In America, wage growth is getting wiped out entirely by inflation

From today’s Washington Post:

Rising prices have erased U.S. workers’ meager wage gains, the latest sign strong economic growth has not translated into greater prosperity for the middle class and working class.

Cost of living was up 2.9 percent from July 2017 to July 2018, the Labor Department reported Friday, an inflation rate that outstripped a 2.7 percent increase in wages over the same period. The average U.S. “real wage,” a federal measure of pay that takes inflation into account, fell to $10.76 an hour last month, 2 cents down from where it was a year ago.

The stagnant pay comes despite accelerating U.S. growth, which has increased in the past year and topped 4 percent in the second quarter of 2018 — the highest rate since mid-2014.

The lack of raises have befuddled economists and policymakers, who hoped that after job openings hit record highs and the unemployment rate dipped to the lowest level in decades, employers would give beefy raises to attract and retain employees. But so far, gains have been slight, and small recent increases are now being eclipsed by rising prices.

Inflation hit a six-year high this summer, driven in part by a jump in energy costs. The price of a gallon of gas has increased 50 cents in the past year, up to a national average of $2.87, according to AAA. Some analysts expect the climb in energy prices to halt soon, which should bring the overall inflation rate down and possibly lift real wages slightly.

Consumers are also paying more for housing, health care and car insurance, the federal government reported Friday. Additional price hikes could be coming as President Trump’s new tariffs boost prices of cheap imported products U.S. consumers rely on. And many economists warn that growth might have peaked for this expansion.

Read the complete article here.

Employers Are Finally Ready to Talk About How Much They Pay

From today’s Bloomberg News:

Up until last week, none of the 170 employees working at Verve, a marketing company, knew what anyone else made. Now, everyone’s salary is listed on an internal document for everyone to see.

By 2019, all 1,100 employees at CareHere, a Nashville based health-care company, will know the pay ranges for all positions in the company. Fog Creek, a New York-based software company with about three dozen employees, did the same last year. As did Hired, an online job search network in San Francisco that employs 200 people.

Employers have long discouraged talking about money at work, in part because obscuring salary information keeps compensation costs down. But that attitude is starting to change. In a survey of almost 2,000 employers by the consulting firm Willis Towers Watson, more than half of the respondents said they plan to increase transparency around pay decisions in the next year.

Pay transparency can mean a lot of things. A minority of companies are taking the most extreme approach, where everyone knows what everyone else makes. A larger share of companies are letting employees in on the voodoo behind their pay practices and explaining what goes into compensation decisions. Others are revealing pay ranges for positions and posting that information alongside job listings.

“Many of us who entered the workforce a longer time ago entered into a culture where you didn’t talk about pay,” said Sandra McLellan, who heads Willis Towers Watson’s North America rewards practice. “Today, people are much more comfortable discussing what they earn.”

Employees now have more access to compensation data than ever before—just not necessarily from their employer. Sites such as Glassdoor and Fairygodboss aggregate and list pay information for thousands of jobs across industries, giving workers a clearer picture of how their pay stacks up against that of their co-workers. Even LinkedIn has a feature that breaks down pay by job title and location.

The proliferation of information is leading to some issues for employers. More than anything, people want to feel like they’re being paid fairly, surveys have found. Armed with this new information, many of them are going to their managers and complaining that they’re not.

Read the complete article here.

Disneyland reaches a tentative contract settlement with workers, ending a heated battle that lasted months

From today’s Los Angeles Times:

Walt Disney Co. reached a tentative settlement Monday with four unions at the Disneyland Resort, putting an end to a contentious dispute that attracted the attention of Sen. Bernie Sanders and prompted a ballot measure to require the Burbank media giant to pay resort workers a “living wage.”

Although details of the settlement were not disclosed, the agreement appears to end a heated, months-long contract dispute with about 9,700 employees who work in the eateries and retail shops, operate the attractions and provide maintenance at the two Anaheim theme parks, the Disney hotels and nearby shopping district.

“The Disneyland Resort and Master Services Council are proud to have reached a tentative agreement, which we are hopeful will be ratified later this week,” the park and the council that represents the workers said in a joint statement. “We have had a successful history of working together since Disneyland Park opened in 1955, and this contract continues that shared commitment to cast members.”

Union members vote on the proposed contract Thursday. Negotiations began in April for the contract that was set to end in June. Employees have been working under an extension to the contract.

