Higher Minimum Wage, Faster Job Creation

From yesterday’s NYT “Taking Note” Blog by Teresa Tritch:

The standard argument against a higher minimum wage is that it will lead to job loss as employers, unable to pay more, lay off current workers or don’t hire new ones.

It’s important to state up front that research and experience don’t bear that out. The minimum wage has been raised many times without hurting employment. Rather than cut jobs, employers have offset the cost of higher minimums through reduced labor turnover. Employers also cope with a higher minimum by giving lower raises further up the wage scale, raising prices modestly or other adjustments.

Bolstering what we already know, new evidence shows that job creation is faster in states that have raised their minimum wages. The Center for Economic and Policy Research used federal labor data to tally job growth in 13 states* that raised their minimums in 2014. In all but one, New Jersey, employment was higher in the first five months of 2014 (after the wage increase) than it was in the last five months of 2013 (before the wage increase). In nine of the 12 states with faster growth, employment gains were above the national median.

That doesn’t mean that a higher minimum wage caused the job growth, a point clearly stated by the researchers at CEPR.  But it indicates that raising the minimum didn’t hurt job growth, as opponents claim ad nauseam.

That hasn’t stopped those opponents — especially in the restaurant industry — from attacking the findings. But their only argument is bluster. They don’t dispute the job gains in states that have raised their minimums. Rather, they claim that it may mask job loss among low-wage workers directly impacted by the raise. To support that conjecture, they have pointed to a study from 2010, sponsored by the restaurant lobby, which found a link between a higher minimum wage and lower teen employment.

The fact of the matter is that no one knows why job growth has been above trend in states with higher minimum wages. A plausible explanation is that a minimum-wage hike may have a more pronounced stimulus effect in a generally weak economy than it would have in a strong economy, as workers who long have struggled to make ends meet quickly spend their extra dollars, providing an economic boost that help job growth.

What is clear is that there is no need to fear a minimum wage increase — unless, apparently, you are a restaurant lobbyist, whose job depends on keeping wages low for already very low paid waitresses, waiters and fast-food servers.

*Four states passed legislation to raise their minimum wages in 2014: Connecticut, New Jersey, New York, Rhode Island. Nine states automatically increased their minimums in line with inflation: Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont and Washington.

New Rules for Part-Time Work?

From the July 23, 2014 NYT “Room for Debate”:

Part-time jobs often come with fluctuating, on-call schedules and – because of the uncertain hours – inconsistent pay. This can make it hard for workers to schedule weekly routines, childcare or other means of employment for themselves.

Legislation in the House, proposed this week, would ensure employees get two weeks notice about their work schedules, as well as extra pay to compensate for last minute changes.

Should there be a law limiting unpredictable schedules for hourly and part-time workers?

Read the different perspectives of this debate here.

N.L.R.B. Ruling Holds McDonald’s, Not Just Franchisees, Liable for Worker Treatment

From today’s NYT by Steven Greenhouse:

The general counsel of the National Labor Relations Board ruled on Tuesday that McDonald’s is jointly responsible for workers at its franchisees’ restaurants, a decision that if upheld would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide.

Richard F. Griffin Jr., the labor board’s general counsel, said that of the 181 unfair labor practice complaints filed against McDonald’s and its franchisees over the last 20 months, he found that 43 had merit on such grounds as illegally firing or threatening workers for pro-union activities.

In those cases, Mr. Griffin said he would include McDonald’s as a joint employer, a classification that could hold the fast-food company responsible for actions taken at thousands of its restaurants. Roughly 90 percent of the chain’s restaurants in the United States are franchise operations.

McDonald’s said it would contest the decision, warning that the ruling would affect not only the fast-food industry but businesses like dry cleaners and car dealerships.

Read the entire article here.

