Allied Approaches Archive

For a certain breed of wonk and nerd, it’s not the holiday season until some of CBPP’s best graphs of the year are collected and briefly annotated. This year, Kathleen Bryant and I took a stab at picking some of the figures we thought were most important to document the economic and policy landscape facing economically vulnerable people.

One of the most important and positive trends of the last decade was the decline in share of Americans without health coverage due to the Affordable Care Act. Their numbers fell from about 45 million to 27 million, a gain in coverage for ~18 million people. But this year’s release of the Census Bureau’s health insurance data revealed a troubling reversal of this trend. In 2018 (the data lag one year), the uninsured rate increased for the first time since the ACA’s passage. These findings illustrate the grave consequences of the Trump Administration’s repeated attempts to undermine the ACA over the past several years.

One reason the reversal shown above is of such concern is that health coverage saves lives. Reviewing a recent academic study, Matt Broadus and Aviva Aron-Dine report that the ACA’s Medicaid expansion prevents thousands of premature deaths each year and saved the lives of at least 19,200 adults aged 55 to 64 between 2014 and 2017. Matt and Aviva find that if all states had expanded Medicaid in 2017, the number of lives saved by full expansion would almost equal the number saved by seatbelts. Given such magnitudes, and considering that the federal government pays 90 percent of the costs of the expansion, these findings underscore the cruelty of remaining state resistance to the expansion.

For more, click here.

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Reposted from On the Economy

By Lawrence Mishel and Melat Kassa

Newly available wage data for 2018 show that annual wages for the top 1.0% were nearly flat (up 0.2%) while wages for the bottom 90% rose an above-average 1.4%. Still, the top 1.0% has done far better in the 2009–18 recovery (their wages rose 19.2%) than did those in the bottom 90%, whose wages rose only 6.8%. Over the last four decades since 1979, the top 1.0% saw their wages grow by 157.8% and those in the top 0.1% had wages grow more than twice as fast, up 340.7%. In contrast those in the bottom 90% had annual wages grow by 23.9% from 1979 to 2018. This disparity in wage growth reflects a sharp long-term rise in the share of total wages earned by those in the top 1.0% and 0.1%.

These are the results of EPI’s updated series on wages by earning group, which is developed from published Social Security Administration data and updates the wage series from 1947–2004 originally published by Kopczuk, Saez and Song (2010). These data, unlike the usual source of our other wage analyses (the Current Population Survey) allow us to estimate wage trends for the top 1.0% and top 0.1% of earners, as well as those for the bottom 90% and other categories among the top 10% of earners. These data are not top-coded, meaning the underlying earnings reported are actual earnings and not “capped” or “top-coded” for confidentiality.

For more, click here.

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Reposted from EPI

From the EPI

Despite the Trump administration’s claims of success, the Tax Cuts and Jobs Act (TCJA) did not increase wages for working people, failed to spur business investment, decreased corporate tax revenues, and boosted stock buybacks in its wake. Stock buybacks rose more than 50% to $560 billion in 2018—and look on-pace to hit $500 billion again in 2019. Meanwhile, there was no uptick in business investment in 2018 and significant declines in the six months of available data in 2019. Additionally, CBO estimates show that corporate tax revenue has declined more than originally anticipated. While real (inflation-adjusted) wage growth accelerated in 2018 relative to 2017, similar one-year accelerations have been seen in recent years. Further, wage growth in 2019 has decisively decelerated. Other influences pushing up wage growth in 2018—tight labor markets and higher state-level minimum wages—can fully explain the mild pickup in wage growth for that year.

To read the report, click here.

Generations of working class shrimpers, oysterers, and other fishing families on the sparkling bays along the Texas coastline of the Gulf of Mexico, have long shared the waterways with alligators and snakes that also call this place home.

But in the 1980s, a strange and invasive new critter entered Lavaca Bay, and it’s been devouring whole species of seafood, along with the livelihoods of local Gulf communities. This was not some monster from the deep, but a massive, 45,000-acre factory owned by Formosa Plastics Corporation, founded by the richest man in Taiwan.

Formosa is not here for seafood. It’s the world’s second largest fabricator of polyvinyl chloride, the tiny, highly-toxic pebbles and powders used to make gabillions of plastic bags, pipes, bottles, etc. For decades, Formosa has cavalierly been dumping trillions of these poisonous pebbles and tons of the polyvinyl powders into its wastewater – which end up in Lavaca Bay.

That poisonous content then spreads to other bays and into the shrimp, oysters, fish, and other creatures living there. The result has been species vanishing from these waters, creating economic and social devastation for families and communities that rely on nature’s bounty.

Wait, isn’t this against the law? Of course – but petrochemical behemoths like Formosa have corrupted the law, turning Texas lawmakers and environmental regulators into their puppets. But, when leaders won’t lead, The People must, and that’s exactly what’s happening in this case. A defiant, determined shrimper and a scrappy environmental coalition have combined to win the largest citizen environmental lawsuit in US history, forcing Formosa to stop its gross contamination.

For information on the details and impact of this remarkable people’s victory, go to Texas Rio Grande Legal Aid at TLRA.org.

You might think Congress is entirely tied up in the impeachment hearings. But no!

On Monday, House and Senate negotiators agreed to a compromise version of the massive National Defense Authorization Act (NDAA), which sets in place policy and spending for Department of Defense. Tucked in this huge conference report is legislation modeled on the Transportation Infrastructure Vehicle Security Act (TIVSA) that would bar federal dollars from being used to purchase rolling stock – rail cars or buses – from state-owned or -controlled companies. In effect this meant big Chinese companies, whose presence in the American bus and rail car markets has grown significantly in recent years.

