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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

Employment Breakeven Levels: They’re higher than most of us thought

5 days ago

Recent writings underscore an important hole in economists’ knowledge base: we know neither the natural rate of unemployment nor the potential level of GDP. I mean, we’ve got estimates for days, but an honest confidence interval around them renders them useless as policy guidelines.
As Alan Blinder recently put it:
“For [the natural rate] to be useful you have to have at least a little confidence you know the number. You don’t need to know it to two decimal places, but within a reasonable range. If your range is 2.5 to 7, that doesn’t tell you anything.”
This post is about a related number that we don’t quite have right, either, one I wrote about a couple of years back: the jobs breakeven level (BL), or the monthly, net change in payroll employment that’s consistent with a stable

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Three pieces on why work requirements won’t work

6 days ago

The Trump admin and their allies in Congress are trying to add work requirements to anti-poverty programs. A number of excellent sources explain why this won’t work, where “work” means help poor adults move closer to self-sufficiency. Of course, if the goal is to simply kick people of the rolls, which for some legislators, I’m certain is the case…well, then I guess it could work.
First, this efficient WaPo editorial gives you the facts and the numbers behind why this pursuit of work requirements is folly, either in terms of budgetary savings or improving the poor’s living standards.
Next, for a deep dive into the issue, this testimony by the Urban Institute’s Heather Hahn is one-stop-shopping for granular evidence, down to the level of caseworkers, as to why work requirements are so

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Real wages for mid-wage workers actually haven’t grown much over the past couple of years.

9 days ago

We always talk a lot about wage growth on jobs day because, you know, it’s jobs day. But later in the month, when the inflation numbers for the previous month are released, we should really say something about real, as in inflation-adjusted, wage growth. After all, what matters most to people is the buying power of their paychecks, right?
When the BLS real earnings report came out yesterday, I saw that Trump’s economic advisers tweeted out this pat-on-the-back:

But their claims should not be taken seriously. First, these are jumpy, monthly numbers, so you want to look at the longer-term trend, and second, the bit about prices falling is particularly weird. Deflation is clearly not upon the land—that’s a monthly blip.
The figure below plots the real, hourly wages for middle-wage workers:

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Some lynx: Unions, CBO’s new baseline, the Bernstein Rule…

12 days ago

The teachers provide us with a teaching moment, over at WaPo. Their actions pose a stark reminder of the essential need for a strong, organized movement to push back on the forces promoting inequality, non-representative government, trickle down tax policy, and more.
CBO released their updated “baseline,” or estimate of the US gov’t’s fiscal outlook. If you like red ink, you’re in biz. Instead of deficits between 3 and 4% of GDP over the next few years, we’re looking at deficits of 4-5%.
As I’ve written in many places, when you’re closing in on full employment, you want your deficit/GDP to come down and your debt/GDP to stabilize and then fall. It’s not that I worry about “crowd out” so much–public borrowing hasn’t crowded out private borrowing for a long time, as evidenced by low, stable

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March jobs: Topline miss but solid trend, plus a deeper dive into the current wage story

16 days ago

Payrolls were up 103,000 last month, well below expectations for about 180,000, but this miss should not be taken to mean that the job market is in trouble. To the contrary, the trend of job growth remains strong and unemployment is at a 17-year low. Remember, these monthly data are noisy and you must average over numerous months to extract a meaningful trend—see “smoother” figure below. Consider, for an example of the monthly swings in these data, February’s gain, revised up now to 326,000 (the larger downward revision to January led to a decline of 50,000 from the combined previous reports of job gains in those months).
Wages, before inflation–a closely watched gauge of the extent to which the tightening job market is boosting workers’ bargaining clout–rose 0.3% in March, and 2.7%

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Enough already with GDP growth…

20 days ago

Readers know I’ve long been noodling over measurement issues, whether it’s accurately measuring the economy’s capacity–and admitting we don’t have reliable, policy relevant gauges of potential GDP or a “natural rate” of unemployment–or maybe most importantly, measuring well-being versus growth. See this in today’s WaPo.
Like David Pilling, whose book The Growth Delusion I highly recommend in this space, the idea is not to toss GDP growth rates and other aggregate measures. It’s to put them in perspective, and critically: be aware of what they leave out. In that regard, I think one of the most important points in the WaPo piece is the need to net out environmental degradation (which, as I point out, includes adding back in some positive developments, like less use of coal, more use of

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Musical interlude: Steve Winwood can’t find his way home.

21 days ago

I haven’t posted one of these for awhile, but I stumbled on this gem on YouTube the other day and had to share it. It’s the grown-up child prodigy Steve Winwood just sitting there, letting loose with some pure music. I recall the song from my younger days from the rock-star-studded band Blind Faith.
These days, I’m finding musical respites like this one increasingly essential.

