Thursday, July 12, 2018

[NJFAC] Trade: It’s About Class, Not Country; Six Lies on Trade--Dean Baker

Two good pieces by Dean Baker:

There is a fundamental flaw in the way that both Donald Trump and his critics generally talk about trade. They make it an issue of country versus country, raising the question of whether China, Canada and other trading partners are treating the United States fairly as a country.
Trump of course does this more explicitly with his "America First" rhetoric and complaints about other countries cheating us because they run trade surpluses, but his critics also often use similar language. After all, it is common for the adults in the room to make assertions about China's theft of "our" intellectual property.

Have you had any intellectual property stolen by China?

The economist and policy types who have been pushing the trade agenda of the last four decades often make assertions like "everyone gains from trade." This is what is known in the economics profession as a "lie." 

No models show that everyone gains from trade. Standard models show that some groups are benefitted by trade and others are hurt. The usual story is that the winners gain more than the losers lose.
This means in principle that the winners can compensate the losers so that everyone is better off. In the real world, this compensation never takes place, so when we talk about trade we're talking about a policy that redistributes from some groups to others.

Our trade policy over the last four decades has been quite explicitly designed to redistribute income upward. This was the point of deals like NAFTA, or admitting China to the WTO.

These deals were about putting US manufacturing workers in direct competition with much-lower-paid workers in the developing world. The expected and actual effect of these policies is to reduce employment in manufacturing. This also put downward pressure on the wages of the manufacturing workers who kept their jobs, as well as on the wages of less-educated workers more generally, since manufacturing has historically been a source of relatively high-paying employment for workers without college degrees.....


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June Zaccone
National Jobs for All Coalition
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Wednesday, July 4, 2018

[NJFAC] Increased Minimum Wage’s Positive Effects Grow

Report: Increased Minimum Wage's Positive Effects "Persist and Indeed Grow in Magnitude over Several Years" Paul Constant, 4/18  Here's the best news about the minimum wage that nobody is reporting.

Last month, Kevin Rinz and John Voorheis from the U.S. Census Bureau published an astounding new working paper on the minimum wage. (It's titled "The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data," and you can read it in full in PDF form here.) The study examines decades' worth of unique data, and it comes to some pretty thrilling conclusions. You'd think that a study about the minimum wage coming from Census employees in the Trump era would be worth a juicy headline or two, don't you?

Not one single news outlet that I can find picked up on this report. Seriously. Go check Google News for yourself, and let me know if I'm wrong. Granted, Rinz and Voorheis are economists and the language they use in the report is highly technical, but technical language has never stopped a news outlet from reporting on a negative study. In fact, the only difference I see between this study and some of the other minimum-wage studies that have been heavily covered in the media over the last few years is that the results are overwhelmingly favorable.
....
So how is the Census report different? They take information from the Social Security Administration and cross-reference it with Census data in order to track how the effects of the wage "persist over time."This allows the Census report to follow how individuals were affected by the wage increase. The majority of studies, even the most positive examples, are unable to prove that the higher minimum wage benefits the people it's intended to help. Critics will often argue that a higher minimum wage pushes the most undereducated or under-skilled employees out of the labor market entirely, rendering them unemployable. This study puts that thesis to the test.
....
After running the data, Rinz and Voorheis find it reasonable to argue that "a minimum wage increase comparable in magnitude to the increase experienced in Seattle between 2013 and 2016 would have blunted some, but not nearly all of the worst income losses suffered at the bottom of the income distribution during the Great Recession."

Further, their findings suggest that "raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years." So raising the minimum wage increases the wages of the poorest Americans, and an increased minimum wage has positive effects that grow over time.
....

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June Zaccone
National Jobs for All Coalition
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Tuesday, June 26, 2018

[NJFAC] majority positive to national health insurance; many don't understand single payer




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June Zaccone
National Jobs for All Coalition
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Thursday, June 7, 2018

[NJFAC] How big is the gig economy?


"In May 2017, the Labor Department counted 5.9 million people, or 3.8% of workers, in what it calls contingent jobs, which are those that the workers don't expect to last or that workers call temporary. In 2005, the last time the government looked into the issue, there were 4.1% of workers who classified themselves this way. Other classifications of these kinds of alternative arrangements either declined or stayed the same....

One key caveat: the government is measuring the job in which they usually work the most hours. The government notes it is still evaluating survey data on a question of those who found short tasks or jobs through a mobile app or website. "


Here is another accounting:

Opinion: If the economy is so great, why are 78 million hustling for dimes? Nutting, Marketwatch 6/4/18
Millions of people are working erratic shifts, or scrambling for extra cashOverall in 2017, 31 percent of all adults engaged in
gig work in the month before the survey, up slightly
from 28 percent in 2016.

