The Center's work on 'Recession and Recovery' Issues

The Center examines the impact of changes in the economy on federal and state budgets, as well as the likely effectiveness of economic stimulus proposals. We also examine trends in employment and promote reforms to strengthen the unemployment insurance system.


Our Big-Picture Look at Inequality

December 10, 2014 at 11:58 am

“The broad facts of income inequality over the past six decades are easily summarized,” our newly updated Guide to Statistics on Historical Trends in Income Inequality explains:

  • The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity.
    • Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s.
    • The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
  • Beginning in the 1970s, economic growth slowed and the income gap widened.
    • Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. (See first graph below.)
    • The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago, during the “Roaring Twenties.” (See second graph below.)
  • Wealth — the value of a household’s property and financial assets, minus the value of its debts — is much more highly concentrated than income. The best survey data show that the top 3 percent of the distribution hold over half of all wealth.  Other research suggests that most of that is held by an even smaller percentage at the very top, whose share has been rising over the last three decades.

The guide describes common sources of income data and discusses their relative strengths and limitations in understanding income and inequality trends.  It also highlights the trends that those key data sources show and gives additional information on wealth (which helps measure how the richest Americans are doing) and poverty (which measures how the poorest Americans are doing).

Today’s Jobs Report in Pictures

December 5, 2014 at 9:51 am

Today’s solid jobs report shows a continuing labor market recovery, but one in which unemployment — especially long-term unemployment — remains high relative to recent recoveries.  With inflation running below its 2 percent target, the Federal Reserve faces little or no danger of igniting unacceptable inflation by keeping interest rates low to encourage further job market improvements.

Click here for my statement with further analysis.






Today’s Jobs Report in Pictures

November 7, 2014 at 10:33 am

Today’s solid jobs report shows the labor market continues to improve in important ways but that wage growth continues to languish.  That suggests the Federal Reserve should wait until the labor market improves enough to boost wages before beginning to raise interest rates.

Click here for my statement with further analysis.






Why We Should Give Wages Room to Grow

October 17, 2014 at 1:35 pm

My latest post for U.S. News’ Economic Intelligence blog shows that American workers have been shortchanged in the recovery from the Great Recession and explains why the projected quickening of wage growth over the next few years won’t trigger an upward spiral of wages and prices.  It says in part:

How can wage increases go from 2 percent per year to 3.5 percent [as the Congressional Budget Office projects will occur over the next three years] without igniting unacceptable inflation?  The answer lies in the arithmetic of prices, productivity and labor costs.

In round numbers, since the start of the recession in late 2007, hourly labor compensation (wages plus fringe benefits) has grown at about 2 percent a year on average.  Productivity growth (increases in output per hour worked) offset about 1.5 percentage points of that increase.  The difference, a mere 0.5 percent a year, is the growth rate of labor costs per unit of output produced.

Prices were rising three times as fast as that over this period — 1.5 percent per year — so businesses had three times the revenue per unit of output they needed to cover the increase in unit labor costs.  It’s not surprising that profits grew substantially while workers got the short end of the stick. Businesses could have raised hourly compensation by 3 percent a year over this period (half paid for by higher prices, half by greater productivity) without threatening their bottom line.

CBO projects that inflation will rise gradually toward the Fed’s stated longer-term goal of 2 percent per year. That means hourly compensation can rise at 3.5 percent a year without putting any additional upward pressure on prices: Price increases would cover 2 percentage points of that increase, and greater productivity would cover the rest.

Click here for the full post.

Join Jared Today to Discuss Ways to Reduce Poverty

October 9, 2014 at 10:35 am

CBPP Senior Fellow Jared Bernstein will participate in a TalkPoverty LIVE! online panel discussion at 2:00 today on three policies to reduce poverty and increase economic security:

  • Raising the minimum wage and strengthening the Earned Income Tax Credit, or EITC;
  • Addressing erratic work schedules to make it possible to balance work and family;
  • Reforming the criminal justice system and re-entry policies so that criminal records do not resign people or their families to a life of poverty.

Other panelists include the Center for Law and Social Policy’s Jodie Levin-Epstein and the Southern Coalition for Social Justice’s Daryl Atkinson.  The Center for American Progress’s Rebecca Vallas will moderate.

Viewers can participate through tweets to @TalkPoverty with the hashtag #talkpovertylive and posts on the TalkPoverty.org Facebook page during the conversation.