July jobs report confirms weak pace of jobless economic “recovery”

The Labor Department released July’s employment figures today and once again there is little good news. According to the report the economy added 163,000 jobs last month even though the unemployment rate ratcheted up slightly to 8.3 percent. The number of additional jobs is mediocre by any other name, but the figure is double the jobs added in June and exceeded Wall Street’s doom-and-gloom forecast. This tarnished silver-lining was enough to provide the Obama administration with some spin traction by claiming that the “pace” of job growth is picking up.

Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, said that Obama’s jobs plan would help those economic sectors that are struggling the most during this jobless recession, namely, public sector employees and construction workers.

“If you look at today’s jobs report, where we saw declines were construction and government education jobs,” said Krueger. “The main components of the Jobs Act would target exactly those two areas, by investing more in infrastructure and helping local governments keep teachers and first responders on the payrolls. I think it’s the kind of medicine that’s well targeted to the continuing areas of weakness in the job market.”

The devil is in the details, of course, and today’s report also provided Republicans with ammunition for their nauseatingly familiar mantra:  less government, less regulation, and less taxes means more investment by the private sector. Mitt Romney, the Republican presidential nominee, rehearsed the same tired lyrics Republicans have been singing for decades, laying the blame for America’s economic woes at the feet of the man who inherited the mess three years ago.

“This is an extraordinary record of failure. The president’s policies have not worked because he thinks government makes America work. He’s wrong,” Romney bleated.

Never mind that Obama has spent his first term cleaning up the mess left in the wake of Republican economic policy during the two terms that they controlled both the White House and Congress. Never mind the surpluses left by Clinton that Bush squandered. Never mind that the largest expansion of government spending since the New Deal was brought on by two wars and an expansion of Medicare. Never mind that the Republicans irrational fear of taxes has a created a climate in which it is impossible to govern because revenues are hamstrung by unaffordable tax cuts they want to keep extending into infinity. No, never mind the facts.

Admittedly, Obama’s economic policy has been less than admirable. Under Treasury Secretary Tim Geithner, many of the same Wall Street-favoring features of the Bush years have continued:  bail outs for irresponsible (indeed, criminal) investment banks, failure to regulate volatile markets like derivatives where trading smoke-and-mirrors continues with no accountability, failure to regulate investment bank shenanigans, and an ineffective response to Republican rhetorical nonsense on taxes.

Nevertheless, it is doubtful that an economy as large and complex (and corrupt!) as America’s can be turned around on a dime, let alone a single term, so Romney’s exhortations ring as hollow as the Republican economic fantasy that markets can do everything if we just leave powerful private actors to do as they please.

FED to continue twist, without shout

The economic recovery has become even more sluggish, particularly in the labor market where hiring in both the private and public sectors has slowed to a near standstill. Weak job reports, deep debt among consumers and governments, the evolving crisis in the euro zone, and of course the uncertainty of a presidential election are all conspiring to undermine investor confidence in the near term. The markets have been slow to bounce back, and when they do it is an erratic “one-step forward, two-steps back” form of recovery.

Yesterday’s announcement from the chairman of the FED, Ben Bernanke, that it would moderately expand its policy called “Operation Twist” to stimulate growth did little to bolster that confidence. With the economy stumbling into the summer months after the false promise of a relatively strong winter, the Fed announced a modest expansion of its efforts to stimulate growth. The central bank pledged to buy $267 billion in long-term Treasury securities over the next six months in order to reduce borrowing costs. The intended consequence of reducing borrowing costs is to stimulate consumers and small businesses to borrow more money and spend it.

In its report the Fed stated it now expected growth of 1.9 percent to 2.4 percent this year, half a percentage point lower than they forecast in April. In addition, it predicted the unemployment rate would not drop below 8 percent this year, and that inflation would not go above 1.7 percent. Bernanke noted in the press conference that the outlook could worsen if events in the euro zone worsen, unnerving financial markets, or if politicians in Washington failed to resolve a stalemate over fiscal policy.