"Overall in 2017, 31 percent of all adults engaged in gig work in the month before the survey, up slightly from 28 percent in 2016." p. 19, Fed. Res. report.
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June Zaccone
National Jobs for All Coalition
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Tuesday, May 15, 2018

[NJFAC] April Unemployment: 3.9%. Be Glad, But Remember Those Left Behind by Frank Stricker

            Even those of us who think the U.S. economy is far from real full employment can admit that 3.9%  is a lot better than 5 or 6% unemployment. Unemployment's not been this low since December of 2000. Prior to that, you have to go back to the late 1960s to find unemployment rates under 4%. Some employers are now even eager to hire ex-convicts and people in prison, and at regular wages.
            It is a positive sign that more employers are complaining about labor shortages. As the economy continues to grow, it takes a little more effort for some employers to find workers. For agribusinesses, it's an extra problem because there's been less immigration from south of the border in recent years, and the work itself is strenuous and underpaid.
            Elsewhere, there's better times now in towns that were decimated by deindustrialization and capital flight. Then, young people left for the metropolis; now they don't want to come back, even when locals offer financial incentives. Around the country, fast-food business owners complain that they cannot find teenagers to work their stores. Some offer tuition reimbursements, bonuses, and even higher wages. It's just that tough for the bosses. But let's be realistic: it is tougher for severely underpaid fast-food workers, most of whom are adults, and who work every day to subsidize profits for owners and low prices for consumers.
            As to labor shortages, across the whole economy, there are millions of jobless people who can work. Six million were are actively searching for a job in April, and are considered unemployed. Some among them suffer extra-high unemployment. The rate for African- Americans was 6.6% in April, for black teens 29%, and for disabled people 8%. And that is the official count which leaves out a lot of people.
            Another fact suggests that there is no general labor shortage. Shortages should lift wages substantially; but wages aren't rising much. The mid-May earnings report from the Bureau of Labor Statistics is same-old, same-old. Real wages for rank-and-file employees in the private sector in April were exactly where they had been in April of 2017. Some labor shortage.
            But since unemployment is lowish, the lack of wage-growth is a puzzle. Why aren't average wages increasing? There are several explanations but I want to focus on two of them. One is a matter of will and ideology: employers' extreme application of the normal business practice of keeping wages down. As one commentator put it, "American businesses seem to think they are entitled to low-cost, untroublesome labor," so they resist the imperatives of the market. They began to do this in a big way in the 80s when Ronald Reagan led the assault on unions and working-class living standards. This fundamentalist effort to fend off wage hikes for rank-and-file workers is still with us, so that even when labor markets tighten up a little, some employers try every other thing than higher pay to attract workers.
            But there is a second, deeper explanation for why wages have not taken off, even with apparently full employment. There are millions of people who are essentially unemployed but are not counted as such. In other words, there is no general labor shortage, and the 4% official unemployment rate omits millions who are virtually unemployed. Here are three examples.[1]
            1. Every month, most newly employed people were not counted as looking for work and unemployed in the previous month. In January of 2018, 70% of the newly employed came off the sidelines. Big deal? Yes. This means there are a lot of people outside the labor force who are about to look for work or who are searching in a passive way or who are not searching at all, but all of whom are ready to work if their life situations change or attractive job possibilities come into view. In short, the population of those who would like to work but are not counted that way is large.
            2. Some of the people in this nearby labor force are mentioned in the government's regular employment survey. They are the 5 million people who say they want a job but are not currently searching for one.
            3. There is a very large group that includes quite a few people who either try for a job against heavy odds or don't even try. Poor and working-class prisoners were pushed into alienation and crime because of lousy labor markets due to racism, capital flight, and inadequate demand across the economy. Now, as ex-prisoners they again meet restricted job opportunities, and also harassment by the police and other officials. Some are caught up in a web of impossible situations that drive them back to crime if they are not already there.
            The number of felons in America jumped from 5 to 20 million between 1980 and 2010. Eight percent of adults in 2010 and 33% of adult African-American males had felony convictions. Many ex-prisoners do get jobs. Most face huge barriers. Studies have shown that ex-convicts are less than half as likely as others to get an employer call-back. More felons and even prisoners are being employed at regular jobs because of labor shortages in some locales across the country, but there are untold millions who will not get work even if they want it.[2]
            There's no general labor shortage. We'll know that there is one and that we are near real full employment when real wages rise 3, 4, or 5% for 3, 4, or 5 years running. We won't get there with anecdotes about employers who promise employee bonuses. Bonuses aren't widespread, they don't go into base pay, and often they don't amount to much. A $500 annual bonus for  someone earning a poverty-level income of $30,000 is not to be sneezed at, but it's only a 1.7% increase, and inflation wipes all of that out.
            In 2017, Trump, Ryan and the Cheatum Caucus gave huge tax-cut handouts to corporations and the rich. We know already that most of the new money is not going to job creation or higher wages. For real change, we'll need federal programs to create millions of good, regular jobs, and I know where we can get the money for it.
Frank Stricker is on the board of the National Jobs for All Coalition and is emeritus professor of History and Labor Studies at California State University, Dominguez Hills.
Notes

