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Tag Archives: Inequality

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…

The low-wage, high-death economy

More than a thousand low-wage textile workers were killed last year in Bangladesh, because their bosses were so fixated on maximizing production that they ordered workers back into a building they knew was on the verge of collapse. How different is this from the 1911 Triangle Fire in New York City, when low-wage textile workers were burned to death or died leaping from windows to escape the flames? Or the 25 chicken processing workers who died in North Carolina in a 1991 fire because the boss had chained the emergency exit doors shut in order to make sure no one snuck out with a couple of chickens?

Workers were dying by the thousands for profits a century ago, and we are dying by the hundreds of thousands around the world to this day. Sometimes we die quickly, in fires and other disasters; sometimes the deaths linger over months or years. (The International Labour Organization estimates more than 2 million workers die each year of work-related diseases and “accidents,” most of which are entirely preventable.)

One principle always holds: the lower the pay, the more dangerous the job. You don’t see the CEO who pulls in millions of dollars working in dilapidated buildings with no working fire escapes or sprinklers. The corporate farmer who sprays farm workers with toxic chemicals is not in the fields breathing the poisons himself. No fashion designer ever came down with brown lung. And Starbucks’ CEO is in no danger from the repetitive stress injuries that plague his workers.

As we are editing this year’s calendar, thousands of fast food workers are mounting strikes and other job actions in dozens of cities across the United States, demanding a living wage and decent working conditions. They don’t have union protections, they don’t have any meaningful protection from discrimination and abuse, they don’t have health insurance for them or their kids.

But the fast food bosses would have you know that they care. Realizing that it’s hard for its workers to live on the minimum wages and irregular schedules McDonald’s prefers, the company now makes financial planners available to help workers manage their money. Only it turns out not to be so easy, and so those financial planners had to resort to budgeting 80 hours of pay a week (at different jobs, of course, since McDonald’s has no intention of paying anyone overtime) in order to get enough income to survive.

That’s not surprising. The strikers have been demanding a $15 an hour wage from the fast food giants, recognizing that it takes that much just to get by. (Fifty years ago, the widely celebrated National March for Jobs and Justice demanded a $2-an-hour minimum wage – adjusted for inflation, that works out to more than $15 an hour today.) But employers refuse even to discuss the matter, and media pundits (who never worked a minimum wage job in their lives) have dismissed the demand as a utopian fantasy.

When the tomato pickers in Immokalee, Florida, began their long campaign for a living wage, they noted that it would cost the fast food joints and other customers only about a penny a pound to double their wages. It took years of picketing before a few companies agreed to pay that pittance; many still refuse. (In June 2013, Mexican authorities freed some 275 tomato workers in Jalisco from slave-like conditions; the Coalition of Immokalee Workers’ organizing in Florida has led to over 1,200 tomato pickers being freed from modern-day slavery in Florida, and a few years ago to an agreement by growers to no longer tolerate slavery in the fields.)

The harder the work, the lower the pay. And the lower the pay, the more likely the bosses are to turn to children and slavery to make their profits. The global chocolate industry, for example, depends upon child and slave labor to ensure rock-bottom prices for cocoa beans. The transnational corporations that profit off this abuse do not hire children or purchase slaves themselves, of course; they just keep demanding lower prices from producers, and then turn a blind eye to the consequences of their insatiable greed.

The international garment industry works the same way, as does the trade in computer components and other high-end gadgets. Everyone loses in this global race to the bottom, except for the bosses.

Millions of workers are losing ground every day, working harder to produce more to get less. And if we raise a peep of protest, they threaten to move the work somewhere else.

That’s true in the sweatshops of New York City, where the threat of replacement by low-wage workers in dismal firetraps in Bangladesh hangs over workers’ heads. It’s true in Bangladesh, where the bosses point out that they can always find someone even more desperately poor to exploit. It’s true in Haiti, where U.S. State Department officials demand that workers’ wages be held down so that corporate profits are not damaged.

Workers everywhere pay a heavy price for letting the bosses run the economy. It’s no different in the United States.

U.S. inflation-adjusted wages have fallen for the “bottom 70 percent” since 2002, even though productivity rose by 25 percent. (That’s a mighty big bottom; very few workers are making it in this economy. Things are of course very much worse at the lowest income levels.) And fewer of us are working, making the misery even worse.

