This blog was first posted at OnLabor. 

As Jon reported this morning, an employment tribunal in London has concluded that Uber drivers are not self-employed independent contractors, but rather Uber workers. The tribunal’s decision is available here, and I recommend it: it’s full of details regarding the relationship between Uber and its drivers. And although legal tests differ across jurisdictions, what the U.K. tribunal found has clear relevance for the question of whether Uber drivers in the U.S. meet the definition of “employee” under U.S. labor and employment laws. To put it bluntly, what the tribunal finds clearly confirms the conclusion that Uber drivers are employees under U.S. standards. The opinion is 40 single spaced pages, but here are some (and just some) of the relevant findings that led the tribunal to conclude that drivers are workers under UK law:

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The Fed’s Federal Open Market Committee (FOMC) will debate again this week whether or not they should raise interest rates to slow the economic recovery in an effort to forestall potential inflation.

The debate over when the Federal Reserve should begin raising its short-term policy interest really began in earnest in September 2015. In the month before the FOMC met in September 2015, futures markets put the odds of a rate hike at over 50 percent. It is likely that all that kept the hike from happening in September of that year was the surprise financial market declines in China, which spilled over into the American stock exchanges for a spell. In December 2015, after this short-term drama passed, the Fed raised rates for the first time in seven years.

In the debate that accompanied the run-up to the September 2015 meeting, those arguing for further patience from the Fed (like this author) argued that there remained lots of slack remaining in the labor market, and that this slack would contain inflationary pressures. One source of slack identified was a potential firming-up of labor force participation, which had dropped considerably over the recovery.

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Annual inflation-adjusted earnings of the top 1.0 percent of wage earners grew 2.9 percent in 2015, and the top 0.1 percent’s earnings grew 3.4 percent, according to our analysis of the latest Social Security Administration wage data. What is relatively unique about 2015 was that the 3.4 percent wage growth for the bottom 90 percent matched that of the top 0.1 percent. This strong wage growth for the bottom 90 percent reflects both the lull in inflation (up just 0.1 percent) and the failure of wage inequality to continue its growth in 2015. Annual wages of the bottom 90 percent now stand 3.5 percent above what they were pre-recession in 2007, with all of that growth essentially occurring in 2015. The top 1.0 percent’s earnings have surpassed their previous high point, attained in 2007, by a mere 0.2 percent, recovering from the steep 15.6 percent fall during the financial crisis from 2007–09. High earners between the 90th and 99.9th percentile have seen the strongest growth since 2007, with earnings rising 7.7 percent. It’s only the earnings of the top 0.1 percent that remain below 2007 levels (down 5.1 percent).

Wage inequality has grown tremendously over the longer-term period from 1979 through 2015. The annual earnings of the top 1.0 percent rose 156.7 percent from 1979 to 2015 while the very top 0.1 percent enjoyed earnings growth of 338.8 percent. In contrast, the bottom 90 percent of wage earners had annual earnings grow by just 16.7 percent over the 1979–2007 period and an additional 3.5 percent between 2007 and 2015 for a cumulative annual earnings growth of 20.7 percent over the thirty-six years from 1979 to 2015.

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The national recovery since the end of the Great Recession has been needlessly held back by spending cuts at all levels of government. Figure A below compares the growth in per capita spending by federal, state, and local governments in this recovery with previous recoveries.

As tight as federal spending growth has been in recent years, the bulk of the differences between the current recovery and previous ones shown in Figure A actually stems from state and local spending decisions. These state-level spending cutbacks have held down growth substantially.

States, unlike the federal government, are generally constrained in their ability to boost spending by the need to raise revenue. But as a general rule, government spending boosts economic activity in a weak economy more than tax cuts drag on activity. (In economist jargon, spending increases have higher “multipliers” than revenue increases.)

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Progress on closing the gap between men’s and women’s wages in the U.S. economy has been glacially slow in recent decades—and gender wage parity has become a top priority for those committed to ensuring the economic security of American women. This priority is absolutely essential. No matter how you cut it, the gender wage gap is real and it matters. That said, pay parity cannot be the only goal for those looking to improve the economic lot of American women. In recent decades, the hourly pay of typical male workers has essentially stagnated even as the economy has grown. Closing only the gap between typical female and typical male workers threatens to ensure parity in this stagnation, not parity in progress. To achieve parity in progress, gains in reducing gender wage gaps must be paired with gains in closing another gap: the gap between economy-wide productivity and the wages of all typical workers. This is an ambitious goal, but it’s the only one that ensures genuine economic security for American women and the families that rely on them.

