workers freedom

economics as if workers mattered

Tag Archives: Inequality

Class Struggle (hidden) in the New York Times

A golden age for workers?

The front page of the Sept. 20 New York Times Business Day section has headlines suggesting workers are doing well, but when you read the stories things look quite different.

Eduardo Porter’s column headline trumpets “Labor Shortage Gives Workers an Edge.” It takes him until the fourth graf to tell us that average hourly pay for production and nonsupervisory workers has almost reached 1973 levels (after adjusting for inflation). Less, of course, after 44 years of speed-up, but close. Of course, that doesn’t take account of lost benefits. We’re paying a lot more out of pocket for our health care. Time off is harder to get. Pension plans are but a distant memory. And right next door, “Cost of Employer-Based Plans Remains Stable, a Study Finds.”

Good news, right? Well, it’s good news for the bosses. Average premiums for family coverage are up 3 percent, to $18,764 a year. The cost is rising faster than wages, and far fewer small employers are offering health benefits at all. Out-of-pocket costs are higher, as employers switch to insurance companies that restrict access to doctors and hospitals. But “deductibles rose only slightly this year.” Why? “Companies are recognizing that they have reached the limits of what they can ask their workers to pay, said Michael Thompson, the chief executive of the National alliance of Healthcare Purchaser Coalitions, which represents employers. ‘We’re running out of runway to keep cosh-shifting to employees,’ he said.”

But at least we’re seeing the promise of new jobs? Same page’s “A Manufacturing Model Tough to Export” notes that FoxConn, which is promising 13,000 new jobs in Wisconsin, has a history of breaking such promises once it gets its government hand-outs.

In Brazil, FoxConn promised nearly 100,000 jobs in exchange for billions in subsidies. Six years later, the plant site sits empty – only 2,800 jobs ever materialized. In Pennsylvania, FoxConn promised to hire 500 workers in a $30 million plant it has yet to break ground on.

Wisconsin officials have promised $3 billion in tax breaks and other subsidies. If FoxConn hires all the workers it promises, it would take until 2042 before the state could hope to recoup its money. (Of course, the deal would have run out by then, and so FoxConn would have long since demanded more payments.)

Back to the looming labor shortage. Employers profess to be worried that they’re going to run out of workers (though there are tens of millions of folks frozen out of the labor market – far more than the jobs employers say they can’t fill). The Times quote “experts” who suggest slashing disability benefits, expanding government assistance for workers paid so little they can’t afford childcare or rent, and holding down the minimum wage because higher wages “could price some workers out of jobs” even in the face of the “looming labor shortage” the column is fretting about.

Over in Arts, the same issue reviews a book, Nomadland, about tens of thousands of older workers forced to trade in their homes for vans and old school buses, traveling from part-time job to part-time job – sometimes working for little more than a place to park their vehicles. Their ranks include “retired” teachers and aged-out software engineers. Amazon hires lots of these desperate workers, getting federal tax credits for 25 to 40 percent of the paltry wages it pays them for working in dangerous sweatshops where the company distributes free painkills to keep them working as long, and as fast, as possible.

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The arrogance of the economic elite

The New York Times’ resident liberal economics columnist, Paul Krugman, illustrated in his Monday column why the Democrats have little hope of persuading the Trump voters – and, more importantly, the tens of millions who refused to vote for either candidate – that they have any understanding of the lives of working people, let alone any ideas of how to improve them.

