[NJFAC] Will a Robot Take Your Job?

This is an update of my earlier paper.

https://njfac.org/wp-content/uploads/2018/04/RobotsJobs.pdf

https://njfac.org/wp-content/uploads/2018/04/RobotsJobsSlides.pdf

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

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[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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[NJFAC] The Federal Job Guarantee--Paul, Darity and Hamilton, CBPP

The Federal Job Guarantee - A Policy to Achieve Permanent Full Employment March 9, 2018 Mark Paul^[1], William Darity, Jr.^[2], and Darrick Hamilton^[3]

....
At today's relatively low unemployment rate of 4.1 percent (January, 2018), 6.7 million workers remain unemployed, an additional 5 million are working part-time though they would prefer full-time work, and job seekers still substantially outnumber job openings.^[5] Moreover, this aggregate picture masks the fact that unemployment does not affect all workers equally. Historical unemployment data highlight the persistent trend of discriminatory labor market practices that result in substantially higher unemployment rates for some social groups. For instance, black workers routinely face an unemployment rate that is roughly twice that of white workers, even after controlling for educational attainment.^[6][7] There is recent evidence that narrowing of the racial unemployment gap occurs as the labor market tightens, but these gaps may be exacerbated during economic downturns.[8]
....

Conclusion

A job guarantee would fundamentally transform the current labor market in the United States. Our current conception of full employment is inadequate; we discuss a bold policy in this paper to bring the United States to a permanent, more accurate indicator of full employment­—by which we mean that everyone who seeks a job can find one at non-poverty wages. Beyond providing full employment, the job guarantee could be a turning point for American workers. Workers are faced with stagnating real wages and a continued erosion of labor's share of income. The job guarantee could significantly alter the current power dynamics between labor and capital—particularly for low-wage workers and traditionally marginalized groups.

Benefits of the program reach beyond those directly employed under the NIEC. If a job guarantee were to be implemented, it also would function as a de facto employment floor in the labor market. Private employers would have to offer wages and benefits that are at least competitive with the NIEC in order to attract workers. The universal nature of the program would ensure jobs for all—including those with some forms of disability who may not be employed through the private sector. The universal design is critical to ending working poverty and involuntary unemployment; this is in contrast to other forms of intervention in the labor market, such as minimum wage laws, which do not ensure access to employment in the first place. Nevertheless, complementary changes to the existing social insurance system would be necessary to eliminate poverty entirely, as some individuals may be unable to work for various reasons.^[54]

Despite the discussion of full employment as a national priority for nearly a century now, policymakers have failed to deliver an economy that prioritized employment for all. Full employment is a goal that the private market in unable to achieve, therefore requiring government intervention in the labor market. Above, we discuss a transformative policy proposal—a federal job guarantee—whereby the government engages in the direct hiring of workers at non-poverty wages to achieve, and maintain, a full employment economy. Whether or not policymakers agree with the specifics we suggest in our proposal, we encourage them to think about bold solutions to achieve and maintain full employment. Restructuring our public policies to eradicate involuntary unemployment and poverty is within our reach.

Profs. Darity and Hamilton are on the Advisory Board of NJFAC. Hamilton will join Senator Bernie Sanders in a town hall on March 19th. See details below. jz

Senator Bernie Sanders will hold a televised town hall on March 19th to address the issue of economic inequality. Tune in live as Milano Professor of Economics and Urban Policy, Darrick Hamilton joins Sen. Bernie Sanders, Sen. Elizabeth Warren (D-Mass), and filmmaker Michael Moore on the four-person panel. 

"The town hall, called "Inequality in America: The Rise of Oligarchy and Collapse of the Middle Class," will take place from 7 to 8:30 pm ET before a live audience in the auditorium of the U.S. Capitol. It will be broadcast online with the help of the event's digital media partners, The Guardian, NowThis, The Young Turks and Act.tv." – HuffPost

Read More.

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June Zaccone
National Jobs for All Coalition
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[NJFAC] High Wages Improve Economic Performance

Even McKinsey Gets It: High Wages Improve Economic Performance

Economic stagnation is the outcome of conscious policy choices.

By Marshall Auerback / AlterNet March 3, 2018

"After a year-long analysis of seven developed countries and six sectors," global management consultancy company McKinsey has "concluded that demand matters for productivity growth and that increasing demand is key to restarting growth across advanced economies." Which means—surprise, surprise—higher wages for the workforce. The report by James Manyika, Jaana Remes and Jan Mischke was published in the Harvard Business Review.
....

If deficient demand (and a concomitant commitment to full employment) is not considered relevant as far as productivity goes, the policy framework is very different. Fiscal policy is diminished because there is little point in "wasting" limited financial resources on fiscal stimulus, higher real wages, or a restructuring of the private debt overhang. And economic inequality doesn't even factor into the equation at all. Rising inequality, growing polarization and the vanishing middle class have all been seen as unfortunate, but inevitable byproducts of globalization, rather than drivers of slow potential growth.

