Thursday, March 26, 2015

[NJFAC] Chomsky on right to work; "Right to Work" and its inventor's racist past

Noam Chomsky blasts the assault on labor: "'Right to work' means 'right to scrounge'" Leftist intellectual laments America's lack of a robust labor movement Luke Brinker

The United States, Chomsky told Nichols, is "a business-run society," tainted by a "very violent and repressive labor history."

That legacy reverberates today, as governors of onetime bulwarks of labor power like Wisconsin and Michigan sign "right-to-work" laws allowing workers to opt out of paying fees to support unions that bargain on their behalf. While such measures are framed in terms of workers' rights, Chomsky argued that they effectively sanction freeloading.

"'Right to work' means right to scrounge, " he said. "It has nothing to do with 'right to work.' It means the right to be represented by a union to defend you and not to pay for it."

As "Right To Work" becomes law in Wisconsin, a reminder of its inventor's racist past

By Mark Ames On March 13, 2015

On Monday, Wisconsin governor Scott Walker signed into law the controversial anti-union "Right To Work" bill, following weeks of protests in Madison. Right To Work laws are designed to kill unions by mandating "open shop" workplaces, allowing workers to work in unionized workplaces, without paying union dues.

Wisconsin is historically one of the most pro-union, progressive states, home to the legendary "Fighting Bob" LaFollette, and the only community-owned nonprofit NFL football team— so gutting unions in labor's historical heartland is like what Russian homicide detectives call a "control shot" — the point-blank bullet to the head that makes sure the bleeding target on the ground never breathes again.

It's also gratuitous, like doing donuts on road kill, when you consider how close to extinction labor unions have fallen over the years. Only 6.6% of private sector workers are in unions today, down from a peak of 35% in the mid-1950s. It's only thanks to public sector unions—which Scott Walker destroyed in Wisconsin in 2011—that the overall percentage of the workforce that's unionized is 11.1%. California, which has rejected "Right To Work" laws in the past, has the largest number of union members in the country — 2.5 million workers — though as a percentage, California ranks sixth highest.

....Walker's RTW law reminds me of is some unfinished business I have with the number one national organization behind the law: The National Right To Work Committee.

A couple of years ago, I wrote an article for NSFWCORP (since acquired by Pando) exposing the ugly, racist roots of the whole "Right To Work" movement, tracing it back to the brains behind "Right To Work": Vance Muse, the loonie anti-Semitic, anti-black Texan who coined "Right To Work" in the early 1940s, and worked Karl Rove-like to push through the first "Right To Work" laws in the South in the 40s and early 50s. Since a lot of people these days are not in tune with labor union struggles and what "right to work" laws even mean, my article exposing the KKK racist who started "Right To Work" created a bit of a PR headache for the union-busting movement.

In the weeks and months that followed the publication of my article, people I know started forwarding me emails from a certain Stan Greer of the Washington, DC-based "National Right To Work Committee". Greer avoided me personally, but trolled anyone who quoted my article, falsely claiming that my article misquoted Vance Muse, inventor of "Right To Work". A great labor reporter, Moshe Marvit, forwarded me one of Greer's trolling emails he sent to Marvit's co-author of their book "Why Labor Organizing Should Be A Civil Right":

....

I had a librarian from the University of Nevada Las Vegas help me scan and send original page copies of the book "Southern Exposure" by the legendary undercover journalist Stetson Kennedy, in which the quotes were printed. For the rest of you—here is a photo from my own marked-up book of the Vance Muse quote Greer denies ever existed, published in 1946, in the heat of Muse's "Right To Work" campaign:

Muse2 Southern Exposure

That Vance Muse invented "Right To Work" is not in dispute: If you don't have time to read Kennedy's book [available here for free], you can read a more recent history of "Right To Work" by Dartmouth professor Marc Dixon in the "Journal of Policy History".

....

