Category Archives: economics

The American Economy Is Creating a National Identity Crisis for Workers

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From today’s New York Times:

Europeans often describe the United States as a great place to buy stuff but a terrible place to work. They understand the appeal of our plentiful and affordable consumer goods, but otherwise they just don’t get it: the lack of real vacation, the sending of emails after business hours, the general insensitivity to work-life balance.

That may be just a casual observation, but it identifies something deep and problematic about the economy that the United States has built over the past 40 years.

Since the 1980s, American economic policy has insisted on the central importance of two things: cheaper prices for consumers and maximum returns for corporate shareholders. There is some logic to this: We all buy things, after all, and more than 50 percent of Americans own at least some stock.

But these priorities also generate an internal conflict, for they neglect, repress and even enslave our other selves: our identities as employees, producers, family members, citizens. And in recent years — as jobs become increasingly unpleasant and unstable, as smaller towns and regional economies are gutted, as essential industries like the pharmaceutical and telecommunications sectors engage in outlandish profiteering, and above all, as economic inequality becomes the trademark of our nation — the conflict seems to have reached a breaking point.

Read the complete article here.

Sex Workers Say Incel Campaign to Report Them to IRS Won’t Work

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From today’s Rolling Stone Magazine:

A few angry men on the internet have launched a campaign encouraging others to report sex workers to the IRS for failing to report income they make online, claiming they’ll get a cut of any back taxes collected as a reward for being “whistleblowers.” The campaign, dubbed the “Thot Audit,” is circulating around misogynist “men’s rights” and incel (involuntary celibate) circles on Twitter and Reddit along with a lot of anti-women, anti-sex worker rhetoric. Sure, it’s cruel — but does it pose a real threat?

“I’m not concerned about being reported,” says Rachel, who works as a financial dominatrix. “The IRS is not only heavily overburdened, I’d be shocked to find someone had even one-sixteenth of the necessary information to file form 3949-A [the form used to report another person for non-payment].”

“The presence of any kind of real threat here seems to be mitigated by people who are more interested in being granted some kind of permission to harass sex workers,” she says. “Boredom will inevitably set in, and the ‘thot audit’ campaign will be put to bed soon.”

Christopher Kirk, a tax attorney who works with sex workers and other alternative communities, agrees that this is likely an empty threat.

“I don’t think that cam girls and other online sex workers are at a very high risk of being audited as a result of this harassment campaign,” he says. “The IRS requires rather detailed information from whistleblowers, including, at the very least, the taxpayer’s legal name and location. While some cam girls and other online sex workers may operate under their legal name, I doubt many do.”

“Moreover,” Kirk says, “the Service wants actionable information about significant tax issues, not guesses, and the program is not a forum for people with an ax to grind. Because the incel trolls engaging in the #thotaudit campaign likely have no idea whether their targets file taxes or report the income from their online work, I don’t think it likely that such reporting will actually trigger an audit.”

He says the best way for sex workers to protect themselves is to file their taxes, reporting their income as accurately as possible, and keeping receipts for any business expenses so they have a paper trail if they ever do get audited.

Read the complete article here.

G.M. to Idle Plants, Cutting Thousands of Jobs in North America as Sales Slow

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From today’s New York Times:

General Motors announced Monday that it planned to idle five factories in North America and cut roughly 14,000 jobs in a bid to trim costs. It was a jarring reflection of the auto industry’s adjustment to changing consumer tastes and sluggish sales.

The move, which follows job reductions by Ford Motor Company, further pares the work force in a sector that President Trump had promised to bolster. Referring to G.M.’s chief executive, Mary T. Barra, he told reporters, “I spoke to her and I stressed the fact that I am not happy with what she did.”

Mr. Trump also invoked the rescue of G.M. after its bankruptcy filing almost a decade ago. “You know, the United States saved General Motors,” he told reporters, “and for her to take that company out of Ohio is not good. I think she’s going to put something back in soon.”

In addition to an assembly plant in Lordstown, Ohio, the cuts affect factories in Michigan, Maryland and the Canadian province of Ontario.

Part of the retrenchment is a response to a slowdown in new-car salesthat has prompted automakers to slim their operations and shed jobs. And earlier bets on smaller cars have had to be unwound as consumers have gravitated toward pickup trucks and sport-utility vehicles as a result of low gasoline prices.

In addition, automakers have paid a price for the trade battle that Mr. Trump set in motion. In June G.M. slashed its profit outlook for the year because tariffs were driving up production costs, raising prices even on domestic steel. Rising interest rates are also generating headwinds.

Read the complete article here.

As Immigrant Farmworkers Become More Scarce, Robots Replace Humans

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From today’s New York Times:

As a boy, Abel Montoya remembers his father arriving home from the lettuce fields each evening, the picture of exhaustion, mud caked knee-high on his trousers. “Dad wanted me to stay away from manual labor. He was keen for me to stick to the books,” Mr. Montoya said. So he did, and went to college.

Yet Mr. Montoya, a 28-year-old immigrant’s son, recently took a job at a lettuce-packing facility, where it is wet, loud, freezing — and much of the work is physically taxing, even mind-numbing.

