labor-market

Watching Trump Create Money from Nothing

A new CNBC poll shows that optimism in the economy has surged since Trump got elected. That’s how Trump creates money from nothing. Literally.

The economy runs on optimism. The more you have, the better your economy will be, all other things being equal. And Trump just cranked up the optimism in a way that history has rarely seen. The stock market is up too, as you would expect when you have more optimism.

Keep reading

thoughts of a goldfish
  • goldfish: nice rock
  • goldfish: nice rock
  • goldfish: nice rock
  • goldfish: nice rock
  • goldfish: The country’s economy and labor market remain in deep disrepair. Whereas our various post-market institutions (e.g., the safety net, educational institutions, health institutions) have a mixed record of coping with the rising poverty and inequality that has been handed to them by a still-struggling economy and labor market.
  • goldfish: nice rock
Work and Worth

What someone is paid has little or no relationship to what their work is worth to society. 

Does anyone seriously believe hedge-fund mogul Steven A. Cohen is worth the $2.3 billion he raked in last year, despite being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?

On the other hand, what’s the worth to society of social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse? Probably higher than their average pay of $18.14 an hour, which translates into less than $38,000 a year.

How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year.

What’s the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year.

Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year?

Yet what would the rest of us do without these dedicated people?

Or consider kindergarten teachers, who make an average of $53,590 a year.

Before you conclude that’s generous, consider that a good kindergarten teacher is worth his or her weight in gold, almost.

One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.

And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.

At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.

They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.

I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).

They don’t even build the economy. 

Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.

They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.

It’s said that by moving money to where it can make more money, these games make the economy more efficient.

In fact, the games amount to a mammoth waste of societal resources.

They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.

Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society – if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.  

Graduates of Ivy League universities are more likely to enter finance and consulting than any other career. 

For example, in 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.

The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.

But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.  

You deserve to live
  • Whether or not you can produce marketable labor
  • Whether or not you can perform labor unassisted
  • Whether or not you can perform labor efficiently and profitably
  • Whether or not you have marketable skills or training

You deserve to live, even if you are disabled or uneducated.

Raise the god damn minimum wage. (And make it illegal to pay disabled workers less than minimum wage.)  Support Universal Basic Income

marketwatch.com
40% of unemployed workers are millennials

The jobs market is improving, according to government data released Thursday, but millennials are still left out in the cold. They’re suffering more than any other age group, new research finds.

Some 40% of unemployed workers are millennials, according to an analysis of U.S. Census data by the Georgetown University Center on Education and the Workforce released to MarketWatch, greater than Generation X (37%) and baby boomers (23%). That equates to 4.6 million unemployed millennials — 2 million long-term — 4.2 million unemployed Xers and 2.5 million jobless baby boomers.

“There are alternative ways to think about refugees. Existing approaches too often ignore the skills, talents, and aspirations of refugees themselves. Yet refugees have capacities as well as vulnerabilities. They need not inevitably be a ‘burden’ on host states; they have the potential to contribute economically as well as socioculturally.”

The economic lives of refugees.

Image credit: refugees accept Scotland by Richgold. Public domain via Pixabay.

7

Chemical Warfare:  Park Geun-hye cracking down on demonstrators with water cannons laced with tear gas (11/14/2015)

The demonstrations, which are protesting the current Park Geun-hye government’s efforts to unilaterally push through the policies of state-issued textbooks and labor market reform, are expected to bring out around 100,000 people, both members of 53 civic groups, including the Korean Confederation of Trade Unions, and members of the general public.

via http://www.hani.co.kr/arti/society/society_general/717453.html

At Stake in 2016: Ending the Vicious Cycle of Wealth and Power

What’s at stake this election year? Let me put as directly as I can.

America has succumbed to a vicious cycle in which great wealth translates into political power, which generates even more wealth, and even more power.

This spiral is most apparent is declining tax rates on corporations and on top personal incomes (much in the form of wider tax loopholes), along with a profusion of government bailouts and subsidies (to Wall Street bankers, hedge-fund partners, oil companies, casino tycoons, and giant agribusiness owners, among others).

