Wednesday , September 26 2018
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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

Nerd Alert. This is not a test. New BLS data on employer costs by percentiles!

4 days ago

You go, BLS!
The Bureau of Labor Statistics just released a new data series derived from the Employer Costs for Employee Compensation series. These ECEC data have been around for awhile–they’re the basis for the more commonly cited Employer Cost Index data*–but only for averages (see Technical Note here if you want more info). Now we have compensation, wages, and benefits for the 10th, 50th (median), and 90th percentile. I consider these to be high quality data that, relative to other series, provide a more fulsome look at the full compensation package.
At this point, the data only go back to 2009, with first quarter data through this year (i.e., all the data that follow are for the first quarter of the year in question).
And now, without further ado, here’s my initial analysis of these

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Some greatest hits of the 10-year lookback pieces on the crisis.

9 days ago

I’ve read probably 100 of those “lessons learned (or not)” pieces about the crisis on the 10-year anniversary of Lehman’s collapse.
Here are some that stood out to me, though one inevitably leaves out some worthy of your attention, so feel free to add others. (My own piece is out today on WaPo.)
–I found this Steve Pearlstein piece interesting on a couple of levels. It’s a solid take of the shampoo economy dynamics (bubble, bust, repeat) that I’ve long bemoaned, citing the insights of Minsky’s analysis (by putting financial cycles and regulatory amnesia at the heart of his model, Minsky explains a reality that conventional economics, which assigns finance a benign, intermediary role, assumes away).
But on a deeper level, as someone who’s read Pearlstein’s work over the years–he’s long been

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New Census data show that low-income people are responding as they always do to tight labor markets…by working!

13 days ago

One of the particularly frustrating, fact-free aspects of the conservative push to add (or ramp up) work requirements in anti-poverty programs like Medicaid or SNAP is that low-income people who can do so are already working hard. Moreover, as the job market tightens, they respond to tightening conditions.
Using the new Census data, Kathleen Bryant and I, with help from Raheem Chaudhry, used the 2017 microdata (the data on which the poverty and income numbers are based) to compare the employment rates of low-income single mothers (with incomes below twice the poverty threshold) with prime-age (25-54), non-poor adults. We found that between 2010 and 2017, the employment rates of the low-income single moms increased by 5.4 percentage points (67.7% to 73.2%), while those of non-poor adults

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Poverty and middle-class income data out tomorrow morning

14 days ago

It’s that time of year again, when the Census Bureau releases its poverty, income, and health-insurance coverage data for 2017. I’ll get a write-up out as soon as I can after the 10am data release, but be forewarned: these data are more complicated and a lot less standardized than, say, the BLS jobs data. So, it will take a few hours to chew through them.
For what it’s worth, which isn’t much, as recent survey changes make these data tough to accurately forecast, my predictions are that poverty fell half a point last year (from 12.7% to 12.2%) and real median household income grew about 1.7%. If so, both changes would be statistically significant gains.
But they would be smaller gains than the prior two years, and one reason for that, if I’m in the ballpark, will be that inflation was a

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A couple of economists respectfully disagree on the politics of policy in the age of Trump and the new socialists

16 days ago

Belle Sawhill is an economist I greatly admire, so I carefully read her Twitter-thread critique of a piece I recently posted in the WaPo.
My piece makes the case that technocratic policy wonks, like Belle and me, should not be overly critical of ambitious, even unrealistic, policy proposals by the new socialists. True, they often eschew the path dependency by which many of us are constrained. But they signal to key constituencies that, relative to establishment or centrist Democrats, they’re going to bring a new, aggressive fight to the powerful, well-endowed forces that have long been aligned against the progressive agenda.
I argue that:
“What Trump should have taught us by now is that if people believe you’ve got their backs, you can do things never imagined by the status quo. In this

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Jobs Report: A long-awaited wage pop that’s hopefully part of an emerging trend

19 days ago

Payrolls grew 201,000 last month, and the unemployment rate held steady at 3.9 percent in yet another in a long series of strong job reports (at 3.853 percent, the rate just missed a tick down). Though there are still some people and places who’ve been left behind, the U.S. labor market remain solidly in the midst of one of its longest expansions on record, with no signs of strained capacity or overheating.
Hourly pay for private-sector workers is a standout in today’s report, up 2.9% over last year, its strongest posting since 2009. Though we don’t yet know August inflation, my guess is that it comes in lower than that, perhaps ~2.6 percent, implying a much-needed gain in real hourly wage growth. For middle-wage workers (the 82 percent of the private workforce covered by the Bureau’s

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Thumb on the scale: correcting the CEA’s corrections re real wage growth.

