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Jared Bernstein

Jared Bernstein

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

Articles by Jared Bernstein

A wounded Trump is an especially dangerous Trump: Thoughts on his proposed economic pivot.

9 days ago

When I first heard that Trump and some other conservatives were making the case for punting on containment of the virus in the interest of reflating the economy, I ignored it because it made no sense to me. It still doesn’t, but from what I’m seeing, the idea seems potentially serious enough to warrant a response.
There are at least three reasons this pivot idea is nonsensical.
First, Trump may admire and aspire to emulate authoritarian leaders, but he has no such powers. He did not close my workplace and he cannot reopen it. To be sure, I’m not discounting his bully pulpit and he surely has the capacity to undermine containment efforts with deadly consequences by telling people to get back to work and go out to restaurants, etc. But especially if many more people get sick—the predictable

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Yes, this is an emergency. No, that doesn’t justify a $500 billion Trump/Mnuchin slush fund.

10 days ago

By Jared Bernstein and Dean Baker
While the indicators are lagging, the U.S. economy is in a recession that will very likely be extremely deep. It’s likely that real GDP falls at double-digit pace in the quarter that begins next month and the unemployment rate more than doubles. If that sounds implausible, history shows that in sharp downturns, the unemployment rate takes the elevator up and the stairs down.
To their credit, after a slow start Congress appears to have grasped this urgency and is working around the clock on what may turn out to be the largest stimulus package in our history, with a price tag of $1-2 trillion, or 5-10 percent of GDP (the Recovery Act was $800 billion over two years, roughly 2 percent of GDP). Given that fighting the virus essentially calls for putting the

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Jobs report: Calm before storm as the virus hasn’t hit the job market…yet

27 days ago

In yet another upside surprise to the U.S. labor market, payrolls grew strongly last month, up 273,000, well above expectations. Upward revisions to earlier months show that contrary to what many have expected, the monthly pace of job gains has accelerated in recent months. The unemployment rate held steady at 3.5 percent, but wage growth, which has been remarkably unresponsive to strong labor demand, remains a soft spot, stuck at 3 percent, year-over-year, just slightly ahead of consumer inflation which is running at around 2.5 percent.
Calm before the storm
As our smoother shows, averaging monthly payroll gains over various time spans, over the past 3 months, payrolls are up 243,000 per month. Over the past year, they’re up less than that: 201,000. Given that most labor market analysts

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Rockefeller Foundation launches an equity/opportunity investment targeting low-income people/places.

February 25, 2020

It’s takes a village–a robust suite of policies and institutional supports–to reconnect a lot of people and places who’ve long been left behind to overall economic growth.
There are roles for government at all levels, with the federal gov’t poised at the top, both in terms of setting policy precedents and financing sub-national initiatives (remember, states can’t run deficits). There are roles for market-oriented, or pre-tax and transfer policies, like persistently tight labor markets and minding the impact of imbalances in credit markets and trade accounts. There are roles for tax and transfer programs, and not just counter-cyclical roles, but investment roles as well. And there are roles for philanthropic foundations, roles that are especially important in ensuring that existing programs

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Another solid jobs report, with lots of evidence that there’s still room-to-run in this labor market.

February 7, 2020

Employers added 225,00 jobs last month as the unemployment rate ticked up slightly to 3.6 percent, largely due to more people entering the job market, yet another sign that there’s still room-to-run in this long labor-market expansion. Wage growth, a perennial soft spot in recent jobs reports, ticked up slightly to a yearly rate of 3.1 percent, around where it has been for much of the past year. That’s ahead of inflation, last seen running at 2.3 percent, but the fact that the wages have not accelerated suggests some degree of slack remains in the job market (other wage and compensation series show roughly similar stability).
Our monthly smoother pulls out trends in job growth by averaging monthly gains over 3, 6, and 12 months. The pattern it shows is interesting and revealing. Over the

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Dr. King knew that full employment raises the price of prejudice

January 20, 2020

There are so many reasons to celebrate the life, work, and legacy of Martin Luther King, Jr., whose birthday we celebrate today. The dimension I like to elevate is Dr. King’s profound understanding of the importance of full employment to the opportunities of black Americans. Remember, the full name of the March on Washington was the March on Washington for Jobs and Freedom (my bold). A sign some of the marchers held that day told of a simple but powerful equation: “Civil Rights Plus Full Employment Equals Freedom.”
Dr. King’s insight was born of the recognition that racial discrimination by employers is costless in slack labor markets. With abundant excess labor, racist employers could handily indulge their prejudices. But when the job market tightens up and stays tight, that strategy