It remains an open question whether the 17 governments of the EU can coordinate their talents to overcome the euro’s financial morass, but the stalemate in Congress between Democrats and Republicans is sure to continue well past November. Political impasse to resolve this nation’s pressing financial woes is, if anything is in this world, a sure bet. This means more hard times ahead for America’s middle class and even worse times for the least well off among us.

Report shows American workers worse off from Great Recession

According to a report released today by the Economic Policy Institute American workers are worse off than they were a decade ago, with underemployed and underpaid workers struggling to makes ends meet. “The State of Working America” documents the statistical evidence as well as personal stories of these deteriorating work conditions, revealing some startling findings about work in an unfriendly environment to both skilled and unskilled workers.

  • Adjusted for inflation the median hourly wage was lower last year (2011) than it was a decade earlier.
  • 2.1 million individuals quit their jobs in March 2012, down slightly from 2.9 million in December 2007, signaling a tight labor market with little to no mobility.
  • Due to the housing bubble and market crash, the median income of the American family in 2010 declined to levels from the early 1990s, showing that workers have lost almost two decades of built equity in their homes.
  • Tuition for education is rising faster than either inflation or wages, and the total debt from student loans is reaching an epidemic proportion that cannot be paid back.
  • Entry-level hourly wages for men who recently graduated from high school fell to $11.68 last year, from $15.64 in 1979.
  • The percentage of jobs that offer health insurance has plummeted to 22.8 percent, from 63.3 percent in 1979.

“Unfortunately, the wage problems brought on by the recession pile on top of a three-decade stagnation of wages for low- and middle-wage workers,” said Lawrence Mishel, the president of the Economic Policy Institute. “In the aftermath of the financial crisis, there has been persistent high unemployment as households reduced debt and scaled back purchases. The consequence for wages has been substantially slower growth across the board, including white-collar and college-educated workers.”

Who is to blame for the decline of American work? Democrats and Republicans alike have both failed to find sustainable solutions to these problems, in part, because both parties have become complicit actors in a corporate agenda that has delivered record profits for many of the nation’s largest companies, as well as widened the income gap to its largest point since the Great Depression

American voters are also to blame for being bamboozled into believing that periphery social differences between the parties—abortion, civil rights for gays and lesbians, and flag-burning—are litmus tests for public office. They have turned a blind eye to the great robbery that has become American capitalism:  with armies of lobbyists and lawyers, Washington has become the center of nearly legalized political corruption where corporations can spend vast amounts of money to ensure the public agenda is shaped to benefit them rather than everyone—particularly average American workers.

Republicans reinvent “class warfare”

Yesterday President Obama introduced a new plan to decrease the deficit by another $3 trillion that includes a combination of spending reductions, efficiency goals for programs like Medicare, and tax increases for the wealthiest 10 percent of Americans. Republicans are decrying the plan as “class warfare” in an ugly and disingenuous inversion of that phrase. Obama countered the claim by defending the simple principle that those Americans who can afford to pay more taxes should do so on that basis. After all, wealthier Americans reap the harvest of all the hard work that the rest of Americans do, so it stands to reason they should pay more as matter of fairness.

The Republican charge raises the following critical questions. What, exactly, is “class warfare”? Why do Republicans believe Obama’s proposal is an example of it?

The term “class warfare” is traditionally used by Marxists, communists, socialists, and anarchists of all stripes to describe the inherent tension between, and conflict generated by, competition between different socio-economic classes. Specifically, the conflict between workers and capitalists. Historically, Americans have naively assumed that there are no “classes” in this country because of the widely believed myth that “anything is possible” or that social mobility of the “rags-to-riches” sort is uniquely American. Surveys done during the Great Depression showed that a large majority of Americans did not believe there were classes, despite the fact that a large majority of them were standing in job lines, bread lines, or starving. (Financial collapse caused by unregulated speculation and unchecked greed? Sound familiar.)