[1] None of these categories is a comprehensive estimate of the total number of people who are ready to work but not counted as unemployed, and each count includes people who are in the other counts.
 
[2] Alice Goffman, On the Run: Fugitive Life in an American City (NY: Picador, 2014);  Ben Casselman, "As Labor Pool Shrinks, Prison Time is Less of a Hiring Hurdle, " at nytimes.com/2018/01/13/business/economy/labor-market-inmates.html.
 
 
 

 

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Tuesday, May 1, 2018

[NJFAC] Will a Robot Take Your Job?

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Saturday, March 31, 2018

[NJFAC] We've Reached Real Full Employment! (April Fools)

Is the U.S. at Full Employment? Should We Put the Brakes on Job Growth to Avoid Inflation Down the Road?                                                                                 frank stricker
            The answers are no and no. Even when the official unemployment rate is 4.1%, we are not close to real full employment. And it does not appear that inflation is about to surge. If the authorities are really worried about it, they should develop counter-measures that do not cause more unemployment. 
            How these issues were worked on over the last fifty years is instructive. In 1969, after a 1964 tax cut, and hefty spending increases for the Vietnam war and for social programs, prices were rising 5.5% a year. But the official rate of unemployment was down to 3.5% and that lifted millions of people out of poverty. But there were  millions more who were still unemployed or underemployed. Some of these people rioted in America's cities. A special Department of Labor survey of ten inner-city communities revealed levels of unemployment that were much higher than those in the regular unemployment census.
            Yet in the late 60s and the 1970s, anti-inflation concerns often replaced anti-poverty and  employment concerns. Reducing demand for goods and workers was used to limit wage and price increases. A short recession in 1969-1971 raised unemployment and but did not moderate inflation much. Then world demand pushed food prices up and oil prices surged. The latter were a long-term and major cause of higher inflation, but it over time it seemed that wages got more blame than oil prices.
            In 1971-1974 President Richard Nixon tried wage-and-price controls--an interesting idea that worked pretty well in World War II--but unionists felt that wages were more tightly controlled than prices; and business leaders did not like price controls. So a possibly useful method for maintaining job growth while restraining prices was dismissed. Then the administration and the Federal Reserve engineered a deep recession--the worst since the 30s. But  textbook results did not follow. A new phenomenon was born: stagflation. Unemployment, which reached 8.5%, was supposed to limit wage and price increases, but it hardly made a dent. You'd have thought that this challenge to economic assumptions would cause experts to rethink the basics. If a recession with 8.5% unemployment did not have much effect on prices, perhaps the high-unemployment approach was wrong. But many experts doubled down on the old-time religion: if high unemployment did not tame inflation, then the economy needed more of it all the time. Not to worry. In the late 70s, former Nixon advisor, conservative economist Herbert Stein, wrote in the Wall Street Journal that people should simply consider that 7% unemployment was full employment. Guilt-problem solved,
            In the early 80s, Federal Reserve Chair Paul Volcker and President Ronald Reagan gave America a shocking recession with very high unemployment. The White House also joined the war on unions and working-class living standards. This recession and some lucky events got inflation rates way down. Job totals grew strongly, but many jobs were lousy ones.
            Economists, meanwhile, refined anti-worker inflation cures. A source here was conservative economist Milton Friedman's 1960s idea of a Natural Rate of Unemployment, below which unemployment must never be allowed to go. This Natural Rate idea was supported by contrived ideas of how workers reasoned about jobs and inflation. In  the 70s, Friedman's idea began to morph into NAIRU, the Non-Accelerating Inflation Rate of Unemployment.  The causative links between unemployment, wages, and prices were not always clear. But NAIRU was presented as a quasi-scientific way to determine how far down unemployment could go before wage-and-price inflation accelerated. While something like NAIRU seemed to work in the Reagan-Volcker recession, it did not have reliable predictive power. But it supplied scholarly sounding gobbledygook to justify the idea that workers had to bear the cost of inflation-fighting in the form of lost jobs and wrecked communities.