The unions have been pushing Disney to pay a “living wage” by, among other tactics, commissioning a study that looked at the economic hardship of the workers and sponsoring a rally featuring Sanders, who called on Disney to share its wealth with employees who are struggling to make ends meet.

The unions were successful in collecting at least 13,185 valid signatures — or at least 10% of the city’s voters — to put on the Nov. 6 ballot a measure requiring large hospitality companies that accept a subsidy from the city to pay at least $15 an hour, with salaries rising $1 an hour every Jan. 1 through 2022. Once the wage reaches $18 an hour, annual raises would then be tied to the cost of living.

Read the complete article here.

Further Thoughts on a Job Guarantee

From today’s New York Times “Opinion” Section by Paul Krugman:

As I wrote the other day, Alexandria Ocasio-Cortez may call herself a socialist and represent the left wing of the Democratic party, but her policy ideas are pretty reasonable. In fact, Medicare for All is totally reasonable; any arguments against it are essentially political rather than economic.

A federal jobs guarantee is more problematic, and a number of progressive economists with significant platforms have argued against it: Josh BivensDean BakerLarry Summers. (Yes, Larry Summers: whatever you think of his role in the Clinton and Obama administrations, he’s a daring, unconventional thinker when not in office, with a strongly progressive lean.) And I myself don’t think it’s the best way to deal with the problem of low pay and inadequate employment; like Bivens and his colleagues at EPI, I’d go for a more targeted set of policies.

But I’m fine with candidates like AOC (can we start abbreviating?) proposing the jobs guarantee, for a couple of reasons. One is that realistically, a blanket jobs guarantee is unlikely to happen, so proposing one is more about highlighting the very real problems of wages and employment than about the specifics of a solution. Beyond that, some of the critiques are, I think, off base.

Here’s the way some of the critiques seem to run: a large share of the U.S. work force – Baker says 25 percent, but it looks like around a third to me – makes less than $15 an hour. So offering these workers a higher wage would bring a huge rush into public employment, implying a very expensive program.

What’s wrong with this argument? The key point is that all those sub-$15 workers aren’t just sitting around collecting paychecks: they’re producing goods and (mostly) services that the public wants. The public will still want those services even if the government guarantees alternative employment, so the firms providing those services won’t go away; they’ll just have to raise wages enough to hold on to their employees, who would now have an alternative.

Now, that doesn’t mean zero job loss. Employers might replace some workers with machines; they would have to raise prices, meaning that they would sell less; so private employment might go down.

But all this is true about increases in the minimum wage, too. And we have a lot of evidence on what minimum wage increases do, because we get a natural experiment every time a state raises its minimum wage but neighboring states don’t. What this evidence shows is that minimum wage hikes have very little effect on employment.

So if we think of a job guarantee as a minimum wage hike backstopped by a public option for employment, we should not expect a mass migration of workers from private to public jobs.

Read the complete article here.

 

Supreme Court delivers blow to organized labor in fees dispute

From Reuter’s News Service:

The U.S. Supreme Court on Wednesday dealt a big blow to organized labor, ruling that non-members cannot be forced in certain states to pay fees to unions representing public employees such as teachers and police, shutting off a key union revenue source.

The 5-4 ruling overturned a 1977 Supreme Court precedent that had permitted these so-called agency fees, which have been collected from millions of workers who opt not to join unions in lieu of union dues to fund non-political activities such as collective bargaining. The court’s conservative justices were in the majority, with the liberal justices dissenting.

Forcing non-members to pay these fees to unions whose views they may oppose violates their rights to free speech and free association under the U.S. Constitution’s First Amendment, the court said in the ruling authored by Justice Samuel Alito.

“States and public-sector unions may no longer extract agency fees from non-consenting employees,” Alito wrote. In a dissent, Justice Elena Kagan accused the court’s conservatives of “weaponizing the First Amendment” to intervene in economic and regulatory policy.

“This case was nothing more than a blatant political attack to further rig our economy and democracy against everyday Americans in favor of the wealthy and powerful,” public-sector unions including the American Federation of State, County and Municipal Employees (AFSCME), the union directly involved in the case, said in a statement.

Two dozen states had required agency fees. The ruling means that the estimated 5 million non-union workers for state and local governments who have paid them can stop. Agency fees do not involve federal or private-sector employees.

The decision represented a major victory for conservative activists who long have sought to curb the influence of public-sector unions, which often support the Democratic Party and liberal causes.

