Thursday, March 16, 2017

[NJFAC] "In A Good Society, What Should the Minimum Wage Be?" by Frank Stricker

            How can we decide what a minimally decent wage is? It is easy to see that $7.25, the federal minimum wage, is not decent. Even $10 an hour yields only $20,800 for year-round, full-time work. That's below the extra-low American poverty line for a family of four. Even for an individual living alone, it would not be enough in most cities around the United States. The $15 goal that many activists are working on and that California will reach in 2022, is much, much better. By an estimate made two years ago, 42% of American workers were earning less than $15 an hour, so movements that win a $15 minimum in states and cities are beginning to help millions and millions of workers. 
            But $15 is the least we should be aiming for over the long-range. It yields just a little more than $30,000 for a full-year of full-time work. And many low-wage workers do not work full-time.[1]
If we are debating with people who think $15 is terribly high, can we defend something higher $15? What would be an ideal minimum for our time. There are several ways to construct an ideal minimum wage, but two methods are particularly relevant. One is about minimum living standards and the other is about equality. As to the first, we can ask how much a family needs to live, not in affluence, but in modest comfort. Experts have estimated that a two-parent, two-child family requires about $54,500 a year for a modest living standard. (The amounts vary by where the family lives.) If there is only one earner, he or she must work full-time and earn $26 an hour.[2]
If we apply the equality method, we can say that people deserve to share in general increases in national income. One way to proceed here is to focus on per capita income--the total national income divided by the population. Per capita income increased 16 times between 1965 and 2015, but average hourly pay increased only half as much. One reason is that a tiny group of Acapitas@--the rich--seized much of the increase in the national income. If the hourly wage of the average rank-and-file worker had increased as much as per capita income, it would be $40 today, not $21. If the federal minimum wage of 1965 had increased by a factor of 16, it would be $20 an hour, not $7.25.[3]
In light of these facts, it is astonishing that many national politicians are happy with the pathetically low national minimum wage of $7.25. This indifference to the working poor occurs while big bankers and business tycoons take home massive compensation packages of millions and even billions of dollars.
I wonder what the President's working-class supporters expect of him on the wage front? He likes to visit factories and talk about jobs, but it tells us something about what he really thinks of the working class that the President, his appointees, and his friends are fine with a $7.25 national minimum wage and do not support the $15 movement.               
 
Frank Stricker is emeritus professor of history and labor studies at California State University, Dominguez Hills, and he is a member of the National Jobs for All Coalition. He's finishing a book about the history and future of American unemployment.
 


[1]. 52 weeks of 40 hours = 2,080. Actual average weekly hours are usually just below 35. A review of much literature on the subject is Arne L. Kalleberg, Good Jobs, Bad Jobs: The Rise of Polarized and Precarious Employment Systems in the United States, 1970s to 2000s (NY: Russell Sage Foundation, 2011). Also Irene Tung, Yannet Lathrop, and Paul Sonn, "The Growing Movement for $15," National Employment Law Project, November, 2015.
[2]. James Lin and Jared Bernstein, AWhat We Need to Get By,@ EPI Briefing Paper #224, October. 29, 2008, www.epi.org. The budgets ranged from a high in New York City ($68,758) to a low in rural Mississippi ($35,733). The national average was $48,778, which, after inflation, is about $54,500 in 2017. See also Andrew Khouri, ALow-Wage Workers Can=t Afford Rent,@ Los Angeles Times, March 25, 2014, B2.
[3]. Annie Lowrey, ARaising the Minimum Wage Would Ease Income Gap but Carries Political Risks,@ New York Times, February 13, 2013, accessed at nytimes.com, 2/13/2013; Steve Lopez, AOverlooked and Underpaid,@ LAT, 5/22, 13, A2; Lydia Saad, AAmericans Say Family of Four Needs Nearly $60K to >Get By,=@ accessed at gallup.ocm/poll162587 on 5/22/2013; Don Lee and Shan Li, ARaising the Wage Floor,@ LAT, February 14, 2013, B1, B4. Per capita income is from the Bureau of Economic Analysis at united-states.reaproject.org/analysis/comparative-trends.
 
