The Consumer Price Index fell 0.3 percent in May, representing the fourth consecutive month of slowing in headline inflation as energy prices plunged, according to the Bureau of Labor Statistics' latest reports on the consumer price, U.S. import/export price and producer price indexes. Energy prices, which showed a 1.7 percent decline in April, dropped 4.3 percent. Core inflation remained steady at 0.2 percent for the third consecutive month, and prices have risen at a 2.7 percent annualized rate over the last three months.

The consumer price of health insurance has rebounded over the past 12 months after falling for three consecutive years. The price of medical care services rose 0.5 percent in May, including a 0.6 percent increase in hospital services. By contrast, the price of medical care commodities—largely drug prices—was unchanged. A 0.8 percent increase in health insurance prices brought the 12-month change to 13 percent. The increase over the past year follows a multi-year slide, and over the past five years, insurance prices are up only 2.3 percent. Health insurance prices have grown at a 2.3 percent annualized rate since December 2005.

For a more in-depth analysis, read our latest Prices Byte.

The Center for Economic and Policy Research once again ranked first in media hits per budget dollar of all major think tanks, based on an analysis of Fairness and Accuracy in Reporting’s 2011 think tank media citation rankings and organizational budgets. CEPR outpaced all other think tanks with 1.3 media citations per ten thousand budget dollars. CEPR had also been first in hits per dollar in the five years from 2004-2008.*

CEPR was also number one in web traffic per budget dollar in 2011, getting more than twice the number of hits as its closest competitor. CEPR had ranked first in three of the five years from 2004-2008 and placed second in the other two years.

* CEPR did not do this analysis for the years 2009 and 2010 because Fairness and Accuracy in Reporting (FAIR), which produces the measure of think tank media citations that is the basis of this analysis, did not compile its list in those years. 

Many of the leading voices in economic policy debates are telling us that excess government spending, like that characteristic of Western European welfare states over the past sixty years, leads ultimately to rising interest rates.  This happens, it is argued, because excessive government spending is likely to crowd out private investment and consumption. This will slow growth and lead to higher inflation. 

However, a cursory glance at recent data on government spending and the interest rates of government bonds reveals a different story.  For 2011, we plotted government expenditure as a percentage of GDP versus the yields on ten-year government bonds for the OECD countries, and found a slight positive relationship between spending and interest rates, as is shown in the following figure. 

While a small positive relationship appears to exist, as can be seen by the upward slope of the line of best fit in the chart above, regression analysis of bond yields and government expenditure showed that this relationship was not statistically significant.  Any miniscule positive relationship can be attributed to a few countries with high government expenditure as share of GDP and high bond yields.  These are the European economies of Greece, Portugal, and Ireland.  While it is possible that government spending played a role in precipitating the current crisis in Greece, this is not the case for the other distressed economies.  For instance, Ireland and Spain both ran  budget surpluses in the years just before the recession.  Noteworthy, also, are the many countries, such as France, Denmark, Finland, and Belgium, with high government expenditure and very low bond yields. 

We already knew that unions increase wages, especially for less-educated workers. They also strongly increase the probability that a worker will have benefits like health care insurance, a pension, or paid sick days and family leave. It turns out that unions are also good for your health.

A new study by Megan Reynolds and David Brady at Duke University finds that being a union member has a large positive effect on self-rated health status. This effect is largest for less-educated workers.

Given that unions provide a much greater degree of security on the job and protection against arbitrary actions by capricious bosses, it perhaps is not surprising to see that unions are associated with better health. After all stress can be a major factor leading to bad health. Still it is nice to see that Reynolds and Brady have produced the evidence showing that this is the case.

