Category Archives: Income Inequality/Gap

New Study Confirms That American Workers Are Getting Ripped Off

Source: Eric Levitz, New York Magazine, July 6, 2018

…. Economists have put forward a variety of explanations for the aberrant absence of wage growth in the middle of a recovery: Automation is slowly (but irrevocably) reducing the market-value of most workers’ skills; a lack of innovation has slowed productivity growth to a crawl; well-paid baby-boomers are retiring, and being replaced with millennials who have enough experience to do the boomers’ jobs — but not enough to demand their salaries.

There’s likely some truth to these narratives.

But a new report from the Organization for Economic Cooperation and Development (OECD) offers a more straightforward — and political — explanation: American policymakers have chosen to design an economic system that leaves workers desperate and disempowered, for the sake of directing a higher share of economic growth to bosses and shareholders.

The OECD doesn’t make this argument explicitly. But its report lays waste to the idea that the plight of the American worker can be chalked up to impersonal economic forces, instead of concrete political decisions. If the former were the case, then American laborers wouldn’t be getting a drastically worse deal than their peers in other developed nations. But we are. Here’s a quick rundown of the various ways that American workers are getting ripped off:

American workers are more likely to be poor (by the standards of their nation). ….
We also get fired more often — and with far less notice. ….
Our government does less for us when we’re out of work than just about anyone else’s. ….
Labor’s share of income has been falling faster in the U.S. than almost anywhere else. ….

OECD Employment Outlook 2018

Source: Organisation for Economic Co-operation and Development, July 4, 2018

The 2018 edition of the OECD Employment Outlook reviews labour market trends and prospects in OECD countries. Chapter 1 presents recent labour market developments. Wage growth remains sluggish due to low inflation expectations, weak productivity growth and adverse trends in low-pay jobs. Chapter 2 looks at the decline of the labour share and shows that this is partially related to the emergence of “superstar” firms, which invest massively in capital-intensive technologies. Chapter 3 investigates the role of collective bargaining institutions for labour market performance. Systems that co-ordinate wages across sectors are associated with better employment outcomes, but firm-level adjustments of sector-level agreements are sometimes required to avoid adverse effects on productivity. Chapter 4 examines the role of policy to facilitate the transition towards new jobs of workers who were dismissed for economic reasons, underlying the need of early interventions in the unemployment spell. Chapter 5 analyses jobseekers’ access to unemployment benefits and shows that most jobseekers do not receive unemployment benefits and coverage has often been falling since the Great Recession. Chapter 6 investigates the reason why the gender gap in labour income increases over the working life, stressing the role of the lower professional mobility of women around childbirth.

Related:
Press release

WEBINARS

Collective bargaining
Collective bargaining systems are at a crossroads in many OECD countries. In this webinar, we will assess the role that collective bargaining systems play for employment, wages, working conditions, wage inequality and productivity (chapter 3 of the publication). We will also discuss what policy-makers, unions and employers’ organisations can do to adapt their national bargaining systems to the challenges of a changing world of work.

The decline in wage growth
10 years after the beginning of the crisis, there are finally more people with a job than before. Yet, wage growth remains considerably below pre-crisis trends. In this webinar, we will address factors behind the persistent wage growth slowdown (chapter 1 of the publication). While low inflation and productivity growth explain much of these patterns, the dynamics of low-pay jobs and the wages associated to them also play a significant, but understudied, role.

KEY COUNTRY FINDINGS
United States

The Case For More Labor Unions Is The Most Obvious Case You Can Possibly Imagine
Source: Hamilton Nolan, splinter, July 5, 2018

….The Organization for Economic Cooperation and Development’s new annual Employment Outlook report is a particularly useful tool for gauging how the United States measures up to the rest of the developed world in terms of economic policies and outcomes. In this context, we have a lot of work to do: “The low-income rate in the U.S. [defined as the share of the working-age population living with less than 50% of median household disposable income] is one of the highest in the OECD,” the report says. “The rate in the U.S. is 14.8% compared to an OECD average of 10.6%. The lowest rate is found in the Czech Republic at just 5.8%.”….