 

 

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Tuesday, February 14, 2017

[NJFAC] Thinking about an Infrastructure Program

Thinking about an Infrastructure Program: Part I       By Frank Stricker
             Here is a link to a useful, short piece on what might be coming down the pike this spring: Trump's infrastructure plan has huge risks It was written by AP reporters Joan Lowy and David A. Lieb and I read it in Business Insider. The article discussed several issues we should be thinking about, but did not include others that should be addressed if we want a good program. Here's a partial list from Lowy and Lieb and others, including your author. You can also look at Robert Reich's five-minute video, at Robert Reich: Trump's infrastructure scam - YouTube
1. Why bother? Do we need a big new program? Most of us say yes; so do the experts. The engineers give America's infrastructure a D+.
2. Privatize? Should structures or at least their revenues be privatized? Two of Mr. Trump's advisors, economist Peter Navarro and billionaire, now Secretary of Commerce, Wilbur Ross, published a campaign paper on October 27, 2016, called "Trump versus Clinton on Infrastructure." It goes without saying that there was nothing about taxing the rich and corporations more to help finance a major push on infrastructure. Just the opposite. It was about cutting regulations, offering huge tax credits to builders and investors, and paying off investors and builders from revenues and fees generated by public structures. During the campaign Mr. Trump promised a trillion-dollar program. Can $123 billion in tax credits generate $1 trillion of repairs and new construction?  If private firms are in control and dependent on fees and tools to support their expenditures, will we end up having to buy a ticket to get into our new neighborhood park? (More likely neighborhood parks and things like that will not be built.) Will local water rates soar after the pipes are fixed? And what kind of revenue stream can be generated from filling pot holes? Much of what is hinted in the Navarro-Ross paper is vague and much is utopian about the wonders of private control and cutting government regulations.
3.Taxation? If not enough can be done with tax credits, will the President and his aides work hard to raise money to do what is needed?  The president and especially Congressional Republicans are all about tax cuts of almost every kind. But if they won't agree to tax the rich and large businesses to repair the infrastructure, will they at least agree to raise the gas tax, which has not been increased in two decades? The increase could ramp up road repair projects and some of the funds could give a boost to mass transit as well. And will Trump be able to get Tea Party types to allow larger budget deficits to finance infrastructure improvements? In general, can we expect that Wall Street investors, rich conservative donors, and Republicans in Congress will support a program that is as clean and large as the country needs? In the old days Republicans liked public improvements that came to their own districts, but is that generalization true of the privatizers in today's party?
4. Equal Access to Jobs? Nothing in the Navarro-Ross publication nor anything else we've heard from the Trump camp has addressed the question of whether equal access to jobs and benefits will be guaranteed to minorities, poor people, women, the disabled, and others who often face hiring discrimination. Will the administration only practice affirmative action for non-college-educated white people in Michigan, Ohio, Pennsylvania, Wisconsin, and West Virginia? The Navarro-Ross paper promises to expedite construction programs--less red tape and fewer regulations. A streamlined application process--it's hard to disagree with that general idea. But what if streamlining is mainly about cutting equality provisions and environmental regulations? If you really want to eliminate the EPA and clean air regulations, as many Republicans do, that means people who live and work in and near workplaces and building projects that generate a lot of dirt and dangerous poisons are out of luck. 
5. Wages. Will there be wage guarantees for people working in the program? Mr. Trump does not support a $15 federal minimum, nor does the man he wants as Labor Secretary. That's not a good sign. Even $15 an hour for a full-time year-round job is just a bit over $30,000 and that's not much for any kind of household, even one with a single member, especially in a big city.
6. Hard Goods Only? Should infrastructure be thought of, mainly, as a question of hard goods--bridges and roads and buildings and so on? Or should we expand the concept so that, for example, we could consider an upgrade for the care industry as part of an infrastructure program? Or should such programs be discussed and fixed separately?
7. Doesn't government always screw things up?  Coming soon. In a later article, I will touch on the WPA, CCC, PWA, and CWA--job programs of the 1930s--and Obama's stimulus package of 2009. Also the difficulties that accompanied the introduction of George Bush's Medicare D program and Obama's Affordable Care Act. And the catastrophes that followed when Wall Street was given a free hand to manage a big chunk of the economy in the late 1920s and early 2000s.
Frank Stricker is emeritus professor of history and labor studies at California State University, Dominguez Hills, and he is a member of the National Jobs for All Coalition. He's finishing a book about the history and future of American unemployment. 

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Tuesday, January 24, 2017

[NJFAC] Who Is Finished Paying Their 2017 Social Security Taxes? Probably Not You.