Here, I hope to draw out the importance of taking a holistic approach to improving the lot of women, men, and families across society. I can summarize my argument in three major points:

1. The gender wage gap exists and progress closing it has been agonizingly slow, particularly in recent years. And, when combined with wage penalties faced by workers of color, it leads to wages for women of color being drastically lower than for white men.
2. Rising inequality has kept the vast majority of men’s and women’s wages from rising as fast as gains in economy-wide productivity over the last four decades.
3. Solutions need to close both the gender and inequality wage gaps and invest in a policy infrastructure to support all workers’ efforts to balance demands of work and home.

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Labor mobility is fundamental to the ability to earn good wages. The improvement in incomes and living standards over the centuries is tied tightly to the growing ability of workers to quit the job they have and take another. And it is a timeless truth that employers will try to find new ways to hamper their employees’ legal right to leave. Increasingly, they are turning to non-compete clauses that they slip into the fine print of employment contracts. Thirty million U.S. employees, many of them relatively low wage workers, are bound by non-competes.

Peasants in medieval times were generally not permitted to leave the land on which they were born, and throughout Europe and Russia they were essentially owned by the owner of the land, their lord and master. The use of indentured servitude in the cities was a less onerous but still heavy burden on young workers, who were forced to work for years with little or no compensation for a single master, whose abuse or mistreatment usually had no remedy.

Slavery is the most extreme example of a legal limitation on labor mobility and the most destructive. Slavery in the United States not only brutalized and impoverished the enslaved, it dragged down the wages of anyone forced into competition with them. Slavery’s effects on free labor were an additional reason beyond simple morality for Abraham Lincoln and the free soil movement to oppose slavery. How could free construction workers, for example, demand higher wages if their employer’s competitor was using unpaid, enslaved labor?

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This article first appeared on the American Constitution Society (ASC) Blog.

From First Lady Michelle Obama’s speech in New Hampshire to accusations by Fox News’ Gretchen Carlson against Roger Ailes, sexual harassment and sexual assault have been dominating the headlines for months.

Also in the news has been the topic of forced arbitration agreements that limit victims’ ability to have their day in court. Very much a part of the Wells Fargo scandal has been the bank’s argument that it shouldn’t have to face its clients at trial.

These two stories actually have more in common than is often mentioned. First, of course, Fox tried to shut down Carlson’s suit by saying her contract’s arbitration clause prevented her from using that public forum. Few realize how common it is for women and men who allege harassment at work to be shunted into a secretive process that often prioritizes the interests of the employer.

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One of President Obama’s most important contributions to better pay and working conditions in the United States is his executive order on Fair Pay and Safe Workplaces, which he issued two years ago and is finally taking effect this month. The order, which addresses wage theft and on-the-job hazards, including sexual harassment and race discrimination, affects 25 million employees working for businesses that provide goods and services under contract to the federal government – businesses that range from janitorial services to ship builders.

The first provisions are set to take effect in two weeks – unless a lawsuit filed in Texas by various business groups succeeds in delaying or blocking enforcement of the rules.

Why is the Executive Order Needed?

The federal government purchases over $500 billion in goods and services from the private sector, and the firms it deals with employ about 20 percent of the nation’s total workforce. It is important that the government chooses to deal with honest employers and that, when given a choice of two otherwise similar contractors, it chooses to do business with the one that demonstrates superior integrity and a greater inclination to obey the law. That is common sense.

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In Quartz, I described a rarely noticed but devastating development that is undermining African American working and middle class families—a racially disparate property tax system that, in many cities, extorts a premium from African American homeowners. This premium can be so large that families lose homes when cities foreclose on properties where taxes have become unaffordable.

This discriminatory race tax has arisen because homes in African American neighborhoods that lost value following the housing price bubble collapse in 2008 have, in the subsequent recovery, been slower to recover value than properties in white neighborhoods. In most cities, assessors are required to re-assess properties on a regular basis, but when they have failed to do so, homeowners in African American neighborhoods wind up paying more tax relative to their home values than homeowners in white neighborhoods.

