Backing up Hassett’s assertions, former CEA chair Glenn Hubbard recently wrote in the Wall Street Journal that too many economists fail to consider the share of the U.S. corporate tax burden borne by labor -- 60 percent according to his research. Neither the TPC, the CBO, nor the JTC (Joint Tax Committee) model these results. Instead, they ignore the evidence.
A recent analysis of the House tax plan -- which is nearly identical to the Trump plan -- by professors Alan Auerbach (Berkeley) and Laurence Kotlikoff (Boston University) concluded that it would boost wages by 8 percent. That’s a big number.
It’s the difference between a prospering and optimistic middle class and a pessimistic middle class that lives day-to-day, paycheck-to-paycheck.
The middle class is back — or so it seems.
That’s the message from the Census Bureau’s latest report on “Income and Poverty in the United States.” The news is mostly good. The income of the median household (the one exactly in the middle) rose to a record $59,039; the two-year increase was a strong 8.5 percent. Meanwhile, 2.5 million fewer Americans were living beneath the government’s poverty line ($24,563 for a family of four). The poverty rate fell from 13.5 percent of the population in 2015 to 12.7 percent in 2016.. . . Not all the evidence is upbeat. Here are three sobering takeaways.
First, men’s median wages for full-time, year-round work have stagnated.
. . . Second, the upper middle class is flourishing — but not the lower classes.
. . . Third, almost three-quarters of the rise of Americans living in poverty since 1990 reflects increases in Hispanic poverty — increases linked to immigration, whether legal or illegal.
For months, I've planned to write a column on the future of the U.S. labor market. Stacked on my desk are reports on "the gig economy," "independent workers," "contingent workers," "freelancers" and the like. All signify a new, less secure labor market. Workers won't have long-lasting career jobs, as the old post-World War II employment model promised. Now it's survival of the fittest. Workers who can adapt to constant change will thrive. As for everyone else, tough luck. I never wrote that column. The main reason is that I never felt certain that this widely prophesied labor market would prevail. Indeed, the postwar employment model might make a comeback. Demographics — the ongoing retirement of the massive baby-boom generation — would make experienced and competent workers prized resources. Because the labor force would be growing only slowly, many companies would try to stabilize their employment by offering career jobs with better wages and benefits. I still don't know which of these models will triumph: the first reflecting a management belief that workers must be hired and fired as business conditions dictate; the second based on the notion that good workers will be scarce for the foreseeable future and smart companies will do their best to train and retain them.
When OMB director Mick Mulvaney unveiled the new Trump budget, he used language that is so important -- although we haven’t heard it in so many years. To paraphrase Mulvaney, the measure of budget success for the Trump administration is not how much federal assistance is given out, but how many people leave government dependency and join the private labor force as full-fledged workers.
Earlier this month four economists released a study of income trends based on an under-used data source, Social Security wage records. These earnings reports are submitted by employers for the purpose of calculating workers’ tax payments and, eventually, Social Security benefits. The income amounts are quite accurate and cover a full career of wage income. The new study confirms that average male earners have seen scant wage gains over the past generation. The study also turned up a surprise. When we combine the earnings trends for men and women, the rise in inequality appears much slower than when we examine trends among each sex separately.