Who Is Finished Paying Their 2017 Social Security Taxes? Probably Not You. Teresa Ghilarducci and Alex Pavlakis 1/1/17

Though 94 percent of us (about 151 million workers) will pay our Social Security tax every paycheck in 2017, a handful of the highest income Americans will stop paying before you finish reading this blog. The over $2 trillion dollars of earnings that escape Social Security tax are an accident caused by the lopsided growth of income for the lucky few (about 9.6 million) earning over $120,000 or so per year.

The tax rate for Social Security (old age survivors and disability insurance OASDI) is 6.4 percent for both the employer and employee and is paid on earnings up to a cap. In 2016, the cap was $118,500. In 2017, the cap will increase to $127,200 in 2017 based on average wage growth. For those at the upper end of the income distribution (the top 1 percent, or the 2 million people earning more than $250,000 per year and the 137,000 people earning more than $1 million per year), $127,200 is a trivial amount on which to pay Social Security tax.

....

The 202 Americans who earned more than $50 million a year finished paying less than 5 hours after the ball dropped in Times Square. Another 773 people earning between $20-$50 million a year will finish paying the tax before you finish reading this blog on January 2nd.

....

We face a retirement crisis in America. We need comprehensive pension reform, but we also need to shore up and expand Social Security. The first step is to right the wrong of lopsided earnings growth and raise the earnings cap. We should also tax some financial capital to strengthen and expand Social Security. Solving the retirement crisis by shoring up pension income is the best policy idea in the New Year. Raising the cap is very little pain and all gain.

************************************************************
WHY THE SYSTEM IS SHORT OF FUNDS

The boomers are not causing the system to run short of revenue in 2035. The system's actuaries anticipated baby boomers' retirement. In addition, the system is not bankrupt. Without increasing revenues, the system will generate revenue to pay 75 percent, rather than 100 percent, of promised benefits.

The main reason Social Security taxes aren't sufficient to pay full benefits is that the system did not anticipate the extreme growth of inequality in earnings and how much of wages would be diverted to pay health insurance back in 1983 when the Social Security tax was last raised by Congress and the President. The inequality of wage income is the most important reason for the short fall. Most of all, labor earnings growth since 1979 has gone to the top earners. When it comes to the pace of annual pay increases, the top 1 percent wage - the wage that escapes Social Security tax due to the cap - grew 138 percent since 1979, while wages for the bottom 90 percent grew only 15 percent. The unprecedented lopsided growth earnings are the main reason the system is in shortfall. The system can easily be made solvent if it adjusts to the reality of inequality.

Extreme earnings inequality explains the Social Security shortfall because Social Security taxes are only collected on incomes below an earnings cap. In 2016, the cap was $118,500 (which is indexed to average wage growth, not the wage growth at the top). Anyone who makes more than the cap stops contributing to Social Security as soon as they hit the earnings cap. For most of us, this does not matter. Last year, less than 6 percent of wage earners took home more than $120,000. Therefore, the vast majority of workers pay Social Security tax all year long.

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June Zaccone
National Jobs for All Coalition
http://www.njfac.org

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Tuesday, January 17, 2017

[NJFAC] Trump's a Keynesian?

Trump's a Keynesian?                                                                                                                                                   January 17, 2017
            Trump's tax cuts, although hugely favoring the rich, will dribble down to the middle class and raise overall economic demand. They will be financed, mostly, by borrowing as there are not enough easy budget cuts to make up for lower tax revenues. So we will have big-time deficit spending from Republicans. That's nothing new. Reagan had the largest deficits since World War II. Bush II had some pretty big ones for a couple of years too. Congress will go along with Trump's deficits because if there's one thing they like more than balanced budgets, it's tax cuts that favor the rich. Here's a good piece on the subject by Dean Baker that appeared two months ago.
            A key element in the Trump stimulus plan will be infrastructure spending and we will do a blog on that later. It's not clear that that there will be much there there.  It could be mostly smoke and mirrors. You know, like the Carrier deal. Trump makes a big payoff to Company X which builds a four-mile road somewhere and Trump talks about it ad nauseaum as a great victory.      Frank Stricker, NJFAC
 
