Posts Tagged ‘OECD’


Back in June, Neil Irwin wrote that he couldn’t find enough synonyms for “good”  to adequately describe the jobs numbers.

I have the opposite problem. I’ve tried every word I could come up with—including “lopsided,” “highly skewed,” and “grotesquely unequal“—to describe how “bad” this recovery has been, especially for workers.


Maybe readers can come up with better adjectives to illustrate the sorry plight of Americans workers since the Second Great Depression began—something that captures, for example, the precipitous decline in the labor share during the past decade (from 103.3 in the first quarter of 2008 to 97.1 in the first quarter of 2018, with 2009 equal to 100).*

But perhaps there’s a different approach. Just run the numbers and report the results. That’s what the Directorate for Employment, Labour, and Social Affairs seem to have done in compiling the latest OECD Employment Outlook 2018. Here’s their summary:

For the first time since the onset of the global financial crisis in 2008, there are more people with a job in the OECD area than before the crisis. Unemployment rates are below, or close to, pre-crisis levels in almost all countries. . .

Yet, wage growth is still missing in action. . .

Even more worrisome, this unprecedented wage stagnation is not evenly distributed across workers. Real labour incomes of the top 1% of income earners have increased much faster than those of median full-time workers in recent years, reinforcing a long-standing trend. This, in turn, is contributing to a growing dissatisfaction by many about the nature, if not the strength, of the recovery: while jobs are finally back, only some fortunate few at the top are also enjoying improvements in earnings and job quality.

Exactly! The number of jobs has gone up and unemployment rates have fallen—and workers are still being left behind. That’s because wage growth “is still missing in action.”

left behind


Workers’ wages have been stagnant for the past decade across the 36 countries that make up the Organisation for Economic Cooperation and Development. But the problem has been particularly acute in the United States, where the “low-income rate” is high (only surpassed by two countries, Greece and Spain) and “income inequality” even worse (following only Israel).

The causes are clear: workers suffer when many of the new jobs they’re forced to have the freedom to take are on the low end of the wage scale, unemployed and at-risk workers are getting very little support from the government, and employed workers are impeded by a weak collective-bargaining system.

That’s exactly what we’ve seen in the United State ever since the crisis broke out—which has continued during the entire recovery.

fredgraph (1)

But we also have to look at the opposite pole: the growth of corporate profits is both a condition and consequence of the stagnation of workers’ wages. Employers have been able to use those profits not to increase worker pay (except for CEOs and other corporate executives whose pay is actually a distribution of those profits), but to purchase new technologies and take advantage of national and global patterns of production and trade to keep both unemployed and employed workers in a precarious position.

That precarity, even as employment has expanded, serves to keep wages low—and profits growing.

What we’re seeing then, especially in the United States, is a self-reinforcing cycle of high profits, low wages, and even higher profits.

That’s why the labor share of business income has been falling throughout the so-called recovery. And why, in the end, Eric Levitz was forced to find the right words:

American Workers Are Getting Ripped Off


*And, of course, even longer: from 114 in 1960 or 112 in 1970 or even 110.2 in 2001.

OECD-income inequality

Back when I was a kid, the country where kids-who-weren’t-me were starving was India, and my parents regularly told me to finish what was served to me at supper because somehow that would help those needy children. (I confess my smart-aleck answer to my parents was to tell them to send the uneaten food to India or wherever for the hungry kids. Problem solved.)

That was pretty much Tim Worstall’s response to the latest OECD report on inequality, In It Together: Why Less Inequality Benefits All. Poverty is the only thing that matters, and the poor in the United States aren’t really poor—not in comparison to the “really poor” elsewhere in the world. So, clean your plates and be thankful you’re not like “them.”

they’re worried that rich Americans have ten times the incomes of poor Americans, not that any and every American has an income many multiples of that of someone who is truly poor. For example, if you’re on the average amount of governmental help to aid you in beating poverty in the US (that’s around $9,400 a year) then your income, from that source alone, is some 25 to 30 times that of someone living in real, absolute, poverty.

Myself, I think that’s the only inequality that we should be worrying about: and absolute poverty the only sort of poverty we should be worrying about. As I then go on to insist that the absolute poverty is being beaten by globalisation, and the relative inequality in the OECD countries is also being caused by globalisation, then I say that this is all a very good idea indeed. Let rip with yet more globalisation and trade, the absolutely poor will continue to get richer and the in-country inequality can rise for all I care. And given the link between the two I even tend to applaud the rising in-country inequality as evidence that that absolute poverty continues to be beaten.