NOTE: For those of you unacquainted with "right to work" [definitely NOT the right to a job]--the law makes paying union dues or their equivalent optional for any worker who objects to paying them. It undercuts unions even as they are obliged to provide all union benefits, including grievance procedures, to those not paying. So workers are encouraged to seek union benefits like higher wages without paying union costs. These laws have been an effective way to undercut workplace unions. And they have now spread north from the south. Wisconsin is the 25th "right to union benefits without paying for them" state. Fortunately, it has been rejected recently "in New Hampshire, West Virginia, New Mexico and Maine. In Montana, no one but the sponsor of a right-to-work bill would testify for it. It failed there, too." [http://www.usatoday.com/story/opinion/2015/03/16/right-to-work-states-labor-unions-editorials-debates/24878359/] jz

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Wednesday, March 25, 2015

[NJFAC] It's official: decline in unionization has fed the rise in incomes at the top, says IMF report

Power from the People

Florence Jaumotte and Carolina Osorio Buitron Finance & Development, March 2015, Vol. 52, No. 1

The decline in unionization in recent decades has fed the rise in incomes at the top

Inequality has risen in many advanced economies since the 1980s, largely because of the concentration of incomes at the top of the distribution. Measures of inequality have increased substantially, but the most striking development is the large and continuous increase in the share of total income garnered by the 10 percent of the population that earns the most—which is only partially captured by the more traditional measure of inequality, the Gini coefficient (see Chart 1). jaumotte chart 1

The Gini is a summary statistic that gauges the average difference in income between any two individuals from the income distribution. It takes the value zero if all income is equally shared within a country and 100 (or 1) if one person has all the income.

While some inequality can increase efficiency by strengthening incentives to work and invest, recent research suggests that higher inequality is associated with lower and less sustainable growth in the medium run (Berg and Ostry, 2011; Berg, Ostry, and Zettelmeyer, 2012), even in advanced economies (OECD, 2014). Moreover, a rising concentration of income at the top of the distribution can reduce a population's welfare if it allows top earners to manipulate the economic and political system in their favor (Stiglitz, 2012).

Traditional explanations for the rise of inequality in advanced economies are skill-biased technological change and globalization, which have increased the relative demand for skilled workers, benefiting top earners relative to average earners. But technology and globalization foster economic growth, and there is little policymakers can or are willing to do to reverse these trends. Moreover, while high-income countries have been similarly affected by technological change and globalization, inequality in these economies has risen at different speeds and magnitudes.

As a consequence, economic research has recently focused on the effects of institutional changes, with financial deregulation and the decline in top marginal personal income tax rates often cited as important contributors to the rise of inequality. By contrast, the role played by labor market institutions—such as the decline in the share of workers affiliated with trade unions and the fall in the minimum wage relative to the median income—has featured less prominently in recent debates. In a forthcoming paper, we look at this side of the equation.

We examine the causes of the rise in inequality and focus on the relationship between labor market institutions and the distribution of incomes, by analyzing the experience of advanced economies since the early 1980s. The widely held view is that changes in unionization or the minimum wage affect low- and middle-wage workers but are unlikely to have a direct impact on top income earners.

While our findings are consistent with prior views about the effects of the minimum wage, we find strong evidence that lower unionization is associated with an increase in top income shares in advanced economies during the period 1980–2010 (for example, see Chart 2), thus challenging preconceptions about the channels through which union density affects income distribution. This is the most novel aspect of our analysis, which sets the stage for further research on the link between the erosion of unions and the rise of inequality at the top.

Changes at the top

Economic research has highlighted various channels through which unions and the minimum wage can affect the distribution of incomes at the bottom and middle, such as the dispersion of wages, unemployment, and redistribution. In our study, however, we also consider the possibility that weaker unions can lead to higher top income shares, and formulate hypotheses for why this may be the case.

So the main channels through which labor market institutions affect income inequality are the following:

Wage dispersion: Unionization and minimum wages are usually thought to reduce inequality by helping equalize the distribution of wages, and economic research confirms this.

Unemployment: Some economists argue that while stronger unions and a higher minimum wage reduce wage inequality, they may also increase unemployment by maintaining wages above "market-clearing" levels, leading to higher gross income inequality. But the empirical support for this hypothesis is not very strong, at least within the range of institutional arrangements observed in advanced economies (see Betcherman, 2012; Baker and others, 2004; Freeman, 2000; Howell and others, 2007; OECD, 2006). For instance, in an Organisation for Economic Co-operation and Development review of 17 studies, only 3 found a robust association between union density (or bargaining coverage) and higher overall unemployment.

