Lessons for Inclusive Growth from the
United States and the World
Jason Furman
Chairman, Council of Economic Advisers
July...
We Are Now Far Into the Recovery From the Great Recession, But
More Work Remains to Be Done
1
Average
in Last
Recovery
GR ...
As Labor Markets Have Strengthened, Nominal Wage Growth Has
Picked Up—and Has Exceeded Inflation
2Source: Bureau of Labor ...
29 OECD Countries Grew Over the Four Quarters of 2013,
Up From 20 in 2012
3Source: National sources; CEA calculations.
0
5...
After Rising Strongly From 1950-1980, Income Growth
Has Slowed or Even Reversed
4
Note: Ireland data is based to 1943=1950...
Long-Term Income Challenges in the United States Can Be Seen in
Multiple Data Sources
5Source: World Top Incomes Database;...
U.S. Total Factor Productivity Has Rebounded
But Still Falls Below the Postwar Period
6Source: Bureau of Labor Statistics;...
Productivity Growth Fell in Many Advanced Economies
But Picked Up in the United States
Note: Data through 2013.
Source: Co...
Productivity Growth and Average Bottom 90%
Income Across Countries
Note: See notes on slide 4.
Source: Conference Board; W...
Share of Total, Labor, Capital Income Accrued to Top 1%
(Piketty & Saez Data)
Source: Piketty & Saez (2013); CEA calculati...
Capital Income Inequality Contributes More to Overall Inequality
Towards the Upper End of the Income Distribution
Source: ...
The Rise in Inequality in the United States Has Coincided With a
Decline in Union Membership
Note: Data through 2012.
Sour...
Wealth in the United States Has, Over the Long Term, Remained
Steady Compared to Europe
Source: Piketty (2014); CEA calcul...
The Labor Share of Income Began To Decline in 2000
Source: Bureau of Labor Statistics; CEA calculations. 13
50
52
54
56
58...
Many OECD Countries Enroll Nearly All Their Four Year Olds in
Pre-School; in the United States, Only 78% Are Enrolled
Note...
Most OECD Countries Currently Invest a Small Share of GDP in
Transportation Infrastructure
Note: Data for Switzerland, Hun...
The United States Was One of the Pioneers of Tax Incentives for
Business R&D, But Has Since Fallen Behind Other Countries
...
With a $10.10 Minimum Wage, the United States Would Be in the
Middle of the Range Across the OECD
Note: Data as of 2012.
S...
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Lessons for Inclusive Growth from the United States and the World Jason Furman Chairman Council of Economic Advisers Executive Office of the President of the United States of America

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Lessons for Inclusive Growth from the United States and the World Jason Furman Chairman Council of Economic Advisers Executive Office of the President of the United States of America
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Lessons for Inclusive Growth from the United States and the World Jason Furman Chairman Council of Economic Advisers Executive Office of the President of the United States of America

  1. 1. Lessons for Inclusive Growth from the United States and the World Jason Furman Chairman, Council of Economic Advisers July 21, 2014
  2. 2. We Are Now Far Into the Recovery From the Great Recession, But More Work Remains to Be Done 1 Average in Last Recovery GR Peak (Trough) Latest Value Percent Change from Previous Average to Latest Value Percent Recovery Since GR Peak (Trough) Unemployment Rates Overall 5.3 10.0 6.1 16 83 Short Term 4.2 6.9 4.0 -5 107 Long Term 1.0 4.4 2.0 92 72 Alternate Measures U-4 (+ Discouraged) 5.5 10.6 6.5 18 81 U-5 (+ Marg. Attached) 6.2 11.4 7.3 18 79 U-6 (+ PT Economic Rsn) 9.1 17.2 12.1 32 63 Discouraged 0.3 0.9 0.4 55 74 Marginally Attached 1.0 1.8 1.3 29 65 PT for Economic Reasons 3.1 6.6 5.2 65 42 Source: Bureau of Labor Statistics; CEA Calculations.