Krugman takes understandable exception to the Trumpster’s long litany of lies, about the empty stands at his inauguration, the epidemic of crime allegedly sweeping our country (Trump is of course not referring to his refusal to pay his workers, his fraudulent University, and the like), etc. Then Krugman gets to the point:

Listening to Mr. Trump, you might have thought America was in the midst of a full-scale depression, with ‘rusted-out factories scattered like tombstones across the landscape of our nation.’ Manufacturing employment is indeed down since 2000, but overall employment is way up, and the unemployment rate is low…

And it’s not just one number that looks pretty good. Rising wages and the growing number of Americans confident enough to quit their jobs suggest an economy close to full employment…

And perhaps they do, to an economist so mired in mainstream thinking that he can not look out the window at the real lives of working people.

asr64 coverThe unemployment rate is indeed down (officially 4.7%, which economists – who draw healthy pay checks opining about such things – consider full employment, even though it means tens of millions are deprived of access to the necessities of life); but primarily because the job market is so dismal that huge numbers of people have given up looking for work. This is particularly the case in industrial and mining regions, where finding work often means scrambling for part-time hours in a minimum wage job that won’t bring in enough to put food on the table (not that these workers can afford a table, or a house to put it in).

Employers claim they’re having trouble finding “qualified” workers. This is partly a reflection of computer screening programs that reject people with too much experience, but also those with not enough; if a resume’s language doesn’t exactly match the criteria some coder who never worked the job put in, into the discard pile it goes. And of course anyone accustomed to earning a living wage with benefits won’t get a second look. But it also reflects a fundamental shift in how employers hire. A few decades ago, they figured they’d hold onto workers for several years, and so were willing to invest a few days or a few weeks training them to do the work. But now, workers are disposable; hired by the gig, or the shift, or the week. So the bosses want them to be ready to be 100% productive the instant they step on the shop floor (and, of course, to squeeze extra productivity out of them by making them work off the clock, do the work of 3 or 4 people, etc.)

If there were jobs on offer at which it was possible to earn a living, there are millions and millions of workers who would jump at them. Ironically, offering such jobs would cause the unemployment rate to skyrocket. More people would have jobs, of course, but this hint of prosperity would encourage others to look for work, like the former student I bumped in today who graduated college eight months ago but figures there’s no point looking for work – in part because he (not incorrectly) believes there’s no good jobs out there, and in part because he’s trying to get a criminal conviction off his record so that he has a shot of getting past the application screening to an interview.

Krugman says things are likely to get worse – much worse – before they get better, and absent a lot of organization and struggle he’s probably right. But things are plenty bad already, and when these liberal pundits try and sell their Pollyanna stories about how great things are they only remind people how out of touch those at the top really are.

Things are going well for those at the top. Not only the infamous 1 percenters. The 5 percenters are doing pretty well too. But half the population is struggling to hold on to the standard of living they “enjoyed” back in the mid-1970s (it wasn’t that enjoyable; there were lots of strikes by workers demanding to be treated like human beings), and a fairly large number of our fellow workers are substantially worse off than they were five decades ago. Telling them that things have never been better (for those at the top) just won’t cut it.

Studying Inequality

At American Historical Association conference right now — tomorrow am part of a panel on a long-lived Polish weekly whose editor was once a Knights of Labor editor but when he became successful busted the Typographers in his print shop and informed on Polish radicals to the FBI. But that is not the point of this post…

This year the AHA Presidential Address by Patrick Manning focussed on the need for a global research project into inequality, much like the 30 years of research into climate change. The climate change research, he noted, started with inadequate data of rising CO2 levels from a single observation site, but over the years researchers developed a systematic program of research such that today the dimensions of this crisis are pretty well understood and all that remains is to act on that knowledge in order to save humanity and the ecosystem.

Similarly, he suggests, the work of Piketty and others has put inequality on the table, but these studies look only at a few comparatively wealthy societies across a relatively short span of time. He wants to see historians, economists and others systematically gather data on various aspects of inequality so that we can documents its extent, historic trends, and speak authoritatively about its effects. (He repeatedly referred to inequality as a crisis, so it’s clear that he has a pretty good idea of the effects, but would like more empirical support.) Such a research agenda (and he is working with a center that has established an open source online repository for research data) could, he believes, lay the foundation for action.

During his speech (I am sure the AHA ultimately publishes its presidential addresses, but I am working off memory here), he noted that society has traditionally dealt with the inequality problem either through redistribution (taxes, social welfare and the like), or by pursuing economic growth policies that, economists would have us believe (and this is an area where he would like more data), will lift the poor out of poverty without inconveniencing the rich. I didn’t hear the connection made explicit, but it seems clear that there can not be unlimited economic growth, and that not all growth (for example, in weapons production or in production of luxury homes) is desirable. And that this is linked to the crisis of climate change.