Redistribution: Strong unions can induce policymakers to engage in more redistribution by mobilizing workers to vote for parties that promise to redistribute income or by leading all political parties to do so. Historically, unions have played an important role in the introduction of fundamental social and labor rights. Conversely, the weakening of unions can lead to less redistribution and higher net income inequality (that is, inequality of income after taxes and transfers).

Bargaining power of workers and top income shares: Lower union density can increase top income shares by reducing the bargaining power of workers. Naturally, top income shares are mechanically influenced by what happens in the lower part of the income distribution. If deunionization weakens earnings for middle- and low-income workers, this necessarily increases the income share of corporate managers' pay and shareholder returns. Intuitively, the weakening of unions reduces the bargaining power of workers relative to capital owners, increasing the share of capital income—which is more concentrated at the top than wages and salaries. Moreover, weaker unions can reduce workers' influence on corporate decisions that benefit top earners, such as the size and structure of top executive compensation.

To study the role of unionization and the minimum wage in the rise of inequality, we use econometric techniques over a sample including all advanced economies for which data are available and the years 1980 to 2010. We examine the relationship between various inequality measures (top 10 percent income share, Gini of gross income, Gini of net income) and labor market institutions, as well as a number of control variables. These controls include other important determinants of inequality identified by economists, such as technology, globalization (competition from low-cost foreign workers), financial liberalization, and top marginal personal income tax rates, as well as controls for common global trends in these variables. Our results confirm that the decline in unionization is strongly associated with the rise of income shares at the top.

While causality is difficult to establish, the decline in unionization appears to be a key contributor to the rise of top income shares. This finding holds even after accounting for shifts in political power, changes in social norms regarding inequality, sectoral employment shifts (such as deindustrialization and the growing role of the financial sector), and increases in education levels. The relationship between union density and the Gini of gross income is also negative but somewhat weaker. This could be because the Gini underestimates increases in inequality at the top of the income distribution.

We also find that deunionization is associated with less redistribution of income and that reductions in minimum wages increase overall inequality considerably.

On average, the decline in unionization explains about half of the 5 percentage point rise in the top 10 percent income share. Similarly, about half of the increase in the Gini of net income is driven by deunionization.

Future research

Our study focuses on unionization as a measure of the bargaining power of workers. Beyond this simple measure, more research is needed to investigate which aspects of unionization (for example, collective bargaining, arbitration) are most successful and whether some aspects may be more disruptive to productivity and economic growth.

Whether the rise of inequality brought about by the weakening of unions is good or bad for society remains unclear. While the rise in top earners' income share could reflect a relative increase in their productivity (good inequality), top earners' compensation may be larger than what is justified by their contribution to the economy's output, reflecting what economists call rent extraction (bad inequality). Inequality could also hurt society by allowing top earners to manipulate the economic and political system.

In such cases, there would be grounds for governments to take policy action. Such action could include corporate governance reforms that give all stakeholders—workers, managers, and shareholders—a say in executive pay decisions; improved design of performance-related pay contracts, especially in the risk-happy financial sector; and reaffirmation of labor standards that allow willing workers to bargain collectively. ■

Florence Jaumotte is a Senior Economist and Carolina Osorio Buitron is an Economist, both in the IMF's Research Department.

This article is based on a forthcoming IMF paper by the authors.

References

Baker, Dean, Andrew Glyn, David R. Howell, and John Schmitt, 2004, "Labor Market Institutions and Unemployment: Assessment of the Cross-Country Evidence," in Fighting Unemployment: The Limits of Free Market Orthodoxy, edited by David R. Howell, pp. 72–118.

Berg, Andrew, and Jonathan Ostry, 2011, "Inequality and Unsustainable Growth: Two Sides of the Same Coin?" IMF Staff Discussion Note 11/08 (Washington: International Monetary Fund).