But it’s not just Worstall: that’s pretty much the usual response from conservatives these days (from a recent commentator on this blog through Bruce D. Meyer and James X. Sullivan to Deirdre McCloskey) when the issue of inequality comes up. Don’t worry about inequality and keep hoping that—someday, somehow—poverty in the world will be eliminated.

Except it hasn’t, and it isn’t. What the OECD report shows is:

1. Poverty within the OECD nations (no matter how measured) increased during the most recent economic crisis.

2. Inequality (in the distribution of both income and wealth) has also increased—and not just in terms of those at the very bottom, but especially with respect to the bottom 40 percent of the population.

3. The growth in poverty and inequality has negative effects on overall economic growth.

4. And, finally, redistributive measures do not have a negative effect on growth.

There is nothing in the clean-your-plate attempts to ignore the existence of already-grotesque and still-rising levels of poverty and inequality that can effectively counter or overturn those findings—much less respond to what I consider to be the key finding in the report:

The most efficient policy package will address inequalities at the point where they originate rather than trying to pick them up only at a later stage.

In other words, additional growth won’t solve or eliminate those inequalities. We need to tackle the point where they originate: by radically transforming the existing set of economic institutions.

infant mortality

According to the U.S. Centers for Disease Control and Prevention [pdf],

In 2010, the U.S. infant mortality rate was 6.1 infant deaths per 1,000 live births, and the United States ranked 26th in infant mortality among Organisation for Economic Co-operation and Devel­opment countries. After excluding births at less than 24 weeks of gestation to ensure international comparability, the U.S. infant mortality rate was 4.2, still higher than for most European countries and about twice the rates for Finland, Sweden, and Denmark.

Infant mortality is an important indicator of the health of a nation because it is associated with a variety of factors such as maternal health, quality of and access to medical care, socioeconomic conditions, and public health practices.

Clearly, as inequality continues to rise, the health of the United States is not good.


According to Larry Mishel, low-wage workers (defined as the tenth percentile of wage earners) in the United States

fare very poorly by international standards, as the OECD’s recent Employment Outlook report reminds us. In the United States, according to the OECD, 25.3 percent of workers had “low-pay”—earning less than two-thirds of the median wage—which was the highestincidence of low-pay work among the twenty-six countries surveyed and far higher than the OECD average of 16.3 percent. In fact, as the figure below shows, low-wage workers fare worse in the United States than any other OECD nation. Low-wage workers earned just 46.7 percent of that of the median worker—far beneath the OECD average of 59.9 percent in 2012. To catch up to the OECD average, U.S. low wage workers would need a 28 percent wage boost.


The OECD [pdf] has just come in with its latest long-term economic projection. And the results ain’t pretty: they forecast slower growth for the global economy and even slower growth for the developed countries (both under relatively rosy predictions about productivity growth and rising immigration requirements), and even those lower growth rates will be challenged and potentially undermined by the effects of climate change.

Perhaps even more important, they expect the existing trend of growing inequality (as seen in the chart above) to continue through 2060 (as see in the charts below).


The bottom-line message: the best capitalism has to offer is probably over. It’s certainly over for the richest countries, and during the next 50 years it will probably end for the other countries that make up the world economy. Even if the existing institutions hang on (under the suggested policy regime of more globalization, more privatization, more austerity, and more migration), the result will be rising inequality within countries.

How long, then, before we decide an alternative set of economic institutions is necessary?

income growth

According to a new study of top incomes by the Directorate for Employment, Labour and Social Affairs of the OECD [pdf],

from 1975 up to the crisis, the top percentile managed to “capture” a very large fraction of the growth in pre-tax incomes, especially in English-speaking countries: around 47% of total growth went to the top 1% in the United States, 37% in Canada and above 20% in Australia and the United Kingdom. By contrast, in Nordic countries, but also in France, Italy, Portugal and Spain it was the bottom 99% of the population which benefited more growth, receiving about 90% of the increase in total pre-tax income between 1975 and 2007. . .

About 80% of total income growth has been captured by the top 10% in the United States, and around two thirds in Canada. In Australia and the United Kingdom, the top 10% benefited from about half of the income growth. Income growth was shared more equally in other OECD countries for which data are available, but in all cases the top of the distribution benefited from growth proportionally more than the rest of the population.




That’s right: nearly 30 percent of Americans between the ages of 64 and 69 were employed outside the home in 2012. According to the OECD, that’s much higher than the European average of 9.6 percent and higher than all other OECD countries except Korea and Japan. And that percentage is growing, since it’s now higher than what it was just a decade ago (26.2 percent).