With the U.S. organized labor movement already in a diminished state compared to past decades, the ruling now deprives unions of a vital revenue stream, undercuts their ability to attract new members and retain current members, and undermines their ability to spend in political races.

Republican President Donald Trump, whose administration backed the challenge to the fees, welcomed the ruling, writing on Twitter, “Big loss for the coffers of the Democrats!”

Read the complete article here.

In parts of America, Department of Labor hasn’t updated “prevailing wage” for taxpayer-funded work in decades

From Bloomberg News Network:

Thanks to a web of loopholes and limits, the federal government has been green-lighting hourly pay of just $7.25 for some construction workers laboring on taxpayer-funded projects, despite decades-old laws that promise them the “prevailing wage.”

Over the past year, the U.S. Department of Labor has formally given approval for contractors to pay $7.25 for specific government-funded projects in six Texas counties, according to letters reviewed by Bloomberg. Those counties are among dozens around the nation where the government-calculated prevailing wage listed for certain work—such as by some carpenters in North Carolina, bulldozer operators in Kansas and cement masons in Nebraska—is just the minimum wage.

That’s in part because, according to publicly available data from the Labor Department’s Wage and Hour Division, the agency is relying on wage survey data in more than 50 jurisdictions that’s from the 1980s or earlier. Experts said that’s a far cry from what Congress intended when, starting with the Depression-era Davis Bacon Act, it passed a series of laws meant to ensure that private companies contracted for government-backed projects pay their workers at least in the vicinity of what others get for the same work in the same geographic area.

In an emailed statement, the Labor Department didn’t address whether the decades-old data is a problem.

“The Wage and Hour Division carefully plans where to survey on an annual basis to ensure that prevailing wage rates reflect the reality of construction pay practices in a locality. The division identifies potential survey areas based on a number of criteria, including where available data on active construction projects in an area reveal changes in local pay practices such that a survey is necessary,” the department said.

Because government contracts are often required to go to the “lowest responsible bidder,” supporters say prevailing wage rules prevent a “race to the bottom” in which exploitative companies who pay workers less outbid safer, higher-quality firms, and in turn drive down industry standards to pocket more taxpayer dollars. Opponents of prevailing wage rules counter that they’re intrusive mandates that waste money, inflating construction costs in order to help unionized firms beat non-union competitors.

In recent years, the opposition—largely Republicans and industry groups—scored a series of wins, successfully pressing state governments in Arkansas, Indiana, Kentucky and West Virginia to repeal their own “little Davis Bacon” rules. By contrast, the federal statutes remain in place, despite the efforts of Representative Steve King, Republican of Iowa, who said last year  that “no one can claim to be a fiscal conservative if they think the federal government needs to inflate the cost of wages.”

Read the complete article here.

Trump Changes Executive Regulations to Ease the Firing of Federal Workers

From today’s New York Times:

Seizing on a longtime ambition of many Republicans, President Trump on Friday overhauled rules affecting at least two million federal workers, making it easier to fire them and rolling back the workplace role of their unions.

Mr. Trump, furthering a goal cited in his State of the Union address this year, signed a series of executive orders affecting disciplinary procedures and contract negotiations and limiting the conduct of union business on government time.

Andrew Bremberg, the head of the White House Domestic Policy Council, said the president was “fulfilling his promise to promote more efficient government by reforming our Civil Service rules.”

Past administrations of both parties have argued that Civil Service rules are in need of modernization, but Mr. Trump zeroed in on aspects that create sharp partisan divisions. And the action follows growing acrimony between his supporters and the federal bureaucracy that they portray as the deep state.

Unions representing government workers were quick to denounce the actions. “This is more than union busting — it’s democracy busting,” J. David Cox Sr., national president of the American Federation of Government Employees, the largest federal employee union, said in a statement. “These executive orders are a direct assault on the legal rights and protections that Congress has specifically guaranteed.”

The executive orders come after a series of prominent Republican victories against public employee unions in recent years at the state level and a rollback of Obama-era policies favorable to labor at the federal level.

In the coming weeks, the Supreme Court will rule on a case, propelled by years of conservative philanthropy, that could end mandatory fees for public-sector unions in more than 20 states, dealing a body blow to union coffers.

The Trump administration portrayed its new rules as a needed remedy to make a sclerotic work force more efficient and responsive, but Newt Gingrich, who has been an informal adviser to the White House on Civil Service issues, has given a different explanation in the past.