Both the House and Senate versions of the NDAA included TIVSA language, and while the Senate’s TIVSA was comprehensive the House’s carved out electric buses from this legislation. In the end, though, the TIVSA language on which the negotiators agreed leaned toward the Senate version; it was more comprehensive.

The Alliance for American Manufacturing (AAM) thinks this is a good outcome. Detailed reports have shown CRRC and BYD – a Chinese state-owned rail car manufacturer and a state-supported bus manufacturer, respectively, that have growing footprints in the American market – maintain close ties to the Chinese Communist Party, the Chinese military, and huge telecom companies like Huawei, which currently sits on a Commerce Department export blacklist because of national security concerns.

AAM President Scott Paul applauded Congress for recognizing that such companies “operate as extensions of China’s government.” Said Paul:

“By moving forward with this legislation, Congress is defending our transportation infrastructure against deeply subsidized Chinese companies that threaten to disrupt our manufacturing capabilities and displace tens of thousands of American jobs throughout our supply chain of parts and components.”

Read the reports on BYD and CRRC here.

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Reposted from AAM

During this Christmas season, there is a tweet making the rounds that shows the number of paid vacation days in thirteen different countries by law:

France             30

Denmark         25

Finland            25

Norway           25

Sweden           25

Russia             24

Cuba                22

Australia         20

New Zealand  20

Canada            10

Japan               10

Mexico            6

United States  0

Workers in the US are legally entitled to zero vacation days. Nada. Zilch.

I raise this now because I’ve been doing some research into the history of Christmas holiday traditions, looking at two histories of Christmas, Judith Flanders’s Christmas: A Biography, and Stephen Nussbaum’s The Battle for Christmas. After reading these histories here is what I have concluded: the working-class invented Christmas.

Many of the traditions that we associate with Christmas have their roots in the winter solstice and the agricultural off season that in Northern climates runs from the end of October through the end of February. In The Battle for Christmas, Nussbaum points out that, “December was the major ‘punctuation mark’ in the rhythmic cycle of work, a time when there was a minimum of work to be performed. The deep freeze of midwinter had not yet set in; the work of gathering the harvest and preparing it for winter was done; and there was plenty of newly fermented beer or wine as well as meat from freshly slaughtered animals— meat that had to be consumed before it spoiled.”

The obituaries for Paul Volcker, the former Federal Reserve chair who died last Sunday at age 92, have been consistently echoing a truly heroic narrative. Between 1979 and 1987, as one prominent obit pronounced, Volcker’s bold and sweeping interest rate hikes shocked “the U.S. economy out of a cycle of inflation and malaise and so set the stage for a generation of prosperity.”

But prosperity for who?

Economist Gabriel Zucman has just delivered the most telling answer yet.

In a special analysis prepared for the Washington Post’s Greg Sargent, the University of California at Berkeley scholar has compared current average American incomes — in six different income ranges — to average incomes at the start of every decade since 1970.

Zucman’s income figures take into account both the taxes Americans pay federal and state governments and the transfers — everything from Social Security checks to veteran assistance — that go from government to individual Americans. In other words, his new breakdown shows what Americans had left in their wallets after paying their taxes and pocketing their benefits.

Some Americans, the new numbers show, had much more left than others. Phenomenally more. For America’s richest, the past half-century could hardly have been more prosperous.

In 1970, the nation’s top 1 percent averaged $328,816, in today’s dollars. By 2018, that top 1 percent average had more than tripled, to $1,152,232.

But the most striking after-tax, after-transfer gains have gone to Americans even higher up in the economic pecking order. Average top 0.1 percent incomes have more than quintupled since 1970, from just over $1 million to over $5 million. Average top 0.01 incomes have jumped over six-fold, from $3.7 million in 1970 to $24.2 million in 2018.

In essence, America’s very richest — the top one-hundredth of our top 1 percent — have on average added about $427,000 to their incomes every year since 1970.

The bottom 50 percent of Americans have added to their incomes, too — all of an average $167 a year.

To read more, click here.

From the AAM

Dubbed the "Sock Queen" by The New York Times, Gina Locklear, founder of zkano organic socks, founded her company with the central mission of saving her parents' sock mill in Fort Payne, Ala. Ten years later, she's as determined as ever to restore her hometown's manufacturing legacy as the "Sock Capital of the World."

Reposted from AAM

From the EPI

This report provides a comprehensive analysis of employer conduct in union representation elections supervised by the National Labor Relations Board (NLRB). Using data obtained through Freedom of Information Act (FOIA) requests, we find that unfair labor practice (ULP) charges were filed against employers in four out of ten union representation elections that took place in 2016 and 2017. In addition to the analysis of employer conduct in union representation elections, the report provides information on the “union avoidance” industry. Disclosures required under the Labor-Management Reporting and Disclosure Act (LMRDA) help to provide information on an industry that operates largely out of the public view. Finally, the report discusses policy recommendations aimed at combating employers’ aggressive efforts to dismantle unions and impede organizing efforts.