            As cheap imports ballooned and union membership sagged, the official unemployment number could get pretty low (4% in 2000) without much increase in prices. But NAIRU lived on and was often equated with full employment. Economists thus defined full employment by reasoning backward from the level of unemployment they guessed was needed to keep the lid on wages, not forward by what was necessary to employ everyone who wanted a job. More economists grew skeptical of NAIRU, but in 2017-2018, the staffs at the Federal Reserve and the Congressional Budget Office seem to believe this: 4.7% unemployment = full employment = NAIRU. But the official unemployment rate is 4.1%--lower than NAIRU--and wages and prices are not taking off.
            There are several reasons why 4.1% unemployment does not send wages and prices soaring. These reasons include falling union density and a flood of cheap foreign goods. But another reason is that real unemployment is much higher than 4.1%. There are millions of potential workers and quiet job-wanters who are ready to work but not counted as unemployed. The U.S. has a labor surplus, not a labor shortage. It's true, for example, that in some locales, there aren't enough truckers available at customary wage levels, so owners have to pay more. That's good, but let's not get too excited: $19.50 an hour and no company-supported health insurance is not exactly the lap of luxury, especially if you are making sizeable payments on your truck.
            We need to reframe the conventional view of current labor markets. There is no general shortage of workers today. Labor markets are just getting to where they should be. A huge fraction of workers are still paid rotten wages. It's not a labor shortage when tens of millions of workers earn less and often much less than $20 an hour. There are millions of potential employees outside the labor force and ready to work. (There is some duplication among the following groups, but the total may be as high as ten million.) There are five million people every month who say they want a job although they are not currently looking for one. These people offer a variety of explanations for why they are not looking, including illness, family responsibilities, and the belief that they will not find a job; some of them eventually go to work.
            Some of these 5 million are among the 7 million prime-age (25-54) males who are not working or even looking for work. Some of these men live in depressed areas in Chicago, Detroit, Cleveland, Paterson and Ocean City, New Jersey, rural areas of Alabama and Mississippi, West Virginia, East St. Louis, El Centro, California, and dozens of other left-behind communities. Some are disabled and some are drug addicts. But the number of disabled people in the labor force is rising and so is the number of prime-age men. There is, also, more demand for ex-prisoners--people who usually face huge barriers to getting hired. It is noteworthy too that the rate of employment for people without high-school diplomas is rising and that the percentage of people 55 and over who are in the labor force, which was 30% in 1993, is now 40%. These facts show that there is a large pool of labor that is not called unemployed but is virtually unemployed and ready to work.
            So looking at the big picture, we can emphasize the labor shortage: it's a boohoo situation for employers who have to accept the kinds of workers they used to reject. How tragic for them. Or we can say that labor markets are just beginning to function as they should. And good times for workers have barely begun. Over the last year, after-inflation wages for average employees and for new hires have not moved.
            Going forward, we should push for fuller employment--let's start by aiming for 3.0% in the official count--and we want wages on the up escalator. We've not had 3.0% since World War II. Before we get there, will inflation fears cause the Fed to put the brakes on job growth? What should people do about inflation? If inflation rates are only modestly higher, and less than wage increases, people should pressure the authorities to leave things alone. If wages are increasing at 4 to 5% and prices at 2 to 3%, and consistently so, that's a good deal for workers in the lower half. But what if prices surge? I don't have the answer but there are a variety of options. I wish some of the geniuses who run the government and the economy would have their experts working on anti-inflation policies that don't push millions of people down into unemployment and poverty. If politicians really love workers--many say they do--why have they gifted corporations and rich people with trillions of dollars in 2001, 2003, and 2017--no obligation to create jobs or raise wages--but not approved a new WPA to provide good jobs for millions who still need them, or authorized a measly hundred million dollars for Institutes to Study Solutions to High Inflation That Don't Require More Unemployment and Low Pay? Finally, why is the Fed is turning NAIRU-ish, raising interest rates to slow job growth, when there is still a lot of underlying unemployment to solve? 
Frank Stricker is in the National Jobs for All Coalition. He taught history and labor studies at CSUDH for thirty-five years. He has just written What Ails the American Worker? Unemployment and Rotten Jobs: History, Explanations, Remedies. For some sources behind this essay, e-mail frnkstricker@aol.com.
 
 
 
 
 
 

 

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