19 days ago

By Jared Bernstein and Larry Mishel
President Trump’s Council of Economic Advisers has a new piece out claiming to show that real wages are growing faster than has been widely reported. Their conclusion stems from numerous adjustments to Bureau of Labor Statistics wage data that otherwise show flat real earnings for most workers.
However, most of CEA’s adjustments, applied accurately, do not change the inconvenient fact that even amidst strong macroeconomic results and a tight labor market, real wage growth for middle-wage workers has been weak over the past two years. That may change, if falling unemployment triggers faster wage growth, but at this point, measurement tweaks make little difference to the conventional wisdom, at least over the short period covered by the CEA report. As

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ISDS and the US

28 days ago

I’ve been touting the fact, i.e., as I understand it, that this new US/Mex NAFTA agreement just struck yesterday largely gets rid of investor dispute rules (investor state dispute settlement, or ISDS) that many progressive have long complained about. (To be clear, whether this deal is going anywhere is a whole other story; I’m skeptical.)
I’m working on a piece about how the new deal looks a lot better for workers on both sides of the border than prior agreements, but re ISDS, the very knowledgeable Lori Wallach tell me it “ends the possibility of any future U.S.-Canada ISDS cases. This is huge given major US-Canada cross investment.” For Mexico, where domestic courts are less reliable, investors who want to bring a case must first exhaust domestic court and administrative remedies, before

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Links; some wage thoughts

August 23, 2018

A few WaPo entries for your entertainment:
—A deeper dive into similarities shared by Trump and Erdogan. And yet, despite their…um…sub-optimal leadership, our economy booms and Turkey’s tanks. I focus on what that has to do with a) dollars, and b) Fed independence.
—My old pal Kudlow is sounding off on how the US economy is just “crushing it!” under Trump. Yeah…not so much. Co-written with Cong. Ro Khanna, who has some highly worthy legislative proposals in the mix which we link to in the piece.
Turning to other econ news, from the minutes of the latest Fed meeting, here’s their thoughts on wages:
Many participants commented on the fact that measures of aggregate nominal wage growth had so far picked up only modestly. Among the factors cited as containing the pickup in wage growth were low

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Lynx; Trump/Erdogan: compare and contrast

August 14, 2018

Recent links to WaPo pieces:
Productivity and wages: They’re connected, of course, but the extent of the connection requires nuanced analysis of wages at different percentiles and movements in labor’s share of national income.
There’s an interesting dichotomy here in how economists and people think about productivity and wages. For many economists, it’s the determinant of wage growth. For many people, it’s irrelevant, in that powerful forces divert productivity growth from paychecks to profits. The truth, especially once you get away from averages, lies in-between. Productivity matters a great deal, but it is not by itself sufficient to drive broadly shared prosperity.
Employment rates also matter a lot: They take the elevator down in recessions and the stairs up in recoveries. They also

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Trump 2020 game plan: Fake Laffer, Go Keynes.

August 5, 2018

I’m genuinely sorry to intrude on your Sunday like this, but this new forecast (no link) from the highly-skilled Goldman Sachs economic research team (GS) has me completely on shpilkes. I’ll make it brief, but not painless.
Back when the tax cut passed, this figure, also from GS, previewed an important fiscal fact about to unfold: outside of wartime, the Republican tax cuts and other deficit spending would add more fiscal juice to an economy already closing in on full employment than we’d ever tried before outside of wartime (note that the right-side scale is inverted; the point is low unemployment is usually associated much smaller deficits than we have now).

Here’s what I wrote at the time:
How unusual is [the divergence at the end of the above figure]? Well, looking at data back to

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July’s Jobs Report: Solid jobs but little wage acceleration

August 3, 2018

Summary: Today’s jobs report shows the U.S. labor market remains in a strong groove, with payrolls up 157,000 last month as the unemployment rate ticked down to 3.9 percent. The broader underemployment rate (“U-6”)–a more comprehensive measure of labor market slack–fell to 7.5%, its lowest rate since 2001, thanks to more part-timers finding the full-time jobs they seek.
Wage growth, however, remains a sore spot and despite further tightening, did not accelerate.
Expectations were for a higher payroll number–190,000–but these monthly data are noisy. To better pull out the underlying signal, we apply JB’s monthly smoother that takes average job gains over 3, 6, and 12-month periods (these averages include a combined revision of 59,000 jobs added to the May and June payroll gains). As shown,

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Breaking News: Trump’s chief economist says some reasonable things! (And some other stuff, too.)