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2019: A robust year for job growth; less so for wage growth

January 10, 2020

Payrolls rose 145,000 last month, capping off a strong year for job gains with payrolls up 2.1 million over the year, an average of 176,000 per month. These are solid numbers, especially at this stage in a uniquely long expansion, but as we show below, their magnitude is well within historical context. In fact, in percentage terms, employment growth in 2019 posted the slowest growth rate (1.4%) since 2010. This, however, is to be expected, as such growth rates typically decelerate as recoveries grow older and the labor market closes in on full capacity (see data note at the end of this post).
The unemployment rate ended the year at 3.5%, a fifty-year low. Wage growth, however, disappointed last month, and has clearly decelerated in recent months, even at low unemployment. This important

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Back-up evidence for WaPo piece on most important econ lessons of the decade

December 23, 2019

Here are the companion figures to my WaPo piece today on econ lessons of the decade.
1) The unemployment rate can fall a lot lower than most economists thought without triggering inflationary pressures.

2) Budget deficits cannot be assumed to place upward pressure on interest rates.

3) Weak worker bargaining power has long been a factor driving inequality. In the last decade, the increasing clout of certain employers has joined the mix.
Source: NY Times
4) Progressive health care reform, wherein the government plays a larger role in coverage and cost control, works.
Source: Paul Van de Water, CBPP
5) [Lesson re-learned] Trickle-down tax cuts don’t work.
Source: Goldman Sachs
6) Antipoverty programs don’t just reduce poverty today; they improve the outcomes of their beneficiaries many

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CBPPs best graphs of 2019!

December 19, 2019

For a certain breed of wonk and nerd, it’s not the holiday season until some of CBPP’s best graphs of the year are collected and briefly annotated. This year, Kathleen Bryant and I took a stab at picking some of the figures we thought were most important to document the economic and policy landscape facing economically vulnerable people.

One of the most important and positive trends of the last decade was the decline in share of Americans without health coverage due to the Affordable Care Act. Their numbers fell from about 45 million to 27 million, a gain in coverage for ~18 million people. But this year’s release of the Census Bureau’s health insurance data revealed a troubling reversal of this trend. In 2018 (the data lag one year), the uninsured rate increased for the first time since

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November job gains beat expectations, as Wal S’yas (reversed Say’s Law) takes hold

December 6, 2019

Payrolls rose by 266,000 last month and the unemployment rate ticked down slightly to 3.5%. Hourly wage growth for all private sector workers remained where it has been, up 3.1%, year-over-year, while the pay of lower-wage workers–the 82% of payroll employment that’s blue collar in factories and non-managers in services–has been trending up a bit, and was up 3.7% last month (a slight tick down from 3.8% in October). With inflation running around 2%, this translates into solid real wage gains for these workers. The stronger trend for lower-paid workers is also a reminder of who disproportionately benefits from persistently high-pressure labor markets.

The November jobs number of 266K was boosted by the return of almost 50,000 strikers due to the end of the GM strike. Thus, much like we

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Things to like, not like, and to be unsure about re Sen. Warren’s M4A plan (along with a mea culpa)

November 5, 2019

Along with many others, I’ve had lots of things to say about Sen. Warren’s Medicare for All (M4A) plan, some positive, some negative, some head-scratchy. But because the issue is so politically loaded, both in terms of the Democratic primary and conservative antipathy toward this or any other idea that expands government’s role in health care, and also because of my association with VP Biden, it’s been hard to have a straight up policy discussion.
In a CNBC TV debate, for example, I was asked what I thought about how Sen. Warren’s numbers added up. I responded, “In terms of making the numbers add up — yeah, there are a lot of questions there, but in fact I think she’s done a very good job of focusing the debate on those questions.” Later, an article showed up without the last half of the

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October jobs report: Robust job growth minus wage pressure equals NOT-full-employment.