Now, though, he can delegate some of the worst work to robots.

Mr. Montoya is among a new generation of farmworkers here at Taylor Farms, one of the world’s largest producers and sellers of fresh-cut vegetables, which recently unveiled a fleet of robots designed to replace humans — one of the agriculture industry’s latest answers to a diminishing supply of immigrant labor.

The smart machines can assemble 60 to 80 salad bags a minute, double the output of a worker.

Enlisting robots made sound economic sense, Taylor Farms officials said, for a company seeking to capitalize on Americans’ insatiable appetite for healthy fare at a time when it cannot recruit enough people to work in the fields or the factory.

Read the complete article here.

With 8 Years of Gains, Unemployment Is Lowest It Has Been Since 1969

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From today’s New York Times:

The unemployment rate fell to a nearly five-decade low in September, punctuating a remarkable rebound in the ten years after the collapse of Lehman Brothers set off a global financial crisis.

The 134,000 jobs that employers added in September reflected the slowest pace of growth in a year, and the growth in wages cooled slightly from August.

But there is little evidence that those mildly disappointing figures suggest a broader slowdown. The report on Friday extended the current run of monthly job growth to eight straight years, double the previous record.

By nearly any measure, today’s labor market is the strongest since the dot-com boom of the late 1990s and early 2000s. Job growth has repeatedly defied economists’ predictions of a slowdown. African-Americans, Latinos and members of other groups that often face discrimination are experiencing some of their lowest rates of joblessness on record.

“I view this as the strongest labor market in a generation,” said Andrew Chamberlain, chief economist at the career site Glassdoor. “These really are the good times.”

The current economic expansion is already one of the longest on record, and there is no sign that it is losing steam. Economic output last quarter increased at its fastest pace in four years, and the current quarter looks strong as well. Yields on United States government bonds have risen sharply in recent days, an indication that investors expect faster growth, and more inflation, in coming years.

For months, the one knock on the economy has been that strong hiring has not yet translated into robust pay gains for many workers. There are signs that that could finally be changing.

The 2.8 percent increase in average hourly earnings last month compared with a year earlier was down slightly from the 2.9 rate in August. But earnings growth has drifted upward in recent months, and other measures show stronger growth.

Workers at the bottom of the earnings ladder are seeing particularly strong growth: Amazon announced this week that it would raise the minimum wage for all of its employees in the United States to at least $15 an hour.

Read the complete article here.

The Wrong Way to Do Paid Family Leave

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From today’s New York Times:

Senator Marco Rubio just made a small bit of history: He became the first of his party to put forward a national paid family leave program. On Aug. 2, he introduced a bill that would allow any American to take paid time off to be with a new child.

It marks a surprising step forward: Paid family leave has become bipartisan. Unfortunately, smart policy design has not. Instead of creating a new, desperately needed benefit, Mr. Rubio’s bill would make parents cash in their retirement to take care of their children today.

All developed countries — except for the United States — guarantee at least some paid maternity leave, ranging from six weeks in Portugal to 43 weeks in Greece. Americans are only entitled to up to 12 weeks of unpaid leave.

Even securing unpaid time off was a bruising political battle. The former speaker of the House, John Boehner, called unpaid family leave “another example of yuppie empowerment,” and Representative Cass Ballenger reportedly smeared it as “socialism.” The unpaid Family and Medical Leave Act suffered two vetoes from President George H.W. Bush, a Republican, and was signed into law only after Bill Clinton, a Democrat, won the White House.

Read the complete article here.

‘Eye-popping’ payouts for CEOs follow Trump’s tax cuts, while wages stagnate

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From today’s Politico “Finance and Tax” Series:

Some of the biggest winners from President Donald Trump’s new tax law are corporate executives who have reaped gains as their companies buy back a record amount of stock, a practice that rewards shareholders by boosting the value of existing shares.

A POLITICO review of data disclosed in Securities and Exchange Commission filings shows the executives, who often receive most of their compensation in stock, have been profiting handsomely by selling shares since Trump signed the law on Dec. 22 and slashed corporate tax rates to 21 percent. That trend is likely to increase, as Wall Street analysts expect buyback activity to accelerate in the coming weeks.

“It is going to be a parade of eye-popping numbers,” said Pat McGurn, the head of strategic research and analysis at Institutional Shareholder Services, a shareholder advisory firm.

That could undercut the political messaging value of the tax cuts in the Republican campaign to maintain control of Congress in the midterm elections.

The SEC requires company executives to disclose share purchases or sales within two business days. Companies emphasize that their executives’ share sales are often scheduled at regular intervals well in advance. In Banga’s case, he has routinely sold shares once a year, and always in May, since 2013…

Yet the insider sales feed the narrative that corporate tax cuts enrich executives in the short term while yielding less clear long-term benefits for workers and the broader economy. Critics of insider sales argue that they diminish the value of paying C-suite employees in shares — a practice that’s intended to give them a greater stake in the long-term health of the company — and can even raise questions about the motivation for the buybacks themselves.