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This blog was first posted at The Globalist.

During the 1993 U.S. congressional debate over the North American Free Trade Agreement, a Democratic Congressman with a solid pro-labor voting record asked me why I thought NAFTA would be bad for working people.

After I had given my answer, he responded: “Well, you may be right about the economics.” “But we have a 2000-mile border with Mexico. The President told me we need NAFTA to make it secure.”

Who can argue against national security?

NAFTA was the economic model for the ever more corporatist trade deals that followed, including the currently proposed 12-nation Trans-Pacific Partnership.

The arguments for NAFTA also set the pattern for the debates over those deals. Whenever the economic case crumbles, “national security” becomes the fallback rationale.

After a quarter century of off-shored jobs and depressed wages in the wake of corporate-driven trade de-regulation, the claim that the Trans-Pacific Partnership will make life better for American workers is so discredited that both Hillary Clinton and Donald Trump are opposed.

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This weekend, the New York Times broke the story that Republican presidential nominee Donald Trump claimed a $916 million loss in 1995, possibly allowing him to avoid paying federal income taxes for as long as 18 years. The ability to use a large, one-time loss to reduce future income tax liability is not, on its face, all that objectionable—it simply allows individuals to smooth out their tax liability and avoid being penalized for having a volatile income.1 But Trump’s refusal to release his tax returns continues to obscure the numerous other potential loopholes that can be exploited by those at the top that are more arbitrary and objectionable.

Take one loophole that is especially relevant to Trump and real estate developers: “like-kind exchange.” Like-kind exchange allows investors owning real estate to defer, and coupled with another loophole in our tax code eventually avoid, paying capital gains taxes.

To see how, consider an investor who owns a stock and would like to invest in another stock. Selling their stock will trigger capital gains taxes. Not so for real estate. Instead, like-kind exchange rules allow investors like Trump to defer paying taxes on their capital gains if they’re exchanging the real estate for broadly defined like-kind property.

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There’s obviously plenty to criticize regarding Donald Trump’s claims and characterizations about the problems facing the U.S. economy during last night’s debate. But one thing that stuck out clearly was his peddling the myth that profits of U.S. corporations are “trapped” offshore by U.S. tax policy, and that these profits “can’t” be returned to the United States “until a deal is struck.” Now, Trump’s presentation of this argument during the debate was a characteristic dumpster fire of incoherence, but on the substance he was actually just trying to explain what has become a depressing conventional wisdom.

So, let’s provide a quick explainer about why these profits are not “trapped” abroad and why the only deal that needs to be cut is closing a loophole in the U.S. corporate income tax.

This loophole allows U.S. multinational firms to defer paying the corporate income tax on profits earned overseas until these profits are “repatriated,” or returned to shareholders in the United States. By now, about $2.4 trillion in profits sits offshore, and there would be about $700 billion in taxes if it were repatriated. Obviously this deferral is a huge deal.

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At the conclusion of their most recent meeting, the Federal Open Market Committee (FOMC) decided against a September interest rate hike. Their decision is consistent with conclusions drawn in a recent analysis by our colleague Josh Bivens. Using the Fed’s own economic projections and other historical data, he makes the case that even a small increase in interest rates is far more likely to slow the economy and deter progress in reducing unemployment than holding interest rates steady is likely to trigger accelerating inflation. Their decision also lets jobseekers breathe a temporary sigh of relief—particularly people of color, who have seen the strongest labor market gains over the last couple years, but who still face extremely high rates of unemployment in some parts of the country.

The table below shows unemployment rates by race and ethnicity for each of the 12 metro areas with a Federal Reserve Bank, as well as other large metro areas across the country with sizable black or Latino populations. We only present unemployment rates for metro areas where the sample size was large enough to generate a reliable estimate for a particular race or ethnic group. These data show that nationally, the black unemployment rate has declined 3.1 percentage points over the last two years, compared with a 2 percentage points decline for Hispanics and a 1.2 percentage point improvement for whites. Although double-digit rates of black unemployment were more of a norm just two years ago than now, African Americans are still suffering from staggering unemployment, with rates higher than 10 percent in Chicago, Detroit, and Philadelphia. With the exception of Dallas, Latinos are more likely to be unemployed than whites in each of the selected metro areas, but Hispanic unemployment rates remain most elevated in Philadelphia and Chicago.