Employment Policy Research Network
“Labor Market Four Years Into the Crisis:  Assessing Structural Explanations”
Jesse Rothstein

“A Reconsideration and Evaluation of Wellington's and Winter's 'The Unions and the Cities' (1971)”
Jeffrey Keefe

National Employment Law Project
“Chain of Greed:  How Walmart’s Domestic Outsourcing Harms Workplace Rights of Warehouse Workers”
Eunice Hyunhye Cho, Anasasia Christman, Maurice Emsellem, Catherine K. Ruckelshaus, Rebecca Smith

In a recent post at The Atlantic Cities blog, sociologist Richard Florida provides an interesting analysis of some of the findings of a new study by the Pew Center on the States on economic mobility in the United States.  Florida shows that, across the 50 states, there is a positive correlation between the degree of residents' upward mobility and state: median household income; high school graduation rates; public education spending per pupil; and openness to immigrant and LGBTQ communities.  His results help to expand the view of the sort of institutional and cultural contexts that support --or are at least associated with-- high economic mobility.

On the other hand, Florida also demonstrates that states with a higher share of their labor force in what he defines as “working class professions” have lower rates of upward mobility. But, his analysis overlooks the role of the most important working class institution: labor unions. The figure below uses the same Pew data analyzed by Florida to compare upward mobility across states with different levels of unionization. The graph shows a strong, positive relationship between the share of a state's workforce that is unionized and the Pew measure of upward mobility. The union data in the graph refer to 2011, but this is a long-standing relationship and a similar pattern holds for 1983, too (the earliest year for which comparable data are available).

The following newsletter highlights CEPR's latest research, publications, events and much more.

CEPR on Work Sharing
CEPR Co-director Dean Baker teamed up with the American Enterprise Institute's Kevin Hassett to pen this Sunday op-ed on the benefits of work sharing for the New York Times.  Dean appeared with Hassett on PBS' NewsHour with Jim Lehrer to discuss the issue.  Dean has written extensively on work sharing as a means to address continuing long-term unemployment, most recently in this issue brief co-written with CEPR’s Director of Domestic Policy Nicole Woo that looks at how work-sharing provisions signed into law by President Obama in February 2012 as part of the Middle Class Relief and Job Creation Act could help states reduce their unemployment rates and also save $1.7billion per year.

Senator Herb Kohl referred to the op-ed in his opening statement at a May 15th Aging Committee hearing titled "Missed by the Recovery: Solving the Long-Term Unemployment Crisis for Older Workers": “And as a bipartisan opinion piece in the New York Times over the weekend stated, this problem “nothing short of a national emergency.”  Work sharing was also featured in this article in the Cleveland Plain Dealer and this one in the West Virginia Gazette.


CEPR on Jamaica
CEPR’s recent release, “Update on the Jamaican Economy,” by CEPR Research Assistants Jake Johnston and Juan Antonio Montecino, looks at Jamaica’s stalled agreement with the IMF, its economic performance over the past year and examines its persistently high debt burden. The paper argues that Jamaica’s economic performance and development prospects have been seriously damaged by an unsustainable debt burden, with the economy stagnating for decades.  The paper updates a similar report released in May 2011.

Yesterday there was quite a bit of media coverage -- in outlets such as Marketplace and the Guardian -- about the launch of a new "national movement of underwater homeowners and their allies," the Home Defenders League (HDL).

With numbers last week showing that there are more than 15 million underwater households in the U.S., this movement seems long overdue. The HDL is pushing for a well-reasoned slate of ideas to to help those who are stuggling with foreclosures and underwater mortgages, including Right to Rent, allowing homeowners to stay in their homes, after foreclosure, paying the market rent (emphasis added below):

WHY THE LEAGUE

Here's what we stand for:

• Resetting of mortgages (principal reduction) to current market value
• Families have the right to stay in homes, paying rent, post foreclosure
• Families, post foreclosure, have the right of “first refusal” to buy back their home at real current value
• A moratorium on foreclosures until due process and fairness can be ensured

This comes just a few days after news articles from California to Pennsylvania popped up about Bank of America's Mortgage to Lease pilot program, which is essentially Right to Rent as well, as noted in this statement by CEPR's Dean Baker. As BofA executive Ron D. Sturzenegger describes it:

It's good for us, it's good for the borrower and ultimately good for the community.