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NYT oped: When it comes to trade-induced job loss, “don’t worry, be happy!”

24 days ago

I’ve long hoped, probably naïvely, that one of the benefits of team Trump’s promotion of generally ineffective (or worse) solutions to the downsides of trade could engender a debate about better ideas. Of course, the debate will also generate some really bad arguments, like this one from economist David Boudreaux in this AM’s NYT.
Boudreaux argues that trade (and, implicitly, anything else) can’t be a problem for jobs because the US economy creates and destroys tons of jobs all the time. The nub of his case comes down to:
“…estimates of jobs destroyed by trade sound big, but they’re actually tiny. Relative to overall routine job destruction and creation — “job churn” — the number of American jobs destroyed by trade is minuscule.
In January alone, the number of American workers who were

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Newsflash: The Libor’s outpacing the Fed funds rate. Whussup with that?

25 days ago

Financial markers are on shpilkes. Stocks, after crushing it Monday, with the Dow up almost 3%, gave back about half those gains the next day, dragged down by a tech sector spooked by potentially forthcoming regulation around data privacy.
Readers know I don’t try to explain daily ups and downs in equity markets. My mantra remains: the stock market ain’t the economy, and the latter, which matters a lot more important for many more people, remains pretty solid. But is there anything to be learned from this latest bout of market volatility?
Clearly jitters about a trade war are in the mix, as are higher interest rates. It’s that last bit that interests [sic] me, as for years, the cost of borrowing was uniquely low, both here and abroad. As that changes–and we’d certainly expect rates to be

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Linx, green jobs

March 15, 2018

Two WaPo posts for your entertainment: First, when it comes to fixing the recklessly drafted tax bill, the D’s have some leverage. I offer some thoughts on how they should use it.
Second, my old friend Larry Kudlow’s going to be heading Trump’s NEC. Some reflections on about 25 years of arguing with the dude.
Readers know I’ve long been promoting subsidized jobs programs. Even as we close in on full employment, there are still significant pockets of folks who have difficulty finding their way into the job market. Sometimes it’s a supply-side problem–skills, health, criminal record, discrimination–sometimes, demand side, as in not enough jobs.
I’m often asked: what will these folks do? Well, some programs subsidize private sector jobs, so the answer is: the same stuff everyone else does.

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The many flaws in the Senate’s rollback of Dodd-Frank: Attention must be paid.

March 9, 2018

A couple of days ago, I participated in the “On Point” radio show about this (sort of) bispartisan effort to significantly rollback the Dodd-Frank financial reform bill that passed back in 2010. I was a member of team Obama back then and thought this was an important and very necessary advance. Imperfect, sure, but an essential set of regulations and consumer protections to diminish the seemingly endless repetition of the economic shampoo cycle: bubble, bust, repeat.
You can listen to my take on the show. I think this so-called fix to the bill goes way too far and exempts or partially exempts too many potentially risky institutions from the necessary oversight in Dodd-Frank. This mistake represents a) precisely the amnesia about reckless finance that repeatedly shows up years after the

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Jobs report: There’s still room to run in this job market!

March 9, 2018

Payrolls rose 313,000 last month, well above expectations, and the unemployment rate held at 4.1 percent, as wage growth moderated a bit  from last month’s pace (up 2.6 percent, yr/yr). Though these monthly data are notoriously jumpy, the out-sized job gains were accompanied by a nice pop in labor force participation rate–up 0.3 percent to 63 percent–suggesting that the hot labor market may be pulling new workers in from the sidelines. If so–if this turns out to be more of a trend than a blip–this has important, positive implications for the increased “supply-side” of the economy, implying more room-to-run than many economists believe to be the case.
This was the first over 300K month since July 2016, and the jump in labor force participation comes after the rate was stuck at 62.7 percent

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If we’re so productive in steel, why the persistent deficits?

March 7, 2018

First, let’s get this out of the way: I’m certain the Trump tariffs will do more harm than good. But I’ve been trying to add a bit more nuance to the conversation than “trade war!” and “higher prices!”
It’s been clear forever that team Trump mistakenly views the trade deficit as a scorecard, one that’s not improved on their watch so far. Again, nuance is required. There are times when the overall trade deficit is a clear drag on growth, and times when the capital flows that support it are distortionary. But this is not one of those times, and targeting bilateral trade deficits makes no sense and can be counterproductive, as I describe here (and I’ll have more to say about this question of when trade deficits are problematic in coming days).
Still, Trump’s lousy tariff idea is surely

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College, wages, inequality, and the implied policy agenda

