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

Pressure Cooler

At the end of June, that very powerful group of bankers, the Federal Reserve's Open Market Committee (FOMC), got together under Chairman Alan Greenspan's leadership to decide whether they should try to slow down the pace of economic growth by raising the federal funds rate. That's the interest rate that banks charge each other for loans; the important thing about it is that when it goes up, it raises the cost of borrowing throughout the economy. That, in turn, usually dampens investment and hiring activity, but the ultimate target is inflation. Raising the price of borrowing, the idea is, will dampen the pace of economic growth and take some of the pressure off prices. And so that's what they did last month, authorizing a slight boost to the federal funds rate. Now, those of you not on the FOMC: Raise your hand if you really think the economy is growing too quickly. True, the jobless recovery is behind us, but we've still got a deep jobs deficit. We're 1.2 million jobs down from the...

Growing Apart

It's official: Though the economy is clearly expanding and jobs are coming back, the benefits of growth are once again accruing to the wealthy. After a brief hiatus during the late 1990s, economic inequality is reasserting itself. No less than the nation's chief economist, Federal Reserve Chairman Alan Greenspan, noted this in recent testimony, stating that “most of the recent increases in productivity have been reflected in a sharp rise in the pretax profits…” This trend stands in sharp contrast to the way growth was apportioned just a few years ago, when the benefits of workers' increased efficiency were broadly shared. The difference between then and now -- and the key determinant as to how the benefits of growth are distributed -- is the tautness of the labor market. Back in the late '1990s, we recognized the unique nature of the first full-employment economy in decades and wrote a book to document the phenomenon. One of our observations was that fast productivity growth is a...

Workers, Stiffed

One recent spring day, I found myself before a congressional subcommittee testifying on behalf of increasing the federal minimum wage, which currently stands at $5.15. A bit of context here: The minimum wage was last raised in 1997; inflation has just about fully eroded the value of that increase. Congress will soon tie the record set during the Reagan years for the longest period without an increase (1981-1990, compared to 1997-?). Since the average wage grew relatively quickly over these years, the value of the minimum wage relative to the average wage is at a 50-year low of 33 percent, a sure-fire recipe for a growing wage gap between low- and higher-wage workers. After the last increase, the low-wage labor market soared, making it very tough (you'd think) for opponents to claim that minimum wage hikes kill jobs. The panel was stacked four to one against an increase, staffed by the business lobby and the Heritage Foundation. The opponents' arguments were predictable -- recent...

Working Wounded

Overheard recently: senior staffers of a mid-sized software developer on the West Coast. The names have been changed to protect the innocent. Jeff, a manager ( with great enthusiasm ): My staff has really been producing lately -- I mean these guys have been staying late, missing lunch, you name it. And given that we seem to be pulling out of the slump, I'm thinking we should add a new position. After all, my department is at least 10 after the downsizing. ( Others around the table gasp audibly. ) Ross, CEO : Hold on, everyone. Let's hear Jeff out. His folks have been delivering the goods big time since we cut out all that excess fat a few years ago. Karen, from Legal : Jeff, I can't hide my surprise. Have you really explored all your options? Ross : Karen's got a point, Jeff. Let's tick down the menu: Offshoring? Jeff : I'm all for it -- you guys know my department has sent tons of coding work abroad. But we need some new blood to help at the level of architecture, to start thinking...

School's Out

Recently, it was my good fortune to be able to testify before the House Committee on Education and the Workforce. But it was my great misfortune to have to follow the Almighty One: Alan Greenspan. Our nation's chief economist just sucks all the air out of the room. After his two hours of testimony and discussion with committee members, he (and almost everyone else) got out of there. I'm telling you, the guy raises his hand to illustrate a point, and 50 cameras go off. So I should warn you: Today's column is steeped in the petulant tone of a mid-level wonk who was totally eclipsed by the Man. Feel free to bail on this rehash of what we each said. No hard feelings. But read on if you want to hear the radical and surprising conclusion that, in contrast to what Greenspan claims, more education isn't the answer to everything that ails us. The topic was the role of education in a "knowledge economy." Greenspan's testimony offered eloquent, if conventional, wisdom leading to this punch line...

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