to policies intentionally designed to suppress the wages of American workers.
Pitchfork Economics June 2, 2021 -
So what are Republican leaders talking about when they complain about the labor shortage? First, it’s important to understand that they’re not using it as a technical economic term. “There’s no index of labor shortages that [the US Bureau of Labor Statistics] puts out,” Heidi Shierholz, the senior economist and director of policy at the Economic Policy Institute, explained in the latest episode of “Pitchfork Economics.”
“The key footprint of a labor shortage in the data is very fast wage growth,” Shierholz explained. “The idea behind that is really straightforward: If an employer can’t attract the workers they need, they will raise wages to poach workers from other employers, who will in turn raise wages to retain their workers, and on and on.”
So is there a labor shortage in our economy? And, if so, should we panic? “While we are not, right now, seeing widespread labor shortages, I do think that the data are indeed flashing labor shortages in very isolated sectors,” Shierholz said. In particular, “it’s pretty much just leisure and hospitality – the sector that has restaurants in it. It’s the lowest-wage major sector in our economy, and that’s where we are seeing some evidence of labor shortages.”
Business Insider June 2, 2021 -
“When employers say they can’t find the workers that they need, always add the phrase, ‘at the wages I want to pay,’” said Heidi Shierholz, director of policy at the Economic Policy Institute. “We know how to attract workers: give them better jobs, better pay, better working conditions. It’s not rocket science; that’s how you do it.”
New York Times June 2, 2021 -
But progressives are pushing back, questioning the long-held belief that high debts will shift the economy into a lower gear.
The left-leaning Economic Policy institute said the budget “shows what true ‘fiscal responsibility’ means” by making investments to tackle inequality and level the playing field in the labor market.
The Hill June 2, 2021 -
Meanwhile, both the steel and lumber industries are strongly urging Biden to keep the tariffs in place. Removing them could prove to be politically unpopular, especially among steel workers in battleground Rust Belt states.
“Why would you kneecap the domestic steel industry when you want to spend $2 trillion on infrastructure?” asked Rob Scott, senior economist and director of trade and manufacturing policy research at the Economic Policy Institute. “It would be like taking a sledgehammer to kill a flea.”
Scott argued the steel tariffs effectively supported the industry and that removing them, along with quotas limiting imports, would lead to both a “hemorrhaging of jobs” and importing steel that is in many cases worse for the environment than what is made in America.
CNN Business June 2, 2021 -
“There is nothing sacrosanct, or even formal or legitimate, about the current lottery allocation process,” said Daniel Costa, director of immigration law and policy research at the Economic Policy Institute. “There was no regulation and no transparency or public comment to inform the process.”
Costa expressed skepticism that the Biden administration would implement a measure devised by the Trump administration, but thought the changes would help improve the H-1B program.
According to Costa’s research, outsourcing IT staffing firms continue to get the majority of the 85,000 visas available in the lottery, petitioning for workers receiving a level one or two wage that are marked at the 17th and 33rd percentile wages of a specific job and region, and below the median pay.
Bloomberg Law June 2, 2021 -
The left-leaning Economic Policy Institute calls on prosecutors and state lawmakers to seek criminal punishment of employers for workplace and labor-law violations that are currently addressed through less serious legal sanctions. There are good reasons to be wary of this advice.
EPI’s new report persistently lumps together different kinds of workplace infractions. At one end of the spectrum are offenses that have long been illegal, such as forced labor or theft of premiums intended for unemployment or injury funds. Everyone agrees that a crooked construction boss who skips town without paying his crew’s wages has committed a crime. There is little controversy over the law coming down hard on offenses like these.
High on EPI’s new prosecutorial agenda, however, are legal infractions at the other end of the spectrum. These include so-called employee misclassification, in which workers are designated as independent contractors or supervisors when a court, state labor agency or similar authority thinks they shouldn’t be. Another EPI priority is the sidestepping of prevailing-wage laws, which set public contractors’ wages well above market value. Also on the list are miscalculations by restaurant managers about when and how the law allows them to engage in tip pooling and conduct that an employee considers retaliation for a workplace complaint.
The Wall Street Journal June 2, 2021 -
Many CEOS, at the start of the pandemic, vowed to not take a salary last year to keep layoffs to a minimum. But new preliminary data from the Economic Policy Institute shows that the average CEO’s compensation still jumped 16% last year.
Average worker compensation was up just 1.8%.