By contrast, the McKinsey analysis leads to a very different policy outcome—one that places demand management and full employment at the heart of macroeconomic policy-making.....

ps from June:  Some consider the lag in introducing innovations made possible by artificial intelligence partially related to low wages. [Obviously, a mixed blessing, given our limited social supports for the jobless.] For example, Kevin Cashman,  https://theminskys.org/automation/

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June Zaccone
National Jobs for All Coalition
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[NJFAC] Wages Again? Yup. It’s a Swamp Out There, So Let’s Review the Facts

Wages Again? Yup. It's a Swamp Out There, So Let's Review the Facts      Frank Stricker

            Every other day, Mr. Trump and his cronies tell us that wages have increased since their great American policies began. And every other month, reporters discover a wage surge. Recently, you could have read that average hourly pay had risen 4.9% or 2.9% or some other substantial number. Reporters have been searching for a wage upswing for a long time, and especially now that unemployment seems low and demand for workers high. But unemployment is not so low, as is apparent in NJFAC's alternative monthly rate.

            Sometimes reporters don't bother to talk about real wages, that is, after the effects of inflation are accounted for. They also tend to talk about the whole non-farm, private sector work force, which gives too much weight to the success of the minority that is doing well. We should be talking about rank-and-file workers.  When we do, we find that real hourly wages went up--hold your breath--0.1% from December of 2016 through December of 2017. That's one-tenth of one percent for a year. How about January of 2017 through January of 2018? Still just 0.1%.

            Thanks, Don. On Valentine's Day, the Vice-Liar in Waiting, Mike Pence, said that 4.5 million workers were getting raises because of administration policies. But the employed work force is 155 million and two-thirds of them are not doing well. The losers include Trump's white working-class supporters. Their pay is lagging and they are getting less than their share of new jobs; sometimes college graduates are getting jobs they used to get. Overall, wages for people in the top 40% are substantially higher than they were in the 1970s, but wages for the bottom 60% are about where they were 45 years ago.

            Obviously wage stagnation is not just Donald Trump's fault. At least Trump talked about it. But he's done nothing to fix it. Will his white working-class supporters get tired of the circuses and look for something real?  And will they find it? Will Democrats across the country in this election year promise to work for a $15 federal minimum wage? They did not do so in 2016. It's the very least they should be doing on the wage front right now. 

 

Sources: Bureau of Labor Statistics, Real Earnings--January 2018, 2; Robert Shapiro, "The New Economics of Jobs is Bad News for Working-Class Americans--and Maybe for Trump," Brookings, January 16, 2018; The Hamilton Project, Thirteen Facts about Wage Growth (September, 2107), Fact 2.

Frank Stricker is Emeritus Professor of History and Labor Studies at California State University, Dominguez Hills, a member of the National Jobs for All Coalition, and has written What Ails the American Worker? Unemployment and Crummy Jobs: History, Explanations, Remedies.

 

 

 

 

 

 

 

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[NJFAC] What explains wage stagnation?

Why Is It So Hard for Americans to Get a Decent Raise?

A new answer could change how we think about unions, monopolies, and the minimum wage. By Jordan Weissmann Jan 16, 2018

....
Since 1979, inflation-adjusted hourly pay is up just 3.41 percent for the middle 20 percent of Americans while labor's overall share of national income has declined sharply since the early 2000s. There are lots of possible explanations for why this is, from long-term factors like the rise of automation and decline of organized labor, to short-term ones, such as the lingering weakness in the job market left over from the great recession. But a recent study by a group of labor economists introduces an interesting theory into the mix: Workers' pay may be lagging because the U.S. is suffering from a shortage of employers.

The paper—written by José Azar of IESE Business School at the University of Navarra, Ioana Marinescu of the University of Pennsylvania, and Marshall Steinbaum of the Roosevelt Institute—argues that, across different cities and different fields, hiring is concentrated among a relatively small number of businesses, which may have given managers the ability to keep wages lower than if there were more companies vying for talent. This is not the same as saying there are simply too many job hunters chasing too few openings—the paper, which is still in an early draft form, is designed to rule out that possibility. Instead, its authors argue that the labor market may be plagued by what economists call a monopsony problem, where a lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay. If the researchers are right, it could have important implications for how we think about antitrust, unions, and the minimum wage.....

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June Zaccone
National Jobs for All Coalition
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[NJFAC] Happy New Year, Sure, But Why Aren’t Wages Soaring?

Happy New Year, Sure, But Why Aren't Wages Soaring?                      by Frank Stricker

 

            The official unemployment rate is 4.1%. That's full employment for mainstream economists. We'd expect to see wages on a long upward path, as employers compete for new hires. But average pay rises one month and falls the next. You may read that it increased 2%+ in the last twelve months, but after inflation is accounted for, much of the increase disappears. Higher minimum wage laws have helped in some places, but for the nation as a whole wages are not on the up-escalator.