 
November 17, 2016
Photo by Ninian Reid | CC BY 2.0
Photo by Ninian Reid |
It looks like we will have to get used to the idea of Donald Trump being president for the next four years. In his campaign he pushed many outlandish proposals, like banning Muslim immigrants and deporting 11 million immigrants without documentation. We will have to do whatever we can to block such flagrantly inhumane measures.
There are many other items on his campaign agenda and that of the Republican leadership that will have to be resisted, but at least one part of his agenda could actually offer real gains. Trump has proposed large infrastructure spending and also tax cuts that will hugely increase the deficit. Both offer real benefits, although with substantial risks.
The infrastructure story is straightforward. Roads and bridges in many parts of the country are badly in need of repair. This is both an economic waste, as people needlessly get caught in traffic, and a health hazard when bad roads increase the risk of accidents. Ideally, infrastructure spending would also go to repair schools and improve water systems so that we don't have more Flints with people drinking lead in their water. It would be great if some of this funding also went to mass transit and clean energy to reduce greenhouse gas emissions, but that might be expecting too much from a Trump administration.
The infrastructure spending would also create jobs. Public construction has traditionally been a source of relatively good paying jobs for men without college degrees. In recent years, the construction workforce has been disproportionately Hispanic. Spending in this area benefits a segment of the labor market that badly needs help. Of course the benefits are considerably less if projects are privatized, as Trump has suggested, and this will have to be part of the battle.
The other useful part of Trump's agenda is that he clearly does not care about budget deficits. His tax cuts could add more than $400 billion, more than 2.0 percent of GDP, to the annual deficit. These tax cuts are not a good use of money. They will overwhelmingly go to the rich who have been the main beneficiaries of economic growth over the last four decades.
In addition to not needing the money, if the point is to boost demand, giving tax breaks to the rich is the worst way to do it. If a poor or middle class person gets $1,000 from the government they are likely to spend most or all of it. But if we give another $1,000 or even $1,000,000 to Bill Gates it is unlikely to affect his consumption at all.
Even though the bulk of the Trump's proposed tax cuts do go to the rich, there are still substantial cuts for the middle class, which will provide a real boost to consumption. This boost to consumption, along with the increased demand from his infrastructure spending, will mean a large increase in demand in the economy. The result will be more jobs and a reduction in unemployment.
The strengthening of the labor market will also leave workers better situated to get pay increases. The only time in the last four decades when workers at the middle and bottom of the wage distribution saw sustained gains in real wages was the tight labor market of the late 1990s.
The irony in this story is that it might take a Republican president to give us a tight enough labor market for workers to get their share of the benefits of growth. This is partly due to Democrats having come to idealize the virtues of balanced budgets. Many have wrongly concluded that the prosperity of the 1990s was due to the budget surpluses of the time, which were in fact the outcome rather than the cause of strong growth. In her campaign, Clinton repeatedly promised that her spending plans would not increase the deficit.
However the bigger obstacle to larger deficits under a Democratic president is the Republican Congress. The Republicans routinely screamed bloody murder over any effort by President Obama to stimulate the economy with larger deficits. Several times they have balked at raising the debt ceiling, arguing that this routine maintenance measure was somehow a threat to our children's well-being. In fact, the burden posed by servicing the debt, at 0.8 percent of GDP, is near a post-war low.
But Congressional Republicans will no longer care about deficits with President Trump in the White House. This means that he will be able to run deficits large enough to get the economy to full employment and quite possibly beyond.
We may once again see issues with inflation and a need for higher interest rates to slow the economy. That will have some negative effects, but at least it will put an end to the long period of high unemployment and secular stagnation. This will be a good thing; it's just unfortunate that we needed a Trump administration to get there.                 
This column originally appeared on Huffington Post.
 
 
 

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Tuesday, January 10, 2017

[NJFAC] Progressive efforts can be successful

 
Democrats Denounced Sanders' Ideas as "Impossible," Now Many are Starting to Materialize ....
19 states are raising the minimum wage this year, a testament to the success of activist movements protests for the fight for a $15 federal minimum wage.
....

Progressive Climate Change activists managed to help push through a pro-solar amendment in Florida this past August 2016, and help deny an anti-solar amendment in November.

....On January 2, New York Governor Andrew Cuomo announced with Sanders a plan to provide free college tuition to New Yorkers whose families make less than $125,000 a year.....

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June Zaccone
National Jobs for All Coalition
http://www.njfac.org

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Wednesday, December 14, 2016

[NJFAC] Why Aren't More Prime-Age Men Working?

OpEdNews Op Eds

What's Wrong with These Men? Why Aren't They Working?

