Monday, July 15, 2019

[NJFAC] AOC recognizes the Fed as political

Alexandria Ocasio-Cortez noted that over the past five years, the central bank had repeatedly suggested that unemployment could not fall much lower without triggering high inflation — only to see unemployment fall much lower without triggering high inflation.
Ocasio-Cortez: In early 2014, the Federal Reserve believed that the long run unemployment rate was around 5.4 percent. In early 2018, it as estimated that this was now lower, around 4.5 percent. Now, the estimate is around 4.2 percent. What is the current unemployment rate today?

[Fed chairman] Powell: 3.7 percent.

Ocasio 3.7 percent…Unemployment has fallen about three full points since 2014 but inflation is no higher today than it was five years ago. Given these facts, do you think it's possible that the Fed's estimates of the lowest sustainable unemployment rate may have been too high?

Powell: Absolutely.

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June Zaccone
National Jobs for All Coalition
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Tuesday, July 9, 2019

[NJFAC] Three Billionaires Have More Wealth Than Half of America

2020 Inequality https://inequality.org/great-divide/bernie-3-billionaires-more-wealth-half-america/

Bernie's Right: Three Billionaires Really Do Have More Wealth Than Half of America


And in addition to the 3 billionaires Bernie mentioned, we should also be worried about the expanding fortunes of multi-generational wealth dynasties.

Blogging Our Great Divide
June 28, 2019 by Chuck Collins
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Tuesday, June 11, 2019

[NJFAC] What Good is the Republican Tax Cut of 2017? by Frank Stricker


            The Tax Cuts and Jobs Act was pushed by right-wing politicians and signed into law by Donald Trump on December 22, 2017. Has it made life better for most Americans? Many of us say no right away, but what are the crucial facts?
            Did average folk get much of a tax cut? Reporters at the New York Times found that while most people did receive a cut, many did not believe they had. People did not see the benefits at tax time, and progressives convinced them that the cuts would mainly benefit rich individuals and corporations. Which is the truth. The middle fifth of the earners got an average cut of $780 in 2018. The top 1%, who were already among the richest people in history, were gifted with a $30,000 handout, and that's not counting their gains from the cut in corporate taxes. So while it is true that many Americans received a tax cut, it is a more important fact that they got very little while rich people and businesses got a lot.
            (We might also mention here Republican take-backs. For example, the tax bill eliminated the penalty in Obamacare for not having health insurance. The predicted result will be higher health insurance costs for those who buy insurance.)
            How about other benefits? Republicans and right-wing economists asserted--few bothered to offer reasonable arguments--that more cuts for rich people and businesses would create jobs and lift wages. This is trickle-down dogma. It seemed to work in the early 60s, but not so much after Reagan's huge tax cuts in 1981 (wages sank in the 80s), and there was no special bump for job creation following the Bush cuts in 2001 and 2003.
            And this time? Have the cuts increased investment in new jobs? Not yet. Giant tax cuts to encourage corporations to bring home the profits stashed overseas have not yet been used to add jobs. Rather there's been a surge in stock-buybacks. Companies buy their own stock and retire it. That jacks up the value of remaining stocks and makes a lot of people happy, including executives whose compensation is linked to stock prices.
            On balance, the tax cuts may have added a bit to total economic output, but the job situation is more or less what it has been for several few years. Some ups, some not so up. Overall job additions in 2018 were very good and better than in Trump's first year, but 2014, 2015, and 2016 were about as good and without the tax giveaways. It is notable, too, that while rank-and-file manufacturing jobs, a favorite Trump area, increased by 1.8% in 2018, they had increased by 1.7% in 2017 before the cut. And in 2019, factory job totals are stagnating.