It would be nice, of course, if data resolved matters. We know, beyond any doubt, that climate change is an urgent crisis. But that does not mean the politicians or those who run industry have the slightest interest in doing anything about it if such action might disrupt their profits or business as usual. Quite the contrary, and so while the compilation and dissemination of this information performs a vital social function, organizing and direct action in defense of our interests (and the interests of the entire ecosystem) is even more vital. The question of income inequality is similar. We know it is growing rapidly, and long ago reached obscene levels. But there is certainly a great deal of useful information that could be gathered, and analysis that could be done. It is interesting that the head of the largest organization of academic historians recognized global economic inequality as one of the major issues of the day, and apparently the research project he intends to pursue for the next several years. I hope the project is successful, but ultimately inequality will not be resolved through better data, but through better organization and more determined action. The rich already know they’re filthy rich, and they damn well want to keep it that way.

 

Forced into the “gig economy”

Last year, one of my daughter’s teachers worked as a waitress on the side, in order to keep up with the bills and student loan payments. When the administrators pushed her around one time too many (they closed our neighborhood school so the state could sell the building, so we’re in a charter and the teachers aren’t in the union, which has gone years working under an expired contract with no pay raises), she quit, figuring she could make as much waiting tables as teaching, and with a lot less aggravation.

This week’s Nation has an interesting article about teachers spending their evenings and weekends driving for Uber and Lyft, so they can make their rent and car payments. (Alissa Quart, “Driven to Extremes,” Sept. 26, pp. 22-25) Many are veteran teachers unable to make ends meet in some of the country’s wealthiest cities. They grade papers and prep classes while waiting for calls.

Uber has a division focused on reaching out to underpaid teachers, allegedly as an act of “civic altruism.” Teachers can’t make ends meet, and so Uber offers them a chance to work longer hours at even less pay! A teacher on Uber’s website puts it this way:

Every day teachers are asked to do more with less, constantly faced with new challenges and limited resources. Uber opens the door for more possibilities and delivers a meaningful impact to the communities we serve.

And as Uber cuts payments to drivers, they can always give up the apartment, move their stuff into the car trunk, and keep taking fares all night long. For the bosses, it’s a win-win situation. For the rest of us, it’s a sign of the times…

Economy Booming – For the Top 5%

U.S. Census data released in mid-September shows that 2015 wages rose significantly for the well-off; a result newspapers heralded as strong wage increases that were pulling millions out of poverty. Although wages for the top 5 percent are up 3 percent since the onset of the Great Recession in 2007, those in the bottom fifth are still down 5.2 percent in inflation-adjusted income. (Workers in the bottom 80 percent have lost ground across the board, but the poorest workers were hit the hardest.) And while women workers are now making more than they were in 1973, though still significantly less than their male counterparts, men’s wages are $2,152 less, after inflation, than in 1973. (The Economic Policy Institute has an unduly optimistic take here.)

The growth in 2015 income is mostly attributed to workers taking on more hours, often in the form of second jobs, and partly to what the government claims was 0% inflation (though those having to pay rent, go to the hospital, or buy groceries will likely have had a different experience).

Fat Cat Tuesday

Today is “Fat Cat Tuesday” in Britain, the day when CEO annual pay overtakes what ordinary workers can expect to earn in an entire year of (much harder) labor. It took just 22 work hours for the heads of the 100 largest British corporations to hit the mark. If I do the math right (I’m not finding a directly comparable calculation for the U.S.), it took about 16 hours for U.S. CEOs to do the same. (Based on a study of CEO pay at the top 350 U.S. companies; there is company by company data on CEO to worker pay that shows a ratio as high as 1,951 to 1 at Discovery Communications [owner of the Animal Planet cable channel]. Chipotle was second, at 1,522, and CVS drugstores came in third at 1,192.)

