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.

Missouri voters blocked the state’s ‘right-to-work’ law in perhaps the biggest electoral stunner of the night

From today’s Business Insider:

Missouri voters on Tuesday struck down a right-to-work law by a resounding margin, representing a huge victory to the organized labor movement and a decisive blow to the agenda of the state’s majority-Republican legislature.

In 2017, Missouri Republicans passed legislation to ban compulsory union fees for workers who choose not to join, which would’ve severely limited the influence of the organized labor movement.

Former Gov. Eric Greitens signed the bill into law, but union organizers started a petition to stall its implementation, ultimately gathering enough signatures for the law to be put on hold pending a statewide referendum.

In the end, on Proposition A, roughly 67% voted against the keeping the law, while 33% voted in favor of it.

Supporters of right-to-work laws say workers shouldn’t be forced to join unions and pay membership fees. But opponents contend these fees are necessary to protect worker’s rights, especially given that federal law requires unions to represent all employees — even those who opt out of joining unions.

The Supreme Court in June ruled unions could not require public-sector employees to pay such fees. Twenty-seven states have laws permitting workers in unionized settings to choose not to join and pay membership fees.

Read the complete article here.

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.

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.

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.

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.

Teachers’ strikes: meet the leaders of the movement marching across America

From today’s The Guardian:

When teachers in West Virginia went on strike in February, there was little indication that a swath of other states would follow suit.

But that action in the Appalachian state, which resulted in teachers winning a 5% pay rise, has spurred on educators in Oklahoma, Kentucky and Arizona.

Teachers in Oklahoma have been on strike since 2 April, while school districts have also walked out in Kentucky. In Arizona, teachers are demanding a 20% pay rise and could go on strike at the end of April.

In some states the protests are being driven from the bottom up, rather than by unions, as teachers and school districts take matters into their own hands.

Here are some of the leaders of the teachers’ strike movement.

Cindy Gaete is a 25-year-old teacher at Marshall elementary school in Tulsa, Oklahoma. The daughter of Chilean immigrants, she is currently the only Spanish speaker in her school, which is nearly a third Latino.

She says it is frustrating that in addition to her teaching duties that the lack of Spanish speakers means that any time the schools needs to communicate with parents that she has to serve as translator.

“The first thing I told my principal when I got hired is that if we are a third Latino, there should not be just one Hispanic teacher in your school,” said Gaete.

Inspired to fix her school, she helped lead a 110-mile March for Education that arrived in Tulsa from Oklahoma City.

As teachers are expected to end their strike this week, she says that it’s important for teachers like her to run for office to keep the momentum. On Saturday, Gaete decided to lead by example and file her papers to run for state representative in Oklahoma 78th house district.

“Today I start day one of my campaign for house district 78,” said Gaete in announcing her bid. “For my students. For my community. Because all students deserve an equitable educational experience, regardless of race, socio-economic status and gender.”

Read the complete article here.

Tariffs bad news for American economy, including workers and consumers

From today’s The Hill:

There’s never a good time for tariffs. American workers and consumers will pay dearly for the Trump administration’s short-sighted action to protect an industry that shows no signs of needing any protection—the market values of the five largest steel companies have more than doubled over the past five years. Yet with a major infrastructure spending bill set to come through Congress over the next year, Trump’s tariffs are bad policy with even worse timing.

While a small amount of people will benefit from the proposed tariffs, many more will be harmed. The American steel industry employs roughly 140,000 workers, but industries that rely on steel to create their products—the ones who will suffer directly under the tariffs—employ 6.5 million workers. A recent study by the Trade Partnership found that the direct cost of tariffs on employment would be 18 jobs lost for every one created. On net, 470,000 Americans could lose their jobs.

The Trade Partnership’s study fits with the lessons of recent history. In 2002, President Bush instituted protective tariffs on foreign steel imports. After just a year in which steel prices rose by up to 50 percent, steel production was insufficient to meet demand, 200,000 Americans lost their jobs, and the tariff was dropped. A mere fifteen years later, these lessons have already been forgotten.

Nor will other countries sit idly by as Trump restricts trade. Well over 10 million Americans’ jobs are supported by exports—jobs which would be at risk in the case of a trade war. Already, the European Union has prepared a ten-page hit list of potential targets of retaliatory tariffs should Trump’s steel and aluminum tariffs go into effect.

American consumers will be harmed as well. A combination of new steel tariffs and lumber tariffs imposed last year mean that the cost of new homes is likely to continue rising—nearly half of steel imports go towards construction. Other American staples such as cars and canned beer are also set to see price spikes resulting directly from tariffs.

Read the complete article here.

The Tipping Equation: At restaurants in America, servers calculate how far is too far, weighing harassment against wages

From the New York Times:

The balancing act plays out every day in restaurants across America: Servers who rely on tips decide where to draw the line when a customer goes too far.

They ignore comments about their bodies, laugh off proposals for dates and deflect behavior that makes them uncomfortable or angry — all in pursuit of the $2 or $20 tip that will help buy groceries or pay the rent.

There was the young server at a burger joint in Georgia, Emmallie Heard, whose customer held her tip money in his hand and said, “So you gonna give me your number?” She wrote it down, but changed one of the digits.

There was the waitress in Portland, Ore., Whitney Edmunds, who swallowed her anger when a man patted his lap and beckoned her to sit, saying, “I’m a great tipper.”

And at a steakhouse in Gonzales, La., Jaime Brittain stammered and walked away when a group of men offered a $30 tip if she’d answer a question about her pubic hair. She returned and provided a “snappy answer” that earned her the tip, but acknowledges having mixed feelings about the episode.

“Literally every time it happens, I will have this inner monologue with myself: ‘Is this worth saying something, or is it not?’” said Ashley Maina-Lowe, a longtime server and bartender in Tucson. “Most of the time I say, ‘No, it’s not worth it.’”

Read the complete article here.