Robots or Job Training: Manufacturers Struggle to Improve Economic Fortunes

From today’s New York Times:

For Anthony Nighswander, rock-bottom unemployment is both a headache and an opportunity. For businesses and workers, it could be the key to reversing one of the country’s most vexing economic problems: slow productivity growth.

Mr. Nighswander is president of APT Manufacturing Solutions, which builds and installs robotic equipment to help other manufacturers automate their assembly lines. Lately, business has been booming: With the unemployment rate now below 4 percent, he says he gets calls every day from companies looking for robots to help ease their labor crunch.

The problem is that Mr. Nighswander faces a hiring challenge in his own business, especially because, in this town of fewer than 4,000 people near the Indiana border, the pool of skilled workers is shallow. But rather than turn to robots himself, he has adopted a lower-tech solution: training. APT has begun offering apprenticeships, covering the cost of college for its workers, and three years ago it started teaching manufacturing skills to high school students.

 “I never thought that I would be training high school students in our facilities,” Mr. Nighswander said. “What I knew was that I was in survival mode. I knew the orders for robots and for automation were coming in faster than I could get the jobs out.”
That kind of urgency could prove to be a powerful economic force. The investments in training and automation by Mr. Nighswander and his customers should, over time, make their companies more productive. Multiplied across thousands of companies, those decisions could have benefits for companies and workers that endure even after today’s hot economy inevitably cools.
Productivity — how much value the economy generates in an average hour of work — gets less public attention than more intuitive economic concepts such as employment and wages, but it may be even more fundamental.
Rising productivity — whether through better technology, more educated workers or smarter business strategies — is why people’s economic fortunes, on average, improve over time. When productivity growth is strong, companies can afford to pay workers more without eating into their own profit margins, letting a rising tide lift all boats.
Since the end of the Great Recession, however — and, to a lesser extent, even during the stronger economic times that preceded it — productivity growth has been confoundingly weak, forcing business owners and workers to compete over a relatively meager sliver of economic growth. There have been peaks and valleys, but not since the dot-com boom of the late 1990s and early 2000s has the American economy consistently delivered productivity growth above 2 percent a year.
Now some economists think a rebound could be on the way. For most of the recovery, wage growth has been anemic, suggesting companies faced relatively little pressure to invest in automation or to find other ways to squeeze more production out of workers. But as the labor market tightens, companies’ incentives could be changing.

Read the complete article here.

Opinion: When Companies Supersize, Paychecks of Workers Shrink

From today’s New York Times:

Anyone with a cellphone should have paid attention to the big merger news on April 29: T-Mobile and Sprint announced their intention to tie the knot after years of speculation. If it goes through, it will leave the country with just three major wireless carriers instead of four.

Less noticed, on the same day, about a dozen other corporate marriages were announced worldwide, worth a combined $120 billion. So far this year, $1.7 trillion worth of deals have been declared globally, higher than the pre-financial-crisis record set in 2007. This year’s big-dollar mergers in the United States range from Cigna’s purchase of Express Scripts, oil refiner Marathon Petroleum buying rival Andeavor, and Dr Pepper Snapple cozying up to Keurig Green Mountain. That’s in addition to AT&T’s play for Time Warner in 2016, CVS’s offer for Aetna, and Amazon swallowing up Whole Foods.

All this activity means fewer companies, which means less competition. For consumers, that can raise prices if the merged companies face less pressure to keep things cheap. That’s the main test these deals have to pass: whether regulators, including the Justice Department and Federal Trade Commission, think consumers will fare worse.

That narrow focus on consumer prices hides another, potentially more dangerous side effect. A growing body of evidence has found that as mergers thin the ranks of businesses, workers have fewer options when they look for jobs. That reduces their bargaining power and, in turn, is part of why wages have stagnated.

Read the complete article here.

The Case for a Federal Jobs Guarantee

From the New York Times “Opinion” Section by Eric Loomis:

Employment numbers may look solid now, but economists, physicists and industrial engineers all say that automation will, in the not-so-distant future, drive higher unemployment. The Columbus Dispatch recently calculated that in Ohio, out of total state employment of about 5.5 million workers, 2.5 million jobs are at risk of automation.

How do we prepare for such disruption and the future of work? We might revisit an idea from the 1970s: a federal guarantee of employment. In recent weeks, three Democratic senators (and likely presidential contenders) — Kirsten Gillibrand of New York, Cory Booker of New Jersey and Bernie Sanders of Vermont — have either expressed their approval of the idea or unveiled initial ideas about how an updated version could work.

They are building on the legacy of the Humphrey-Hawkins Act, introduced in the 1970s by Senator Hubert Humphrey, Democrat of Minnesota, and Representative Augustus Hawkins, Democrat of California. In addition to the guarantee of employment, their initial bill allowed citizens to sue the government if they could not find a job.