Berg, Andrew, Jonathan Ostry, and Jeromin Zettelmeyer, 2012, "What Makes Growth Sustained?" Journal of Development Economics, Vol. 98, No. 2, pp. 149–66.

Betcherman, Gordon, 2012, "Labor Market Institutions: A Review of the Literature," World Bank Policy Research Paper No. 6276 (Washington).

Freeman, Richard B., 2000, "Single Peaked Vs. Diversified Capitalism: The Relation Between Economic Institutions and Outcomes," NBER Working Paper No. 7556 (Cambridge, Massachusetts: National Bureau of Economic Research).

Howell, David R., Dean Baker, Andrew Glyn, and John Schmitt, 2007, "Are Protective Labor Market Institutions at the Root of Unemployment? A Critical Review of the Evidence," Capitalism and Society, Vol. 2, No. 1.

Organisation for Economic Co-operation and Development (OECD), 2006, Employment Outlook (Paris).

———, 2014, "Focus on Inequality and Growth," December 9. Stiglitz, Joseph, 2012, The Price of Inequality: How Today's Divided Society Endangers Our Future (New York: W.W. Norton).

National Jobs for All Coalition
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Sunday, March 15, 2015

[NJFAC] Inequality and One Comparison: Wall St. bonus pool vs earnings of full-time, minimum wage workers

All You Need to Know About Income Inequality, in One Comparison

Justin Wolfers MARCH 13, 2015

The Wall Street bonus pool for last year is roughly double the total earnings of all Americans who work full time at the federal minimum wage.

That claim, which comes from a new report from Sarah Anderson of the Institute for Policy Studies, is one of the more striking sound bites I have heard in quite some time. And so I thought it worth digging in to the data to see if it checks out. Short answer: It does, although given the uncertainty in these sorts of calculations, the precise ratio could easily be a bit higher or lower.

Continue reading the main story

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National Jobs for All Coalition
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Wednesday, March 11, 2015

[NJFAC] Even Highly Educated Workers Have Declining Wages

Even the Most Educated Workers Have Declining Wages

By Elise Gould | February 20, 2015,http://www.epi.org/publication/even-the-most-educated-workers-have-declining-wages/ EPI

Some commentators are under the false impression that wage inequality is a simple consequence of employers' demand for increased skills and education—often thought to be driven by advances in technology. According to this myth, because there is a shortage of skilled or college-educated workers, the wage gap between workers with and without a college degree is widening. This is sometimes referred to as a "skill-biased technological change" explanation of wage inequality (since it is based on the notion that advances in technology lead to the need for more skills). But new data from 2014 shows that even college educated workers and workers with advanced degrees are not in demand enough to see their wages rise.

The figure below shows the most recent data on average hourly wages by education. Here we find reinforcing evidence that there is no sign of a technologically related demand for more-credentialed workers. The workers with the credential that should be in high demand—four-year college graduates—have not done that well, especially in the last year. In fact, among education categories, the greatest real wage losses between 2013 and 2014 were among those with a college or advanced degree. Workers with a four-year college degree saw their hourly wages fall 1.3 percent from 2013 to 2014, while those with an advanced degree saw an hourly wage decline of 2.2 percent. If demand for high-skilled workers were driving wage inequality, we would expect to see these workers' wages increasing, or at the very least, falling less than their low-skilled counterparts.

National Jobs for All Coalition
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Wednesday, March 4, 2015

[NJFAC] IMF: The decline in unionization in recent decades has fed the rise in incomes at the top

Power from the People

Finance & Development, March 2015, Vol. 52, No. 1 Florence Jaumotte and Carolina Osorio Buitron

The decline in unionization in recent decades has fed the rise in incomes at the top

The widely held view is that changes in unionization or the minimum wage affect low- and middle-wage workers but are unlikely to have a direct impact on top income earners.

Changes at the top

So the main channels through which labor market institutions affect income inequality are the following:

Wage dispersion: Unionization and minimum wages are usually thought to reduce inequality by helping equalize the distribution of wages, and economic research confirms this.

On average, the decline in unionization explains about half of the 5 percentage point rise in the top 10 percent income share....

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