March 6, 2018

I stumbled on a number of facts today that put me in mind of the old, venerable debate among labor economists about the extent to which educational wage premiums driven by employers’ increased demands for skills is driving overall wage inequality. It sounds obscure, but it actually has very potent policy implications. Let me try to quickly break it down.
–The gap between high, middle, and low wages has grown a great deal since the late 1970s. No secret there. In real terms, this has meant long periods of wage stagnation for middle- and low-wage workers.
–At the same time, the earnings of those with college educations have grown a lot relative to those with terminal high-school degrees. Economists interpret this as increasing returns to “skill,” or more wonkily, evidence that technological

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Trump’s tariffs

March 4, 2018

To an extent, I join with the conventional wisdom that Trump’s tariffs on steel and aluminum will do more harm than good, but if that’s where your analysis stops, you’re not going nearly far enough: At WaPo, with more coming tomorrow or Tues (with Dean Baker).
Probably the most salient concern here is retaliation–ie, trade partners blocking our exports–though could be mitigating factors there as well. With 12% of GDP in exports, we’re less exposed to countervailing tariffs than other advanced economies. Also, to the extent that retaliation generates a GDP drag from larger trade deficits (think about that, Trump), the Fed could raise less quickly–or pause in their “normalization” campaign.
Also, here’s an interesting wrinkle. As I note below, most of our trade partners have good reason to

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The Hamilton Project’s “Revitalize Wage Growth” Event

March 2, 2018

All the speakers and panels were flush with interesting analysis and practicable policy ideas to reverse wage stagnation, so give this Hamilton Project event a look. But my chat with Minneapolis Fed President Neel Kashkari and CNBC’s Ylan Mui starts at around 1:16.
Here’s my paper that I so mercilessly flack in my comments.

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Stop what you’re doing and read this

February 28, 2018

It’s my interview with David Pilling about his new book, The Growth Delusion. One can’t over-stress how important it is that instead of always blithely holding forth on the movement of this or that indicator, we look behind the curtain at what we’re actually measuring…and what we’re leaving out.
I’m not kidding, btw, when I assert that Pilling’s book is also pretty entertaining. So, check it out (the book, not the interview) and let me know if you agree with my positive take.

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Spending, work, and taxes

February 27, 2018

Ed Lazear’s oped in the WSJ this AM made both resonant and discordant points, at least to my ears/eyes.
The part that didn’t make sense to me was the idea that other countries are demonstrably worse off because they tax more and work less. Based on the data in the figure below, Lazear asserts that we in the US are better off because our relatively low taxes encourage “hard work” and “robust growth.”
He’s conflating growth with welfare/well-being. All the other economies in the figure collect 30-40% of their GDP in order to support more robust (there’s that word again) public health care, education, safety net, child care, and other public goods expenditures. These are sovereign choices made by their citizens, based on their legit preferences. Before you assert that our model is better than

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Work requirements don’t work. Just look what they did to TANF.

February 26, 2018

This WaPo piece I posted this AM taps some new evidence by my CBPP colleagues (Mitchell, Pavetti, Huang). I found the numbers highly germane to the work-requirement thrust from conservatives attacking safety-net programs. The CBBP results track poor parents sanctioned off of the TANF program in Kansas and finds what I’ve always, always, always maintained in this debate, since I started out my adult life as a social worker in East Harlem, NYC: Able-bodied, poor people work.
No question, they’re less solidly attached to the job market than the non-poor, but the idea that they’re just chillin’ at home on SNAP and Medicaid never made any sense, and the data don’t come close to supporting either that myth or the notion that kicking them off the rolls will help. That is, if by “help,” we mean

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What’s at stake in the Janus case.

February 26, 2018

Lots of people think unions are pretty much kaput, but that’s not so, especially in the public sector, where union membership has been a bit north of one-third of the public-sector workforce, and remarkably steady, since the late 1970s (private sector coverage, by contrast, is 6.5%; see figure). That’s why the Janus case being argued at the Supreme Court today is so vitally important. Its outcome will either strengthen or weaken public sector unions, and if the result is the latter, it will have political repercussions far beyond the voice of workers in their workplaces.

The Janus case is about whether public sector unions can require “agency fees.” Such fees, also called “fair share” fees, are paid to the union to cover the cost of bargaining on behalf of all workers in the bargaining

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Perspective, people!

February 21, 2018

Over at WaPo. I left out one figure/point due to space constraints. The other day when the CPI report came out slightly above expectations, as I discuss in the WaPo piece, a few freaker-outers actually started talking about 70’s-style stagflation. So here’s a graph of how we measured stagflation back in the day, using the “misery index,” or unemployment + inflation. Not quite back to 70’s levels, I’d say.
Sources: BLS

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Lynx, and a comment about the political non-costs of fiscal recklessness.

