From 1954 thought 1974, American workers brought home most of the wealth that they produced. Since 1974, they’ve steadily lost power—and they’re getting just a fraction of the wealth they produce today….What no one grasped at the time was that this wasn’t a one-year anomaly, that 1974 would mark a fundamental breakpoint in American economic history. In the years since, the tide has continued to rise, but a growing number of boats have been chained to the bottom. Productivity has increased by 80 percent, but median compensation (that’s wages plus benefits) has risen by just 11 percent during that time. The middle-income jobs of the nation’s postwar boom years have disproportionately vanished. Low-wage jobs have disproportionately burgeoned. Employment has become less secure. Benefits have been cut. The dictionary definition of “layoff” has changed, from denoting a temporary severance from one’s job to denoting a permanent severance….
From the abstract:
In its early days antitrust policy was motivated largely by public fears regarding economic power, the excess influence owners of large businesses might exert over political and commercial markets. Over time, antitrust enforcement has come to focus exclusively on market power, the ability to raise prices or reduce output in narrowly defined product markets. This article calls for a return to the wisdom of days past, less for the populist reasons then articulated, and more due to the ‘influence effect’, the scale and scope economies in procuring political influence and their detrimental effects on democracy. After delving into the market and political effects created by big business, the recent financial crises and Too-Big-To-Fail (TBTF) dynamic are discussed. The main problem, it is argued, is not potential business failures and resulting bailouts, but the influence TBTF institutions exert ‘while business is going well’. Preventing excess economic power and TBTF firms is a task originally entrusted to antitrust agencies, and this article calls for reaffirming this obligation. There are practical difficulties and political risks inherent in combating economic power, and these are discussed. In the end, such difficulties are very real and require careful formulation of enforcement strategy, but antitrust agencies should not shy away from the task.
Hispanics are playing an increasingly prominent role in the U.S. economy. They are the youngest and fastest growing segment of the population and are expected to make up nearly one-third of all people living in the United States by the year 2050. But significant challenges remain for many Hispanics, particularly with respect to poverty, education and health insurance coverage. Comprehensive immigration reform could help address these issues for a number of
Hispanic immigrants. This report provides an economic snapshot of the current state of the Hispanic population in the United States….
…Five years after the crash of 2008 is still early to be trying to determine its intellectual consequences. Still, one can see signs of change. I’ve been following academic economics and finance as a journalist since the mid-1990s, and I’ve researched academic debates going back much further than that. To me, three shifts in thinking stand out: (1) Macroeconomists are realizing that it was a mistake to pay so little attention to finance. (2) Financial economists are beginning to wrestle with some of the broader consequences of what they’ve learned over the years about market misbehavior. (3) Economists’ extremely influential grip on a key component of the economic world—the corporation—may be loosening.
These trends are within and on the fringes of elite academia; I won’t attempt to delve into politics or public opinion in this article. That’s partly because doing so would make it impossibly broad, but also because—for the past half century at least—economic ideas born at the University of Chicago, MIT, Harvard, and the like really have tended to trickle down and change the world. …
Source: Hirokazu Yoshikawa, Christina Weiland, Jeanne-Brooks-Gunn, Margaret R. Burchinal, Linda M. Espinoza, William T. Gormley, Jens Ludwig, Katherine A. Magnuson, Deborah Phillips, and Martha J. Zaslow, Society for Research in Child Development, Foundation for Child Development, October 2013
From the summary:
For the first time in a generation, national legislation on publicly-funded preschool education is the focus of prominent debate. The research brief “Investing in Our Future: The Evidence Base on Preschool Education,” reviews rigorous evidence on why early skills matter, which children benefit from preschool, the short- and long-term effects of preschool programs on children’s school readiness and life outcomes, the importance of program quality, and the costs versus benefits of preschool education.
Key findings include:
There are important benefits of comprehensive services when these added services are carefully chosen and targeted.
The global financial crisis and ensuing Great Recession reduced the income and wealth of many families, but older families generally fared better than young and middle-aged families. The Federal Reserve’s Survey of Consumer Finances reveals that being young was a significant risk factor during the downturn, regardless of a family’s race, ethnicity, or education level. Among older families, those headed by someone 70 or over fared slightly better than those headed by someone between 62 and 69. Income and wealth also increased most strongly among older families during the two decades preceding the crisis. Part of the explanation for favorable income and wealth trends among currently living older Americans is a positive birth-year cohort effect. After controlling for a host of factors related to income and wealth, we find that cohorts born in the late 1930s and 1940s have experienced more favorable income and wealth trajectories over their life courses than earlier-or later-born cohorts. While it is too soon to know how cohorts born in recent decades will fare over their lifetimes, it appears that the median Baby Boomer (born in the 1950s and early 1960s) and median member of Generation X (born in the late 1960s and 1970s) are on track for lower income and wealth in older age than those born in the 1930s and 1940s, holding constant many factors other than when a person was born.
