Jared Bernstein

Jared Bernstein is an economist and senior fellow at the Center on Budget and Policy Priorities. He was formerly chief economist to Vice President Joe Biden and a member of President Barack Obama’s economics team.

 

Recent Articles

Short Circuited

--- Date: April 10, 2057 Memo: From the communitarian of labor Topic: Historical musings regarding the dark ages --- The seed of the destruction of the market economy that predominated until the early 21st century was planted in a 50-year-old press release from the electronics retailer Circuit City. As was common in this dark period of our economic history, the firm announced a restructuring, claiming that the proposed changes would position them to make "improved and sustainable returns in today's marketplace." Part of the plan was to lay off 3,400 sales workers -- again, not unusual, as restructurings often involved "layoffs." (Younger persons will not recognize the word -- it was a practice wherein people were told they no longer had a job). What was so unusual about this announcement, however, was Circuit City's claim that they were going to replace the laid off workers with lower wage workers (yes, back then employers simply decided what they would pay their workers). Given the...

Keep it Clean

It should come as no surprise that one of the first acts of the 110th Congress will be legislation to raise the minimum wage. A bit more surprising is the endorsement by President Bush, who recently announced that a minimum wage increase was a policy on which he and the incoming Democratic congress could "work together." Unfortunately, his cooperation comes at a cost. To the president, "working together" on a bill to increase the $5.15 federal minimum wage to $7.25 over two years means … guess what? … more tax cuts. There's every reason to keep this minimum wage bill clean and little rationale for tax cuts. Bush's stated motivation for accompanying cuts is to avoid "punishing" small businesses, by offsetting the increase in their labor costs with "targeted tax and regulatory relief." Since all low-wage firms face the same increase (and thus no one firm is at a competitive disadvantage) and Congress has surpassed the nine-year Reagan-era record for failing to raise the minimum wage, "...

Caging the Inflation Hawks

As was widely expected, the high priests at the Temple of the Fed announced yesterday that they would hold the Fed Funds Rate (FFR) steady at 5.25 percent. There are inflation hawks out there who will criticize the decision, but it's a good thing these hawks are keeping their claws off the pause. Neither the economy nor workers' wages need higher interest rates and slower growth right now. Technically, the FFR is the interest rate the Fed charges to lend money to banks, but practically, it is the main lever by which they set the cost of borrowing throughout the economy. It's also a deeply scrutinized signal of where the Fed thinks the economy is, or should be, going. When they raise the rate, they're signaling their concern that the economy is overheating, and needs the weight of higher borrowing costs to slow it down. And visa versa -- lower rates are intended to boost economic activity. By continuing to pause -- the FFR has been at 5.25 since June 29th -- the Fed is diagnosing the...

Honey, I Raised the Fed Rate Again

For the 16th time in a row, the Federal Reserve has raised its benchmark interest rate, bringing the federal funds rate to 5 percent. The rate hike was widely expected. The question among soothsayers who parse the entrails of the Fed's statements was not whether this hike would occur, but whether the committee would signal an end to the long climb that began back in June of 2004 when the rate was 1 percent. When the Fed funds rate was at a 40-year low and the economy was beginning an expansion, rate hikes were as close to no-brainers as such things get. Now, Federal Reserve Chairman Ben Bernanke and the rest of the Open Market Committee are deep into a 3-D chess game, with many crosswinds blowing in all directions. The language in last week's announcement suggests that Bernanke and Co. will be doing some serious data mining to determine their next move. First and foremost, they'll be evaluating conditions in the macro-economy, specifically growth and inflation. GDP grew smartly in the...

Short Changed

When the economy is doing well, presidents tend to spout growth rates and historical comparisons in their State of the Union speeches, while leaders of the other party suffer through the speech. If a president is presiding over a downturn, he feels their (and everybody's) pain, tortures a few numbers to suggest things are not that bad, and describes a way forward. But -- despite the serious economic challenges the country faces -- we heard little about it last night. The economy and economic policy got short shrift, with one or two statistics (4.6 million jobs and four-plus years of uninterrupted growth), a few sentences on health care, a few lines on tax cuts, and a smattering of education. Sometimes what presidents don't say speaks volumes. It's worth pondering why the economics section of the speech was light. First, many things are not going Bush's way right now. A few days ago, we learned the real GDP rose 1.1 percent in the last quarter of 2005, the worst growth rate in three...

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