February 16, 2018

I’m not exactly sure which links I’ve put here already, but I’ve been busy (there is the possibility that if you can’t remember what you’ve been writing, you’re either writing too much or getting too old; I know the latter is true; not sure re former).
WaPo PostEverything Posts:
—There’s a leaked proposed rule from team Trump that expands the definition of “public charge cases,” wherein immigration status is threatened by use or expected use of public benefits. Here’s why the daft draft rule is destructive and counterproductive. My intuition is that it won’t block people from coming here; it will lead to disinvestment in them and their kids once they’re here.
—Yes, inflation and interest rates are definitely picking themselves up off the mat. That’s a good and expected development at this

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The President’s new budget. Sorry, but attention must be paid.

February 12, 2018

Every year around this time, we ask the Talmudic question: is there any reason to pay attention to the president’s budget?
This year, given that the Congress just passed, and President Trump just signed, a spending deal covering the next couple of years, the question is particularly germane, as “dead on arrival” would be an upgrade for this year’s budget.
And yet, I once again conclude that attention must be paid. People should know an administration’s priorities, but in the case of team Trump, as the gulf between their rhetoric and their budget preferences is uniquely wide, tracking their priorities is particularly important. They make a huge deal over infrastructure but cut transportation funds; they talk about helping the left-behind but propose cuts to health care, nutritional

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The new asymmetric risk

February 9, 2018

For years, economists, including no less than former Fed chair Janet Yellen, talked about the concept of “asymmetric risk,” or AR. In this earlier context, which related to monetary policy, AR maintained that the risk of weak demand was greater than that of faster inflation. Therefore, the full-employment side of the Fed’s mandate should get more weight in interest rate decisions than the stable-prices part.
With some important caveats I’ll get to below, there’s a new AR in town, this time as regards fiscal policy. As I’ve written in many places, thanks to the deficit-financed tax cuts and new spending bill, the deficit as a share of GDP is going to be unusually large, given that we’re likely closing in on full employment.
As John Cassidy points out, some analysts, quite reasonably, worry

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Links and a musical interlude from the Professor

February 9, 2018

First, here’s a post at WaPo wherein I point out that as long as new tax revenues remain off the table, then we’re implicitly agreeing to ever-higher deficits and debt.
Here’s another one on how we shouldn’t let the prevailing fiscal dynamics tie us up in knots.
And, far better than the above, here’s Professor Longhair telling the fabled tale of poor old Junco Partner, a dude who drank a bit too much and ended “wobblin’ all over the street.”

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This moment in deficit spending

February 8, 2018

There’s an interesting argument in play right now as to whether current deficit spending is welcomed or problematic, and what its impact might be. The motivation for the argument is the deficit financing of the tax cut and the new budget deal (which adds at least $300-$400 billion to the debt over the next decade), particularly at a time when the economy is closing in on full employment. As I recently pointed out, deficits of around 4-6% of GDP, which is what we’re probably looking at over the next few years, are highly unusual at such low unemployment. On average, going back many decades, the deficit/GDP at such low unemployment has hovered around zero.
The figure below makes the point:
Source: Alec Phillips, GS Research
The figure is a little tricky, because the unemployment rate is

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Will wage growth boost price growth? Sure, but how much depends on whether the near past or the distant past is prologue.

February 6, 2018

As the stock market works out its manic episode of the past few days, let’s get into a question of great importance: if wage growth is really accelerating, what will that mean for price growth?
This relationship is at the heart of the market selloff that’s got everyone pretty freaked right about now. As I wrote in the WaPo this AM:
The wage pop [last Friday’s 2.9% growth in hourly wages] spooked the markets because investors, already skittish as valuations were a bit steep (though not as bad as people have been saying, given strong current and expected corporate earnings), envisioned this sequence: wage growth gooses price growth (i.e., inflation), which raises both market and Federal Reserve interest rates, which slows growth and shaves corporate profit margins.
I then wrote: “But there

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Links, High vs. Low Wages

February 5, 2018

The stock market opened way down, continuing last Friday’s selloff, though it has climbed back since the open–implying the return of volatility–as skittish investors continue to fear the sequence I describe in this AM’s WaPo: tight labor market, wage pressures, higher interest rates, inflation, lower profit margins. Underneath these swings is an unsustainable, inequitable economic model with serious political implications.
BTW, in discussing last Friday’s 2.9% wage pop–which I tried to put in perspective here (Don’t Fear Wage Growth! Embrace It!)–many of us noted that the wage gains of the 80% of the workforce that’s blue-collar production workers or non-mangers in service jobs went up only 2.4% (call this the PNS wage, for production, non-supervisory). Well, given that we know the average

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