But this is not just a product of the “Great Recession,” itself a global catastrophe brought on by the untrammeled greed of our economic masters. No, conditions for most workers have been getting steadily worse for decades. In 2011, 57 percent of U.S. households earned less than $60,000 – many much less. Given that the vast majority of those households were putting in at least 80 hours a week (two people holding down jobs; in many poorer households, of course, the adults have two or three jobs, and children are working too), the average wage is less than $15 an hour. Every living wage study has found that that’s barely enough to get by – which is why the fast food workers strikes have been demanding a $15 minimum.

Half of all American households are just barely getting by, living paycheck to paycheck with no cushion for survival if they lose one of their jobs or an emergency strikes.

Things really were better 50 years ago. Not for everyone, of course. Corporate executives had trouble affording third homes and personal shoppers and private jets. Now they’re rolling in so much cash they haven’t a clue what to do with it, and so they fling it at politicians and speculators with wild abandon.

In 2012 the top 1 percent received 19 percent of U.S. household incomes (about the same level as in 1929),  Moreover, when you add in the next 9 percent’s ill-gotten gains, 10 percent of U.S. households have 30 percent or more of household incomes.  To make this possible, it is necessary for at least 50 percent of American households to have a wage rate of less than $15.00 per hour. (Wealth, of course, is even more concentrated, as the rich do not need to spend most of their income on living.)

Low wages are not an accident. They are tied to the sky-high “wages” of the top 10 percent. And those who receive these low wages can only buy cheap stuff; buying that cheap stuff made and sold by other low-wage workers keeps the vicious cycle going. If workers did not earn such low wages, companies like WalMart could not exist.

No one’s work is free from the danger of becoming low-wage work. The wage we receive, just like the hours we work, is in no way a reflection of our skill level, nor of the importance of the work. Many workers do not earn even enough to sustain life, and so are forced to take multiple jobs or scrounge from dumps or turn to soup kitchens for survival.

Often, people doing the same work on the same job site receive radically different pay. This is true of warehouse workers (many are employed through subcontractors and so work by the day for a fraction of the pay, while a small core has higher pay and steady work), of retail workers (full-time staff typically earn far more than the part-timers, whose “flexibility” is so essential to allowing the bosses to extract maximum profits), of auto workers (the subcontracting never stops, and the further down the line of precarity one is, the more dangerous the work and the lower the pay), of teachers (many of whom are now forced into part-time positions paying a fourth or less per course of the full-time rates)…

In many countries, forming a union – or at least a union under the control of workers, rather than of the employers or the government – is illegal. In others, a combination of anti-labor laws and a complete lack of enforcement of the minimal protections that workers are supposed to enjoy, make forming an officially recognized union nearly impossible. As a result (and also because too many unions have limited their vision to what the law countenances), less than 1 in 14 private sector workers in the U.S. has union protection, even though half of all workers say they’d like to be in a union.

But a union is simply workers acting together to defend their interests. And because all wealth is created by labor, even “unorganized” workers have substantial power on the job which means that many workplace struggles can be won. Having won even modest gains, we have built the foundations – including the realization of our own nascent power – to take on bigger fights.

Workers at businesses from car washes to Wal-Mart are winning wage hikes and other improvements by acting union, by taking action even when there is little to no immediate prospect of union recognition.

We are often told that in this race-to-the-bottom economy, the best we can hope for is to hold on to the few scraps we have. But it isn’t true. Our wages have been stagnating (and for many falling) even as productivity has continued to increase. The bosses are moving production overseas (and sometimes moving it back again, having concluded that our fellow workers overseas are getting too uppity), slashing wages and benefits, and speeding up our work not because they’re going broke. No, they just want even more profits, and to hire even more parasites to supervise and market and generally live off the wealth we produce. In a great many workplaces, the bosses could easily afford to double wages – but that doesn’t mean they’ll do it unless they’re forced to.

Some critics seem to suggest that capitalism would be fine if the bosses could only be made to pay higher wages. But why should the bosses care how workers live so long as the capitalists and their lackies live well? Capitalism has no interest in the welfare of workers. While fighting for higher wages is a good thing, and fighting for safer working conditions even better; the only way to really improve workers’ conditions is to get rid of capitalism – since it is an economic system that has at its core the immiseration of workers for the benefit of the capitalists.