Is it great to be a worker in the U.S.? Not compared with the rest of the developed world.
Source: Andrew Van Dam, Washington Post, Wonkblog, July 4, 2018

The U.S. labor market is hot. Unemployment is at 3.8 percent, a level it’s hit only once since the 1960s, and many industries report deep labor shortages. Old theories of what’s wrong with the labor market — such as a lack of people with necessary skills — are dying fast. Earnings are beginning to pick up, and the Federal Reserve envisions a steady regimen of rate hikes.

So why does a large subset of workers continue to feel left behind? We can find some clues in a new 296-page report from the Organization for Economic Cooperation and Development (OECD), a club of advanced and advancing nations that has long been a top source for international economic data and research. Most of the figures are from 2016 or before, but they reflect underlying features of the economies analyzed that continue today.

In particular, the report shows the United States’s unemployed and at-risk workers are getting very little support from the government, and their employed peers are set back by a particularly weak collective-bargaining system…..

The Anti-Union Janus Ruling Is Going to Hit Black Women the Hardest

Source: Miles Kampf-Lassin, In These Times blog, June 27, 2018

…. Today’s ruling means that all public-sector unions could essentially operate under “right-to-work,” depriving labor of critical funding, increasing the problem of “free ridership” and potentially decimating union membership.

Unions are bracing for the aftermath of the ruling. And mainstream media outlets, which do not generally devote much ink to labor stories, have highlighted the case in headline after headline. Yet what many fail to mention is that Janus would be particularly devastating for one group in particular: African-American women.

Public sector unions have long been a source of economic power for African-American women, who are disproportionately represented in their ranks. A March brief from Celine McNicholas and Janelle Jones at the Economic Policy Institute (EPI) shows that African-American women have the highest share of workers in the public sector—17.7 percent, equaling about 1.5 million workers.

The public sector provides job opportunities for African-American workers, and women especially, at a rate much higher than the private sector. In 2015, African-American women made up 10 percent of government workers, compared to just 6 percent in private-sector employment. ….

Less Bang for Your Buck? How Social Capital Constrains the Effectiveness of Social Welfare Spending

Source: Mallory E. Compton, State Politics & Policy Quarterly, Online First, First Published June 21, 2018
(subscription required)

From the abstract:
Rising economic insecurity in recent decades has focused attention on the importance of social welfare programs in managing household financial stability. Some governments are more effective than others in managing this outcome, and informal social institutions help explain why. Social capital is expected to shape economic security through multiple mechanisms, but whether the effect is to magnify or mitigate volatility is an open question. Part of the answer has to do with how social capital interacts with policy implementation, and whether it conditions the effectiveness of government spending. Evidence from the U.S. states from 1986 to 2010 fails to support a benevolent social capital thesis—not only is social capital associated with greater economic insecurity, there is no evidence that it improves social welfare effectiveness. However, greater spending on some social programs can mitigate the adverse impact of social capital on economic security.

Report of the Special Rapporteur on extreme poverty and human rights on his mission to the United States of America

Source: United Nations, General Assembly, Human Rights Council, Thirty-eighth session, Agenda item 3, June 18 – July 6, 2018

From the Oral Statement by Mr. Philip Alston Special Rapporteur on extreme poverty and human rights, 38th session of the Human Rights Council:
…. My starting point is that the combination of extreme inequality and extreme poverty generally create ideal conditions for small elites to trample on the human rights of minorities, and sometimes even of majorities. The United States has the highest income inequality in the Western world, and this can only be made worse by the massive new tax cuts overwhelmingly benefiting the wealthy. At the other end of the spectrum, 40 million Americans live in poverty and 18.5 million of those live in extreme poverty. In addition, vast numbers of middle class Americans are perched on the edge, with 40% of the adult population saying they would be unable to cover an unexpected $400 expense.