Our analysis of ULP charges2 filed with the NLRB shows the following:

• Employers were charged with violating federal law in 41.5% of all NLRB-supervised union elections in 2016 and 2017, with at least one ULP charge filed in each case.
  • Firings. Under the most conservative measures, employers were charged with illegally firing workers in one-fifth (19.9%) of all elections. Using more comprehensive measures, employers were charged with illegally firing workers in nearly a third (29.6%) of all NLRB-supervised elections.
  • Coercion, threats, retaliation. In nearly a third (29.2%) of all elections, employers were charged with illegally coercing, threatening, or retaliating against workers for supporting a union.3
  • Discipline, firings, changes in work terms. In nearly a third (29.3%) of all elections, employers were charged with illegally disciplining workers for supporting a union.4
• Employers were more likely to be charged with violating the law where there were larger bargaining units. More than half (54.4%) of employers in elections involving more than 60 employees (roughly 25% of elections) were charged with violating federal law.

In addition, we examine the degree to which employers enlist the help of “union avoidance” lawyers and consultants to help them prevent or disrupt union elections. To do so, we analyze publicly available reports filed with the U.S. Department of Labor (DOL) Office of Labor-Management Standards (OLMS). Based on our analysis, we estimate that employers spend nearly $340 million per year hiring union avoidance advisers to help them prevent employees from organizing.

The “phase one” trade deal between the United States and China is… probably done?

President Trump on Friday took to Twitter to announce the deal, which he called “very large” and “an amazing deal for all.” But specific details about the agreement remain unclear — and what is out about it doesn’t seem to be all that great.

But while political pundits are laser-focused on how the deal will impact things like tariff rates and agricultural purchases, evidence is mounting that China is adding “a sickening new dimension” to one of the world’s most serious human rights crises.

And although U.S. trade negotiators have strategically stayed quiet about China’s human rights abuses in an effort to get a trade deal done — and although China really does not like to talk about them — given that these abuses impact the global supply chain and overall trade flows… maybe it’s time to start talking about them?

It’s long been reported that China has placed at least 1 million Uighurs and other Muslim ethnic minorities from the Xinjiang region into concentration camps, which China says are “vocational training centers.”

But in November, The New York Times published a bombshell report that included 400+ pages of internal Chinese Communist Party documents that showcased just how orchestrated this effort is — even Chinese leader Xi Jinping is implicated. Other leaks from inside the camps provide a glimpse into life inside, describing how China uses physical and psychological torture in an attempt to rid the Uighurs and other detainees of their language, religion and culture.

Sadly, it doesn’t appear that things improve for these prisoners once they leave the camps, either. A new paper from Adrian Zenz, a senior fellow in China Studies at the Victims of Communism Memorial Foundation, finds that China is placing “limited but apparently growing numbers of detainees… into different forms of forced labor.” Zenz writes:

“19 cities and provinces from the nation’s most developed regions are pouring billions of Chinese Yuan (RMB) into the establishment of factories in minority regions. Some of them directly involve the use of internment camp labor, while others use Uyghur women who must then leave their children in educational or day care facilities in order to engage in full time factory labor. Another aspect of Beijing’s labor schemes in the region involve the essentially mandatory relocation of large numbers of minority workers from Xinjiang to participating companies in eastern China.

“Soon, many or most products made in China that rely at least in part on low-skilled, labor-intensive manufacturing, may contain elements of involuntary ethnic minority labor from Xinjiang.”

Zenz’s entire paper is worth a read, as it makes clear the extent to which China is using forced labor in many of its factories. But Zenz isn’t the first to highlight this problem — there long has been evidence that China is using forced labor to make many of the products that line our store shelves, particularly in textiles.

The New York Times reported on these forced labor factories about a year ago, and around that time the Associated Press even connected one of the factories to a U.S. sportswear supplier. Companies from Kraft Heinz and Coca-Cola to Adidas and Gap also run supply chains through Xinjiang, meaning that it is plausible, if not certain, that at least some of their products have been made in these factories.  

Economic Policy Institute Director of Government Affairs Celine McNicholas explains how Trump's National Labor Relations Board has actively worked against the workers the NLRB is tasked with protecting—on behalf of corporations.

While unemployment rates are sitting at their lowest levels in decades, wage growth (adjusted for inflation) remains slower than in previous periods of comparably low unemployment. Part of the reason why wage growth remains subdued is that productivity growth has been generally weak since the Great Recession ended. This week’s newsletter provides some guidance on a key question for macroeconomic policymakers like the Federal Reserve: do we need to take this slow rate of productivity growth as a given, or can we nudge productivity upward by allowing unemployment to sink even lower for longer?

Specifically, I address the widespread speculation about the possibility of “wage-led productivity growth”—the hypothesis that tight labor markets that push up labor costs lead firms to invest more in labor-saving equipment and practices. Some suggestive evidence of this wage-led productivity growth has been shown in patterns of macroeconomic data. This newsletter provides some more suggestive evidence from patterns of productivity growth broadly but also across a set of very detailed industries when the labor share of industry income rises and falls. Here are the key findings:

• At the aggregate level, a rise in the labor share of corporate-sector income is associated with a small but significant rise in the pace of average productivity growth over the subsequent two years.
• At detailed industrial levels (looking at 124 industries mostly in manufacturing), this relationship is even stronger: a 1 percentage-point rise in the labor share of industry income is associated with a 0.1 percentage-point increase in the average pace of productivity growth over the subsequent two years.
• These relationships between labor share of income and productivity growth are consistent with a scenario in which firms try harder to make labor-saving investments and organizational changes when labor becomes scarcer and the need to pay higher wages threatens to pinch profits. If the labor share of corporate-sector income rose from today’s 78% to the 82% that characterized the tight labor markets of 2000, this would imply a boost to productivity of roughly 0.4 percentage points—an amount that would cut almost in half the gap between the productivity growth in recent years and the productivity growth of the late 1990s.