The vicious cycle of wealth and power is less apparent, but even more significant, in economic rules that now favor the wealthy.

Billionaires like Donald Trump can use bankruptcy to escape debts but average people can’t get relief from burdensome mortgage or student debt payments.

Giant corporations can amass market power without facing antitrust lawsuits (think Internet cable companies, Monsanto, Big Pharma, consolidations of health insurers and of health care corporations, Dow and DuPont, and the growing dominance of Amazon, Apple, and Google, for example). 

But average workers have lost the market power that came from joining together in unions.

It’s now easier for Wall Street insiders to profit from confidential information unavailable to small investors.

It’s also easier for giant firms to extend the length of patents and copyrights, thereby pushing up prices on everything from pharmaceuticals to Walt Disney merchandise.  

And easier for big corporations to wangle trade treaties that protect their foreign assets but not the jobs or incomes of American workers.  

It’s easier for giant military contractors to secure huge appropriations for unnecessary weapons, and to keep the war machine going.

The result of this vicious cycle is a disenfranchisement of most Americans, and a giant upward distribution of income from the middle class and poor to the wealthy and powerful.

Another consequence is growing anger and frustration felt by people who are working harder than ever but getting nowhere, accompanied by deepening cynicism about our democracy.

The way to end this vicious cycle is to reduce the huge accumulations of wealth that fuel it, and get big money out of politics. 

But it’s chicken-and-egg problem. How can this be accomplished when wealth and power are compounding at the top? 

Only through a political movement such as America had a century ago when progressives reclaimed our economy and democracy from the robber barons of the first Gilded Age.

That was when Wisconsin’s “fighting Bob” La Follette instituted the nation’s first minimum wage law; presidential candidate William Jennings Bryan attacked the big railroads, giant banks, and insurance companies; and President Teddy Roosevelt busted up the giant trusts.

When suffragettes like Susan B. Anthony secured women the right to vote, reformers like Jane Addams got laws protecting children and the public’s health, and organizers like Mary Harris “Mother” Jones spearheaded labor unions.

America enacted a progressive income tax, limited corporate campaign contributions, ensured the safety and purity of food and drugs, and even invented the public high school.

The progressive era welled up in the last decade of the nineteenth century because millions of Americans saw that wealth and power at the top were undermining American democracy and stacking the economic deck. Millions of Americans overcame their cynicism and began to mobilize.

We may have reached that tipping point again.

Both the Occupy Movement and the Tea Party grew out of revulsion at the Wall Street bailout. Consider, more recently, the fight for a higher minimum wage (“Fight for 15”). 

Bernie Sander’s presidential campaign is part of this mobilization. (Donald Trump bastardized version draws on the same anger and frustration but has descended into bigotry and xenophobia.)

Surely 2016 is a critical year. But, as the reformers of the Progressive Era understood more than a century ago, no single president or any other politician can accomplish what’s needed because a system caught in the spiral of wealth and power cannot be reformed from within. It can be changed only by a mass movement of citizens pushing from the outside.

So regardless of who wins the presidency in November and which party dominates the next Congress, it is up to the rest of us to continue to organize and mobilize. Real reform will require many years of hard work from millions of us.

As we learned in the last progressive era, this is the only way the vicious cycle of wealth and power can be reversed.

I want to talk about Universal Basic Income for a little bit, because I’m always sad it’s not talked about in national politics

If you don’t know,  universal basic income is a form of social security system in which all citizens or residents of a country regularly receive an unconditional sum of money, either from a government or some other public institution, in addition to any income received from elsewhere. (Imagine if you will, if the government simply gave every citizen over the age of 18 $35,000 every year. Enough money to cover the BASIC NEEDS of a person.) The free market and labor market still exist, people still work for money, people still buy stuff with money. 

Some links if you are curious as to how this works:

The wikipedia article on Basic Income.

The Reddit for Basic Income

Basic Income.Org

Thinking Utopian: How about a universal basic income?

The Economic Case for a Universal Basic Income (Part 1 of a series)

How Universal Basic Income Will Save Us From the Robot Uprising 


I really like this for a couple of reasons as an economic policy. I mean, there are the obvious benefits in that it is more efficient than our current mishmash of welfare programs, and it basically makes welfare fraud impossible (not that I’m even that worried about welfare fraud honestly. But some people are. So there ya go.)