November 1, 2019

Payrolls rose 128,000 last month, well above expectations for 85K, and job gains in the prior two months were revised up by 95,000 (a sizable upward revision). Also, the October gain of 128K was dampened by the absence of about 50,000 striking workers at General Motors who are now back at work as the strike ended. In other words, despite slowing global growth, political uncertainty, weakening trade flows hit by the trade war, the U.S. job creation machine remains in high gear.
What’s missing–and it is a serious omission–is wage growth. Yes, wages are rising at a decent yearly clip of around 3% and importantly, they’re beating inflation which is running below 2%. But if anything, wage growth, at least for the series in this report, has decelerated in recent months (see figures below;

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September jobs report: solid, slowing, and not yet at full employment

October 4, 2019

Payrolls rose 136,000 last month and the unemployment rate dipped to 3.5 percent, its lowest rate since the late 1960s. Though the payroll number missed analysts’ expectations (~145,000), the more reliable 3-month average came in at a healthy 157,000, strong enough to put downward pressure on unemployment (the prior two months of payroll data were revised up by 45,000 jobs).
Our monthly smoother takes 3, 6, and 12-month averages of monthly job gains to help pull out the underlying trend out of the noisier monthly data. Over the past 6 months, payroll gains have average 154,000, a deceleration from the 12-month number (179K), but such a pattern is expected in an economy closing in on—though not yet at—full employment.

Wage growth for private-sector workers was up 2.9 percent over the past

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Got work? The highly responsive labor supply of low-income, prime-age workers.

October 3, 2019

[Note: this is draft of a forthcoming paper for CBPP’s Full Employment Project. I posted it here first as I will be referencing its findings at a Brookings inflation conference on Thurs, Oct 3.]
By Jared Bernstein and Keith Bentele[i]
Introduction
The benefits to running a hot labor market continue to be evident both in the data and in anecdotal accounts. In our last paper, we examined the monetary policy rationale for allowing high-pressure labor markets to continue to flourish.[ii] We also focused on the benefits of persistently low unemployment to lower income workers, through both higher real pay and more hours of work. In this short paper, we turn back to this evidence, with a closer focus on the benefits of high-pressure labor markets to the labor supply of lower-paid workers.
The

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The King of the Blues Birthday!

September 16, 2019

Google tells me that today would have been BB King’s 94’th birthday, so I got my booty over to YouTube to queue up one of my fav BB jams–Let’s Get Down to Business! BB crushes it, of course, but also dig busy-yet-funky electric bass playing by Jerry Jemmott.
“Whatever made us breakup baby
I don’t know til today
But if it was my fault
I swear I’ll change my ways!”

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How hot labor markets can lead to misleading median comparisons.

September 10, 2019

The Census income and earnings data sometimes have a confusing characteristic that is not uncommon in these sorts of data, especially in periods of tight labor markets, as was 2018. The issue has to do with changes in medians from one year to the next.
For example, the data that came out this morning showed that for both men and women full-time, full-year workers, real annual earnings rose 3.4 and 3.3 percent, respectively, 2017-18. But for all ft/fy workers, combining both genders, earnings fell 0.6 percent. The decline was statistically insignificant, but jeez–that’s confusing, right? Why would earnings fall, overall, in a year with a clearly solid job market, especially when both genders did pretty well?
A number have folks have asked me about this today–a similar dynamic is in the data

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The 2018 Poverty, Income, and health coverage results: a tale of three forces.

September 10, 2019

This morning, the Census Bureau released new data on health insurance coverage, poverty, and middle-class incomes. While the data are for last year, they shine an important light on key aspects of families’ living standards that we don’t get from the more up-to-date macro-indicators, like GDP and unemployment.
As the economic recovery that began over a decade ago persisted through 2018, poverty once again fell, by half-a-percentage point, from 12.3 percent to 11.8 percent. Other results from the report show that anti-poverty and income support programs lifted millions of people out of poverty, including 27 million through Social Security alone. Though the real median household income—the income of the household right in the middle of the income scale—increased slightly less than 1 percent

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Payrolls slow and the trade war is hurting manufacturing. But underlying job market still solid.

September 6, 2019

Payrolls rose by 130,000 last month and the unemployment rate held at 3.7 percent, close to a 50-year low and the same level as the past 3 months. Still, job growth is cooling (25,000 of this month’s gains were temporary decennial Census workers), as the pace of monthly gains, while still strong enough to support low unemployment, has slowed. Wage growth also stayed parked at about where it has been in recent months, and there’s some evidence that the trade war is taking a toll on factory jobs. However, the job market remains strong, real wages are growing, and consumer spending will continue to be supported by these dynamics.
The slowdown in payrolls
To get a clearer take on the underlying trend in job growth, our monthly smoother shows the average monthly gain over 3, 6, and 12-month

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The NYT wrote a woefully imbalanced piece on Opportunity Zones.