These results are obviously suggestive, not dispositive. The key challenge to testing the causal link that runs from higher pressure labor markets to increased effort by firms to find and adopt labor-saving practices and investments is finding truly exogenous changes in labor market tightness. This search for exogenous changes in the cost pressures firms face should be a prime preoccupation for macroeconomic policymakers in the near future. In the rest of this newsletter, we’ll describe our findings in a bit more detail and discuss their potential implications.

It's been nine months since General Motors (GM) shuttered its assembly plant in Lordstown, Ohio, but the impact of the automaker's decision continues to reverberate... and it's been a busy few days. 

GM announced on Thursday that it plans to open a $2.3 billion battery factory not far from the site of the car assembly plant that the company closed in Lordstown, part of the company's efforts to expand its electric vehicle (EV) business. Speaking of the Lordstown facility, it looks like the automaker also is loaning electric-vehicle startup Lordstown Motors Corp. at least $40 million to cover the purchase and retooling costs at the plant.

Huh.

O.K., let's start with the battery factory.

In the aftermath of the closure of the nearly 53-year-old Lordstown plant, GM attempted to ameliorate the loss by relocating most of the 1,600 workers remaining at the site to alternate GM facilities. Nonetheless, the region was left devastated in the aftermath, and the lives of the workers and their families were upended.  

Enter the new battery plant. The planned facility is central to GM's mission to expand its EV offerings and should enable the company to produce batteries for its cars more affordably while leveraging the region's manufacturing talent. The company argues that by locating the new plant near Lordstown, it is fulfilling its promise to bring back jobs to the region; White House trade adviser Peter Navarro even offered praise in The New York Times!  

It's not all good news, however. Though GM estimates that it will employ 1,100 workers at the new facility, this number pales in comparison to the roughly 4,500 jobs that the Lordstown plant sustained three years ago. Moreover, plant employees will earn between $10 and $15 an hour, roughly what U.A.W. workers earned at Lordstown, according to GM CEO Mary Barra. But that's well below the "top union wage of $32 an hour," The New York Times pointed out.  

And what about the fate of the original Lordstown assembly plant?

There’s a new political army on the march in America: Tromp-tromp-tromp they came, it’s the Billionaire Brigade!

It’s actually a very small army – only 749 Americans rank as billionaires. But they have a lot of firepower – collectively, they’ve amassed some $4-trillion in personal wealth and are now grabbing nearly all of the new wealth that our economy generates. In response to the extreme inequality their greed has created, Bernie Sanders, Elizabeth Warren, and other Democratic leaders are proposing a widely-popular wealth tax on the opulence of this tiny group. And oh, what wails of anguish this has generated in the lairs of billionaires! They’re indignant that fortunes above $50-million would be assessed a teeny surtax to help fund education, health care, infrastructure, and America’s other essential needs.

So, with a rallying cry of Save the Poor Rich, the Billionaire’s Brigade seeks your pity: Mark Zuckerberg laments that taxing his gabillions would hurt charities; Michael Bloomberg suggests that the tax could turn America into Venezuela; and Wall Street baron Leon Cooperman actually teared up while wailing that a wealth tax would harm his family. As one money manager said, “These tax proposals are scaring the bejeezus out of people who have accumulated a lot of wealth.”

I don’t think there’s much Jesus in these people! The Biblical Jesus would bless Sanders, Warren, and the majority of Americans who favor a wealth tax to benefit the Common Good. No need to cry for the few hundred haughty families whose love of money would be only slightly dinged by this tax – every one of them would still be fabulously rich. Plus, they’ll be privileged to live in a country that’s a little more closely aligned with its people’s egalitarian values. And that’s priceless.

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Reposted from Hightower Lowdown

With the UK general election looming, there has been renewed interest in the effects of years of austerity measures on poor and working-class people. It seems clear that inequality has increased and more and more people rely on food banks and charities to provide the basics. Many children live in poverty, and households cannot heat their homes in winter. Homelessness has been on the rise. Special features in publications such as the Guardian  and documentaries like Growing up Poor have made all of this visible.

Yet even though these articles and documentaries include the stories of those affected, they seem to be created for the middle-class reader and viewer, people who are much less likely to have experienced poverty. They view working-class lives from a distance. But two new memoirs written by working-class women offer insights into poverty and hardship from a more intimate perspective. Kerry Hudson’s Lowborn tells her story of growing up in poverty in the 1980s and 1990s, and Cash Carraway’s Skint Estate relays her more recent experience of living hand-to-mouth as a working-class single parent. These first-person narratives seem to be written for working-class readers, who know how easy is it to slip from getting by to not affording the rent or bills. Such readers will find plenty in these books to recognise, empathise with and get angry about.

Lowborn jumps between Hudson’s early life moving around with her mother from Scotland to the south of England, back to the north, and then ending up in the east of England. She experienced huge disruption to her schooling and a dysfunctional family life. There is a sense throughout the book that Hudson, now a successful author who lives a mostly middle-class life, comes to terms with her childhood poverty. She returns to her childhood homes to recall in detail the experience and effects of poverty and to reconcile with her past. This is not a romantic journey. Her mother did not cope, and at times, Hudson was taken into care by the state. Their relationship was difficult, and they remain estranged, but through the process of writing the book, Hudson finds commonalties and closeness with some of her extended family.