UK’s Trade Union Group is not pleased:

Ultimately, these figures show the complete failure of this government in tackling inequality and Britain’s low wage economy. By prioritising tax cuts for the very millionaires raking in such high salaries while actively pursuing policies, like cuts to tax credits, which hit the most vulnerable in society, they could not have made it clearer whose interests they prioritise.

This has to stop. For top earners to surpass the average salary for UK workers in under two working days is frankly unacceptable. In order to change this, it is clear that we need to shift the balance of power from the boardroom to the workers.

The “middle class” economy

The July 6 Business Week reports on a proposed rule change, cracking down on companies that give low-paid staff “manager” titles so as to avoid paying overtime. If the rule goes through (and business is fighting it hard), workers in the bottom 40% of wage earners would be automatically entitled to overtime pay, even if they are bona fide managers. (There are a great many low-paid “managers,” following a 2004 rule change that declared that even workers whose primary duties entail stocking shelves, running a cash register, etc., can be classified as managers and so excluded from overtime pay as long as their duties include “supervision” of at least two employees at some point during the work week.)

A former economic advisor to VP Joe Biden is quoted saying this rule change will reach “more middle-class workers” than anything else the Obama administration has done. And it appears that 4.7 million U.S. workers (all earning less than $970 a week) would be entitled to overtime pay for extra hours under the proposal. How such paltry wages justifies calling someone “middle class” just goes to show how flexible the concept is. For Republicans, “middle class” tax cuts benefit millionaires and their ilk; for Democrats, anyone earning minimum wage has entered the ranks of the “middle class.”

We can no longer afford the rich

Pundits’ bleating about the need to further gut workers’ pensions and health benefits has reached a deafening roar. In New Jersey, the governor warns that the state can not afford to pay its share into public employees’ pension funds. Illinois just slashed pensions because it also “could not afford” them. Similar is happening all over.

Next time your grocery bill look a bit daunting or the mortgage check is about to bounce, I suggest you follow the lead of our eminent polytricksters and explain that your bills are unsustainable, and so you will just have to “restructure” your obligations. I’m sure they would be glad to settle for 50 cents on the dollar.

General Motors, which is now looking at record profits thanks to deep concessions from its unions and millions of dollars in assistance from the rest of us working stiffs through our taxes (much — but far, far from all — of which it repaid interest-free; the rest was a gift I’m sure you were glad to give), has so much cash on hand that it’s buying back its stock. And, of course, it’s asking for new concessions from the autoworkers.

The Philadelphia Daily News’ Will Bunch asks if we can afford these parasites. Shockingly, he concludes that they are a luxury we no longer can afford after decades of austerity, off-shoring production, speed-ups, tax cuts for the rich, and the like.

Financial Advice for Workers

McDonald’s continues to provide useful financial advice to its workers, in an attempt to counter the growing movement for a $15 hourly wage for fast food workers. First they advised workers to get a second full-time job, turn off the heat, and live in a flophouse. Then they suggested workers cut meals into tiny bites so that it will seem like they’re eating more. They’re advising long-time workers to apply for food stamps and other welfare programs. And they suggest workers sell their Christmas presents for a little bit of pocket change.

More than half of U.S. fast food workers earn so little that they rely upon food stamps and other public assistance to survive. Many more are eligible for benefits, but don’t claim them. McDonald’s flacks try to spin this by point out that more than 40% of their workers earn $25,000 a year or more. That’s probably true, but it includes managers and marketers and executives in corporate HQ. And it tacitly admits that more than half earn less, which suggests that even under the U.S. government’s very conservative definition, most McDonald’s workers live in poverty.

But the CEO and the shareholders are doing just fine, and the Dow Jones average is setting new records day by day.

Happy Times Are Here Again (for the rich)

The American Affluence Research Center (a marketing outfit masquerading as a social science operation) reports that those making $800,000 or more a year think the economy’s doing great. The rest of us, not so much…