Thinking Beyond the Minimum Wage Fight

On June 23, 2014, SCEPA Director Teresa Ghilarducci appeared on MSNBC's UP with Steve Kornacki along with Neera Tanden from the Center for American Progress and Paul Sonn with the National Employment Law Project to discuss the bigger economic picture that necessitates raising the minimum wage. The panel discussed the facts that productivity gains have far eclipsed wage gains, that the federal minimum wage has been stagnant since 2009, and that the average hourly pay has declined over the past 12 months. The panel overwhelming agreed the best way to address these structural economic issues is through increased collective bargaining. A recent working paper by Teresa Ghilarducci and Joelle Saad-Lessler find two factors that significantly impact the likelihood of obtaining employer-offered benefits - time spent unemployed and union status. Therefore, attempts to raise wages must address the decline in workers' bargaining power and change the norms relating to benefits and wage provision. The City of Seattle has taken the largest step in addressing the wage gap by elevating their minimum wage to $15 an hour, while Massachusetts offers the highest state level minimum wage at $11 an hour. Teresa Ghilarducci ended the MSNBC panel with a summary of the advantages of unionization for both workers and employers.

A Conference to Honor Economics Professor Ed Nell

Professor Ed NellOn May 3rd, the Economics Department of The New School for Social Research honored Professor Edward J. Nell's 39 years of teaching with a conference celebrating his many contributions to the field of economics. Prior to his retirement in 2013, Nell served as the Malcolm B. Smith Professor of Economics since 1969. He published more than twenty books and wrote hundreds of articles for leading journals on macroeconomic theory, monetary analysis and finance, economic methodology and philosophy, and transformational growth and development.

Below is a sample of the working papers contributed to the conference by former students inspired by Professor Nell.

Willi Semmler: "A New Chapter"
Anna Shoysta: "Edward Nell as the Worldly Philosopher: Shaping the Minds of the Future Economists"
David Laibman: "Democratic Planning and Incentives – Coming to Grips with (Yet Another) Impossibility Theorem"
Louis-Phillippe Rochon: "The Monetary Circuit and the State"
Sergio Parrinello: "A Search for Distinctive Features of Demand-led Growth Models"

Beyond Broke: Why Closing the Racial Wealth Gap is a Priority for National Economic Security

Darrick HamiltonSCEPA economist, Darrick Hamilton recently coauthored the report, "Beyond Broke: Why Closing the Racial Wealth Gap is Priority for National Economic Security" with the Center for Global Policy Solutions, the Carolina Population Center at UNC, the Research Network for Racial and Ethnic Inequality at Duke University, and Milano Graduate School of International Affairs at The New School.  The report evaluates wealth disparities across racial and ethnic categories by providing an in-depth analysis of housing and liquid wealth.

The report finds that:
• Between 2005 and 2011, the median net worth of households of color remained near 2009 levels, reflecting a drop of 58 percent for Latinos, 48 percent for Asians, 45 percent for African Americans but only 21 percent for whites.

• For most African Americans and Latinos, checking accounts are their only liquid asset.

• African Americans (38 percent) and Latinos (35 percent) are over twice as likely as whites (13 percent) to hold no financial assets at all and to have no or negative net worth.

This analysis provides new insight into the close interplay between race and place as it relates to America's persistent wealth gap. To address these issues, the report calls for Congress and the Administration to ensure that future mortgage settlements include the collection of racial/ethnic, gender, geographical and other demographic data to ensure that relief programs are transparent, fair, and target the hardest-hit communities. The report also calls for the Federal Housing Finance Agency to allow Freddie Mac and Fannie Mae to perform principal reduction and loan modifications for distressed homeowners.

This report is part of the Closing the Racial Wealth Gap Initiative, which seeks to build awareness and support for efforts to address racial and ethnic wealth inequalities based on structural factors.

Just Say Yes- Bernard Schwartz Autobiography and Vision for America

Bernard L. Schwartz - an investor, a retired industrialist, a progressive public policy advocate and a philanthropist - recently published his autobiography, 'JUST SAY YES: What I've Learned About Life, Luck, and the Pursuit of Opportunity.'

JUST SAY YES is a story about a boy raised in Depression-era Brooklyn who grew up to become a giant in the aerospace business, a confidante of U.S. presidents, and a renowned international deal maker. From this lifetime of experience, Schwartz finds himself increasingly concerned about the future of the United States and its citizens due to the ever-increasing gap between the country's have's and have-not's. "Far too much emphasis is put on money and profit, instead of treating clients and customers as human beings. Our political leaders must also come back to the table, and start working together to improve the lives of all citizens." Without this effort, Schwartz fears that our glory days will remain behind us. As an "optimist by nature," Schwartz believes that American politics and business can change for the better.

Bernard L. Schwartz on his new book, 'Just Say Yes' - An Interview with Charlie Rose at the New-York Historical Society from Bernard L. Schwartz Center on Vimeo.

Financial Stress, Sovereign Debt and Economic Activity

The Journal of International Money and Finance, one of the top journals for international finance, published SCEPA economists, Christian R. Proaño, Christian Schoder and Willi Semmler's working paper, 'Financial Stress, Sovereign Debt and Economic Activity in Industrialized Countries: Evidence from Dynamic Threshold Regressions.' This paper is an expansion on their policy note, 'The Role of Financial Stress in Debt and Recovery' which studied the change in the sovereign debt and its impact on economic growth. Their study discovered that national debt was insignificant in determining the level of economic growth a country experiences as long as the financial market was stable. National debt was only detrimental to countries if there were high levels of instability and risk in the financial market. These findings explain why austerity policies have failed to promote economic growth, because economic growth depends first on financial market stability, and is only an issue if financial markets are unstable.

