A recent report from the Center for Economic and Policy Research (CEPR) finds that the U.S. labor market is failing in two critical ways: “steeply rising inequality combined with a poor employment performance.”[i]

The first labor market failure that economist John Schmitt identifies is “high and rising inequality.” This includes the often-discussed income inequality: since the mid-1970s, wages have grown for America’s highest earners at a much faster pace than for middle-income and especially low-income workers.[ii] But income inequality is just part of the picture. Since the 1980s, wealth inequality has also grown considerably, and the Great Recession helped accelerate that growth. History suggests that this trend isn’t organic:

“…data show wealth inequality falling for five decades from the 1930s through the 1970s, suggesting that it is possible for wealth inequality to fall even when the economy grows as rapidly as it did in the early postwar period.”[iii]

 Bottom 90% Wealth share in the United States

Schmitt then argues that the U.S. economy is failing to create enough jobs, and has been for some time.

The national employment rate has been weak for most of the 21st century. The recession of 2001 put an end to the robust employment growth the country had enjoyed since the 1970s, and the employment rate hadn’t fully recovered when the Great Recession hit. Of course, the employment rate has barely moved since 2009, when the recovery ostensibly began. In fact, while the unemployment rate has fallen by 3.7 percentage points since its 2010 peak, the employment rate has only risen by half a percentage point in the same time.

Unemployment and Employment Rates 

Schmitt concludes that macroeconomic reform – including more worker protections and bargaining rights - is the best way to solve both of these labor market issues.

Click here to read the full report.



[i] Schmitt, John. (January 2015). Failing on Two Fronts: The U.S. Labor Market Since 2000. Center for Economic and Policy Research. Available at http://www.cepr.net/documents/failure-two-fronts-2015-01.pdf

[ii] See note i

[iii] Ibid