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Article Artículo

The Median Wage for Black Workers: Why Isn't It Rising?

One of the main reasons that I and others have given for leaning on the Fed to keep interest rates down is that low unemployment disproportionately benefits those at the bottom. While we can and should try to help the disadvantaged through increased education, training, child care and other programs necessary to give them a foothold in the labor market, the easiest thing is allow them to get jobs.

When the Fed raises rates it is deliberately slowing the economy and thereby reducing the number of jobs available. The people who are then denied jobs are disproportionately the most disadvantaged groups, such as blacks, Hispanics, and less educated workers. These workers are hurt not only because fewer have jobs, but also because the bargaining position of those employed weakens when there is higher unemployment. In this telling of the story, wage gains for those at the bottom should be strongest during periods of low unemployment, as we have been seeing in the last few years.

For this reason, the latest data on median wages for black workers is somewhat surprising. The Bureau of Labor Statistics Usual Weekly Earnings series showed real median weekly earnings for full-time black workers in the first quarter of 2018 were up just 0.6 percent from the first quarter of 2017. Furthermore, taking the last three years together, it showed real weekly earnings for blacks were up by a meager 1.1, trailing the 2.8 percent rise in real earnings for the median white worker. The racial gap seems to be increasing even in this period of relatively low unemployment.

CEPR / April 15, 2018

Article Artículo

The War on Pensions Continues

There has been an ongoing battle in major media outlets against public sector pensions. Papers like The New York Times and The Washington Post have regularly featured pieces telling readers that these pensions are unaffordable.

This crusade, carried on mostly in the news pages, has often taken bizarre twists. Back in 2011 the Washington Post had a front page article complaining about generous pensions that highlighted the story of former employer who was getting a pension of $520,000 a year. People who read through the article discovered that this former employee was a former administrator who was under indictment for fraud at the time, not the typical California employee.

In this vein, The New York Times had a piece on pensions in Oregon that highlighted the pension of an eye surgeon who had formerly been employed by the government who receives a pension of $76,000 a month. It then goes on to discuss the $46,000 a month pension of a former University of Oregon football coach.

While these pensions do sound exorbitant, there are two important points to keep in mind. First, pensions are part of worker's pay, just like their health care insurance and the money they get in their paycheck every month. The second is that these pensions are far from typical for either Oregon or public sector employees in general.

CEPR / April 15, 2018