In an interview last year, when the administration was considering action, Mr. Gingrich, a former House speaker, said that a major impetus was the federal bureaucracy’s ideological opposition to the Trump agenda.

Read the complete article here.

Democrats’ Next Big Thing: Government-Guaranteed Jobs

From today’s New York Times:

Prominent Democrats — stung by their eroding support from working-class voters but buoyed by the deficit-be-damned approach of ruling Republicans — are embracing a big idea from a bygone era: guaranteed employment.

The “job guarantee” plans, many of them pressed by Democratic White House hopefuls, vary in scope and cost, but they all center on government-sponsored employment that pays well above the $7.25-an-hour federal minimum wage — a New Deal for a new age, absent the bread lines and unemployment rates of the Great Depression. The most aggressive plans seek to all but eradicate unemployment and to set a new wage floor for all working Americans, pressuring private employers to raise wages if they want to compete for workers.

How such guarantees would be paid for is still largely unresolved. And criticism of the idea has emerged not only from conservatives who detect a whiff of socialism but also from liberals who say guaranteed employment is the wrong way to attack the central issue facing workers in this low-unemployment economy: stagnant wages.

But Democratic leaders hope the push will help their party bridge the growing political divide between white and minority workers, and silence the naysayers who accuse the party of being devoid of new, big ideas.

The employment plans, along with single-payer “Medicare for all” health care, free college, legalized marijuana and ever less restrictive immigration rules, are parts of a broader trend toward a more liberal Democratic Party in the Trump era.

“It’s going to create a more competitive labor market where people are going to start getting living wages, not just minimum wage,” said Senator Cory Booker, Democrat of New Jersey, who unveiled a job-guarantee planin April. “Giving people the dignity of work, of being able to stand on their own two feet, there’s such a strengthening element of that.”

Read the complete article here.

SCOTUS Upholds Workplace Arbitration Contracts Barring Class Actions

From today’s New York Times:

 The Supreme Court on Monday ruled that companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues.

The vote was 5 to 4, with the court’s more conservative justices in the majority. The court’s decision could affect some 25 million employment contracts.

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

Justice Ginsburg called on Congress to address the matter.

Brian T. Fitzpatrick, a law professor at Vanderbilt University who studies arbitrations and class actions, said the ruling was unsurprising in light of earlier Supreme Court decisions. Justice Gorsuch, he added, “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreements.”

As a result, Professor Fitzpatrick said “it is only a matter of time until the most powerful device to hold corporations accountable for their misdeeds is lost altogether.”

But Gregory F. Jacob, a lawyer with O’Melveny & Myers in Washington, said the decision would have a limited impact, as many employers already use the contested arbitration clauses. “This decision thus will not see a huge increase in the use of such provisions,” he said, “but it does protect employers’ settled expectations and avoids placing our nation’s job providers under the threat of additional burdensome litigation drain.”

Read the complete article here.

Massive UC workers’ strike disrupts dining, classes and medical services

From today’s Los Angeles Times:

A massive labor strike across the University of California on Monday forced medical centers to reschedule more than 12,000 surgeries, cancer treatments and appointments, and campuses to cancel some classes and limit dining services.

More than 20,000 members of UC’s largest employee union, the American Federation of State, County and Municipal Employees Local 3299, walked off their jobs on the first day of a three-day strike. They include custodians, gardeners, cooks, truck drivers, lab technicians and nurse aides.

Two altercations involving protesters and people driving near the rallies were reported at UCLA and UC Santa Cruz. At UCLA, police took a man into custody Monday after he drove his vehicle into a crowd, hitting three staff members. They were treated for minor injuries at the scene and released, said Lt. Kevin Kilgore of the UCLA Police Department.

The system’s 10 campuses remained open, largely operating on regular schedules, and protests were peaceful and even festive.

At UCLA, workers marched through campus in green union shirts that said “We run UC” and held signs calling for equality, respect and more staff. Some brought children and walked dogs. Drivers honked in solidarity. Hundreds of workers rallied in front of the Ronald Reagan UCLA Medical Center, taking taco breaks under green balloons.

Oscar Rubio, a UCLA food services worker, said that staffing at some dining hall stations has been cut from five workers to three, leading to more injuries for those who remain.

Top UC officials “make more money … while we suffer,” Rubio said. “We’re not asking to make like they make. We’re asking to support us enough to pay our rent.”

Read the complete article here.