            But aren't more companies paying bonuses to their employees? About $4.4 billion is said to have gone out as employee bonuses since the tax law took effect. That sounds like a lot of money but it is tiny next to the need and next to $1 trillion in stock-buybacks. Had the $4.4 billion been distributed widely to, say, the poorest 40 million workers, each would have received a grand total of $120.
            The record on regular wages is so-so. Real average hourly pay increased between 1 and 2% a year, depending on the measure. That is better than 2016 and 2017, but 2014 and 2015 were good too. Any increase is welcome because wage growth has been lousy for most of the last forty-five years. If we'd seen real wage increases of 1 to 2% every year over that span, we'd have something very good. But we haven't. The purchasing power of the average hourly wage is still about where it was in the early 1970s.
            Tax cuts favoring the rich and corporations are unlikely to promote substantial and consistent wage growth. Real solutions are well known: truly full employment, which we don't have yet, much more unionization, and a $15 dollar federal minimum wage that is staged to reach $20 soon. Trump's Secretary of Labor is opposed to raising the federal minimum wage even from its pathetically low level of $7.25. He's supposed to be the labor guy in the federal government. Meanwhile, the administration pushes more work requirements for government benefit programs. They don't want to make work more attractive; they want to punish people for being poor.
            There is another key issue. Treasury Secretary Steve Mnuchin and Trump advisor Larry Kudlow claimed that the cuts would generate so much new business and government revenue, even at lower tax rates, that the cuts would pay for themselves. This idea was made famous by the aptly named economist, Arthur Laffer. He used it to support Reagan's tax cuts. It did not work then and it won't work now. Federal budget deficits will rise and Republicans, following Reagan's example, will not take responsibility for failed predictions. They will blame Democrats for rising deficits and try to cut programs that serve the lower half. Poor people will pay for tax-cut handouts going to the top 1%.
            No surprise. Most rich Americans don't want a little more equality; they want more inequality, and they always want more money. The tax cuts were meant to reward big political donors and the whole class of very rich people. Some Republicans may have hoped that the cuts would provide enough stimuli to assure that the long economic boom would continue. But that was secondary. Pretty much every Republican, many conservative religious leaders, and some Democrats believe that it is right and just that very affluent Americans never have to worry about food or medical expenses or housing or how they will get from here to there for work. They have limos and many mansions while millions of people live in overcrowded apartments and beat-up trailers, or without any shelter at all.  
            We've had three major tax cuts in 38 years. They've all been about making sure that rich people get richer. The top 0.1% is 400% richer than it was in 1980. The bottom 50% has gained just a couple of percentage points of income over four decades. Conservative tax policy is one big reason why.
Submitted, June 11, 2019. Some sources: A key source is Jane G. Gravelle and Donald J. Marples, The Economic Effects of the 2017 Tax Revision: Preliminary Observations (Congressional Research Service, May 22, 2019). Michael Hiltzik, "Tax Cut Review: Bust for Most," Los Angeles Times, May 30, 2019, C1, C5, an exposition of the Gravelle report, is shorter and easier to digest. BLS.gov, Economic Reports of the President, and other federal sources for wages, jobs, and GDP. Also useful were Ben Casselman and Jim Tankersley, "Face It: You (Probably) Got a Tax Cut," New York Times, April 14, 2019 at nytimes.com; and Kimberly A. Clausing and Edward Kleinbard, "What Trump Gave in Tax Cuts He Took Away with a Trade War," Los Angeles Times, June 5, 2019.
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Frank Stricker is a board member of NJFAC/NJFAN and Emeritus Professor of History and Labor Studies at California State University, Dominguez Hills. His new book, American Unemployment: Past, Present, and Future, will be out soon.
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Saturday, May 25, 2019