But it’s also just a really efficient way to address SO MANY OTHER problems at once. 

Guaranteed paid parental leave? Done.

LGBT+ Homelessness? Done. 

Childhood hunger? Done. 

Unemployment? Done. 

People losing their jobs to automation and the shifting workforce needing less and less human labor to function? Done. 

Like, it’s a really simple, straight forward, 21st century solution to so many problems. Any problem that stems from “People are living in poverty or near poverty and are completely reliant on their employer to not starve to death”- this fixes it. 

Although there have been some remarkable gains in the labor force status of racial minorities, significant disparities remain. African Americans are twice as likely to be unemployed as whites (Hispanics are only marginally so), and the wages of both blacks and Hispanics continue to lag well behind those of whites (author’s analysis of Current Population Survey, 2006). A long line of research has examined the degree to which discrimination plays a role in shaping contemporary labor market disparities. Experimental audit studies focusing on hiring decisions have consistently found strong evidence of racial discrimination, with estimates of white preference ranging from 50% to 240% (Cross et al. 1989, Turner et al. 1991, Fix & Struyk 1993, Bendick et al. 1994; see Pager 2007a for a review).

For example, in a study by Bertrand & Mullainathan (2004), the researchers mailed equivalent resumes to employers in Boston and Chicago using racially identifiable names to signal race (for example, names like Jamal and Lakisha signaled African Americans, while Brad and Emily were associated with whites). White names triggered a callback rate that was 50% higher than that of equally qualified black applicants. Further, their study indicated that improving the qualifications of applicants benefited white applicants but not blacks, thus leading to a wider racial gap in response rates for those with higher skill.
—  Devah Pager and Hana Shepherd, “The Sociology of Discrimination: Racial Discrimination in Employment, Housing, Credit, and Consumer Markets” [pdf]
Why We Must Try

Instead of “Yes we can,” many Democrats have adopted a new slogan this election year: “We shouldn’t even try.”

We shouldn’t try for single-payer system, they say. We’ll be lucky if we prevent Republicans from repealing Obamacare.

We shouldn’t try for a $15 an hour minimum wage. The best we can do is $12 an hour.

We shouldn’t try to restore the Glass-Steagall Act that used to separate investment and commercial banking, or bust up the biggest banks. We’ll be lucky to stop Republicans from repealing Dodd-Frank.

We shouldn’t try for free public higher education. As it is, Republicans are out to cut all federal education spending.

We shouldn’t try to tax carbon or speculative trades on Wall Street, or raise taxes on the wealthy. We’ll be fortunate to just maintain the taxes already in place.

Most of all, we shouldn’t even try to get big money out of politics. We’ll be lucky to round up enough wealthy people to back Democratic candidates.  

“We-shouldn’t-even-try” Democrats think it’s foolish to aim for fundamental change – pie-in-the-sky, impractical, silly, naïve, quixotic. Not in the cards. No way we can.

I understand their defeatism. After eight years of Republican intransigence and six years of congressional gridlock, many Democrats are desperate just to hold on to what we have.

And ever since the Supreme Court’s “Citizens United” decision opened the political floodgates to big corporations, Wall Street, and right-wing billionaires, many Democrats have concluded that bold ideas are unachievable.

In addition, some establishment Democrats – Washington lobbyists, editorial writers, inside-the-beltway operatives, party leaders, and big contributors – have grown comfortable with the way things are. They’d rather not rock the boat they’re safely in.

I get it, but here’s the problem. There’s no way to reform the system without rocking the boat. There’s no way to get to where America should be without aiming high.

Progressive change has never happened without bold ideas championed by bold idealists.

Some thought it was quixotic to try for civil rights and voting rights. Some viewed it as naïve to think we could end the Vietnam War. Some said it was unrealistic to push for the Environmental Protection Act.

But time and again we’ve learned that important public goals can be achieved – if the public is mobilized behind them. And time and again such mobilization has depended on the energies and enthusiasm of young people combined with the determination and tenacity of the rest. 