In response, the Trump administration has pursued a welfare policy that consists primarily of (i) steadily diminishing the number of Americans with health insurance (‘Obamacare’); (ii) stigmatizing those receiving government benefits by arguing that most of them could and should work, despite evidence to the contrary; and (iii) adding ever more restrictive conditions to social safety net protections such as food stamps, Medicaid, housing subsidies, and cash transfers, each of which will push millions off existing benefits. For example, a Farm Bill approved yesterday by Republicans in the House of Representatives would impose stricter work requirements on up to 7 million food stamp recipients. Presumably this would also affect the tens of thousands of serving military personnel whose families need to depend on food stamps, and the 1.5 million low-income veterans who receive them. ….

Organized Labor’s Check on Rising Economic Inequality in the U.S. States

Source: Laura C. Bucci, State Politics & Policy Quarterly, Volume 18 Issue 2, June 2018
(subscription required)

From the abstract:
Recent demonstrations of growing economic inequality in the United States raise normative concerns about the political representation of all but the very wealthiest citizens. Building on existing cross-national work on the roles of unions in welfare states, I provide evidence that organized labor, as a political institution, limits unequal income distributions in the U.S. states. The states are useful to our understanding of labor’s influence on inequality as states differ in their acceptance of labor unions, base levels of inequality, political preferences, industries, and levels of development but are all nested within a single overarching national framework. Over the 39-year period examined, states where unions maintain more members remain more equal within the labor market and after redistribution via government transfer. These effects persist after accounting for state-level policy, demography, and economic conditions. However, states where union membership has the largest influence on inequality have also seen growing attempts to reduce unionization rates. Overall, I find that unions are still able to limit the growth of economic inequality in spite of declining levels of union membership.

Do We Need a Universal Basic Income? A Debate.

Source: Matt Bruenig, rebuttal by Rohan Grey and Raúl Carrillo, In These Times, June 2018

Getting free money from the government is popular. But would it prop up capitalism?

Related:

Do We Need a Federal Jobs Guarantee? A Debate.
Source: Rohan Grey and Raúl Carrillo, rebuttal by Matt Bruenig, In These Times, June 2018

Sens. Kirsten Gillibrand, Cory Booker and Bernie Sanders have all proposed a job guarantee. But would it be drudgery?

Race, Economics, and Social Status

Source: Reginald A. Noël, Bureau of Labor Statistics, Spotlight on Statistics, May 2018

Social and economic status of an individual or group can be measured as a blend of wealth, income, occupation, and education. Other contributors to social and economic status include race, ethnicity, home ownership, family size, family types, and even types of foods purchased. The combination of social and economic status can reveal a group or individual’s unequal access to resources, privilege, power, and control in a society. This Spotlight on Statistics examines Consumer Expenditure Survey data to explore the patterns of social and economic factors by race and ethnicity.

Workers’ wages fall after passage of GOP tax cuts

Source: Ryan Koronowski, ThinkProgress, June 13, 2018

Trump’s corporate tax cut hasn’t benefited workers like he said it would.

Related:
Real Earnings Summary – May 2018
Source: Bureau of Labor Statistics, Economic News Release, USDL-18-0996, June 12, 2018

All employees
Real average hourly earnings for all employees increased 0.1 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.3-percent increase in average hourly earnings being offset by a 0.2-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings increased 0.1 percent over the month due to the increase in real average hourly earnings combined with the unchanged average workweek.

Real average hourly earnings were unchanged, seasonally adjusted, from May 2017 to May 2018. Combined with a 0.3-percent increase in the average workweek, real average weekly earnings increased by 0.3 percent over this period. ….

…. Production and nonsupervisory employees

…. From May 2017 to May 2018, real average hourly earnings decreased 0.1 percent, seasonally adjusted…..