September 3, 2019

A number of people (OK, four…but it’s early) have asked me to respond to the NYT piece from last Sunday on how the Opportunity Zone tax break is nothing but a boon to the rich. As I’ve written in a few opeds, I’ve been a cautious supporter of the program, though I’ve been careful to make the points that a) it’s too early to say much about outcomes, and b) while OZs have the potential to become a wasteful tax shelter mechanism, some early signs are hopeful. And, as the Times points out, some early signs are not.
The problem is, the piece was a list posing as an analysis. It just lists many examples of rich people getting the tax break through the program without a shred of evidence that poor people and places aren’t getting helped. That’s largely because, as noted, it’s simply too early to

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Recession Readiness and State UI Trust Funds

August 22, 2019

Given the recent dramatic spike in media coverage of our economic headwinds and recession readiness over the past week, we decided to take a closer look at the balance sheets of state unemployment insurance (UI) trust funds. While the Department of Labor (DOL) is responsible for overseeing the UI system and paying administrative costs, the basic program is managed and mostly funded by the states. Using the most recent final data available from the Treasury Department, we analyzed the number of state UI trust funds that meet DOL’s recommended minimum solvency standard. This standard is measured using a ratio called the  “Average High Cost Multiple,” where a value of 1 means that trust fund reserves could pay out at least 1 year of benefits during a recession of average depth– states with an

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A quick note on China’s devaluation

August 5, 2019

Source: WSJ
Just back from ranting about this on CNBC so I’ll quickly share some thoughts on the news that the Chinese yuan broke 7/$, in a depreciation that threatens trade-war escalation.
Bottom line: the trade war may be about to get worse, and that won’t be good for markets, consumers, and the global economy. It’s hard to see a way out between these two sides, though electoral politics could force Trump to stand down next year.
The numbers:
–Depreciations offset tariffs. That is, a 10% tariff, paid by importers and passed forward to consumers, is fully offset by a 10% depreciation. This is especially relevant in the case of Trump’s latest plan to place a 10% tariff on $300 billion more in Chinese goods, two-thirds of which are consumer goods (shoes, apparel, toys, cell phones). Earlier

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Still a solid job market, but with a cloud or two

August 2, 2019

Payrolls rose 164,000 last month and the unemployment rate held steady at 3.7 percent. Wage growth accelerated very slightly–3.1% in June to 3.2% in July (year-over-year nominal hourly pay)–but it has been roughly stalled just north of 3 so far this year.
Downward revisions for the prior two months–May and June–appear to have slowed the underlying trend in job growth. In our report from last month, we showed the 3 and 6-month trends to be 170K jobs per month. As this month’s jobs smoother shows, both the 3 and 6 month averages are now about 140K.

Part of this is deceleration is because two big job months–January and April–dropped out of the 6 and 3 month averages, so this slowdown may not stick. But if it does, it raises the question of whether job growth is slowing because long expansion

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Sharing the wealth, or at least the compensation

July 30, 2019

Twitter econ asked for my historical ECI series, so here you go. See tab “finaltbl.” For columns B and C–pvt industry–I do a small splice re older data which you can track through the spreadsheet. For cols D & E–these are “all civilian” and are the series we use for our wage mashup–I don’t bother splicing. I doesn’t really make a difference as splice factor is tiny for toplines (they matter more for industries).
Now, in return, I want gobs of twitter love and a wage series to be named later.

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Some responses to the responses to my “4-economic mistakes” piece.

July 22, 2019

I got lots of interesting feedback on a piece I wrote for Vox about long-held but empirically wrong assumptions in some key areas of economics, assumptions that have been asymmetrically harmful. That is, their costs consistently fall on those with low- and moderate incomes and their benefits help the wealthy.
Some argued that I didn’t go far enough. Dean Baker, a friend and frequent co-author, argued that I pulled punches regarding globalization, which “…was designed to hurt workers. We could have had globalization where we reduced IP barriers and trade in professional services (e.g. doctors).” (Baker explores such themes in his book Rigged, a close, older cousin of themes in my Vox piece.) Various respondents added other harmful policies supported by bad economics, such as Kevin Drum’s

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Here’s a simple way to tell if someone (like the Nat’ Restaurant Assoc.) is abusing numbers to mislead.