From the summary:
…Today it is not only poor families but many middle class families who are furiously running in place. Millions are working hard to move forward, or just to make ends meet, and getting nowhere. Anyone who wishes to address poverty and strengthen economic opportunity needs to connect the dots between the needs of the working poor and those of the middle class.
Stagnant social mobility, increasing inequality, and the rise of low wage jobs without benefits are affecting both groups. For the working poor, these trends mean that the ability to move forward and upward economically is not only stunted, it is often cut off. For the middle class, these trends mean an ongoing susceptibility to financial shocks like job loss, unexpected medical expenses and predatory mortgages and an inability to adequately prepare for the future.
In this environment, no amount of individual effort, self-improvement, or thrift can guarantee a secure middle-class lifestyle. If current circumstances continue, even those who are able to move from poverty to the middle class on paper (in terms of education, job title, or income level) may never know long-term financial stability….
…In the aftermath of decades of increasing income inequality and of 2008 economic recession, the challenges and hardships facing lower-income and middle class Americans have grown more severe. These challenges make it harder to move from poverty into the middle class, and to experience middle class financial stability. Today’s dire circumstances can serve as a rallying point to unite the needs of poor and middle class families and renew our commitment to policies that support widespread economic health.
…The deeper and more systematic erosion of urban life is happening among a less glamorous set of people – the ones who fill the tens of thousands of jobs that undergird every single U.S. city.
These are the home health aides, the fast-food workers, the janitors, the teachers’ aides, the delivery people, the manicurists, and countless others who are making more than minimum wage but less than enough to meet the soaring cost of living – not just in New York, but in cities around the country. These people, increasingly, are falling off the shaky ladder of economic viability, and many are being pushed into homelessness….
….Families that experience homelessness, and those at risk of homelessness, almost by definition lack the financial resources to make a move to some cheaper place hundreds or thousands of miles away. They are understandably reluctant to sever ties to family and friends where they have lived for perhaps all their lives (this reluctance is wise, as the risk of homelessness increases among people who live far from social support networks). And they are ill-positioned to find a job in a far-off cheaper city before they move there, meaning that even if they were able to make a wrenching move, they could find themselves in the same position once again. …
… Even moving to a suburb within commuting distance of jobs is unrealistic for most low-wage workers. The cost of housing is still significant, and the cost of transportation much greater: grueling commutes and finding adequate child care for longer hours take another kind of toll….
Will Work for Inspiration
Source: David Byrne, Creative Time Reports, October 7, 2013
…New research from the Federal Reserve indicates the share of middle-skill jobs in the workforce has dropped from 25% in 1985 to just above 15% today, part of the hollowing-out effect that David Autor of MIT has documented. And as our chart above shows, middle-wage jobs — those that pay between $13.84 and $21.13 per hour, as defined by the National Employment Law Project — sustained much deeper cuts during the 2008-2009 recession than high- and low-wage jobs.
But not every middle-skill, middle-wage job is now extinct because of automation and offshoring. A subset of mid-wage manufacturing jobs (along with jobs in energy, health care, and other sectors) are among the healthiest post-recession occupations in the U.S. Furthermore, in a handful of states (Wyoming, Iowa, North Dakota, Michigan), mid-wage fields account for more than or close to 40% of all new jobs since 2010….
…For our analysis, we used middle-wage jobs instead of middle-skill jobs (i.e., those that require less than a bachelor’s degree but more than a high school degree). This is because some occupations that the BLS has assigned a mid level of education (e.g., registered nurses) often require a higher level of education by employers….
From the press release:
As Congressional leaders and the President discuss a potential temporary solution to the current fights over the government shutdown and the debt ceiling, the repeated cycle of lurching from crisis to crisis has significant costs to the U.S. economy, according to a new report released today.
The macroeconomic analysis, “The Cost of Crisis-Driven Fiscal Policy,” quantifies the negative economic impact of governing by crisis, and examines the effects of Washington’s actions — and inactions — including events such as sequestration, the government shutdown, and brinksmanship over the debt ceiling.
The report concludes that crisis-driven government and the resulting fiscal policy uncertainty has directly harmed the American economy by increasing the unemployment rate by 0.6%, or the equivalent of 900,000 jobs. …