Resurrecting Humphrey-Hawkins can help pre-empt a technology crisis and even future labor dislocation from globalization. In the original Humphrey-Hawkins bill — not the watered-down version that ultimately passed in 1978 — the president would submit an annual plan to Congress to achieve full employment, and local committees would coordinate job needs in their communities. The bill would have spurred private-sector job creation and a New Deal-style federal job creation program. Private employment would limit government investment, while federally mandated wage and price controls would fight inflation.

The final bill fell far short of this. Unions stripped out the wage and price controls in exchange for their support and put a priority on negotiating better contracts for their members over the fate of the nation’s poor. The Carter administration fretted about the potential impact on inflation from a bill without those controls. President Jimmy Carter never truly supported it, and the bill that passed committed the nation to ending inflation more than to full employment. Since then, the idea of full employment has largely disappeared from the American political system.

The arguments against Humphrey-Hawkins in 1978 are largely irrelevant today. After decades of low inflation, wage and price controls are unlikely to be problems. Mr. Booker’s pilot plan to test these ideas in 15 areas of the country builds on the Great Society belief in community control over federal resources.

Read the complete article here.

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

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.

MLK Day 2018, A Time to Reflect on Socio-Economic Injustice In All Forms

In honor of MLK Day, we post a short educational video here with excerpts from Martin Luther King, Jr. and James Baldwin that draw the connection between racial injustice and economic inequality in the United States. Their insights are as true today as they were fifty years ago, showing just how far we’ve come and how far we have to go. If we want peace, we must work for justice in all its forms.

KY Gets OK To Require Work From Medicaid Recipients, Most Already Do

From National Public Radio:

Poor residents in Kentucky will have to work or do volunteer work if they want to keep their Medicaid benefits after the Trump administration on Friday approved the state’s request to add the requirements to its Medicaid program.

The new requirements apply only to “able-bodied” adults who get their health insurance through Medicaid, the federal-state health insurance program for the poor. People with disabilities, children, pregnant women and the elderly are exempt from the requirement.

“Kentucky is leading the nation in this reform in ways that are now being replicated all over the nation,” said Kentucky Governor Matt Bevin, in announcing the plan’s approval.

Kentucky’s program was approved a day after the federal Centers for Medicare and Medicaid Services announced it would look favorably on proposals from state to require poor Medicaid beneficiaries to work, go to school, get job training or do volunteer work to earn health coverage.

Nine other states — Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah and Wisconsin — have asked CMS to allow them to add “community engagement” requirements to their Medicaid programs.

CMS Administrator Seema Verma says the work requirement option is designed improve people’s financial status and health outcomes.

In addition to the work requirement, some of Kentucky’s Medicaid beneficiaries will have to begin paying premiums for their coverage and will have to meet certain milestones to earn dental and vision care.

Before Verma joined CMS she was a private consultant and an architect of the Kentucky plan that was approved Friday.

It’s not clear how many people would be affected by the new rules in Kentucky and elsewhere.

study by the Kaiser Family Foundation found that about 60 percent of “able-bodied” Medicaid beneficiaries already work. And a third of those who don’t have jobs say it’s because they are ill or disabled.

Robots Are Coming, and Sweden Is Fine

From New York Times:

From inside the control room carved into the rock more than half a mile underground, Mika Persson can see the robots on the march, supposedly coming for his job here at the New Boliden mine.

He’s fine with it.

Sweden’s famously generous social welfare system makes this a place not prone to fretting about automation — or much else, for that matter.

Mr. Persson, 35, sits in front of four computer screens, one displaying the loader he steers as it lifts freshly blasted rock containing silver, zinc and lead. If he were down in the mine shaft operating the loader manually, he would be inhaling dust and exhaust fumes. Instead, he reclines in an office chair while using a joystick to control the machine.

He is cognizant that robots are evolving by the day. Boliden is testing self-driving vehicles to replace truck drivers. But Mr. Persson assumes people will always be needed to keep the machines running. He has faith in the Swedish economic model and its protections against the torment of joblessness.

“I’m not really worried,” he says. “There are so many jobs in this mine that even if this job disappears, they will have another one. The company will take care of us.”

In much of the world, people whose livelihoods depend on paychecks are increasingly anxious about a potential wave of unemployment threatened by automation. As the frightening tale goes, globalization forced people in wealthier lands like North America and Europe to compete directly with cheaper laborers in Asia and Latin America, sowing joblessness. Now, the robots are coming to finish off the humans.

Read the complete article here.

Labor Board Reverses Ruling That Helped Workers Fight Large Chains

From today’s New York Times:

The National Labor Relations Board on Thursday overturned a key Obama-era precedent that had given workers significant leverage in challenging companies like fast-food and hotel chains over labor practices.