Following the tax cuts, roughly 28 percent of companies in the S&P 500 mentioned plans to return some of their tax savings to shareholders, according to Morgan Stanley. Public companies announced more than $600 billion in buybacks in the first half of this year — already toppling the previous annual record.

Year to date, buybacks have doubled from the same period a year ago, Merrill Lynch said in a July 24 report, citing its clients’ trading activity. “Last week we noted that buyback activity [was] poised to accelerate over the next six weeks, and indeed, corporate clients’ buybacks picked up to a two-month high and the 6th-highest level in our data history,” the company said.

Read the complete article here.

 

‘Too Little Too Late’: Bankruptcy Booms Among Older Americans

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From today’s New York Times:

For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.

The signs of potential trouble — vanishing pensions, soaring medical expenses, inadequate savings — have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.

Driving the surge, the study suggests, is a three-decade shift of financial risk from government and employers to individuals, who are bearing an ever-greater responsibility for their own financial well-being as the social safety net shrinks.

The transfer has come in the form of, among other things, longer waits for full Social Security benefits, the replacement of employer-provided pensions with 401(k) savings plans and more out-of-pocket spending on health care. Declining incomes, whether in retirement or leading up to it, compound the challenge.

Cheryl Mcleod of Las Vegas filed for bankruptcy in January after struggling to keep up with her mortgage payments and other expenses. “I am 70, and I am working for less money than I ever did in my life,” she said. “This life stuff happens.”

As the study, from the Consumer Bankruptcy Project, explains, older people whose finances are precarious have few places to turn. “When the costs of aging are off-loaded onto a population that simply does not have access to adequate resources, something has to give,” the study says, “and older Americans turn to what little is left of the social safety net — bankruptcy court.”

Read the complete article here.

Tariffs Imperil Workers in South Carolina, Deep in the Heart of Trump Country

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From today’s New York Times:

In the middle of David Britt’s campaign to get BMW to put a car factory here, a man grabbed him by the tie while he was in a restaurant.

“Don’t give that land to the Germans,” the man hissed to Mr. Britt, a county official.

Two decades later, the automaker has become the most important local job creator, earning the affection of a deep-red county where one in 10 people earns a living making vehicles or their parts.

The Spartanburg plant is BMW’s biggest in the world. It has helped draw more than 200 companies from two dozen countries to Spartanburg County. And the German company — not an American icon like Ford or General Motors — is now the largest exporter of cars made in the United States, turning the port of Charleston, S.C., into a hub for global trade.

But by setting off a global trade battle, President Trump is threatening the town’s livelihood. People aren’t happy.

“BMW saved Spartanburg and transformed South Carolina into a manufacturing mecca to the world,” said Mr. Britt, a member of the County Council. “When you mess with the golden goose, they’re family, and you’re messing with me.”

On Thursday, the Commerce Department is holding a hearing in Washington on whether imported cars and car parts harm national security, the premise of an administration plan to impose hefty duties. If imposed, the tariffs would most likely have deeper and wider-reaching repercussions for the economy than levies on fish or steel. Cars don’t come together in one plant, with one work force — they’re the final result of hundreds of companies working together, in a supply chain that can snake through small American towns and cross oceans.

Automakers have lined up to oppose the measure, which they say would make it more expensive to build cars here and would prompt other countries to respond in kind, hurting exports.

Read the complete article here.

Local: Jobs and work support could curtail LA’s stubborn homeless crisis

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From today’s LA Times:

Providing jobs and other aid to Los Angeles County residents soon after they land in the streets could help prevent 2,600 to 5,200 people a year from falling into persistent homelessness, according to a new study from a liberal think tank.

The “Escape Routes” study from the nonprofit Economic Roundtable zeroes in on a key dilemma in Los Angeles’ homelessness crisis: Even as officials have moved 33,000 homeless people into permanent housing since 2013 and launched a $1.2-billion construction program, high rents, job loss and medical crises continue to push people out of their homes.

Without early intervention, thousands of these people will become mired in chronic homelessness, deepening the region’s stubborn problem, the study found.

“Housing alone is not enough to end homelessness. The steady flow of new people into chronic homelessness keeps moving the goalposts back,” Dan Flaming, president of Economic Roundtable, said in a statement.

The researchers combined 26 data sources — including county healthcare and social services records, the U.S. Census and homeless counts and demographic surveys — to sketch what experts called a novel portrait of people at risk of falling into chronic homelessness, as well as recommendations of how to help them.

For several years running, Los Angeles has topped the nation in chronically homeless people, with 16,576 in the 2017 count, the most recent available.

Dennis Culhane, a University of Pennsylvania professor and a leading researcher of homeless demographics, said one of the most important findings was that 150,000 people in L.A. County are homeless in a year, although many resolve their crises on their own.

Because more than three-quarters of L.A.’s homeless people live outdoors in camps or vehicles, the official homeless count — a three-day snapshot of people living in the streets and shelters — has always been suspect, Culhane said.

The study says the number of people languishing in homelessness can be reduced, but not without a big investment. Many homeless people are eager to work, particularly those with children, but they need childcare, transportation, temporary housing, training and in some cases government-funded jobs to bring them into the work force, study said.

Read the complete article here.