[NJFAC] Treasury Secretary Janet Yellen Celebrated Unemployment as a “Worker-Discipline Device”

In Confidential Memo, Treasury Secretary Janet Yellen Celebrated Unemployment as a "Worker-Discipline Device"

Yellen wanted this to be the best of all possible worlds, but the best world she could conceive of was terrible. Jon Schwarz January 24 2023,

The memo is titled "Job Insecurity, the Natural Rate of Unemployment, and the Phillips Curve." Barker learned of it from references in the books "Maestro" by Bob Woodward and "Empathy Economics" by Owen Ullmann. Greenspan distributed the memo to the entire Federal Open Market Committee, or FOMC — the group that decides interest rates — and it worked. As Ullmann puts it, "Yellen rescued Greenspan from his tight spot."

Here's the context in which Yellen was writing.

By mid-1996, unemployment had fallen to 5.3 percent. To understand the significance of this, it's necessary to understand the standard economics model at the Fed (and the other centers of U.S. powers). There is, they believe, an inescapable trade-off between unemployment and inflation: If unemployment gets low, workers across the economy will have the bargaining power to bid up their wages, which will cause unstoppable inflation, which a few steps later will cause the rise of another Hitler. (Germany's hyperinflation during the 1920s is generally believed to be one reason the country was open to extreme leadership.) You might think it would be nice for everyone to have jobs and good pay, but that just shows you are naïve and/or a Nazi.

Therefore, as previous Fed Chair William McChesney Martin said in 1955, the job of the Federal Reserve is to be "the chaperone who has ordered the punch bowl removed just when the party was really warming up." They can't let unemployment get too low, or the party will get out of hand.

....

...members of the FOMC were "prodding Greenspan to raise interest rates right away." But Greenspan was resisting this; no one knew for sure where the NAIRU was..... Greenspan's rationale was not that higher inflation was OK. Rather, as he eventually explained, "greater worker insecurity" had made possible a "healthy economic performance" with both low inflation and lower unemployment. This increased worker insecurity, he believed, could be measured by surveys finding that in 1991, in the middle of a recession, 25 percent of workers agreed with the statement, "I am frequently concerned about being laid off" — yet five years later, with far lower unemployment, 46 percent did.

Yellen's memo was an attempt to provide intellectual support for Greenspan's belief that increased worker insecurity could coexist with low unemployment. She writes in the memo that "unemployment serves as a worker-discipline device."

....

In her view of how economics works, the insecurity that working people hate is positive for everyone, including them, because this is the best we can do without provoking catastrophe. But is she right?....

The Yellen memo is available at https://ourtime.substack.com/api/v1/file/ca14e08f-387e-4425-ac23-ab343c846be4.pdf

Note that employed workers can feel less secure even at lower rates of unemployment. jz

June Zaccone
National Jobs for All Network
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[NJFAC] Dr. King’s goal was full employment and universal health care. J. Phillip Thompson

Unfinished Revolution

Dr. King's goal was full employment and universal health care.

J. Phillip Thompson January 21, 2013

Rev. Dr. Martin Luther King, Jr. is a leader for our times. A thoroughgoing revolutionary, he advocated peaceful yet determined resistance to not only racial but also economic subjugation.

Though his approach was nonviolent, he never to advised passivity in the face of injustice or acceptance of the "politics of the possible." His was a call to prolonged protest and self-sacrifice among people of conscience, a resolve strong enough to force a humanistic reordering of national priorities and transformation of the political economy. In opposing militarism and denouncing the Vietnam War during the height of its popularity, King proposed spending money instead on full employment, universal healthcare, affordable housing, and massive investments in education. He repeatedly cautioned that technology and corporate wealth were being used for selfish ends:

The contemporary tendency in our society is to base distribution on scarcity, which has vanished, and to compress our abundance into the overfed mouths of the middle and upper classes until they gag with superfluity. If democracy is to have breath of meaning it is necessary to adjust this inequity.

On this national holiday, as we debate austerity measures, the jobs crisis, and gross inequality, we would do well to recall the entirety of King's mission.

• • •

King believed that racial justice was not the final aim of black Americans' struggle, but rather part of a broader and more fundamental struggle for economic justice. Economic justice also was not the ultimate goal, but it was a condition of that goal: upholding the dignity and promise of human beings everywhere. While he supported blacks' efforts to win political offices and championed black pride as a counter to negative anti-black stereotypes and black self-hatred, King continuously reminded black audiences that winning meaningful improvements required strong alliances with poor whites, Latinos, Asians, and Native Americans.....

Some progressives, desperate for signs of hope, look to the labor movement. King believed it was imperative to redesign the economy to protect workers and sought an alliance with labor leaders. He told the national AFL-CIO convention in 1961:

In the next ten to twenty years, automation will grind jobs to dust as it grinds out unbelievable volumes of production. This period is made to order for those who would seek to drive labor into impotency. . . . To find a great design to solve a grave problem, labor will have to intervene in the political life of the nation to chart a course which distributes the abundance to all instead of concentrating it among a few. The strength to carry through such a program requires that labor know its friends and collaborate as a friend.

....

Tragically, following King's assassination, most black political leaders were too fearful to follow his example. They retreated from building a multiracial movement for full employment. By the early 1970s, most accepted affirmative action—a far less costly strategy than full employment, created by the Kennedy and Johnson administrations to quell urban rioting and appease elites—rather than befriending and collaborating with other minority groups and poor whites in the service of transforming society....