July 27, 2018

I was just on MSNBC with Ali Velshi talking about today’s GDP report (here’s my take). I came on right after Ali interviewed Kevin Hassett, the chair of Trump’s Council of Economic Advisers. Since Ali and I were so engrossed in GDP talk, I didn’t get a chance to note some of the things Kevin said that were on point, and since you don’t get a lot of that from this crew, and because I’ve been highly critical of this CEA’s work in other areas, let me agree with some of Kevin’s points but also point out where I think he goes wrong on a very important matter: the lack of real wage growth in the current economy.
Kevin said:
–Real GDP growth is likely to hit the CEA’s 3 percent forecast for the year 2018: In an administration that’s constantly throwing around random 4s, 5s, and 6s re GDP growth,

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Prepping for Friday: What’s trend GDP growth?

July 23, 2018

This Friday morning at 8:30, we’ll see the first estimate of GDP for 2018Q2. Various trackers have it coming in at or above 4% (that’s the real, annualized quarterly growth rate). It’s that ballpark correct, as I expect it is—the trackers use much of the same incoming data as BEA—it will be a big political football, but that’s not the purpose of this post. Here, I’d like to think about the best way to pull out the underlying trend of real GDP growth.
While team Trump will be going bananas for any number with a handle of 4 on it (as would, to be fair, even a normal administration), it’s widely agreed upon by long-time GDP watchers that any single quarter should be down-weighted, and even more so if it’s an outlier (i.e., well above or below trend). But the concept of outlier implies the

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Responding to questions re my wage oped.

July 19, 2018

I’ve got a piece in the NYT on the cyclical, and more importantly, structural factors, that have long suppressed real wage gains. I’ve gotten many interesting responses, some of which I’ll address here.
Inflation: As I stressed in the piece, the ups and downs in price movements have been instrumental in recent years. A lot of this is energy prices, which crashed in 2015 and have picked up of late. If energy prices pull back, especially as unemployment falls further, real working-class pay should get a boost.
But the concerns I stress in the piece, especially the collision of stronger institutional and corporate anti-worker forces with weaker pro-worker forces, are robust to a short periods of real gains. This raises another good question I got, which I’ll tackle below: what is it you’re

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Team Trump’s phony poverty argument, GDP growth v. chaos, and a little e.g. of where an FTT would come in handy.

July 17, 2018

First, Trump’s Council of Economic Adviser abuses data and logic to conclude that work requirements would help poor people. Over at WaPo.
Next, I will not stray from my lane and comment on what everybody’s thinking about today: the summit from Hel…sinki. I will share this Steven Colbert clip, to which I’ve nothing to add.
I do, however, find it interesting that amidst all this madness–which feels too much like an existential threat to American democracy from within–the US macroeconomy is, if anything, stronger. Obviously, I’m all about the distribution of GDP growth, which remains a serious problem. Also, quarterly GDP numbers are jumpy and it’s a far more limited measure than we generally admit. But the latest GDPnow forecast for Q2 (data out late next week) is 4.5%, which is about 2.5%

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Lynx, trade politics, a super swingin’ slice of Kelly Roll, and a bit of pop psychology re JOMO

July 12, 2018

Trade policy has been really interesting of late. I get into the economics of what I think is going on here and here. The first piece makes the argument that Trump is fruitlessly and fecklessly trying unscramble the globalization omelet. The second takes on–with help from a great, new Susan Houseman paper–the incorrect but pervasive notion that the increased pace of labor-saving technology is responsible for manufacturing job loss.
I don’t get into the politics of trade in these pieces because I can’t clearly figure it out. Yesterday someone asked me, “where are the Democrats on trade policy right now” and I hemmed and sputtered until he walked away. For years, a large flank of D’s have opposed trade deals they judged to be unfair to workers and consumers, warned about China’s

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Why I’m not paying too much attention to the flattening yield curve.