If we don’t aim high we have no chance of hitting the target, and no hope of mobilizing that enthusiasm and determination. 

The situation we’re in now demands such mobilization. Wealth and income are more concentrated at the top than in over a century. And that wealth has translated into political power.

The result is an economy rigged in favor of those at the top – which further compounds wealth and power at the top, in a vicious cycle that will only get worse unless reversed.

Americans pay more for pharmaceuticals than the citizens of any other advanced nation, for example. We also pay more for Internet service. And far more for health care.

We pay high prices for airline tickets even though fuel costs have tumbled. And high prices for food even though crop prices have declined.

That’s because giant companies have accumulated vast market power. Yet the nation’s antitrust laws are barely enforced.  

Meanwhile, the biggest Wall Street banks have more of the nation’s banking assets than they did in 2008, when they were judged too big to fail.

Hedge-fund partners get tax loopholes, oil companies get tax subsidies, and big agriculture gets paid off.

Bankruptcy laws protect the fortunes of billionaires like Donald Trump but not the homes of underwater homeowners or the savings of graduates burdened with student loans.

A low minimum wage enhances the profits of big-box retailers like Walmart, but requires the rest of us provide its employees and their families with food stamps and Medicaid in order to avoid poverty – an indirect subsidy of Walmart. 

Trade treaties protect the assets and intellectual property of big corporations but not the jobs and wages of ordinary workers.

At the same time, countervailing power is disappearing. Labor union membership has plummeted from a third of all private-sector workers in the 1950s to fewer than 7 percent today. Small banks have been absorbed into global financial behemoths. Small retailers don’t stand a chance against Walmart and Amazon.

And the pay of top corporate executives continues to skyrocket, even as most peoples’ real wages drop and their job security vanishes.

This system is not sustainable.

We must get big money out of our democracy, end crony capitalism, and make our economy and democracy work for the many, not just the few.

But change on this scale requires political mobilization.

It won’t be easy. It has never been easy. As before, it will require the energies and commitments of large numbers of Americans.

Which is why you shouldn’t listen to the “we-must-not-try” brigade. They’ve lost faith in the rest of us.

We must try.  We have no choice.

In 2013, America’s three largest private-sector employers are all low-wage retailers: Wal-Mart, Yum! Brands (which owns Taco Bell, Pizza Hut, and Kentucky Fried Chicken) and McDonald’s. In 1960, the three largest employers were high-wage unionized manufacturers or utilities: General Motors, AT&T, and Ford.
—  Harold Meyerson, ‘The 40-Year Slump’ via The American Prospect

Jobs are not stolen. Exploitation and greed drives the capitalist labor market.

Shareholders and owners make the decisions to hire. They enable the shadow economy.

online.wsj.com
Whose job is it to train workers?

Companies complain that they can’t find skilled hires, but they aren’t doing much to impart those skills, economists and workforce experts say. U.S. companies have been cutting money for training programs for decades, expecting schools and workers to pick up the slack. Economists say that reluctance to develop workers in-house has made it hard for workers to launch or sustain careers, resulting in a stalemate in the labor market: Companies won’t look at job candidates who lack a specific skill set, so openings go unfilled even as millions linger on the unemployment rolls.

The government hasn’t tracked spending on corporate training since the mid-1990s, but one rough measure, the percentage of staffers at U.S. manufacturers dedicated to training and development, has fallen by about half from 2006 to 2013, according to research group Bersin by Deloitte.

Employers’ expectations for new hires have shifted since the recessions of the early 1980s, when companies laid off masses of workers and slashed training programs. Where bosses once hired for potential, viewing workers as lumps of clay to be molded to the company’s needs, they now want hires to arrive with all or most of the skills needed for the job—another symptom of how the employer-employee relationship has become reduced to a transaction, said Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School.

If employers “want only people who can step in immediately because they are currently doing the job, [they] narrow the pool to almost no one,” said Mr. Cappelli. He added that today’s novices are more likely to briefly shadow an experienced worker or log a few hours of on-the-job training than participate in a weekslong learning program.