The ruling changes the standard for holding a company responsible for labor law violations that occur at another company, like a contractor or franchisee, with which it has a relationship.

The doctrine also governs whether such a corporation would have to bargain with workers at a franchise if they unionized, or whether only the owners of the franchise would have to do so.

While most labor law experts expected the labor board, which gained a Republican majority only in late September, to overturn the board’s so-called joint-employer decision from 2015, the speed of the change came as a surprise to many.

“Frankly, it’s shocking,” said Wilma B. Liebman, a former Democratic appointee on the board who once served as its chairwoman.

The board’s 3-to-2 vote, along party lines, restores the pre-2015 standard, which deemed a fast-food corporation a joint employer only if it exercised direct and immediate control over workers at the franchise, and in a way that was not limited.

Employer groups had been agitating to undo the standard that was set under President Barack Obama almost from the moment it was decided, and they applauded the decision on Thursday.

The key question in determining whether a company, like a fast-food corporation, is a joint employer of workers employed by another company, like one of the chain’s franchisees, is the degree of control exercised by the corporation over workers at the franchise. The ruling on Thursday declared that such control must be direct.

Under the Obama-era doctrine, the fast-food corporation could be held liable for labor violations that occurred at the franchise even if the control it exerted was indirect — for example, if it required the franchisee to use software dictating certain scheduling practices — or if it had the right to exercise control over workers that it nonetheless didn’t exercise.

The reversal could have important implications for the ability of workers to win concessions from employers through collective bargaining. In many cases, a contractor or franchisee has such low profit margins that it could not afford to raise wages or improve benefits even if it wanted to.

Read the complete article here.

Proof Retail Jobs Don’t Need to Be Bad

From today’s New York Times by Eduardo Porter

Bethamy Magrow is grateful that the minimum wage in New York City is rising to $13 at the end of next month. Earning the current minimum of $11 an hour at a Times Square fashion retailer and scheduled to work some weeks for only 19 hours, the 25-year-old sales worker realizes she doesn’t quite clear New York’s poverty line.

It would be nice if her schedule didn’t change so much from week to week, she told me, so she could set up her doctors’ appointments in advance. But at least New York bars retailers from changing the schedule from one day to the next. In any case, jobs she has had at Whole Foods and Pokéworks, a restaurant on Union Square, were no better or worse.

Millions of Americans have similar stories to tell. For all the talk about the “end of retail,” it is one of the largest employers in the country, accounting for about one in eight workers in the private sector. For every miner toiling in the United States, there are almost 25 retail workers. Manufacturing, the apple of President Trump’s eye, doesn’t employ nearly as many.

Typically paying full-time employees less than $33,000 a year, well below the midpoint across the economy, retail jobs have become the work of the lower class, the main source of support for Americans left behind by economic change.

This raises a fairly urgent question: If retail work sets the living standard for so many low-income families, why doesn’t it get more attention?

Read the entire article here.

A Better Deal for American Workers

From today’s New York Times by Sen. Chuck Schumer (D-NY):

Americans are clamoring for bold changes to our politics and our economy. They feel, rightfully, that both systems are rigged against them, and they made that clear in last year’s election. American families deserve a better deal so that this country works for everyone again, not just the elites and special interests. Today, Democrats will start presenting that better deal to the American people.

There used to be a basic bargain in this country that if you worked hard and played by the rules, you could own a home, afford a car, put your kids through college and take a modest vacation every year while putting enough away for a comfortable retirement. In the second half of the 20th century, millions of Americans achieved this solid middle-class lifestyle. I should know — I grew up in that America.

But things have changed.

Today’s working Americans and the young are justified in having greater doubts about the future than any generation since the Depression. Americans believe they’re getting a raw deal from both the economic and political systems in our country. And they are right. The wealthiest special interests can spend an unlimited, undisclosed amount of money to influence elections and protect their special deals in Washington. As a result, our system favors short-term gains for shareholders instead of long-term benefits for workers.

And for far too long, government has gone along, tilting the economic playing field in favor of the wealthy and powerful while putting new burdens on the backs of hard-working Americans.

Democrats have too often hesitated from taking on those misguided policies directly and unflinchingly — so much so that many Americans don’t know what we stand for. Not after today. Democrats will show the country that we’re the party on the side of working people — and that we stand for three simple things.

First, we’re going to increase people’s pay. Second, we’re going to reduce their everyday expenses. And third, we’re going to provide workers with the tools they need for the 21st-century economy.

Over the next several months, Democrats will lay out a series of policies that, if enacted, will make these three things a reality. We’ve already proposed creating jobs with a $1 trillion infrastructure plan; increasing workers’ incomes by lifting the minimum wage to $15; and lowering household costs by providing paid family and sick leave.

Read the entire op-ed here.