“The offer by CEOs to forgo salary increases during the pandemic was largely symbolic,” the EPI said in a blog post. “Salaries were stable, but many CEOs pocketed a windfall by cashing in stock options and obtaining vested stock awards, compounding income inequalities laid bare during the past year.”
Fortune June 2, 2021 -
I’m just looking at a study from the Economic Policy Institute this morning shows CEO compensation went up nearly 16% last year. But the average guy only went up 1.8 %. It has a lot to do with the stock packages but it permeates throughout.
WGN News May 28, 2021 -
In this powerful episode, Laverne talks with Richard Rothstein, the author of The Color of Law: A Forgotten History of How Our Government Segregated America. Rothstein breaks down how the government implemented housing policies in order to segregate Black people primarily in the 1930s and 50s. Though many decades ago, the effects are as present as ever in the education gap, income gap, wealth gap, and “slums.” As violations of the Constitution, it is a requirement to correct past injustices.
The Laverne Cox Show May 28, 2021 -
CEO pay skyrocketed 15.9% through the pandemic as the rallying stock market boosted compensation packages, the left-leaning Economic Policy Institute said in a Thursday blog post. That marks an acceleration from the 14% jump seen in 2019 despite COVID-19 roiling the global economy. EPI cited 281 filings from large firms in its preliminary report.
Conversely, annual compensation for the average American worker rose just 1.8% in 2020. The widening pay gap is captured in EPI’s CEO-to-worker compensation ratio, which rose to 307.3 last year from 276.2 among early reporting companies.
To be sure, CEO salaries broadly shrank through the year. The average salary for chief executives fell 5.2% as businesses paused pay hikes during the health crisis, according to EPI.
Yet a broader measure shows the stock market’s meteoric rise through 2020 more than made up for the slump. Realized direct compensation — which includes salary, bonuses, long-term incentive payouts, stock options, vested stock awards — rallied last year as stocks rebounded from their pandemic lows. Among the 281 early reporting firms analyzed, realized compensation rose to $21.4 billion from $18.5 billion throughout 2020.
Business Insider May 28, 2021 -
DENITSA TSEKOVA: Exactly, yes, we have JP Morgan, and we also have a similar analysis by the Economic Policy Institute saying that that move of all those states opting out of the program, it’s rather a political move and not an economic one. So currently, we have 24 states opting out of some or all federal unemployment programs. And all of these states have a Republican governor. But the economic conditions across those states are very different.
So looking at the JPMorgan analysis, they look at unemployment rates, earnings growth, and participation rates in those states. And they are very different in the different states. For example, some of the states opting out of the programs may have a very tight labor market and strong earnings growth, which may signal a potential for worker shortage and tie into that whole debate that there are not enough workers to hire.
But this is not the case for many of the other states are opting out of the program. For example, Texas, their unemployment rate in April was 6.7%, which is almost double its pre-pandemic level. So in states like Texas, the unemployment rate is a long way from recovering to pre-pandemic level. While in other states that are opting out of the program, the unemployment rate has pretty much recovered.
Yahoo Finance May 28, 2021 -
The math, again, is simple: Shortages have gone up because salaries have gone down. The Economic Policy Institute reported that teacher pay, adjusted for inflation, declined from 1996 to 2017.
Teacher deficits and departures hurt students because inexperienced educators often fill the vacancies. But even when children have skilled, veteran instructors, the quality of their education is compromised if these teachers are underpaid.
The New York Times May 28, 2021 -
Vox’s Emily Stewart talks with Janelle Jones, chief economist at the Labor Department, about what’s actually going on with the US economy — and who are the workers most dramatically affected by the pandemic. They discuss the tasks ahead in an economic recovery, who should receive the most help, and how to put policies in place that do more than just return to the status quo.
Host: Emily Stewart (@EmilyStewartM), Senior Reporter, Vox
Guest: Janelle Jones (@janellecj), Chief Economist, Department of Labor
References:
- “U.S. Labor Shortage? Unlikely. Here’s Why” by Heidi Shierholz (May 4, The Commons blog, Initiative for Public Discourse)
- “Lumber mania is sweeping North America” by Emily Stewart (May 3, Vox)
- “Black workers have made no progress in closing earning gaps with white men since 2000” by Elise Gould, Janelle Jones, and Zane Mokhiber (Sept. 12, 2018, Working Economics Blog)
- “The U.S. economy could use some ‘overheating’” by Josh Bivens (Jan. 14, Working Economics Blog)
Vox Conversations May 28, 2021 -
Here’s what you need to know about the disappointing development, including which governors are cutting off unemployed workers in their states from these benefits, what programs are affected, and why, according to a new analysis from the Economic Policy Institute, cutting unemployment benefits is more about cruelty than problem-solving.