What is striking when reading this book are the small details that working-class readers will recognise: the mad dash from her council flat down to the ice-creak van with a few pence in hand to buy the cheapest treat available, trips across the country on National Express coaches (rail travel was a real luxury), and the sheer delight of occasional fancy foods such as pop and mini-sausage rolls. While the more extreme experiences of being homeless, living in B&Bs, surviving neglect and abuse might not be as common, the working-class reader is likely to have lived in close proximity to families like Hudson’s.

The book also reveals how Hudson and her mother were let down by various institutions and individuals (especially the men in her mother’s life) and how the effects of being left behind accumulate and wear people down. The book includes stories of substance abuse and self-harm, which seem to be symptoms of poverty and life-long disadvantage. Ultimately, Hudson reclaims her working-class origins, but she also shows how the stigma of growing up poor can harm.

We’ve been so lost in the hustle and bustle of the holiday season that we didn’t get a chance to talk about an important bipartisan bill introduced last month that aims to improve a key piece of America’s infrastructure — and create good-paying jobs, too.

Reps. Cheri Bustos (D-Ill.) and David McKinley (R-W. Va.) put forth the “Buy America for Drinking Water Extension Act” on Nov. 20. The legislation would permanently ensure that all iron and steel products used for projects in the Drinking Water State Revolving Fund are “made entirely in the United States.”

The revolving fund is a federal-state partnership that is used to finance projects to improve drinking water systems nationwide. Between 1997 and 2018, the fund has given more than $38.2 billion in low-interest loans to more than 14,500 projects, helping provide safe drinking water to millions of Americans.

Still, more needs to be done. Like most of America’s infrastructure, our nation’s drinking water infrastructure is in terrible shape. The American Society of Civil Engineers gave it a “D” rating in 2017, noting that the 1 million miles of pipes that deliver water to our homes in businesses were laid in the early-to-mid 20th century.

Given that these pipes have a lifespan of 75 to 100 years, it’s time to get to work modernizing these systems. And when we do, it’s important to also make sure our tax dollars are reinvested back into our communities, creating jobs and boosting the local economy, which is the goal of the new legislation.

Although they might at first seem like separate issues, jobs and infrastructure are closely linked. It’s no secret, after all, that the places that were hit hardest by manufacturing job loss and industrial flight in the late 20th century also watched their infrastructure crumble.

Perhaps the most famous example of this is Flint, Michigan.

Thirty years ago, after having dropped out of college after just one term, unable to pay for my dorm room, I was unsure if I would ever leave the working class.  Two years later I was a student at Barnard College, an elite small liberal arts college three thousand miles from my parents’ home.  To this day, I am not sure how I made that leap, but it was smoothed over by significant financial assistance from the college.  Unable to pay for my public university, I was able to graduate from one of the best private colleges in the country virtually debt-free.

Now I study higher education and its connection to what we call intergenerational social mobility, the movement (or lack of movement) between classes, comparing children and parents’ occupational outcomes over time.

I have some bad news.  While the path I took was not easy, gaining social mobility through college education is much harder for young people today.  Ironically, even as more children of the working class go to college, the educational attainment gap between the middle class and the working class continues to grow.

How can this be?  For one thing, the bar for “being educated” continues to rise.  As more people earn college degrees than ever before, the kind of college degree increasingly matters.  What type of institution?  What major field of study?  Also important is the level of education – in many fields a four-year degree is no longer enough to assure a middle-class salaried job.  You need a master’s degree, or even a PhD, for some work, even outside of academia.

Scholars of education (including sociologists like me) have known all of this for a while now, which is why so many of us have studied access to colleges and programs.  Colleges have struggled to open their doors to first-generation and working-class students.  They are paying more attention to ways of broadening access, sometimes pushed and shoved into doing so by state boards of higher education.  At the same time, budget cuts at public colleges and universities undercut many of these efforts.

AFL-CIO State of the Unions Podcast co-host Tim Schlittner talks to Guy Ryder, the director-general of the ILO about the international labor movement, the idea of "decent labor" and the future of work.

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Reposted from AFL-CIO

By Heidi Shierholz and David Cooper

In October, the Trump administration published a proposed rule regarding tips which, if finalized, will cost workers more than $700 million annually. It is yet another example of the Trump administration using the fine print of a proposal to attempt to push through a change that will transfer large amounts of money from workers to their employers. We also find that as employers ask tipped workers to do more non-tipped work as a result of this rule, employment in non-tipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.2%, resulting in 243,000 jobs shifting from being non-tipped to being tipped. Given that back-of-the-house, non-tipped jobs in restaurants are more likely to be held by people of color while tipped occupations are more likely to be held by white workers, this could reduce job opportunities for people of color.

The background: employers are not allowed to pocket workers’ tips—tips must remain with workers. But employers can legally “capture” some of workers’ tips by paying tipped workers less in base wages than their other workers. For example, the federal minimum wage is $7.25 an hour, but employers can pay tipped workers a “tipped minimum wage” of $2.13 an hour as long as employees’ base wage and the tips they receive over the course of a week are the equivalent of at least $7.25 per hour. All but seven states have a sub-minimum wage for tipped workers.

In a system like this, the more non-tipped work that is done by tipped workers earning the sub-minimum wage, the more employers benefit. This is best illustrated with a simple example. Say a restaurant has two workers, one doing tipped work and one doing non-tipped work, who both work 40 hours a week. The tipped worker is paid $2.50 an hour in base wages, but gets $10 an hour in tips on average, for a total of $12.50 an hour in total earnings. The non-tipped worker is paid $7.50 an hour. In this scenario, the restaurant pays their workers a total of ($2.50+$7.50)*40 = $400 per week, and the workers take home a total of ($12.50+$7.50)*40 = $800 (with $400 of that coming from tips).