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[NJFAC] Beat the Press - Big Victory on Retirement Income in Omnibus Spending Bill

Good discussion of new bill, including pointing out the benefits of a state strategy:

"The passage of the Secure Act 2.0 provisions is also a vindication of the state-by-state strategy that progressives have been pursuing for the last quarter century when action at the national level seems blocked. This has been done with increases to the minimum wage, paid sick days and family leave, support for child care, and a number of other areas."

Since coming to Washington more than three decades ago, I have spent much of my time working on retirement income. The biggest part of that story was defending Social Security, which leaders in both parties were anxious to cut. This defense was largely successful, as the efforts to privatize it in the 1990s and under President Bush were beaten back, and the efforts at cuts often focused on the annual cost of living adjustment, were similarly derailed.

...

Big Victory on Retirement Income in Omnibus Spending Bill Dean Baker, December 24, 2022 Since coming to Washington more than three decades ago, I have spent much of my time working on retirement income. The biggest part of that story was defending Social Security, which leaders in both parties were anxious to cut. This defense was largely successful, as the efforts to privatize it in the 1990s and under President Bush were beaten back, and the efforts at cuts often focused on the annual cost of living adjustment, were similarly derailed. Defending Social Security was crucial, both because tens of millions of people depend on it for most or all of their income, but also because it was a model social program. The administrative costs are minimal, with the total program's costs coming to less than 0.6 percent of annual benefits, with the costs of the retirement program alone coming to less than 0.4 percent of benefits. By comparison, the fees from private 401(k)s run in the neighborhood of 15 to 20 percent of annual retirement benefits.        Read More     Contrary to What the NYT Tells You, the Problem in An Aging Society is Distribution More Mind Reading at the NYT: Tells Readers U.K. Prime Minister, Rishi Sunak's Real Concern Is the Working Class The NYT Doesn't Have Access to Census Data: We Do Not Have a Record Number of Renters Quick Note on Minimum Age for Mandatory Retirement Fund Distributions Industrial Policy Is Not a Remedy for Income Inequality Real Consumption Rises as Inflation Decimates People in Joe Biden's America Dean Baker, Senior Economist Dean Baker co-founded CEPR in 1999. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.     Learn More     Support CEPR If you value CEPR's work, support us by making a financial contribution.     Donate

Connect with us   1611 Connecticut Ave NW, Suite 400 Washington, DC 20009 (202) 293-5380 cepr@cepr.net

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[NJFAC] WSJ: Your Coworkers Are Less Ambitious; Bosses Adjust

Your Coworkers Are Less Ambitious; Bosses Adjust to the New Order For a growing number of professionals, the days of unpaid overtime and working through weekends are in the past. Firms add people to finish projects, close for holidays and take other steps. Lindsay Ellis and Ray A. Smith Dec. 31, 2022

Where have all the go-getters gone? 

At law firm Nixon Peabody LLP, associates have started saying no to working weekends, prompting partners to ask more people to help complete time-sensitive work. TGS Insurance in Texas has struggled to fill promotions, and bosses often have to coax staffers to apply. And Maine-based marketing company Pulp+Wire plans to shut down for two weeks next year now that staffers are taking more vacation than they used to.

"The passion that we used to see in work is lower now, and you find it in fewer people—at least in the last two years," says Sumithra Jagannath, president of ZED Digital, which makes digital ticket scanners. The company, based in Columbus, Ohio, recently moved about 20 remote engineering and marketing roles to Canada and India, where she said it's easier to find talent who will go above and beyond.

Since the onset of the pandemic, several employees have asked for more pay when managers asked that they do more work, she says. "It was not like that before Covid at all," she adds.

Many white-collar workers say the events of the past three years have reordered their priorities and showed them what they were missing when they were spending so much time at the office. Now that normalcy is returning, even some of the workers who used to be always on and always striving say they find themselves eyeing the clock as the day winds down, saying no to overtime work or even taking pay cuts for better work-life balance.

The reduced ambition can leave companies needing more people to do the same amount of work, something that ultimately could be a drag on American economic productivity. And bosses are openly considering the ramifications. Comments by Home Depot Inc. co-founder Bernie Marcus that "nobody works, nobody gives a damn," with possible implications for the future of capitalism, in the Financial Times spread quickly this week. A spokeswoman for the retailer said: "Bernie Marcus retired from The Home Depot more than 20 years ago and does not speak on behalf of the company."....

In a November survey of more than 3,000 workers and managers by software firm Qualtrics, 36% said their overall career ambitions had waned over the past three years, compared with 22% who said their ambition had increased. Nearly 40% said work had become less important to them in the past three years, while 25% said it had grown more important, according to researchers at Qualtrics, which provides software to businesses to evaluate customer and employee experiences.

Even in hard-charging fields like law and finance, where all-nighters aren't uncommon, some professionals are objecting to the grind. A group of first-year analysts at Goldman Sachs Group Inc. complained to bank leaders last year that they were working an average of 95 hours a week and that job stress had harmed their physical and mental health. Goldman, in response, said it would hire additional bankers and more strictly enforce boundaries around working hours. In an American Bar Association survey of nearly 2,000 members this year, 44% of young lawyers said they would leave their jobs for a greater ability to work remotely elsewhere.....

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June Zaccone
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[NJFAC] Average CEO Will Make More in a day Than an Average Workers in an Entire Year

On the First Workday of the New Year, the Average CEO Will Make More Than an Average Workers Earns in an Entire Year by Sarah Anderson December 27, 2022

If the typical CEO of a large U.S. corporation clocks in at 9 am on January 2, by 3:37 pm that afternoon he'll have earned $58,260 — the average annual salary for all U.S. occupations.

In other words, in less than seven hours on the first workday of the New Year, that CEO will have made as much as the average U.S. worker will make all year.

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June Zaccone
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