The news is that this pilot has started to roll out in California, and will tested in Arizona, Nevada and New York soon. A BofA spokesman says that their program will be expanded if their pilot "works out for enough borrowers" and that they expect to get some test results in 60 days. Rest assured that CEPR will be on the lookout for that!

Dean has been advocating for his Right to Rent plan for years. It's rewarding to see entities from across the spectrum -- mega-corporate Bank of America to a league of underwater homeowners -- endorse, and indeed, start to implement his idea. We can only hope it'll continue to get picked up by more mortgage-holders, advocates, and policy makers!

Though the economy only saw a slight rise in the unemployment rate to 8.2 percent, revisions of the march and April jobs numbers showed much slower job creation than previous reported. The public sector continues to shed jobs – 657,000 have been lost over the last four years.The current pace of recovery lags behind that of any of the previous four recoveries.  More in this month’s Jobs Byte.

New labor market research from last week:

Center for Economic and Policy Research
Who’s (Still) Above the Social Security Payroll Tax Cap?
Nicole Woo, Janelle Jones, and John Schmitt

Demos
The Retirement and Savings Drain:  The Hidden and Excessive Costs of 401(K)S
Robert Hiltonsmith

Economic Policy Institute
Can Workers Offset Social Security Cuts By Working Longer?
Eric Kingson and Monique Morrissey

National Employment Law Project
Fact Sheet:  Phase Out of Federal Unemployment Insurance
NELP

The following are the latest labor market policy research reports from the past week.

Center for Economic Policy and Research

Size and Characteristics of States’ Union Workforces
John Schmitt and Marie-Eve Augier

Economic Policy Institute

Labor force participation: Cyclical versus structural changes since the start of the Great Recession
Heidi Shierholz

Employment Policy Research Network

The Dismal State of the Nation's Teen Summer Job Market, 2009-2011, and the Outlook for the Summer of 2012
Andrew Sum and Walter McHugh

Institute for Women’s Policy Research

Paid Time Off: The Elements and Prevalence of Consolidated Leave Plans
Andrea Linderman and Kevin Miller

Valuing Good Health in Massachusetts: The Costs and Benefits of Paid Sick Days
Kevin Miller and Claudia Williams

National Employment Law Project

Letter to USDOL: Changes to Florida Unemployment Program Cause Serious Decline in Access to Benefits
Christine Ownes

Two CEPR papers by John Schmitt and Janelle Jones released earlier this year on long-term unemployed were published in the spring issues of Challenge and New Labor Forum. In the newest issue of Challenge, “Down and Out: Measuring Long-Term Hardship in the Labor Market” (behind a paywall here) proposes several ways to rethink our understanding of long-term unemployment. In New Labor Forum, “America’s “New Class”: A Profile of the Long-Term Unemployed” (behind a paywall here) uses the framework from the Challenge piece to paint a demographic portrait of those still suffering from long-term unemployment in the labor market.

The Challenge article is based on this January 2012 CEPR briefing paper. The New Labor Forum piece is based on this March 2012 CEPR briefing paper.

Unionization rates — and the gender and racial composition of unionized workers — vary widely across the 50 states and the District of Columbia. In a newly released issue brief, based on an analysis of the Current Populations Survey, we give an overview of the size and basic demographics of the unionized workforce in each state. The brief is a partial update of some of the numbers that appeared in a 2010 release CEPR report called “Unions of the States.”

Size of the States' Union Workforces

The figure below (Figure 2 in the new brief) shows the size of the union workforce in each state in 2011. We define a unionized worker as anyone who is a member of a union or represented by a collective bargaining agreement.

In 2011, the 13.3 percent of the U.S. workforce was unionized. New York state had the highest unionization rate, at 26.4 percent. Alaska (24.3 percent) and Hawaii (24.0 percent) followed closely. Only one other state had a unionization rate above 20 percent and that was Washington (21.2 percent). The rest of the top ten most unionized states were Michigan (19.2 percent), New Jersey (18.8 percent), California (18.5 percent), Connecticut (17.6 percent), Oregon and Rhode Island (17.4 percent each), and Nevada (17.3 percent). Eight states had a unionization rate that was less than half of the national average: Tennessee (6.2 percent), Texas (6.1 percent), Arkansas and Louisiana (5.9 percent each), South Carolina (5.7 percent), Virginia (5.3 percent), Georgia (5.1 percent) and North Carolina (4.4 percent).