But suppose the restaurant makes both those workers tipped workers, with each doing half tipped work and half non-tipped work. Then the restaurant pays them both $2.50 an hour, and they will each get $5 an hour in tips on average (since now they each spend half their time on non-tipped work) for a total of $7.50 an hour in total earnings. In this scenario, the restaurant pays out a total of ($2.50+$2.50)*40 = $200 per week, and the workers take home a total of ($7.50 + $7.50)*40 = $600. The restaurant’s gain of $200 is the workers’ loss of $200, simply by having tipped workers spend time doing non-tipped work.

Why has the United States become so much more unequal over the last four decades? Any number of factors have been driving our increased inequality. But no single factor may have been more significant than the behavior of the modern American corporation.

Corporations are contributing to inequality on two fronts. On the one hand, they’re systematically depressing incomes for average Americans, via everything from outsourcing to pension cuts. On the other, they’re just as systematically stuffing the pockets of America’s executive class.

These two vile sets of behaviors are relentlessly reinforcing each other. Outrageously huge rewards give corporate executives an incentive to behave outrageously, to squeeze their workers at every opportunity.

So how can we fight these corporate pay outrages? We change the incentive structure. We start giving Corporate America reason to narrow income divides, not stretch them ever wider. New legislation just introduced in Congress does just that.

The legislation — the Tax Excessive CEO Pay Act — raises the corporate tax rate on companies that pay their top executives over 50 times more than what they pay their most typical workers. The wider the pay-gap multiple over 50 times, the higher the tax rate.

Not that long ago, no one could have possibly dreamed that this sort of tax penalty would be so necessary. In mid-20th century America, CEOs at major U.S. firms seldom made much more than 30 or 40 times average worker pay. Today, by contrast, the nation’s top CEOs average nearly 300 times more. In 2018, a new Institute for Policy Studies report details, 50 top execs grabbed over 1,000 times more.

The proposed Tax Excessive CEO Pay Act carries some heavyweight sponsors. In the Senate, Bernie Sanders (I-Vermont) introduced the legislation November 13, the same day that veteran lawmaker Barbara Lee (D-California) and outspoken first-termer Rashida Tlaib (D-Michigan) introduced the bill in the House. And, on the Senate side, Senator Elizabeth Warren (D-Massachusetts) is co-sponsoring the legislation.

Over two dozen national labor, religious, and policy organizations have already endorsed the new Tax Excessive CEO Pay Act. They range from the AFL-CIO and the National Council of Churches to the Coalition on Human Needs and Public Citizen.

While national news outlets hail the conclusion of a historic teacher strike in Chicago, another important story often overlooked by national reporters is the ongoing struggle to defend public education in the months that follow successful strikes. In Oakland, California, where teachers won important concessions from the district as a result of their strike earlier this year, the community is nevertheless still seeing their students’ education undermined by lack of resources and disrupted by school closures and further privatization from charter schools.

Recently, when Oakland teachers, joined by contingencies of parents and students, showed up at a school board meeting to voice their opposition to a decision to close a beloved elementary school, they were met with barricades and a phalanx of police officers who roughed up peaceful protesters.

The ongoing struggle that continues in Oakland after teachers held a successful strike illustrates why advocacy for public education can no longer settle for labor-friendly contracts that make life better for teachers and students, but has to challenge more widespread political and societal conditions that undermine schools, as Chicago teachers just did. Calling for these deeper structural changes means taking on an economic and political agenda and a hierarchy of policy leaders that choose to give public funds and tax breaks to an array of beneficiaries other than public schools.

Advocating for this more ambitious goal can result in real change not only in local communities, as teachers have been proving in Chicago, but also on the national stage where leading presidential candidates in the Democratic Party are finally turning away from the decades-long narrative that public schools are failed institutions and the solution is to withhold funding from them and subject them to competition from a parallel charter school industry.

In recent weeks, a number of policy analyses of progressive economic policies—a surtax on high-incomes, a wealth tax, and Social Security expansion—have claimed these policies would damage economic growth. Policymakers should give these analyses very little weight in debates about these issues, for a number of reasons.

First, and most important, is the fact that all of these analyses are grounded in an economic view of the world that sees growth as constrained by the economy’s productive capacity (or the supply side of the economy) and not by the spending of households, businesses and government (the economy’s demand side). These estimates have other problems too—they are not even particularly convincing supply-side estimates and even if the economy’s growth really was constrained by supply, these estimates would still be misleading about the effects of these policies on welfare. But the biggest reason why policymakers should give these analyses zero weight is because they assume that growth is almost never demand-constrained.

Before the Great Recession, the assumption that growth was nearly always supply constrained was almost universally held by economists and macroeconomic policymakers. It was recognized that demand (or aggregate spending) could occasionally be too weak to fully employ the economy’s productive capacity and hence cause rising unemployment, but it was generally thought that such periods were rare and would end quickly after the Federal Reserve sensibly cut interest rates. Because shortfalls of demand relative to supply were rare and short and easy to fix, the reasoning went, any real constraint on the economy’s growth over the long-run must be the pace of growth of supply. Growth in supply is generally driven by growth in the quality of the workforce, the productive stock of plants, equipment and research, and growth in technological progress, which together lead to growing productivity—or the amount of income or output generated in an average hour of work.

Ralph Waldo Emerson once wrote of being leery of a fast-talking huckster who visited his home: “The louder he talked of his honor, the faster we counted our spoons,” Emerson exclaimed.

