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

Which Kind of Economics?

Economist Bryan Caplan confuses reality with ideology, to unfortunate effect; economist Richard Freeman calls for open-source unions, which might just point the way to a revival of the labor movement.

The Myth of the Rational Voter: Why Democracies Choose Bad Policies by Bryan Caplan (Princeton University Press, 276 pages, $29.95) America Works: Critical Thoughts on the Exceptional U.S. Labor Market by Richard B. Freeman (Russell Sage Foundation, 191 pages, $19.95) Economic analysis can con-strict our imagination and choices, or it can allow us to evaluate choices with greater clarity and insight and help us to achieve the goals of a prosperous and decent society. The two books under review here show contemporary economics in its most dismal and luminous forms. Both argue that public policy is seriously off track, but the similarity ends there. One writer assumes that economists always know best, and he provides a misleading and constricted view of America's economic alternatives. The other has a deep respect for market forces as well as an appreciation of their limits, and he provides a far more useful guide to some of the critical economic choices that the country faces today. In...

Is Education the Cure for Poverty?

Economists may disagree a lot on policy, but we all agree on the "education premium" -- the earnings boost associated with more education. But what role can education play in a realistic antipoverty policy agenda? And what are the limits of that role? First, it depends on whether you're talking about children or adults, and schooling versus job training. And second, the extent to which education is rewarded depends on what else is going on in the economy. As Greg J. Duncan's companion piece (page A20) suggests, investment in early childhood has immense benefits. And at the other end of the schooling spectrum, college graduates' wage advantage over those with only a high-school diploma went up dramatically in the 1980s and early '90s. But the premium that high-school graduates enjoy over dropouts has been flat for decades. In 1973, high-school grads earned about 15.7 percent more per hour than dropouts, 15.9 percent in 1989, 16.1 percent in 2000, and 15.5 percent last year. And for...

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...

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