  3. 3. As Labor Markets Have Strengthened, Nominal Wage Growth Has Picked Up—and Has Exceeded Inflation 2Source: Bureau of Labor Statistics. -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Average Hourly Earnings for Private Production & Nonsupervisory Workers Percent, year-over-year Inflation (CPI-U, through May) Nominal Earnings (through June)
  4. 4. 29 OECD Countries Grew Over the Four Quarters of 2013, Up From 20 in 2012 3Source: National sources; CEA calculations. 0 5 10 15 20 25 30 00:Q1 02:Q1 04:Q1 06:Q1 08:Q1 10:Q1 12:Q1 14:Q1 Number of OECD Countries Growing Number (based on year-over-year real GDP growth)
  5. 5. After Rising Strongly From 1950-1980, Income Growth Has Slowed or Even Reversed 4 Note: Ireland data is based to 1943=1950=100 and missing for 1944-1974. U.K. and Canada series have breaks in 1990 and 1982, respectively. Australia is indexed to 1951=100. Source: World Top Incomes Database; CEA calculations. 4 1950 1960 1970 1980 1990 2000 2010 United States United Kingdom Canada Australia France Ireland Growth inReal Average Income for the Bottom 90 Percent Index, 1950=100 (log scale) 100 200 300 400 600 800
  6. 6. Long-Term Income Challenges in the United States Can Be Seen in Multiple Data Sources 5Source: World Top Incomes Database; U.S. Census Bureau; CEA calculations. 4 1950 1960 1970 1980 1990 2000 2010 Two Measuresof Real Income Growth for the UnitedStates Index, 1950=100 (log scale) 100 200 300 400 500 Median Family Income (U.S. Census Bureau) Average Incomefor Bottom 90% of Tax Units (World Top Incomes Database)
  7. 7. U.S. Total Factor Productivity Has Rebounded But Still Falls Below the Postwar Period 6Source: Bureau of Labor Statistics; CEA calculations. 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 1950 1960 1970 1980 1990 2000 2010 Growth in U.S. Total FactorProductivity Annual percent change 1953–1973: 1.7 percent per year 1974–1995: 0.4 percent per year 1996–2013: 1.1 percent per year 15-year centered moving average
  8. 8. Productivity Growth Fell in Many Advanced Economies But Picked Up in the United States Note: Data through 2013. Source: Conference Board; CEA calculations. 7 0 1 2 3 4 5 6 7 8 1950 1960 1970 1980 1990 2000 2010 Germany France Italy Ireland United States 15-Year CenteredMovingAverage of Annual Labor Productivity Growth Percent per year
  9. 9. Productivity Growth and Average Bottom 90% Income Across Countries Note: See notes on slide 4. Source: Conference Board; World Top Incomes Database; CEA calculations. 8 4 1950 1960 1970 1980 1990 2000 2010 United States Index, 1950=100 (log scale) 100 200 300 400 500 75 600 700 800 Labor Productivity Real Average Earnings for Bottom 90% 4 1950 1960 1970 1980 1990 2000 2010 United Kingdom Index, 1950=100 (log scale) 100 200 300 400 500 75 600 700 800 Labor Productivity Real Average Earnings for Bottom 90% 4 1950 1960 1970 1980 1990 2000 2010 France Index, 1950=100 (log scale) 100 200 300 400 500 75 600 700 800 Labor Productivity Real Average Earnings for Bottom 90% 4 1950 1960 1970 1980 1990 2000 2010 Canada Index, 1950=100 (log scale) 100 200 300 400 500 75 600 700 800 Labor Productivity Real Average Earnings for Bottom 90% 4 1950 1960 1970 1980 1990 2000 2010 Australia Index, 1950=100 (log scale) 100 200 300 400 500 75 600 700 800 Labor Productivity Real Average Earnings for Bottom 90% 4 1950 1960 1970 1980 1990 2000 2010 Ireland Index, 1950=100 (log scale) 100 200 400 600 75 800 1000 1300 Labor Productivity Real Average Earnings for Bottom 90%