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Young boy tending freshly stocked fruit and vegetable stand at Center Market, 2/18/1915

From the series: Photographic Prints Documenting Programs and Activities of the Bureau of Agricultural Economics and Predecessor Agencies, ca. 1922 - ca. 1947

Taken 100 years ago today on February 18, 1915, this photo shows a fruit and vegetable stand in Washington DC’s Center Market. The market once operated on the land now occupied by the National Archives Building.

A Diabolical Mix: U.S. Wages and European Austerity
What if Europe and the US converged on a set of economic policies that brought out the worst in both – European fiscal austerity combined with a declining share of total income going to workers? Given political realities on both sides of the Atlantic, it is entirely possible.

So far, the US has avoided the kind of budget cuts that have pushed much of Europe into recession. Growth on this side of the pond is expected to be around 2.4 per cent this year. And jobs are recovering, albeit painfully slowly.

But a tough bout of fiscal austerity could be coming in six months. The non-partisan Congressional Budget Office warned last week that if the Bush tax cuts expire on schedule at the start of 2013, just as $100bn of budget cuts automatically take effect under the deal to raise the debt ceiling that Democrats and Republicans agreed to last August, the US will fall into recession in the first half of next year.

Even if these measures were to reduce the cumulative public debt, a recession would increase the debt as a proportion of gross domestic product – making a bad situation worse. That is the austerity trap much of Europe now finds itself in.

Meanwhile, real wages in the US continue to fall. A new “World Outlook” released by the International Monetary Fund last Friday showed that in the three years since the depths of the downturn in 2009, total national income has rebounded in most of Europe and in the US. But the share of national income going to workers has fallen sharply in the US, while rising in Europe as a whole.

The trend is even more striking measured from the start of the recession. It used to be that when a downturn began, profits fell faster than workers’ income because companies were reluctant to lay off employees and couldn’t easily cut wages given union contracts or the threat of unionization.

That is still the case in Europe, courtesy of stronger unions and labor-market regulations. But it is no longer the rule in the US. Since the start of the recession, the share of total US national income going to profits has risen even as the share going to the workforce has plunged. Profits in the US corporate sector are now at a 45-year high.

American workers have been willing to settle for lower wages in order to retain their old jobs or secure new ones. At the same time, US companies, intent on increasing profits, have more aggressively outsourced abroad, substituted contract workers and temps for full-time employees and replaced workers with computers and software.

The workforce’s share of total income includes the salaries of managers and professionals as well as the non-salary income of high-flying chief executives and financiers who receive capital gains, interest and stock compensation.

The widening gulf between the stratospheric compensation packages of the latter and most other Americans suggests why the median wage is dropping, adjusted for inflation, notwithstanding a growing economy and a jobs recovery.

The trend is all the more remarkable considering that the share of national income going to workers used to be substantially higher in the US than in Europe because Americans have to buy what most Europeans receive free – including university education and healthcare.

A dozen years ago, 64 per cent of US national income went to the labor force, according to the IMF, compared with 56 per cent in Europe. Today, however, the shares going to workers are converging – 58 per cent of national income goes to the workforce in the US and 57 per cent in Europe.

Political realities in Europe may be pushing policy makers in the same direction. Germany’s Chancellor Angela Merkel has finally started talking about spurring growth. Under increasing political pressure at home, she seems to have accepted the need to add measures promoting growth to the EU’s treaty on fiscal discipline.

But Ms Merkel and her conservative allies haven’t given up on austerity economics. She is still opposed to fostering growth through more spending, insisting that would only worsen Europe’s debt problems. Instead, she wants to spur growth with “structural reforms” – by which she presumably means giving companies more freedom to hire and fire, outsource jobs to contract workers and, in general, be less constrained by regulation.

That is of course the American model – which has been fueling corporate profits at the same time as it depresses wages.

If Europe were to move towards structural reforms that create a labor market similar to America’s while pursuing fiscal austerity, while America embraces fiscal austerity as US corporations continue to shrink payrolls, we are likely to experience the same results on both sides of the Atlantic. Real wages will decline, we will have less economic security and our public services will be diminished. That is not sustainable, economically or politically.

[I wrote this for the Financial Times]