Jason Furman, chairman of the Council of Economic Advisers, and World Bank Chief Economist Kaushik Basu discussed growth strategy on July 21, 2014 at World Bank HQ.

1. Lessons for Inclusive Growth from the
United States and the World
Jason Furman
Chairman, Council of Economic Advisers
July 21, 2014

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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