Likewise, today’s workaday families should do a mass inventory of their silverware, for the fast-talking CEOs of 181 union-busting, tax-cheating, environment-contaminating, consumer-gouging corporations are asking us to believe that they stand with us in the fight against… well, against them. From Wall Street banksters to Big Oil polluters, these profiteers are suddenly trumpeting their future intentions to serve not just their own greed, but every “stakeholder” (which is what they call employees, customers, supplies, et al).

But vague proclamations are cheap, and it’s worth noting that these new champions of the common good propose no specifics – no actual sacrifices by them or benefits for us. A few media observers have mildly objected, saying it’s “an open question” whether any of the corporate proclaimers will change how they do business. But it’s not an open question at all. They won’t. They won’t support full collective bargaining power for workers, won’t join the public’s push to get Medicare for All, won’t stop using monopoly power to squeeze out small competitors and gouge consumers, won’t support measures to stop climate change, won’t back reforms to get their corrupt corporate money out of our politics… won’t embrace any of the big structural changes necessary to reverse the raw economic and political inequality that has enthroned their plutocratic rule.

In fact, their empty proclamation is what West Texas cowboys might call “bovine excrement,” meant to fend off the actual changes that real reformers are advancing. Corporate elites won’t fix inequality for us – they’re the ones doing it to us.

***

Reposted from the Hightower Lowdown

Sens. Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W. Va.), Debbie Stabenow (D-Mich.) and Bill Cassidy (R-La.) introduced a new bill on Tuesday to “crack down on unfair trade cheating from nonmarket economies like China.”

O.K., we know: We need to be more specific here.

The Senators want to give the Commerce Department more power to hold China and other countries accountable when they evade anti-dumping (AD) and countervailing duties (CVD).

For those unfamiliar with this area of U.S. trade law, the United States issues AD/CVD duties when imported products are found to be sold below market value or to have received significant government subsidies when being produced. The idea is to level the playing field a bit for American workers and companies, who operate in a free and open market.

As the Senators note, AD/CVD rules are pretty common, and most countries follow them without issue. But nonmarket economies — especially China — work overtime to dodge these duties, engaging in “a sophisticated and government-backed effort to avoid the duties required.”

For example, China “alters their products slightly to get around the rules, violating the spirit of the law, if not the letter.” It isn’t individual Chinese companies doing this, remember: China uses “its vast government resources” to ensure these firms are able to evade U.S. trade laws and avoid the duties.

It may be hard to remember, but the National Labor Relations Board (NLRB) is supposed to ensure the right of workers to organize and safeguard the stated public policy expounded in the National Labor Relations Act (NLRA), which favors collective bargaining. Under the Trump administration, the NLRB is going out of its way to attack the Act. We are not talking about the usual thrust and jab common to any new administration. Trump’s NLRB and General Counsel are gutting the Act like a fish and then stabbing that knife into the heart of workers, their rights, and their unions.

During the eight years of the Obama administration, the NLRB had the opportunity to recast some contentious issues more favorably for workers and their unions.  Progress was made, though less than unions and organizers had hoped to see. Elections were processed more quickly.  Employers could not challenge a unit before the election, so they could not run out the clock and extend their campaigns through unnecessary hearings and fake challenges to specific jobs or bargaining unit descriptions.  The NLRB made a long overdue and significant update to the determinations for joint employer status, a key issue for franchises and their overlords like McDonalds.  Acknowledging joint employer control of the workforce would have finally made the primary, deep-pocketed company responsible for the labor practices of their franchisees.  Graduate student unions were allowed to be certified and protected under the Act.  Email communications by workers complaining about working conditions and organizing their co-workers were allowed and were protected, concerted activity within workplaces rather than solely company-controlled property, and Facebook rants were protected.

Three years into the Trump term, the NLRB now has three Republican appointees and only one Democratic appointee on the five-member board, and these Obama-era initiatives have either been rolled back already or are under attack. Things will not get better any time soon.  The last Democrat’s term concludes at the end of 2019, and it’s unlikely that a new member will be appointed in 2020. That leaves a 3-0 partisan board to steamroll over workers’ rights.  The decisions are guaranteed to become worse.

The actions of the Trump NLRB and the proposals of the current General Counsel go to the heart of generations of organizing practices and do so deliberately. For example, the NLRA specifies that “an appropriate bargaining unit” can represent workers. It does not require “a” single unit. But in the recent Boeing case emerging from the efforts to organize their South Carolina plant, the Board ruled against this time-honored definition, blocking the certification of a 178-member unit with the larger Boeing workforce.

We're putting the finishing touches on the 2019 Made in America Holiday Gift Guide, our annual assortment of American-made gift ideas from every state, the District of Columbia, and Puerto Rico. We work hard every year to pick new items, and the vast majority come from companies that never have been on the list before. We also try to include an eclectic mix of ideas at a range of price points — there's something for everyone on your list!

The 2019 guide is scheduled to be released on Monday, Nov. 25. But in the meantime, we've been reminising about our favorite items from past gift guides, and thought we'd share some of them below. You can also check out the full guides from previous years below.