July 9, 2018

As Nick Timiraos ably describes, there’s a debate afoot about how seriously to take the flattening and possible future inversion of the yield curve. I got into this a bit last week, pointing out that the signal from the yield curve is a lot more ambiguous than usual (my conclusion was that we should worry a lot more about how we’re going to offset the next recession versus when it’s coming, which is not reliably knowable).
One reason for this ambiguity is the very low term premium on long-term bond yields (see figure). Longer-term interest rates, like the yield on the 10-year Treasury, can be broken up into the expectation of the average of future short-term rates and the term premium, or the extra yield investors require to lock up their money for the term of the loan. Since it’s thought

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More solid job gains, but no real wage growth

July 6, 2018

In the latest solid report on the conditions in the US labor market, payrolls grew by 213,000 in June, and labor force participation ticked up two-tenths, as more people were pulled into the improving labor market. This led to a two-tenths tick-up in the unemployment rate to 4 percent (really, 30 basis points up, from 3.75% to 4.05%). Wage growth stayed at 2.7 percent, the same pace as last month, and the average since last December. It is also worth noting that inflation is now growing at about the same rate as wages, so, in one of the less impressive aspects of the current job market recovery, real hourly pay is flat.
As the economic expansion that began in June of 2009 enters its tenth year, the enduring recovery has moved the job market closer to full employment. However, the key

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Lnyx, potential auto tariffs, yield curves and recession

July 4, 2018

Happy 4th.
Now, down to biz.
Over at WaPo, I reflect on how to get back to WITT (we’re-in-this-together), away from YOYO, and note how the Democratic Socialists are plowing similar ground.
Next, I see where the president is thinking about imposing 20% tariffs on imported cars and car parts. Oy. Once again, I don’t see how this helps anyone, including American car producers and especially American workers/consumers.
Apparently, his motivation was seeing too many foreign cars on our streets. Look, I’m all for gut instinct, but you then need to check out whether your gut is accurate or if that was just a gas bubble. (A hint that it might have been the latter stems from the acronym of a bill the administration is allegedly working on to take us out of the WTO called the United States Fair and

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Musical interlude: Mozart at his best

June 20, 2018

I just stumbled on this performance of what may be my favorite Mozart concerto. It’s the one for violin and viola, overflowing with amazing melodies, counterpoint, and interplay between the soloists. And this performance is as good as it gets, not just the soloists* but the orchestra, which provides perfect accompaniment–note their dynamics, going from a whisper to a roar, while never stepping on the soloists toes–without, you’ll notice, a conductor. Plus, they’re standing up the whole time (not the cellists, of course, but that’d be too much to ask of them).
Enjoy!
*Not taking anything away from the violinist, whose tone/intonation/interpretation sounded perfect to me. But you rarely hear such equally perfect viola playing in this concerto. I suspect Mozart, who played the viola himself,

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A quick note on the rise of dollar il-liquidity. Worrisome? Not worrisome??

June 20, 2018

Between the fiscal stimulus, the Fed, and the tax cuts (which are, of course, a big source of the stimulus), the global supply of dollars is getting squeezed, which is, according to various reports, pressuring some emerging market economies (EMs). How seriously should we take this and what might its impact be on the US economy? To telegraph my conclusion, I suspect these developments will lead to higher US interest rates and a stronger dollar than would otherwise occur. The stronger dollar, in tandem with the fiscal stimulus, could put upward pressure on the trade deficit, even with all the tariffs intended to push the other way. Neither derails the recovery, but they are risks.
There’s been a number of recent articles worrying about the impact of “dollar il-liquidity” in EMs. We’ve got

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A few lynx

June 18, 2018

Over at WaPo, I provide the anatomy of a revealing moment from Federal Reserve Chair Jay Powell’s press conference last week. A tough question landed him in the cul-de-sac one finds oneself in when one tries to defend a specific unemployment rate as the “natural rate.” In fact, the question asked of Powell was, “how is the Fed going to get from 3.5% to 4.5% unemployment?” To which I add: “and why would they want to?!”
In terms of estimating the “natural rate,” I’m still touting this figure from Obama’s CEA of their estimate of the rate with exploding confidence intervals (from my paper on the importance of strong labor demand for the Hamilton Project). In the context of my WaPo piece, the relevant takeaway from the figure is: “I guarantee you that neither the Fed’s very smart staff nor any