[NJFAC] Fwd: Rubio Wants Caps to Focus on Real Investments


Harold Meyerson of The American Prospect evaluates a policy paper issued by Senator Marco Rubio. Rubio wants capitalists and shareholders to focus more on real investment and less on share buy- backs. The Senator is not clear on how to get there from here. And he does not seem to want more public investment. He voted for the 2017 Republican tax cut that gave tons of money to rich people, owners, and investors. That handout has not done much to change behavior or raise the kind of investment that is needed to provide good jobs and to do important work for the environment and infrastructure. 

Here is the link:  https://prospect.org/article/god-damnedest-policy-paper-year 

Posted by Frank Stricker is board member of the National Jobs for All Network and has written American Unemployment: Past, Present, and Future,



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Monday, April 29, 2019

[NJFAC] Minimum wage: rising based on state and local laws; NBER study

NBER study: "We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the [minimum wage] increase." Cengiz et al, 4/19, cited by Times article.

Source: "Americans Are Seeing Highest Minimum Wage in History (Without Federal Help)," Tedeschi, NY Times 4/19

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Sunday, April 7, 2019

[NJFAC] It’s True: Real Wages Are Rising. But Fast Enough? And for How Long? Frank Stricker

             The real wage for rank-and-file workers in January of 2019 was 2% above what it had been in January of 2018. Last year was the second best of the last ten years. But will the good news continue? We're due for a recession, but even if we avoid that for a while, there are the usual impediments to strong wage growth: low rates of unionization, a federal minimum wage stuck at $7.25, and millions of workers just outside the labor force eager to work when decent jobs appear.* In the last ten years, the annual average increase in the purchasing power of a rank-and-file worker's wage has been 0.5%--half of a percentage point.
            Also, despite better labor markets, some capitalists seem confident enough of always finding workers to take back with one hand what they have given with the other. Amazon-Whole Foods is raising hourly rates, but it is also cutting hours for workers, many of whom aren't making that much to begin with. UBER slashed drivers' per mile rate from 80 cents to 60 cents. Even before the cut it was likely that after paying for the upkeep of the car, contributing to Social Security, and buying health insurance, many drivers weren't even earning the minimum wage. So labor markets aren't as strong as some observers say.
            But they are better and the average money wage--the dollar amount written on your paycheck--is up 3 to 4%, and after inflation, 2% a year. Why the good news? Inflation rates are low, partly because oil prices are down. Also, a fair number of state and local governments have raised their minimum wages. (In California, firms with at least 26 employees must pay $12 an hour this year and some localities require more than that.) And another reason: we're not close to full employment, but the number of desperate people who will work for very low pay must be shrinking and the ratio of job seekers to job slots has fallen. More employees have confidence that they can find a better job. The rate of workers quitting their jobs reached a 17-year high in 2018. Other evidence of tighter labor markets include the fact that job-ghosting--not letting your employer know you've quit--is on the rise. One recruiter says she's seen a spike in no-shows for job interviews and for first days on the job. What's more, the number of people working part-time who want full-time work is down and so is the number who say they are out of work due to illness and disabilities. (The number of such people rises when labor markets are bad.)
            In addition, unemployment rates for low-wage workers, less educated workers, and minorities are down. For example, African-American unemployment rates were 6.8% in January; they had been 16.5% in January of 2010. But--there's always a but--black unemployment rates are still double white rates. And in the next recession, people of color, the working poor, and people with less education will add more points to their unemployment rates than better off workers. Scholars Julia Hotchkiss and Robert Moore found that benefits to disadvantaged groups in hot economies are smaller than their losses in bad times.
            There are well-known solutions to such problems and to wage inertia. First, equality of access to good schools and good jobs. That means affirmative actions. Second, the federal minimum wage must be raised to $15. Third, there should be legislation that obligates the federal government and the Federal Reserve to avoid or soften recessions. Despite current restraint, if Federal Reserve officials believe that wages or prices are rising too fast, they will tighten credit to cut economic demand and raise unemployment. Fourth, as part of both anti-recession policy but everyday policy, the federal government should establish large-scale direct job-creation programs. One such program has been introduced into the House of Representatives by allies of the National Jobs for All Network. Several senators have their own ideas for job programs.         It seems crystal clear that the private sector does not create enough good jobs. Or maybe they do and I'm wrong. Perhaps a total real-wage increase of 12% over the last nineteen years is good enough for U.S. workers. I am pretty sure the robber baron class would not accept that kind of increase for themselves.
 
* I am not an economist, so I may not understand. But it's hard for me to accept that insufficient productivity growth is a key reason why wages aren't increasing much. In a just world, it might be so. In our real world, the robber baron class grabs most of the gains of rising productivity. They've been doing it for forty years now.
_____________________________________________________________________________________
 
Frank Stricker is emeritus professor of history and labor studies at California State University, Dominguez Hills, and he is a board member of the National Jobs for All Network. He's written a book called American Unemployment: Past, Present, and Future.

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Tuesday, April 2, 2019

[NJFAC] Realizing the promise of FDR's Economic Bill of Rights; time for the Left

Another State of the Union: A chance to realize the promise of FDR's Economic Bill of Rights, Trudy Goldberg, $ & Sense  M/A/19
 
As Dollars and Sense describes the article, "In our ongoing series on a federal job guarantee, Gertrude Schaffner Goldberg pays tribute to FDR's Economic Bill of Rights, which turns 75 this year. Goldberg shows how the Green New Deal and related policy proposals could finally realize FDR's vision and address the climate crisis and economic inequality at the same time."

Goldberg is Chair of the National Jobs For All Network.

As a bonus, read this intriguing interview with Clinton economist Brad DeLong, who describes himself as a "Rubin Democrat":
"Barack Obama rolls into office with Mitt Romney's health care policy, with John McCain's climate policy, with Bill Clinton's tax policy, and George H.W. Bush's foreign policy," DeLong notes. "And did George H.W. Bush, did Mitt Romney, did John McCain say a single good word about anything Barack Obama ever did over the course of eight solid years? No, they *** did not."
The result, he argues, is the nature of the Democratic Party needs to shift. Rather than being a center-left coalition dominated by market-friendly ideas designed to attract conservative support, the energy of the coalition should come from the left and its broad, sweeping ideas. Market-friendly neoliberals, rather than pushing their own ideology, should work to improve ideas on the left. This, he believes, is the most effective and sustainable basis for Democratic politics and policy for the foreseeable future.....

A Clinton-era centrist Democrat explains why it's time to give democratic socialists a chance

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June Zaccone
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