See the full brief for data on the number of union workers and their racial and ethnic background, by state.

The following are the latest labor market policy research reports from the last week.

Center for American Progress

The American Middle Class, Income Inequality, and the Strength of Our Economy: New Evidence in Economics
Heather Boushey and Adam Hersh

Center for Law and Social Policy

Paid Time Off: The Elements and Prevalence of Consolidated Leave Plans
Andrea Lindemann and Kevin Miller

21^st-Century Public Benefits: Emerging Options, Great Promise, and Key Challenges
Stan Dorn and Elizabeth Lower-Basch

Center on Budget and Policy Priorities

Testimony Of Ladonna Pavetti, Ph.D. Vice President, Family Income Support Policy, Before The House Ways And Means Committee, Subcommittee On Human Resources, Hearing On “State Tanf Spending And Its Impact On Work Requirements”

Economic Policy Institute

The Ryan Budget versus The Budget for All: Exacerbating versus alleviating our serious economic challenges
Andrew Fieldhouse, Rebecca Thiess, and Ethan Pollack

Institute for Women’s Policy Research, Social Security & Medicare Foundation and NOW Foundation

Breaking the Social Security Glass Ceiling: A Proposal to Modernize Women's Benefits
Carol Estes, Terry O'Neill, and Heidi Hartmann

The Consumer Price Index remained flat in April as energy prices showed large declines, falling 2.6 percent, according to the latest Bureau of Labor Statistics' reports on the consumer price, U.S. import/export price and producer price indexes. Excluding volatile food and energy prices, the core index of consumer prices rose 0.2 percent in the month and at a 1.9 percent annualized rate over the last three months.

With core consumer price inflation both low and stable and with little hint of price pressures coming from earlier stages of production, there can be little reason for inflationary fears. An increase in the rate of inflation would actually be welcome economic news, since additional deflation of nominal debts and lowering of real interest rates actually would help spur demand in the economy and induce additional hiring. This would be particularly important to the United States if the deflationary crisis in Europe should cause both a fall in demand for American exports compounded by a sharp rise in the dollar.

For a more in-depth analysis, check out the latest Prices Byte.

Here is this week's roundup of labor-market policy research reports:

Center for Economic and Policy Research

States Could Save $1.7 Billion per Year with Federal Financing of Work Sharing
Nicole Woo and Dean Baker

Center on Budget and Policy Priorities

What the 2012 Trustees’ Report Shows About Social Security
Kathy A. Ruffing

Are Low-Income Programs Enlarging the Nation’s Long-Term Fiscal Problem? : Programs outside Health Care Projected To Decline as Share of Economy
Robert Greenstein and Richard Kogan

Toomey Budget Similar To House-Passed Ryan Budget: Contains Deep Cuts in Low-Income and Non-Defense Discretionary Programs and Likely Tax Cuts for the Most Well-Off
James R. Horney, Chye-Ching Huang, Edwin Park, and Paul N. Van de Water

Testimony Of Stacy Dean: Vice President for Food Assistance Policy before the House Committee on Agriculture’s Subcommittee on Nutrition and Horticulture

National Employment Law Project

Modernizing Unemployment Insurance: Federal Incentives Pave the Way for State Reforms

39 States Claim $4.4 Billion in Recovery Act’s UI Modernization Funds

This is the agenda of many Republicans as we start to get closer to the date where the sequestration rules from a 2011 budget agreement will actually bite. The deal was structured so that the immediate budget cuts were limited. The big hit was scheduled to take place in January 2013. At that point, spending on both the military and discretionary portion of the federal budget were scheduled to fall by roughly 10 percent.

There are good economic reasons for questioning the wisdom of cutting the federal budget while the economy is still saddled with high rates of unemployment and large amounts of excess capacity. While it would be great if the private sector would fill the gap, hiring the government workers who lose their jobs, there is no reason to think this would be the case.