Today, this myth is still widely believed. In part, this is what has made the Republicans so successful at capturing the imagination of populist middle America in which people regularly vote against their own economic interests in order to prop up a façade of traditional values. (Free markets and preservation of traditional values? Contradiction? Anyone? Anyone?) Thanks to unregulated capitalism without democratic accountability most people in Middle America live poorer lives than their coastal counterparts, a fact made clear by the redistribution of taxes in which every $1 in taxes paid by Blue States subsidizes $3 in federal spending going to Red States. Yet, people in Red States have lower incomes and shop more at Wal-Mart. (Have you read Thomas Frank’s What’s the Matter With Kansas? You should.)

What do Republicans mean by “class warfare”? Are they saying that Obama’s tax plan creates conflict between classes by making the wealthiest Americans pay more than their fair share? Does this imply that they are already paying their fair share? Exactly what is their fair share?

Republicans have yet to state clearly what a fair principle of taxation is. The idea that flat tax is more fair in a system where people have radically unequal incomes is like saying that people should be paid the same because everyone makes an equal contribution to the goods and services produced. If the Republicans’ understanding of “fairness” is anything like their understanding of “free and fair” elections, you can be sure it will not be based on “one person, one vote.” If you have more money, you should be able to influence the outcome of elections. That’s their view of the matter.

The charge that Obama’s tax plan is “class warfare” is therefore blowing smoke up the ass of most middle-class Americans. The fact is that Republicans (and most Democrats alike) serve the interests of the wealthy. Campaigns and elections are funded primarily by wealthy individuals, PACs, and corporate contributions. Perhaps Obama’s tax plan should be considered a democratic tax on wealthy people buying elections and influence. That seems more accurate, and fair as a principle, than anything the Republicans have come up with, including their outrageous defense of a flat tax, which is only fair in a situation where everybody is paid the same. In that case, perhaps everyone should be paid the same. That would make an end to “class warfare” for sure. ::KPS::

Obama to introduce “American Jobs Act”

In a speech to a joint session of Congress tonight President Obama is expected to unveil a new White House economic strategy to bolster employment. With unemployment at 9.1 percent, and figures for jobless claims rising according to today’s report from the Department of Labor, the President is switching emphasis from large public stimulus packages to job creation.

Republican lawmakers are not interested in job creation but in profit maximization. Predictably, some are already calling Obama’s announced “American Jobs Act” an example of the same tired Democratic ideas that have failed to stimulate the economy in the past. No word yet on whether Republican ideas about profit maximization and deregulation lead to anything but risky and unstable economic climates like the one that brought about the more recent financial collapse. When it comes to economics, Republicans really have no good ideas.

Democratic lawmakers are also not much interested in job creation. If they were, Americans would have labor laws that promoted job security and stability, fair wages, and standard benefits such as health care insurance. Of course, Democrats say they are for job creation, but when they say this while passing legislation at the same time that allows corporations to transfer profits and jobs out of the country, it’s hard to believe their commitment to American workers is anything but political pandering to people who don’t know any better.

The fact is a small but powerful minority of Americans has become more wealthy in the last two decades since the global internet economy emerged, largely because the corporations they own and run have paired wages, trimmed benefits, hemmed unions, outsourced jobs, and generally practiced an economics of greed. In order to turn this situation around the President cannot be expected to provide job security for every American without help from Congress. The problem is, again, that Congress is effectively bought and sold by the wealthy political elite that governs economic policy in this country. Without a massive congressional turnover, which is unlikely to happened given the influence and power of money in electoral politics, legislation for protecting and promoting the interests of American workers (that is, every American who has, wants, or needs a job) will be anemic and unsuitable for returning Americans to work at jobs that pay well with good benefits

Everyone keeps saying those days are over. If they are over, then so is the growth and sustainability of the American economy. Without workers who get paid well to buy things we produce and other countries import, we will be a nation of debtors with permanent status anxiety. ::KPS::