The high percentage of elderly Americans working is the effect of miserly Social Security and Medicare benefits (including an early-retirement age that’s higher than in many other countries, lower benefits for people who take early retirement, and a high and rising age for full benefits). And now they want to fix the system but cutting the benefits even further.

Only in America, as social wealth grows, are we increasingly forcing our seniors to have the freedom to sell their ability to work in order to survive.


The usual excuse, from mainstream economists and politicians, that the U.S. healthcare system should remain mostly in for-profit, private hands is because the outcomes of that system make it the best in the world.

But a new study (published in the Journal of the American Medical Association) of the burden of diseases, injuries, and leading risk factors in the United States from 1990 to 2010 in comparison to the other countries in the Organisation for Economic Co-operation and Development (OECD) countries reveals a quite different story.

So how did we do compare to other countries? Not particularly well. Between 1990 and 2010, among the 34 countries in the OECD, the United States dropped from 18th to 27th in the age-standardized death rate. The United States dropped from 23rd to 28th for age-standardized years of life lost. It dropped from 20th to 27th in life expectancy at birth. It dropped from 14th to 26th for healthy life expectancy. The only bit of good news was that the United States only dropped from 5th to 6th in years lived with disability.

In other words, the United States spends the most per capita on health care across all countries and falls below the mean for all OECD countries on most indicators. As we can see in the chart below, the United States has lots of red (higher than the mean), a bit of yellow (close to the mean), and only one green (lower than the mean).


What the study demonstrates is the U.S. healthcare system is not designed to produce the best health outcomes for the population but, instead, to produce healthy profits for the private insurers and providers on which the system is based.


I often ask my students in what year the United States passed a law limiting the length of the workweek. And they dutifully respond: 1919? 1928? 1935?

Well, of course, it’s a trick question. There is no legally mandated limit on the length of the workweek. Such a law has never been passed in the United States. And one of the consequences is that Americans now work longer hours than any other rich nation: 1787 hours a year per worker in 2011, close to the OECD average of 1776 and much longer than such countries as the Netherlands (1379), Germany (1399), and the United Kingdom (1625).

But apparently we came close, in 1933. On 6 April of that year, the Black-Connery Bill passed in the United States Senate by a wide margin.* The bill fixed the official American work week at five days and 30 hours, with severe penalties for overtime work. The bill was opposed by Franklin Delano Roosevelt and was subsequently buried in the House, when it emerged five years later as the Fair Labor Standards Act with all its 30-hour teeth pulled.

As Benjamin Kline Hunnicutt explains,

Certainly, the end of the shorter hour movement has many dimensions and causes which must be explored. But the short narrative of events presented in this essay suggest two important dimensions and causes-one social, the other political. Among the reasons for the ending of the shorter hour movement was the fact that American attitudes toward free time changed. For over a century, American workers and their supporters valued shorter hours. They did so for a variety of reasons-some economic and some non-pecuniary. Only higher wages competed with this issue for workers’ attention. During the 1920s and early 1930s labor and other groups and individuals saw in “the progressive shortening of the hours of labor” a practical foundation for liberal idealism as well as a necessary remedy for economic ills. But during the Depression, free time took the form of massive unemployment. Instead of accepting labor’s 30 hour week remedy, Roosevelt and the majority of Americans saw this free time as a tragedy that had to be eliminated by increasing economic activity-an activity stimulated by government spending if necessary. The concept of free time as leisure-a natural part of economic advance and a foil to materialistic values was abandoned. The reform continuum in this one area was broken by Roosevelt’s New Deal and by the modern adherence to economic growth as the great liberal goal.

The result is that, today, American workers are forced to have the freedom to remain on the job for at least 40 hours a week, while millions of their fellow workers remain jobless, and my question to students remains a trick one.

* I haven’t been able to find an on-line version of the 1933 bill. But here’s a link to the 1934 version:

Whereas our private productive system is dependent for its own customers chiefly upon its own employees, who cannot buy the output of the system unless producers give them jobs at wages adequate to exchange for the products; and Whereas private business has not been able, and is not now able, to give jobs to those who need them, on past or existing hours of labor . . .

SEC. 2. (a) No article or commodity shall be purchased by the United States, or any department or organization thereof, from any business enterprise operating contrary to any provision of this Act, or if such article or commodity was produced or manufactured in any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment situated in the United States, in which any person, except officers, executives, and superintendents, and their personal and immediate clerical assistants, was employed, after the date this Act takes effect, more than five days in any week or more than six hours in any day.


The United States may not technically be in a recession (yet) but a large part of the rest of the world is.

According to Dwaine Van Vuuren, more than half of the 41 OECD member nations are in economic contractions—and have been since the last quarter of 2012.