July 19, 2019

One sure way to tell in someone is making a biased argument is showing up in various statements by those who oppose the proposal to raise the minimum wage. I wanted to be sure to elevate this dastardly ploy, as it’s a tell that someone is trying to win an argument based on their bias, not on the evidence.
Here’s a tweet from the National Restaurant Association, a group that’s honor bound to oppose the minimum wage, and here’s the same ploy from a Texas Republican member of Congress. In both cases, they exclusively characterize the CBO’s job loss estimate from the agency’s recent minimum wage report as “as many as 3.7 million.”
Now, if you’ve been following the debate over the CBO’s findings, you’ve probably heard the number of jobs lost cited as 1.3 million, not 3.7 million. Here’s how the

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No question, the unemployment rate paints an incomplete picture…and yet…

July 15, 2019

It’s long been understood by anyone trying to assess the labor market that the unemployment rate is, by itself, not up to the task. Most importantly, it leaves out those not looking for work, but it’s also not adjusted for demographic change, nor does it factor in those who are working fewer hours than they’d like. It combines racial groups with persistently different levels of unemployment. At times like now, these shortcomings can lead this premiere indicator to underestimate the extent of slack in the job market.
This WSJ article from yesterday–“For decoding labor market, unemployment rate may not do the job”–is but the latest salvo in this healthy discussion about the need for a dashboard, not a single dial.
And yet, most of us, when trying to provide a quick overview of economic

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Judy Shelton and her sponsor—President Trump—want to tie the hands of the Fed

July 10, 2019

When someone seeking confirmation to high office has a paper trail fraught with positions antithetical to their confirmation, their theme song quickly becomes Shaggy’s It Wasn’t Me, as they flip and flop to disavow their earlier convictions.
The most recent purveyor of this strategy is Judy Shelton, one of President Trump’s most recent likely nominees for the Federal Reserve. Ms. Shelton, who worked on Trump’s campaign and transition team, currently holds a Senate-confirmed position as the U.S. representative to the European Bank for Reconstruction and Development.
After reviewing her writings and comparing them with what she’s saying in her current campaign to get the Fed job, I’m convinced that her appointment would be extremely problematic for at least two reasons. One, she would try to

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Why a Fed rate cut makes sense

July 9, 2019

[written with Mark Zandi, chief economist of Moody’s Analytics]
This is a post about one-quarter of one percent.
That’s the amount by which the Federal Reserve is expected to reduce the federal funds rate, the key interest rate they control, when they meet at the end of this month. If that sounds like too small a change to get worked up about, we assure you, Fed rate changes can be a big deal, especially when they change direction. The central bank had been steadily raising rates over the past several years, and only just a few months ago was predicting further rate increases this year and next.
The decision to cut rates has become a bit more complicated, as last week’s solid jobs report weakened the case for the cut. Why add interest-rate stimulus to an economy that’s already going

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More evidence–this time from CBO–that higher (even much higher) minimum wages largely do what they’re supposed to do.

July 8, 2019

Raising the federal minimum wage to $15 per hour by 2025 would lift the pay of 27.3 million workers—17 percent of the workforce—according to a new report from the Congressional Budget Office. It would raise the incomes of poor families by 5 percent and thus reduce the number of people in poverty by 1.3 million. Since these low-end gains would be partially financed out of profits, the increase in the wage floor would reduce inequality.
CBO also estimates that “1.3 million workers who would otherwise be employed would be jobless in an average week in 2025.” Because economists’ estimates of the job-loss effects from minimum wage increase are so wide-ranging—some studies find little-to-no job loss impacts; other find more—CBO estimates that there’s a two-thirds chance that the actual change in

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July jobs: nice pop on payrolls but flat wage growth

July 5, 2019

[This jobs report is an important one in terms of assessing the impact of headwinds on the job market, but because it’s sort of a holiday, I’ll just offer up a truncated, bullet-point report. As always, thanks to Kathleen Bryant, who got up early on vacation to help me out!]
Toplines:
–Payrolls rose 224,000 last month, well above expectations for ~165K. Though we never want to over-weight one month of noisy data, that’s an important number, suggesting that building economic headwinds haven’t dented job creation much yet at all.
–Our monthly smoother shows average monthly job gains over 3, 6, and 12-month windows. Even including May’s weak 72K (revised) gain, the average over both the past 3 and 6 months has been around 170K jobs/month. That’s a slight downshift from the 12-month average

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