Businesses hire people when they see more demand for their products, not because the government is laying off workers. It is more likely that these cutbacks will slow the rate of private sector hiring by pulling money out of the economy. The government workers who lose their jobs will not be spending as much money at restaurants, malls, and other places where their spending creates jobs. In a weak economy, this is likely to mean less hiring in the private sector.

Apart from the size of overall spending, there is also the division of the spending. Many Republicans are now upset about the deal they agreed to back in 2011 that provided for roughly equal cuts for the defense and nondefense portions of the budget. They would rather see more money come out of areas like government support for college and preschool education, the national parks, and even cancer research rather than allow the cuts to the military budget to go through as specified.

While the proponents of cuts to cancer research are trying to scare people into believing that the sequestration of the military budget will leave the country defenseless, this is not based on an analysis of the numbers. Even if the cuts go into effect, after adjusting for inflation, military spending will still be more than 20 percent higher in 2013 than it was back in 2000. This should leave us plenty secure assuming the budget is properly managed.

Of course the Defense Department has a long history of getting ripped off by private contractors who charge high prices for complex weapon systems of questionable value. When funding for these weapon systems is threatened with cuts, the contractors run to their friends in Congress for protection.

This is likely what we are seeing now. The issue is not defending the country, it is about defending defense contractors' profits.

This post originally appeared on U.S. News & World Report's Debate Club.

In Sunday's New York Times Magazine, Adam Davidson writes about Ed Conard, a friend of Mitt Romney's and a defender of extremely wealthy investors. Conard argues that investors contribute far more to society than their own bank accounts. In a guest post on NPR's Planet Money blog, Dean Baker disagrees.

In his new book, Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong, Mitt Romney's former business partner Ed Conard claims that for each dollar of wealth pulled in by investors, society gets up to $20. I took issue with this claim, saying that the ratio is closer to 5 to 1. However even this lower number caught many by surprise, thinking it to be an endorsement of Conard's view of the economy, albeit in a bit toned down form. It's worth clarifying what is at issue.

First, the 5 to 1 number is simply a reference to the ratio of labor income to capital income (after taxes). For example, in 2011 after-tax corporate profits were just under $1.1 trillion, while labor compensation was over $5 trillion. If we add the corporate tax revenue to the labor income side, the total is more than $5.5 trillion. The take-away from this is that when companies have productive investment and it actually leads to economic growth, then everyone can benefit.

Even when we talk about productive investment, much of the individual investors' gain is at the expense of other investors. For example in the case of Apple, perhaps the country's most innovative company, we would still have smart phones, tablet computers, and downloadable music if Apple never existed. The products just would not be quite as good. Much of Apple's profit would simply show up elsewhere in the tech sector if the company did not exist. While Apple's innovations have clearly benefited society it would be inaccurate to say that the benefit is five times Apple's profits.

Here is this week's roundup of labor-market policy research reports:

Center for American Progress

Women and Obamacare: What’s at Stake for Women if the Supreme Court Strikes Down the Affordable Care Act?
Jessica Arons

Preparing All Teachers to Meet the Needs of English Language Learners: Applying Research to Policy and Practice for Teacher Effectiveness
Jennifer F. Samson and Brian A. Collins

Center for Law and Social Policy

Workforce Investment Act Reauthorization May Move Youth Development Field Back a Decade: Analysis of H.R. 4297 through a Youth Advocacy Lens
Linda Harris and Kisha Bird

The economy added 115,000 jobs in April, according to the latest Bureau of Labor Statistics' employment report. While the March number was revised up to 154,000, the 135,000 two-month average is well below the 252,000 average for the prior three months. The economy needs 100,000 jobs a month to keep pace with labor force growth. 

In spite of the slower job growth, the unemployment rate edged down again to 8.1 percent. However, this is not a case of the household survey showing a different picture than the establishment survey. As was the case last month, the drop in unemployment was entirely attributable to people leaving the labor force.

For a more in-depth analysis, check out the latest Jobs Byte.