Fatherly May 28, 2021 -
CEO pay grew at what might have been the fastest pace in history last year during the pandemic, widening the pay gap even more between top executives and their workers.
Compensation for chief executive officers increased by 15.9% in 2020, while workers’ wages rose by just 1.8% for the same period, according to an Economic Policy Institute analysis of early filings from 281 large firms.
The average realized compensation for chief execs — which includes salary, bonus, long-term incentive payouts, exercised stock options, and vested stock awards — increased by $2.9 million, reaching $21.4 million last year.
“It was spectacular growth, fueled by the rise of the stock market and cashing in stock options,” Lawrence Mishel, EPI distinguished fellow and co-author of the report, told Yahoo Money. “We may be hitting historic highs in 2020.”
Yahoo Finance May 28, 2021 -
While CEOs have always made more than rank-and-file workers, the ratio has ballooned in recent decades — and wages for top executives have increased dramatically faster than average workers’ pay. The Economic Policy Institute found CEO compensation had surged 940% from 1978 to 2018 while the typical worker pay had risen only 12% over the same timeframe.
CBS News May 28, 2021 -
In 2018, former President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on steel and aluminum of 25% and 10%, respectively, citing national security concerns. The administration sought to boost domestic industry and bring capacity utilization rates up to around 80% (considered a barometer of industry health).
With respect to aluminum, the Economic Policy Institute (EPI), in a white paper released this week, argues for the success of the Section 232 aluminum duty.
Metal Miner May 28, 2021 -
The US’ 10% tariff on aluminum imports from most countries accomplished its stated purpose of protecting the at-risk domestic aluminum industry in the interest of national security, market analysts and participants said May 26 after the release of a report from the Economic Policy Institute.
EPI Senior Economist Robert Scott said the tariff, imposed by former President Donald Trump under Section 232 in 2018, came at a time when the US primary aluminum industry was “hanging on by a thread.”
“The industry was threatened with collapse, and the US had the only existing high-quality, high-purity aluminum smelter that was running in the NATO countries,” Scott said in a virtual panel discussing the EPI’s May 25 report on the tariff’s impact.
“This was critical for national defense that we not lose this capacity as well as maintain the capacity to produce our own aluminum for the supply chains, and I think the COVID-19 crisis has shown just how important it is to be self-sufficient in these primary commodities.”
The EPI report concluded that the aluminum tariffs succeeded in fulfilling their intended effect and have allowed aluminum manufacturers throughout the supply chain to thrive.
S&P Global May 28, 2021 -
“Absolutely, we’re still in a crisis,” Elise Gould said.
Elise Gould is a senior economist with the Economic Policy Institute, a non-partisan Think Tank in DC.
“9 to 11 million more people don’t have a job that would’ve had a job. We’re on a very different trajectory,” Gould said. “That means, they do not have wages to be paying their bill. They do not have income. Many people are struggling –it’s very difficult for many people out there today.”
WSMV News 4 May 28, 2021 -
HEIDI SHIERHOLZ
Senior economist and director of policy, Economic Policy Institute; former chief economist, U.S. Department of LaborFifteen dollars an hour is an appropriate level for the minimum wage right now. We’re not going to suddenly go to $15 during the pandemic. The increase will gradually be phased in. Given inflation expectations over the next four years, $15 in 2025 would be about $13.79 in today’s dollars.
When people picture paying a higher minimum wage, they see it as if they were the only business raising wages. That is the beauty of an across-the-board labor standard. Everyone will need to raise wages, so no business will be at a competitive disadvantage.
After adjusting for inflation, the minimum wage is 31.5 percent less than it was in 1968. During that time, productivity growth has more than doubled. So, as an economy, we can afford this.
Inc. May 28, 2021 -
Although the tariffs were a hallmark of Trump’s trade policy, Biden would have some political cover if he decides to leave them in place.
“Four years ago, the U.S. primary aluminum industry was hanging on by a thread,” a report Wednesday by the left-leaning Economic Policy Institute said, noting that aluminum production increased 37.6 percent after Trump’s tariffs went into effect.