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This week the Federal Open Market Committee (FOMC) will meet to decide whether or not to raise interest rates. By now this is a familiar debate. Some (call them hawks) argue that rate hikes are needed to slow the pace of economic growth and slow progress in reducing unemployment in the name of combating potential inflation. Others (call them doves) argue that we should not tighten until we’re absolutely sure that genuine full employment has been locked in. The past years’ evidence argues strongly that the doves are right.

Let’s start with the Fed’s own projections, which some Fed officials recently pointed to during a meeting with the Fed Up coalition to claim that interest rate increases were not meant to slow the economy or raise unemployment.

The table below shows the Fed’s current projections for the unemployment rate and other variables. They forecast that it will move from today’s 4.9 percent to 4.7 percent in the last three months of this year, and then fall further, to 4.6 percent for 2017 and 2018. After this it rises (after some unspecified time) to its long-run equilibrium of 4.8 percent. This 4.8 percent long-run rate is essentially the Fed’s estimate of the “natural rate of unemployment”—the lowest rate the economy can stay at without sparking an acceleration of inflation (this acceleration terminology is key: it’s not just inflation rising from 1.5 percent to 2.5 percent, it’s inflation that rises from 1.5 percent to 2.5 percent to 3.5 percent to 4.5 percent and so on). Importantly, in the Fed’s forecast, the unemployment rate falls over the next three years even as the projected federal funds rate is moved steadily up. By 2018, the 4.6 percent unemployment coincides with a 2.4 percent federal funds rate (it is just 0.25 percent today).

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Hoping to equate the H-1B temporary foreign worker program with permanent immigration, advocates often lump the H-1B visa together with lawful permanent residence (also known as “green card” status). But the H-1B is a temporary, nonimmigrant visa for guestworkers, not a permanent immigration status that would eventually put a migrant worker on a path to American citizenship.

The H-1B program can serve as a bridge to permanent immigration for many educated and skilled foreign workers; in fact, between 2010 and 2014, an average of 44,000 H-1B guestworkers became immigrants (i.e., lawful permanent residents) each year. The U.S. government approved an annual average of 115,000 new H-1B guestworkers over that same timeframe. The H-1B path to a green card is controlled by the employer. The employer—not the H-1B worker—has the discretion of applying for a green card, and as a result, employers hold a lot of power over the hundreds of thousands of H-1B workers here.

The first step an employer must take to put an H-1B nonimmigrant worker on the path to a green card is to file for permanent labor certification with the U.S. Department of Labor (DOL), to check if there are any U.S. workers available to fill the job that the H-1B worker is already doing. (These are sometimes referred to as “PERM” applications or the PERM process, which stands for Program Electronic Review Management, the name of the electronic system used by the DOL.) Public data are available showing which companies applied for permanent labor certification for their H-1B workers and for how many, and these data let us examine whether employers typically use the H-1B program as a bridge to permanent immigration—or not. As the table below shows, the top employers received large numbers of new H-1B workers in fiscal 2014 but applied for very few green cards for their H-1B workers.

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Today’s jobs report from the BLS showed that the U.S. manufacturing sector lost 14,000 jobs in August and has now lost 57,000 jobs since January of this year. This job loss is, in part, a consequence of the sharp rise of the dollar in 2014 and 2015, which has gained nearly 20 percent on a broad, trade-weighted basis, as shown below. The rising dollar has reduced the cost of imports, increased the cost of U.S. exports resulting in growing trade deficits. Growing exports support U.S. employment, but growing imports cost U.S. jobs, so the manufacturing decline was entirely predictable from the expected increase in the U.S. trade deficit, which responds to changes in the dollar with a lag of one to two years. Yet the U.S. government continues to do nothing about destructive exchange rate movements, whether they are caused by intentional currency manipulation or more recent, market-driven misalignments.

Data for the U.S. trade deficit in July were also released this morning. The trade deficit in manufactured products (Exhibit 1S) increased 3.1 percent, year to date, relative to the same period last year, despite a decline in the overall U.S. trade deficit. U.S. imports of petroleum products declined sharply in this period, while the trade deficit in non-petroleum goods (which is dominated by trade in manufactures) increased sharply. The single largest cause of the growing manufacturing trade deficit is malign neglect of currency manipulation over the past 20 years by the U.S. government.