Anwar Shaikh: Named an "Eminent Economist"

Anwar Shaikh'Eminent Economists in the World Today,' the sequel to 'Eminent Economists,' presents the ideas of influential economists of the last 50 years. SCEPA is proud to announce that Anwar Shaikh, economist and professor at The New School for Social Research, is included in this distinguished honor, which recognizes his work on the economic patterns of the developed world.

Shaikh has always held the belief that economics is a moral science and has dedicated his research to understanding inequality. His entry, "Order In and Through Disorder" is a brief autobiography that captures significant moments in his life that influenced his research. 

How Paul Ryan's Budget Fails

CNN logoSCEPA Faculty Fellow Rick McGahey's opinion piece on today, "How Paul Ryan's Budget Fails," calls out the House-approved budget for using 'voodoo economics' to pose as 'balanced' while calling for tax cuts for millionaires.

In short, McGahey notes, the math fails, which leaves a budget meant more for political posturing than for the health of the nation's economy. 

"How can Ryan claim that his budget is balanced? By invoking what used to be called "voodoo economics" -- assuming budget cuts and unfair tax cuts will unleash economic growth and generate enough tax revenue.

Former Reagan administration economist Bruce Bartlett has criticized this approach as "just another way for Republicans to enact tax cuts and block tax increases. It is not about honest revenue-estimating; it's about using smoke and mirrors to institutionalize Republican ideology into the budget process."

Of course, Paul Ryan isn't stupid, so why the phony budget math and the return of voodoo economics? Because it serves his presidential ambitions."

SCEPA Economist Returns to NYC Council on Behalf of Paid Sick Days

At 11:00am today, SCEPA Faculty Fellow Rick McGahey will testify before the New York City Council's Civil Service and Labor Committee on the economic effects of expanding paid sick leave. His written testimony on behalf of Int. 0001-2014.  

Statement on the Economic Effects of Expanding Paid Sick LeaveRick McGahey
Hearing of the Civil Service and Labor Committee
Of the New York City Council
February 14, 2014

Dr. Richard McGahey

Milano School of International Affairs, Management, and Urban Policy
and the Schwartz Center for Economic Policy Research (SCEPA), The New School

My thanks to Chairman Miller and members of the committee and Council for this opportunity to testify. I am here to strongly support legislation expanding paid sick days to New York City workers at firms with five or more employees and to strengthen the law in other ways.

I am a labor economist with a PhD in Economics, currently teaching in The New School's policy program. I have a long history working on labor policy issues, having served as Chief Economist for the U.S. Senate Committee on Labor and Human Resources, and as Economic Policy Advisor to Senator Edward Kennedy (D-MA). In the federal executive branch, I was nominated by President Bill Clinton and confirmed by the Senate as Assistant Secretary for Policy at the U.S. Department of Labor.

My empirical conclusions are based, in part, on written testimony I submitted last year in support of the original legislation.

The legislation under consideration expands New York's historic paid sick days legislation to include workers at businesses with five or more employees and strengthens the law in other important respects. The legislation is unlikely to create any significant negative economic impact, and, in fact, could create positive economic gains for businesses and provide significant benefits to workers. I have four points supporting the legislation:

Read more: SCEPA Economist Returns to NYC Council on Behalf of Paid Sick Days

Former SCEPA Research Assistant Wins NSF Grant for Research on Work and Retirement

Lauren SchmitzLauren Schmitz, a New School Economics PhD student and former SCEPA research assistant was awarded a grant from the National Science Foundation (NSF) for her dissertation, "The Impact of Working Conditions on the Health of an Aging Workforce." 

Her research examines the relationship between work and health over the life cycle to better understand how various working conditions influence health disparities as workers age.

The NSF Doctoral Dissertation Improvement grant is a highly competitive federal research grant that allows doctoral students to undertake significant data-gathering projects and conduct field research.

Schmitz is creating a unique data set linking restricted W-2 earnings records from the Social Security Administration's Master Earnings File to both data on health and employment outcomes in the Health and Retirement Study (HRS) and data on objective job demands from the Department of Labor's Occupational Information Network (O*NET). 

Analysis on a comprehensive set of working conditions over the course of a worker's career will contribute to a better understanding of how occupation affects health in the years leading up to retirement

Trouble Ahead for the Trans-Pacific Partnership and Multilateral Trade Pacts

Rick McGahey on MSNBCby Rick McGahey, SCEPA Faculty Fellow

As the new Congressional term gets underway, one of President Obama's priorities is to regain "fast track" authority (FTA) for foreign trade pacts, so he can pursue the Trans-Pacific Partnership (TPP), a 12-nation deal involving Pacific Rim nations. (I discussed this today on MSNBC's "The Cycle."

"Fast track" authority allows the President to submit a final deal to Congress, where they can only vote up or down on the whole package, and can't amend it. Although some think this is the only way a trade deal can be enacted, others criticize the procedure as anti-democratic, and favoring special interests that can negotiate trade benefits in secret.

Democratic and Republican Congressional leaders who are close to some business interests are supporting fast track. But led by Sander Levin (D-MI,) the senior Democrat on the House Ways and Means Committee, many Democrats oppose FTA and the TPP in its current form. Levin has called for a different type of authority, with more Congressional involvement, more transparency over negotiations, preservation of labor and environmental standards, and procedures to address currency manipulation that favors exports into the U.S. 

Opponents of TPP fear that labor and environmental standards will be weakened even further, while pharmaceutical companies will get increased patent and copyright protection, making medicines more expensive, especially in the developing world.

Stay tuned. Trade is a volatile issue, especially in an election year, and there is a big divide between President Obama and Congressional Democrats on this one; last November, 151 of the 200 Democrats in the House sent Obama a letter saying they would not renew FTA in its current form.