This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.
Equitable Growth round-up
This week’s release in Equitable Growth’s Working Paper Series argues that an increase in monopoly power, together with a decline in interest rates, is the answer to five “puzzles” that have emerged in U.S. economic data over the past 40 years. The five closely related trends include the outpacing of capital investment by financial wealth, and the simultaneous decline of the labor share of income and increase in the share of income going to profits.
Equitable Growth’s Junior Fellow Jacob Robbins, a co-author of the paper, broke down the five puzzles and the paper’s key findings in a Value Added for us. You can also read coverage of the working paper by the New York Times’ Eduardo Porter and Bloomberg BusinessWeek’s Peter Coy.
Links from around the web
Despite the improving economy, workers haven’t seen much of a pick-up in their wages. One reason might be changes in firms’ compensation practices, as the concern with staying flexible in a changing global labor market has caused more employers to give one-time bonuses rather than pay increases. [nyt]
Workers who are employees of a company – rather than independent contractors – get many benefits for which contractors are ineligible, from their employer picking up the majority of health insurance premiums to eligibility for unemployment insurance if they lose their job and workers compensation if injured on the job. However, the share of workers who are characterized as independent contractors rather than employees has been growing faster than any other type of worker as employers look to shed the cost of traditional responsibilities to employees. That trend could be accelerated by last year’s tax bill, which allows independent contractors to write off 20 percent of their business income – but the benefits of the tax bill might not be enough to balance out the loss of employee benefits for these workers. [cnbc]
Senator Marco Rubio (R-FL) and Ivanka Trump are working together on a plan to increase access to parental leave by allowing families to draw from their Social Security retirement benefits to pay for it. However, experts from across the political spectrum are expressing concern that this plan is poorly designed, will not address the full range of families’ care needs, and will put future retirement at risk. [business insider]
Read what the research tells us about the best ways to structure paid leave in this report by Equitable Growth’s Bridget Ansel and Heather Boushey.
Over the past eight years, debates about how to balance spending with deficit concerns have usually pit Democrats arguing for more spending against Republicans voicing concerns about the deficit. Now, with the $1.5 trillion tax bill passed in December and last week’s budget deal to raise spending caps, those roles have been reversed…kind of. [nyt]
Figure from “How the rise of market power in the United States may explain some macroeconomic puzzles” by Jacob Robbins