South By North Strategies, Ltd.

Lower Wages For Young College Graduates

The Economic Policy Institute traces changes in the average hourly wages if young (ages 21-24) college graduates between 1989 and 2011.

The wages of young college graduates have fared poorly during the Great Recession and its aftermath. Between 2007 and 2011, the wages of young college graduates dropped 4.6 percent (5.1 percent for men and 4.1 percent for women). As the figure shows, however, the wage growth of young graduates was weak even before the Great Recession began; they have fared poorly over the entire period of general wage stagnation that began during the business cycle of 2000–2007. Between 2000 and 2011, the wages of young college graduates dropped 5.4 percent (1.6 percent for men and 8.5 percent for women).
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The wage declines since 2000 stand in sharp contrast to the strong wage growth for these groups from 1995 to 2000. During that period of low unemployment and overall strong wage growth, wages rose 19.1 percent for young college graduates (18.7 percent for men and 19.5 percent for women). The stark difference between these two economic periods illustrates how the wages for young graduates vary considerably depending on the health of the U.S. labor market. Young graduates who enter the labor market during periods of strength (e.g. 1995–2000) face much stronger wage prospects than young graduates who enter the labor market during periods of weakness (e.g. 2001 to the present).

Editor’s Note

Policy Points is taking a long weekend to celebrate the Memorial Day holiday. Posting will resume on May 30, 2012. Thanks for your interest in the blog

Around The Dial – May 24, 2012

Economic policy reports, blog postings, and media stories of interest:

• Marshall Auerback argues that Germany is the “big loser” in the Euro-crisis.
• Robert Skidelsky looks at the problems facing China.
• Robert Kuttner outlines “a growth strategy for Europe.”

Rewarding Work In NC: The Impact Of The State EITC

Alexandra Sirota of the North Carolina Budget & Tax Center analyzes the county-by-county impact of the state Earned Income Tax Credit (EITC) in 2010.

That year, 883,228 working families in North Carolina received $110.1 million in  EITC-related tax refunds. Refunds were delivered to families in every one of the state’s 100 counties. Moreover, the number of families receiving the credit grew by 9.6 percent between 2008 and 2010.

An Argument Born of Silence?

James Kwak of The Baseline Scenario wonder why the modern GOP can position itself as a party of fiscal responsibility when its policies promote fiscal profligacy. Kwak sees several reasons for that strange development.

… One is that many Americans reflexively associate large deficits with excessive spending, even though reductions in tax revenues have played just as big a role since George W. Bush became president. (Compare, for example, receipts and outlays in 2000 and 2011 as a percentage of GDP.) Then they associate excessive spending with Democrats, although the only president to reduce spending significantly in the past forty years was Bill Clinton. It turns out that if you repeat the same tired attack lines year after year—Democrats are all tax and spend liberals, for example—people believe them.
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The other, more important reason why Republicans like talking about the national debt is that Democrats don’t have a good response. Sure, Democrats have lots of policy proposals, and theirs make a good deal more sense than the Republicans’; it was President Obama who proposed trillions of dollars in spending cuts and tax increases, which is what people supposedly want (according to opinion surveys, at least).
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But most Democrats just don’t like talking about deficits and the national debt. They think it’s a distraction from talking about jobs and unemployment, or they think simply broaching the subject is succumbing to a vast right-wing conspiracy to slash entitlements, or both. The result is that there is no liberalprogressive position on the national debt….