2018 | 2017 | 2016 | 2015 | 2014 | 2013

Staff Picks

AMERICAN ROOTS 

With the cold blast of air blanketing most of the U.S. this week, all I can think about is something warm to wear to brave the sub-freezing temperatures. My choice to stay warm is fleece. American Roots is a Made in Maine company that offers a full line of custom-made fleece products, including jackets, vests, pullovers, hoodies, blankets, and even hats. I particularly like the fleece vests, which are unencumbering when worn with layers of garments underneath and do not feel or appear bulky when paired with a heavy winter coat. Like the hoodies, the vests are an added layer of protection that can comfortably be worn around the house if you feel a draft of cold air coming through the windows. Owners Ben Waxman and Whitney Reynolds launched American Roots in 2015 — the company made the 2016 gift guide — with the specific goal of manufacturing clothing in America again. Also worth noting? The employees are represented by the United Steelworkers union. Now, all I need is a fireplace and some hot chocolate. —Jeff Bonior

DEARBORN DENIM

A good pair of denim jeans is hard to find, and I used to go through too many of them. I commute by bike, and five days a week on a bike seat will wear through your imported Levi’s pretty fast! That’s why I switched over to buying Dearborn Denim, which made the 2016 guide. They’re tough and won’t rip on you. The company’s website has a nifty feature that will tell you which size jeans you should buy (just enter your height and weight). And lastly, as a Chicagoland expat, I’m very proud to be able to buy jeans that are made in the Windy City. We will win the Super Bowl someday. —Matthew McMullan

GREEN TOYS

AAM first put Green Toys on our gift guide list way back in 2013, and the California company continues to be a kid-friendly favorite.  I have two young children of my own, so I can personally vouch that these eco-friendly, BPA-free toys are always a hit with babies and young kids. The stacking cups and First Keys are great options for infants and the line of bath toys provide plenty of bathtub fun. My kids also have enjoyed the Dump Truck, Shape Sorter, House Playset, Sandwich Shop, and Build-a-Bouquet — and for the past two springs, we've planted a little garden with the Abby's Garden Planting Activity Set, a collaboration with Sesame Street. Another great thing about the company? Green Toys are made from recycled milk jugs, and everything is packaged in recycled cardboard, cutting down on the plastic waste typically associated with toys. —Elizabeth Brotherton-Bunch

As Congress continues to work on legislation to ban China’s government-owned, controlled or subsidized companies from receiving U.S. tax money to build rail cars and buses, local lawmakers are taking on the issue in their own states.

The latest instance is in New York, where state Assemblymember Michael Cusick (D) is teaming up with state Sen. Diane Savino (D) on a bill to prevent foreign state-owned enterprises, including the China Railway Rolling Stock Corporation (CRRC), from using New York tax money on mass transportation projects.

Like federal lawmakers who have championed this issue, Cusick and Savino say they are worried about the security threats posed by allowing a firm with direct ties to the Chinese state apparatus to build critical infrastructure systems.

They point to recent testimony from former Department of Homeland Security Secretaries Michael Chertoff, Janet Napolitano and Jeh Johnson, who all specifically mentioned critical infrastructure when discussing cyber security threats at a Senate Homeland Security and Governmental Affairs committee field hearing in New York.

“There is wide consensus that allowing CRRC and other state-owned enterprises to have open access to our critical rail infrastructure and mass transportation systems is ill-advised,” Cusick said in a statement. “These contracts create major cybersecurity vulnerabilities in the U.S. The goal should be risk avoidance, not mitigation.”

There’s little doubt about China’s intentions with CRRC.

New research from Radarlock examined the company’s deep ties to China’s government, communist party and military, concluding that CRRC is a key part of China’s plan to dominate global industry. But it’s more than that – CRRC also obtains technology for potentially nefarious purposes, handing everything it gathers from its work abroad to the Chinese state and military.

Cusick and Savino say they are also worried about CRRC’s economic impact, noting that CRRC has nabbed contracts in major cities like Chicago and Los Angeles by “drastically underbidding other railcar manufacturers and using non-market tactics.”

The issue is of critical importance in the Empire State because New York City is looking to upgrade its iconic subway system. CRRC won a 2018 Metropolitan Transit Authority (MTA) contest to design new subway cars – a development that quickly drew the ire of Democratic Senate Leader Sen. Chuck Schumer, who hails from New York.

By Celine McNicholas and Margaret Poydock

In September, California adopted a new law aimed at combatting the misclassification of workers. The legislation, Assembly Bill (AB) 5, will take effect on January 1, 2020. AB5 adopts the “ABC” test that has been used by courts and government agencies to determine employee status. Under this test, workers can only be classified as independent contractors when a business demonstrates that the workers:

1. Are free from control and direction by the hiring company;
2. Perform work outside the usual course of business of the hiring entity; and
3. Are independently established in that trade, occupation, or business.

Workers who don’t meet all three of these conditions must be classified as employees for purposes of state wage and hour protections. AB5 will help ensure that California’s workers who perform core work under company control versus as independent businesses have access to basic labor and employment protections and benefits denied independent contractors, including minimum wage and overtime protections, paid sick days, workers’ compensation benefits, and unemployment insurance benefits. Further, the legislation will protect law-abiding businesses that properly classify workers from unfair competition from companies that cut costs by misclassifying workers: AB5 will make it more difficult for companies to avoid paying their fair share of Social Security, Medicare, and unemployment insurance taxes and avoid providing state workers’ compensation insurance. In contrast, employers would not be held accountable under a ballot initiative backed by digital platform companies.

Misclassification is widespread

The misclassification of workers as independent contractors is a serious and persistent problem nationwide. A 2000 study commissioned by the U.S. Department of Labor found that between 10% and 30% of audited employers misclassified workers and that up to 95% of workers who claimed they were misclassified as independent contractors were reclassified as employees following review.1