China, which has been the most important currency manipulator over the past two decades, was responsible for nearly two thirds (61.3 percent) of the U.S. trade deficit in manufactured goods in 2015. The trade deficit with China increased in July. China has also distorted trade by generating massive amounts of excess production capacity in a wide range of industries, including steel, aluminium, glass, paper and renewable energy products. China’s capacity growth has been fueled by illegal subsidies and other unfair trade practices. A new report from Duke University explores the impacts of overcapacity in China’s steel industry.

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Today’s jobs report came in somewhat underwhelming. This morning, I compared payroll employment growth to weak tea and the labor market saw little to no improvement in other key measures. Yesterday, I urged readers to look under the hood of the headline jobs day numbers and see how well the economy is treating workers across various demographic groups. Today, I’m going to take one statistic from today’s report and see how various groups have fared.

According to the Bureau of Labor Statistics, the official unemployment rate is 4.9 percent. Let’s just remember for a moment that the unemployment rate only counts people actively looking for work, taken as a share of the labor force. So, this leaves out the estimated 2.2 million workers who we expect will return or join the labor force as job opportunities improve. With these missing workers, the unemployment rate would be 6.2 percent. It also leaves out workers who want to work full-time but could only find part-time work or those who might have looked in the last year, but not in the last month. Adding these in, the underemployment rate would be 9.7 percent.

Even with those caveats, I must admit the official unemployment rate is still quite a useful measure. And, along with nominal wage growth, it’s a key measure the Federal Reserve watches when deciding how to act on interest rates. At 4.9 percent, the unemployment rate is 0.3 percentage points higher than it was in 2007, before the recession began, and 0.9 percentage points higher than the last time the economy was at full employment (2000). In fact, for five months in 2000, the unemployment rate was below 4.0 percent, hitting a low of 3.8 percent in April 2000. Examined another way, the unemployment rate is 1.1 times higher today than in 2007 and 1.2 times higher than in 2000.

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Earlier this week, I analyzed the latest wage data by percentile, which shows that inequality has grown since the last business cycle peak in 2007. Today, I’m going to discuss the latest wage data by education groups. The main takeaways are four-fold. First, women are consistently paid less than men across all education groups. Second, wages have increased more for those with a college or advanced degree than for those with lower levels of education, both in the past year and since 2007. Third, the increase in the college premium since 2007 is dwarfed by the growth in wage inequality generally. And fourth, much of the increase in wages in the last few years has been driven by historically low inflation, as opposed to strong or accelerating nominal wage growth.

The table below shows first half (FH) average wages for 2007, 2015, and 2016 by highest level of education attainment and by gender. You can see that at every level of education, men are paid more than women—illustrating the difficulty of women to educate their way out of the gender wage gap. In fact, the gap grows with increasing levels of education. One particular striking finding is that men with just a bachelor’s degree are paid more, on average, than women with an advanced degree.

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It’s well documented and widely understood that wage inequality has grown dramatically over the last four decades as productivity and compensation growth have become delinked. Despite an expanding and increasingly productive economy, wages have stagnated for the vast majority. Looking at the most recent data—through the first half of 2016—we see that wage inequality has continued to grow, with top earners faring far better than those in the middle or bottom of the wage scale. First, the data paints a striking picture of growing wage inequality since the last business cycle peak in 2007. Second, average wage growth overall is slow, and any significant real wage growth continues to be driven by low (and below target) inflation—not meaningful acceleration in nominal wage growth. Last, strong payroll employment growth the last couple of months suggests positive future trends for not only wage growth, but also declining unemployment and rising labor force participation.

The figure below shows the disparate growth across the wage scale from 2007 to 2016 (using the most recent data, for the first six months of 2016, and comparing to wages at each decile and at the 95th percentile to those of the comparable period in 2007). I’m comparing the first half (FH) of both years to maintain the same seasonality in the data. Plus, it gives us a glimpse of what’s happened through the first half of this year. Except for the lowest wages—at the 10th percentile—what you see is a clear increase in growth as one moves up the wage distribution, from negative growth at the 20th percentile (-2.8 percent) to the fastest growth at the 95th percentile (10.4 percent). At the median, real wages grew a total of only 0.8 percent over the nine-year period. So, not only did the labor market since 2007 perpetuate the wage stagnation and inequality of the previous three decades, it has actually exacerbated it.

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