By       Message Frank Stricker     Permalink

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There is a group of adults who do not have jobs, are not recorded as looking for work, and are not counted as unemployed. They are men in the prime working ages of 25 through 54. Most of the men in this age group are in the labor force, but seven million are not and they have received a fair amount of attention in recent years. The labor force participation rate of men in this age group has fallen since the 1960s from 98% to 89%. Declines were substantial in the weak labor markets of the early 1970s, the 1980s, the early 1990s, and the 2010s. About half of these non-participants report that they are ill or disabled and have to take prescription medications every day. More of them are in school or retired or performing home responsibilities than in the past. It must be true, too, that some of them refuse to work for very low wages. Many have no college education. If these men were hired in the retail, hospitality or restaurant sectors, they would earn, on average, ten dollars an hour. Many jobs in this sector are part-time. If you work a full year of 30-hour weeks earning $10 an hour, your gross annual income would be $15,600. That's poverty, and remember, if $10 is the average, millions of people are earning less. Economic analyst Frank Lysy says that much of the problem of non-participation is just Economics 101:"if you want more people in paying jobs, pay them better."
Some of the seven million non-participants have looked for work in the past and been rejected because of their race, or because they have prison records, or both. Men with criminal records are 34% of all nonworking men who are 25 to 54 years old. Sociologist Devah Pager found that men who reported criminal convictions were 50% less likely to receive a callback or job offer and Black men's chances were worse. If we want more men to work, we have to make it easier for ex-prisoners to get jobs. And we need to stop jailing so many people.
Given the barriers some people face and the mediocre results for many of those who do get work, it is not hard to see why some prime-age men don't bother. Lousy wages lower the cost of not working. They may also be a reason to engage in criminal money-making. Ditto, if decent jobs are out of reach, then disability benefits, even though they average just $1,166 a month, look better. (Gross income for 120 hours of work a month at $10 an hour is $1,200.) Similarly, for prime-age women who are not participating in work or the job search, more affordable child-care options and more high quality jobs would make working outside the home more attractive.
In general, if there were real full employment--more vacancies than people who needed jobs and an unemployment level of around 2%-- and if wage levels were increasing substantially every year for many years, more people would work. Also employers would be a little more desperate for workers and they might not be so quick to eliminate whole categories of applicants.
It is not good social policy that every prime-age adult should be working all the time, but if people want a decent job, they should have a shot at it; and if pundits and policy makers claim to be worried about non-participation among prime-age men, they should be active in these areas: reversing the incarceration mania and getting both a $15 federal minimum wage and real full employment.
_______________________________
In addition to government statistics, important sources for this topic include Frank Lysy, "The Structural Factors Behind the Steady Fall in Labor Force Participation Rates of Prime Age Workers, posted October 14, 2016, aneconomicsense.org/2016/ 10/14/the-structural-factors; Jim Puzzanghera, "Job Market Mystery: Where Are the Men?," Los Angeles Times (LAT hereafter), November 21, 2016, A8; Binyamin Appelbaum, "Out of Trouble, but Criminal Records Keep Men Out of Work," New York Times (NYT hereafter), February 28, 2015, accessed 12/4/2016 at nytimes.com.; Don Lee and Samantha Masunaga, "Nothing in the Works," LAT, September 7, 2015, A8; June Zaccone, "The Labor Force Participation Rate and Its Trajectory--Why It Matters," National Jobs for All Coalition, Special Report 5, June 2015, at njfac.org/lfp; David Leonhardt, A Unemployed, and Skewing the Picture, @ NYT, March 5, 2008, updated March 7, and accessed online 9/29/2008; David Streitfeld, "Disparate Jobs Data Add Up To a Mystery, @ LAT, August 23, 2004, C1, C5; A Workers or Shirkers, @ The Economist, January 29, 2005, 28
 
Frank Stricker is a member of NJFAC and has recently completed American Unemployment: a New History, Explanations, Remedies.
 
 
 

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Wednesday, November 23, 2016

[NJFAC] Unemployment increases violence against women

American Marriage in the Time of the Recession, Campbell, Atlantic 11/16

Women who lived in areas that suffered the brunt of the downturn, new research suggests, were more likely to be abused by their partners.
....
Now that the American economy has emerged from the Great Recession, there is new research that looks at its impact on the quality of the country's relationships. Its findings are not encouraging. Daniel Schneider, a sociologist at the University of California, Berkeley, found that among mothers in heterosexual relationships, those who lived in areas hit harder by drops in employment rates during the Great Recession experienced higher rates of domestic violence and controlling behavior.....
--   June Zaccone  National Jobs for All Coalition  http://www.njfac.org