My written testimony is here. A video of the proceedings is available here (my statement starts at minute 34:00). My basic argument was that the labor market is looking better now than at any point in years, but that we are not out of the woods.

The two other panelists were Isabel Sawhill of the Brookings Institution and Heather Boushey of CAP. CAP’s Michael Ettlinger moderated.

The panel discussion followed a speech (pdf) by Senator Tom Harkin, outlining the main elements of his “Rebuild America Act.” The six main points of the proposed legislation: “(1) investing in infrastructure and manufacturing; (2) providing the education and skills necessary for a 21st century workforce; (3) empowering workers; (4) bolstering retirement security; (5) strengthening families, and (6) paying for the bill by creating a fairer tax structure.”

You can watch a video of the full event here.

Janelle Jones and I analyze the numbers in a CEPR “Union Byte” released this morning. Our work is also cited in good stories in the Associated Press and the Wall Street Journal.

The report draws five lessons from the experience of the United States and other rich countries over the last several decades:

Lesson 1: Economic Growth is not a Solution to the Problem of Low-wage Work

Lesson 2: More “Inclusive” Labor-market Institutions Lead to Lower Levels of Low-wage Work

Lesson 3: The United States is a Poor Model for Combating Low-wage Work

Lesson 4: Low-wage Work is Not a Clear-cut Stepping Stone to Higher-wage Work

Lesson 5: In the United States, Low Wages are among the Least of the Problems Facing Low-wage Workers

The countries that have been most successful in reducing the share of their population in low-wage work have typically done so by having widespread collective bargaining or by funding a reasonable and reliable safety net (which, among other things, raises the bargaining power of low-wage workers). See, for example, Figures 4 and 5 from the paper:

The United States, meanwhile, has relied primarily on the minimum wage and the Earned Income Tax Credit (EITC). Both could dramatically reduce the share of the workforce on low pay (see, for example, this excellent paper by Jeannette Wicks-Lim and Jeffrey Thompson), but the US minimum wage and EITC have both been set too low to have a meaningful impact on low-wage work. This figure, for example, shows the gap between the low-wage threshold (what a worker would have to earn to rise above “low-pay”) and the federal minimum wage, in each year from 1979 through 2010.

But as the paper also emphasizes, low-pay isn’t even the worst of it. Low-wage workers are also much less likely to have health insurance (of any kind, employer-provided or from other sources), paid sick days, paid parental leave, or paid vacation. Not to mention very little in the way of job security.

Source: Alan Krueger, Council of Economic Advisers.

Economist Miles Corak, one of the world’s leading experts on economic mobility, has written a devastating take-down of the core of two recent pieces by the Brookings Institution’s Scott Winship. Winship has been arguing that President Obama, his economics team, and many others on the political left are wrong to claim that economic mobility has been on the decline in recent decades. But, as Corak documents, it is Winship that is misreading the data.

Winship’s first piece was written in response to President Obama’s much-commented-on speech last December in Osawatomie, Kansas, where the president argued that a child born into poverty today has a lower chance of reaching the middle class –about 33 percent– than a child born into poverty just after World War II  –about a 50 percent chance.

Writing in the National Review Online, Winship said that the president’s “claim of falling upward mobility … rang false” and is “contradicted [by] most of the research that has been conducted to date.” Winship’s criticisms focused on some pretty technical issues in research conducted by Berkeley economist David Card, one of the country’s foremost labor economists and winner of the 1995 John Bates Clark medal. After reviewing Card’s numbers, Winship concludes that upward mobility today “is no worse than it has ever been and it does not translate into a general lack of opportunity for the middle class.”

Next, Winship took aim at the chair of President Obama’s Council of Economic Advisers, Alan Krueger, another prominent labor economist who was at Princeton before joining the Obama administration in 2009. In a speech last week at the Center for American Progress, Krueger presented what he called “The Great Gatsby Curve,” a graph (see above) that shows a strong relationship across rich countries between higher levels of economic inequality and lower levels of economic mobility.

Winship called out Krueger in a guest post at Reihan Salam’s blog at the National Review Online, calling Krueger’s speech “deceitful.” Again, Winship’s piece revolves around a number of technical points in Krueger’s analysis, and again, Winship concludes: “The data indicate that it is no less true today than it was in the past that poor children can make a better life for themselves.”

But, here is where Miles Corak steps in. At his personal site, Corak writes that Winship “does a disservice to a well-established literature on generational mobility.” After Corak’s own detailed review of the data, Corak arrives at a pretty damning series of conclusions: “All of Winship’s statistical concerns with estimates of the generational elasticity have been addressed since the beginning of this literature”; “Winship’s questioning of the robustness of the empirical literature on the intergenerational elasticity by citing one study is misleading”; “Making projections is tricky, but not because of anything Winship says”; and, finally, Alan Krueger “got his facts right.”

UPDATE: Winship has already posted a lengthy response to Corak, at Salam’s National Review Online blog. I’m guessing this isn’t the last of it.

UPDATE 2: And Corak.

UPDATE 3: Justin Wolfers, at the Freakonomics blog, scores the fight for Corak, saying it’s “not even close.”

From the executive summary:

First, we encourage shifting from a narrow focus on long-term unemployment toward a broader concept of “long-term hardship” in the labor market. Many workers or potential workers who do not fit the official definition of long-term unemployment – including “discouraged” and “marginally attached” workers and those involuntarily working part-time jobs – face long-term hardship in the labor market, but are not captured in the standard measure of long-term unemployment.

Second, we suggest complementing the standard measure of long-term unemployment, which reports the share of the unemployed who have been out of work for 6 months or more, with an alternative measure, which reports the share of the total labor force that has been unemployed for 6 months or more. This alternative measure avoids some counter-intuitive properties of the standard statistic and is better for making comparisons across demographic groups.

The broader measure of long-term hardship that we propose, which adds “discouraged workers,” the “marginally attached,” and half of the workers who are “part-time for economic reasons” to the standard measure of long-term unemployment, is more than twice as large (7.0 percent of the working-age population) as the official long-term unemployment count (3.1 percent).

Source: Epachamo photograph of WPA mural in Coit Tower, San Francisco.

Tomorrow, the minimum wage in San Francisco will rise 32 cents an hour to $10.24.  The rate will be the highest in the country (and the first ever to cross $10.00). I have a piece up at Alternet that analyzes the likely impact. The shorter version: wages will rise, employment won’t be affected in any meaningful way.