            President Trump tells us he is fixing everything. But from the inauguration through November, the average real hourly wage of a rank-and-file employee increased half a percent. If she was earning $20.00 an hour in January; she's earning $20.10 today. And the long-term trend is depressing. Real pay today is about where it was in 1972-1973. The U.S. added tons of new income and wealth, but not much filtered down.

            To get insight into the wage problem and its causes, I sent our intrepid Untrained Economist (UE) to talk to Republican House Member and Freedom Caucus leader, Jordan Rabid.  

 

Untrained Economist (UE): "Are you Republicans going to reward your working-class supporters by raising the federal minimum wage? It's just $7.25 and lifting it to $15 would help 40 million workers."

 

Rep. Rabid: "Higher minimum wages are a job-killer. You should know that."

 

UE: "Many studies show that lifting the minimum wage doesn't kill jobs or only a few, and that it cures a lot of poverty. It creates jobs too, because people buy more things and services."

 

Rep. Rabid: "We believe people should work harder, be more disciplined, go to church, stay married. That's what our President stands for."

 

UE: "I guess you don't want to encourage unionization, which raises pay and benefits?"

 

Rep. Rabid: "You are right."

 

UE: "When unions were stronger in the 40s, 50s, and 60s, wage growth was better."

 

Rep. Rabid. "Don't distract me. We need more incentives for the filthy rich--oops--wise investors, to create jobs. We have those in our great tax-cut legislation. And, hey, we have the word job in the title of the law; that's how important jobs are for us."

 

UE: "Most corporate leaders say they will use the gifts they are getting in the tax bill not to create jobs but to retire debt and buy back their own stock."

 

Rep. Rabid: "Where did you read that?  More fake news from the Post and the Times."   

 

            Our reporter decided to tap another source, a Mainstream Economist (ME).

 

Untrained Economist: "So, Doctor, why haven't wages taken off? We're close to full employment, and the laws of supply and demand say that when workers are scarce, employers have to pay more for them."

 

Mainstream Economist: "It's a mystery. It must have something to do with workers' skill and schooling deficits. That's the kind of thing we like to talk about in the econ biz. Employers can't pay skilled wages for the unskilled. Pay and economic contribution must be equivalent."

 

UE: "Are you saying that many jobs cannot be filled due to skill shortages?"

 

ME: "Maybe. Let me get back to you on this."

 

UE:  "The skill and education levels of workers have risen over four decades, but wages have stagnated. That's a fact. By the way, are you saying that people must have specialized skills to earn a living wage in America?"

 

ME: "Short answer: Yes. I don't make the rules, buddy. It's the way markets work. We don't want people like you tinkering with the dynamic, creative motors of the market system."

 

UE: "Some people think that other people have tinkered in very bad ways--killing unions, sitting on the minimum wage, moving plants, violating labor laws, manipulating money markets, and so on. Markets are rigged by companies and rich people…but you probably think that's a topic for another day."

 

ME: "We agree on that."

 

UE: "Let me ask you this. Quite a few economists and journalists think that productivity--output per hour of labor input--has to rise if wages are to go up. I guess they can't imagine where else the money for higher pay could come from. (Pause) Since the '70s, worker productivity has increased by something like 70 to 150%, depending on your measure, but the average wage of the average employee has not increased. Maybe it's not about productivity, but about inequality and power. The few grab too much.

            "Let me preach a little. Capitalists and their servants have pushed policies that disempower workers. Undermining unions and laws that protect organizers, hiring more temps and contract workers, sending work out of the country, and, sometimes, keeping unemployment high--these things have eroded workers' bargaining power."

 

ME: "If you want to introduce the class struggle, go ahead. You know that Americans don't like talking about class. We're not really a class society."

 

UE: "I want to add one more important thing that disempowers employees. We are not actually close to full employment. If we estimate the number of people who want a job but are not currently looking for one, the real unemployment rate is twice as high. For most jobs there are plenty of people on the sidelines ready to step in. Employers don't seem to be having much trouble finding workers. They may have to make an effort--boo hoo--and they are not used to doing that any more. If there are shortages, it's often because employers are addicted to paying low wages.

            "I know that some economists, including Janet Yellen at the Fed, hint now and then that labor markets aren't as tight as the official unemployment rate shows, but they don't talk about changing the official rate. Just to let you know, the Bureau of Labor Statistics has its own higher alternative rate, and so does the National Jobs for All Coalition at njfac.org."

 

ME: "You would have been smarter if you'd have gotten an economics degree at a good college like the University of Chicago. You know nothing about globalization, comparative advantage, the skill required to make business investments…so many things.  A good economics department would have taught you to respect mainstream economics and capitalism. You'd be less iconoclastic. That kind of thing is not appealing in a middle-aged, middle-class person." 

******************************************************************************

Frank Stricker is Emeritus Professor of History and Labor Studies at California State University, Dominguez Hills, a member of the National Jobs for All Coalition, and the author of Why America Lost the War on Poverty--and How to Win It (2007).

 

 

 

 

 

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