  10. 10. Share of Total, Labor, Capital Income Accrued to Top 1% (Piketty & Saez Data) Source: Piketty & Saez (2013); CEA calculations. 9 0 50 100 150 200 250 300 350 1970 1980 1990 2000 2010 Share of Total, Labor, Capital Income Accruing to Top 1% Index, 1970 = 100 Share of Total Income Share of Labor Income Share of Capital Income
  11. 11. Capital Income Inequality Contributes More to Overall Inequality Towards the Upper End of the Income Distribution Source: Piketty & Saez (2013); CEA calculations. 10 Top 10% Top 1% Top 0.1% Top 0.01% Income Excluding Capital Gains 1970-2010 (Piketty-Saez) 83% 68% 53% 39% 1980-2010 (Piketty-Saez) 71% 54% 59% 35% 1990-2010 (Piketty-Saez) 64% 51% 53% 37% Income Including Capital Gains 1970-2010 (Piketty-Saez) 80% 63% 47% 33% 1980-2010 (Piketty-Saez) 67% 50% 52% 30% 1990-2010 (Piketty-Saez) 61% 45% 44% 30% Increase in Income Share Accounted for by Inequality Within Labor Income Note: Values for any given year calculated as a centered three-year moving average.
  12. 12. The Rise in Inequality in the United States Has Coincided With a Decline in Union Membership Note: Data through 2012. Source: World Top Incomes Database; Economic Policy Institute. 11 0 10 20 30 40 50 60 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 U.S. UnionMembershipandTop 10% Income Share Percent Top 10% Income Share Union Membership Rate
  13. 13. Wealth in the United States Has, Over the Long Term, Remained Steady Compared to Europe Source: Piketty (2014); CEA calculations. 12 0 100 200 300 400 500 600 700 800 1870 1890 1910 1930 1950 1970 1990 2010 National Capital in the United States and Europe Percent of national income United States Europe
  14. 14. The Labor Share of Income Began To Decline in 2000 Source: Bureau of Labor Statistics; CEA calculations. 13 50 52 54 56 58 60 62 64 66 68 1950 1960 1970 1980 1990 2000 2010 Labor Share inthe Nonfarm BusinessSector Percent 2014:Q1 1947-2000 average
  15. 15. Many OECD Countries Enroll Nearly All Their Four Year Olds in Pre-School; in the United States, Only 78% Are Enrolled Note: Data for Canada as of 2010. Source: OECD. 14 0 10 20 30 40 50 60 70 80 90 100 EnrollmentRates at Age 4 in Early Childhood and Primary Education Percent (2011 unless noted)
  16. 16. Most OECD Countries Currently Invest a Small Share of GDP in Transportation Infrastructure Note: Data for Switzerland, Hungary, Japan, Portugal and Denmark as of 2010. Data for Belgium as of 2009. Data for Greece and Ireland as of 2007. U.S. figures updated to 2013 based on OMB data. Source: OECD; U.S. Office of Management and Budget; CEA calculations. 15 0.0 0.5 1.0 1.5 2.0 2.5 3.0 InvestmentinInland Transportation Infrastructure Percent of GDP (2011 unlessnoted)
  17. 17. The United States Was One of the Pioneers of Tax Incentives for Business R&D, But Has Since Fallen Behind Other Countries Note: Data for Belgium, Ireland, Australia, Spain and Chile as of 2010. Source: OECD. 16 0.00 0.05 0.10 0.15 0.20 0.25 0.30 Tax IncentivesforBusinessR&D Percent of GDP (2011 unlessnoted)
  18. 18. With a $10.10 Minimum Wage, the United States Would Be in the Middle of the Range Across the OECD Note: Data as of 2012. Source: OECD. 17 0 2 4 6 8 10 12 14 16 18 MinimumHourly Wage 2012 US$ per hour
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