The report argues that higher prices have had no meaningful effect on consumer prices or other industries.
The Hill May 28, 2021 -
You have no doubt seen the scary headlines warning of a “labor shortage” caused by the additional pandemic unemployment insurance payments. The coverage of this story is widespread, even though most economics reporters can find no credible evidence linking unemployment checks to a labor shortage. EPI economist Heidi Shierholz joins us to explain why UI and stimulus payments aren’t causing a “labor shortage”, and why the answer to this made-up problem is so clear: it’s the low wages, stupid.
Heidi Shierholz is the Senior Economist and Director of Policy at the Economic Policy Institute.
Pitchfork Economics May 28, 2021 -
Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, noted that, typically, labor shortages translate into higher wages. The hospitality and leisure industry saw some of the most precipitous declines in wages during the pandemic; wages are only now approaching where they would have been if the pandemic hadn’t happened. “Many of these jobs in restaurants and hospitality are unambiguously worse than they used to be,” Shierholz said. “You have to deal with anti-maskers and there are health risks. If the market is functioning well, and a job gets harder and riskier, wages should go up.” According to Shierholz, supplemental unemployment insurance was “not driving things,” but had probably contributed to some of the wage growth that we’ve seen in the past few months. She believes this is a good thing. “They are helping the labor market to run better by making it possible for workers to not have to take a really shitty job at suppressed wages because they have no other option.”
The New Yorker May 28, 2021 -
In a new study for the Economic Policy Institute, researchers Lawrence Mishel and Josh Bivens point out that while income for those at the top continues to grow by leaps and bounds, the typical worker, when pay is adjusted to inflation, is making less today than he or she was in the ’80s.
Madison.com May 28, 2021 -
However, restaurants may indeed be suffering from an unusual lack of workers right now, according to the Economic Policy Institute, a liberal think tank, which defines a labor shortage as businesses lacking staff even as they’re raising pay at an unsustainable rate. In the past three months, according to EPI’s analysis, wage growth surged 18% in the leisure and hospitality industry, which includes restaurants.
“It seems clear that in April, customers were coming back to leisure and hospitality establishments faster than employers were able to staff up to serve them at the going wages that recently prevailed in this sector,” EPI’s Josh Bivens and Heidi Shierholz wrote this month.
But they said it’s unlikely unemployment benefits are causing the shortage in restaurants, as the leisure sector and restaurants in particular saw brisk hiring last month. A more likely culprit is the combination of some schools remaining closed and workers fearing the coronavirus.
Huffpost May 28, 2021 -
Daniel Costa at the Economic Policy Institute said employers should try harder to hire Americans. The unemployment rate in the hospitality business is still at almost 14%.
“At the national level, at least, there are not signs of labor shortages in these occupations,” Costa said.
Costa wants to beef up existing requirements that employers search for American workers before applying for guest worker visas.
NPR Marketplace May 28, 2021 -
U.S. tariffs on aluminum imports imposed since the Trump presidency have led to increased output, employment and capital investment by domestic manufacturers, according to a new report from the left-leaning Economic Policy Institute.
Reuters May 28, 2021 -
The reason why this is not worrisome is that prices are basically rebounding from a deeply depressed base in the pit of the COVID recession a year ago. In March 2020, before the recession hit, core inflation was running at an annual rate of just 1.5 percent, or well below the Fed’s target rate.
As EPI’s Josh Bivens puts it:
Even several years of inflation above 2% would still not make up for years of too-slow price growth over the past 12 years, and making up for these years of too-slow price growth would go a long way toward reestablishing the credibility of the Federal Reserve inflation target. This is an opportunity, not a threat.
The American Prospect May 28, 2021 -
“The idea that these governors are saying, ‘we don’t need that federal money right now, we’re going to turn it down,’ even though that money is providing a boost to their economy — it’s just very short-sighted policy,” Heidi Shierholz with the Economic Policy Institute said.
Experts at the Economic Policy Institute say childcare issues and health concerns are keeping many people from returning to work. They also dispute the argument that many unemployed Americans aren’t returning to their jobs because they’re making more money staying home.
“The vast majority of job growth has been in very low wage sectors. Low-wage workers are the ones going back to work, which is exactly the opposite of what you would expect if unemployment insurance were really keeping people out of work,” Shierholz said.
Hearst TV May 28, 2021