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Q&A on that crazy G7 meeitng: Trump, Trade, Tariffs, and Trouble

June 10, 2018

Trump at the G7 meeting? What could go wrong?
Apparently, his Orangeness gave the leaders of the free world a heavy dose of peak Trump this Saturday at the G7 meeting.
Basically, nothing newsworthy is supposed to happen at these meetings. The leaders spend a day or two together discussing mutual interests, and at the end of the summit, they release an anodyne statement renewing their vows to work together to promote cooperation and trade.
Not this time. The summit was quickly tagged the G-6 plus 1 and you can guess the identity of the (very) odd guy out. Perhaps the NY Times headline can give you a flavor of how this played out: Trump Refuses to Sign G-7 Statement and Calls Trudeau ‘Weak;’ Tells Abe “Sushi Sucks!” [OK, I made up that last bit, but the rest is there in black and white.]
I

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Catching up with the lynx

June 4, 2018

Over a WaPo today: As you’d expect, I’m not at all happy to see the rollbacks in financial market regulations. But, given our ability to willfully forget the last financial meltdown, they’re far from unexpected. One of my key points here is that the powerful, rich finance lobby faces little in terms of countervailing pushback. That is, this isn’t good D’s outnumbered by bad R’s. Note also recommendation for a small tax on financial transactions. I plan to amp that up in coming weeks.
The strong jobs report at the end of last week confirmed that the job market remains on track. There was even a pop in middle-wage workers’ paychecks. Here’s some noodling on three things that could throw the recovery off track: Fed mistake, trade war, and supply constraints. I think the last one poses the

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May Jobs: Another solid month; Lowest black unemployment rate on record; Wage growth ticks up for mid-wage workers.

June 1, 2018

Payrolls rose 223,000 last month, beating expectations of 190,000, and the unemployment rate ticked down to 3.8 percent, its lowest level since April 2000, and before that, a level much more commonly seen in the 1960s. (At 3.75 percent, the jobless rate just missed falling two-tenths).
[Before the release, President Trump tweeted that he was looking forward to the jobs numbers. Since certain top officials, including the president, see the report on Thursday night, his tweet telegraphed the positive report, a highly unusual occurrence.]
The unemployment rate for African-Americans fell to 5.9 percent, an historical low point by a wide margin. Typically, the black unemployment rate is twice the white rate. But persistently tight labor markets are especially helpful for minority workers, as

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The question of full employment and music from room 608

May 25, 2018

Over at WaPo, I revisit the argument that a) since economists can’t tell if we’re truly at full capacity in the job market, b) there’s not much in the way and price and wage pressures, and c) the prime-age employment rate is not apparently topping out, we should assume there’s still economic room-to-run.
I’m on the road and in room 608, which is why I can’t get this old, uptempo jam by Horace Silver out of my head. If you let it run on YouTube, next thing you know, you’ll be hanging out with Sister Sadie, who is, ftr, great company.

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The challenges raised by the future of work look a lot like the same ones we’ve always wrestled with.

May 21, 2018

Over at WaPo.
There’s a consensus of sorts that the future of work will be uniquely shaped by the gig economy and labor-displacing technology. At the risk of putting a damper on millions of conference sessions on this topic, I think we should be much less confident in our ability to predict the structure of work or the possibility of technological unemployment.
As new work from Larry Mishel reveals, the gig economy is a tiny share of the whole. We also do not see accelerated labor displacement in the productivity numbers (to the contrary).
But as I stress in the piece, that doesn’t mean we shouldn’t think about ways to improve the quality of future (and present!) jobs. In fact, there’s a robust policy agenda that should be brought to bear, some of which is highly responsive to the increase

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A Multitude of Lynx

May 18, 2018

Various posts at WaPo for those interested:
Trump’s creating all sorts of waves in the oceans of international trade, and that’s led some analysts to worry that the reserve status of the US dollar could be under threat (63% of global reserve holdings are in dollars). While this isn’t the path I’d take to get there, of course–I’m solidly against Trumpian chaos–at this point, the costs of printing the premier reserve currency outweigh the benefits.
This one generated a fair bit of interest. It’s a local story with national implications about a head-tax on large businesses that the Seattle city council just passed to help them deal with their increasing homelessness problem. There are many levels to the story, including the basic revenue story, but also the costs engendered when large firms

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