Why did several thousand people line up in Times Square yesterday for only 65 full-time jobs? Paying a "princely" $10.75? Which by my calculations gives someone an annual salary of a bit over $20,000 (if the job was truly full-time. Although the New York Times account of the line-up says that the jobs offereed "medical benefits" it's not at all clear what the scope of the benefits was...and, call me cynical, but I'd bet they were pretty skimpy.
Here's the whole story.
I wonder how much coverage this story will get. It was buried on page 13 of The New York Times business section. But, it's a good window into what the Chamber of Commerce has been up to--and why we need complete public financing of elections:
Group Claims U.S. Chamber Broke Tax Laws By LYNNLEY BROWNING
The United States Chamber of Commerce violated tax laws by failing to report tens of millions of dollars spent to sway state and federal elections from 2000 through 2004, according to a nonprofit watchdog organization that filed a complaint yesterday with the Internal Revenue Service.
The watchdog group, Public Citizen, cited internal records, corporate documents and media reports as the basis for its assertions about the chamber, one of Washington’s most powerful trade and lobbying groups, and its affiliate, the Institute for Legal Reform.
The complaint, in the form of a letter requesting a formal review of the two organizations by the I.R.S.’s criminal division, comes amid heightened scrutiny by regulators and government officials of tax abuses involving nonprofit organizations.
Under federal law, 501(c) groups like the chamber and its affiliate are allowed to engage in limited campaign activities. But they must report to the I.R.S. any money spent on such work or any investment income.
The rest of the story is here.
It's pretty clear to a majority of people that the president operates in a non-reality-based world when it comes to the Iraq war. So it is with the economy as well. Today, he's visiting a facility of Federal Express in Washington, D.C. to talk about the new job numbers.
Now, I understand why he would use FedEx as a backdrop: the CEO Fred Smith just held a $2,100-a-plate fundraiser for Bush in Memphis last week. Nice. And you can't get more regular guy than Smith, right? After all, he pulled in $5.25 million compensation and $5 million dividend income this year alone. Right up the president's alley. Times are wonderful for Bush and Smith.
But, for regular people, we know times are not great at all. Paul Krugman has a solid column in today's New York Times called "The War Against Wages." (You have to be a Times subscriber to see it, I believe). Krugman's first paragraph sums it up:
Should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages. Economic growth since early 2000, when the Dow reached its previous peak, hasn’t been exceptional. But after-tax corporate profits have more than doubled, because workers’ productivity is up, but their wages aren’t — and because companies have dealt with rising health insurance premiums by denying insurance to ever more workers.
Krugman, then, links the attack on wages to the attack on unions, describing the decision in the Kentucky River cases by the Bush National Labor Relations Board. His final paragraph sums up the whole rotten situation:
So what’s keeping paychecks down? Major employers like Wal-Mart have decided that their interests are best served by treating workers as a disposable commodity, paid as little as possible and encouraged to leave after a year or two. And these employers don’t worry that angry workers will respond to their war on wages by forming unions, because they know that government officials, who are supposed to protect workers’ rights, will do everything they can to come down on the side of the wage-cutters.
Which brings us right back to the president's embrace of Fedex. To just mention a few points about that company's sordid attack on its workers: FedEx Express workers in California sued the company for widespread off-the-clock work (earlier this year the company settled for $30 million); FedEx shifts the risks and and costs of working for the company on to the workers by forcing them to be independent contractors, which means the truck drivers assume costs that should be paid by FedEx--like trucks, and equipment like uniforms and digital scanners; by forcing workers to be independent contractors, the company avoids paying income tax withholding, unemployment insurance premiums, worker compensation contributions and other state or federal contributions, and avoids state labor laws and even federal laws like the Family Medical Leave Act. And need I mention that a California court ruled that this contractor set-up was a scam back in 2005 and the state, then, found the company owed nearly $8 million in back taxes. Since 1988, the National Labor Relations Board, no friend of labor as we know, has ruled 7 out of 8 times that the FedEx ground drivers are employees and not "independent contractors."
I could go on. Ironically, it says a lot that in trying to convince the people that the economy is actually doing well and that workers' lives are improving, the president would choose as a backdrop a company that does its best to make sure that workers' lives are even more insecure.
For a long time, I've argued that politicians who focus on the challenge presented by China miss the real problem, intentionally or unintentionally. Almost a year ago, when the debate was raging about the need for China to revalue its currency, I didn't disagree with the point but added that:
...the level of the currency won't make a huge difference because of the huge advantage China has in labor costs. As long as the authoritarian regime in China suppresses its workers' rights, it will continue to be the industrial Mecca of global corporations. You just can't find cheaper--and more controlled--labor anywhere in the world. If you are a U.S. worker worrying about losing jobs overseas, you should be rooting for Chinese workers getting the right to have unions and breaking loose to push wages up; there are, in fact, regular protests and wildcat strikes in China which may portend a massive social upheaval driven by vast legions of rural poor who want a share of the rapidly developing economy.
Today, Joseph Stiglitz writes in The New York Times about how he sees fixing the imbalances in the financial system of the global economy, particularly the growing trade imbalances being run up by the U.S. I think Stiglitz, as someone who has worked in the upper echelons of the global elites, has made some valuable contributions in the past, talking about some of the weaknesses of globalization.
His main point in the piece today is that United States has to deal with the financial mess at home, rather than point at others to take steps first. His bottom line suggestion:
There is one way out of this seeming impasse: expenditure cuts combined with an increase in taxes on upper-income Americans and a reduction in taxes on lower-income Americans. The expenditure cuts would, of course, by themselves reduce spending, but because poor individuals consume a larger fraction of their income than the rich, the “switch” in taxes would, by itself, increase spending. If appropriately designed, such a combination could simultaneously sustain the American economy and reduce the deficit.
I certainly agree that the tax cuts for the rich need to be reversed. His proposal is troubling because he doesn't talk about where to cut outlays (Medicare? Housing?). But, the real problem is, again, that we are avoiding the real problem of globalization: the pursuit of the lowest wage possible. One of the reasons that China maintains its currency at current levels is that global corporations like Wal-Mart love the cost advantage that currency level affords them, mainly via a very low cost in labor. Nothing can be fixed to make the global economy acceptable to the vast majority of people throughout the globe if we refuse to have a system where China suppresses wages and bans real unions--and the U.S. effectively suppresses union organizing. It's the wages, stupid.
My favorite "George" in government is Rep. George Miller from California. He's been all over the Wal-Mart issue, among other things, and a tiger on workers' rights. So, he's put out a new report on the economy, which summarizes neatly many of the items I've brought up here:
►Families are earning less. Since 2001, median household income has fallen by $1,300. For households headed by someone under the age of 65, the trend is even worse. Their incomes have fallen $2,000 since 2001.4 Between 2004 and 2005, their incomes fell by $275. (The median income rose modestly in 2005 because households headed by someone over the age 65 saw income gains from Social Security and investments – not from work.) In fact, wages and salaries now make up their lowest share of the economy. Meanwhile, corporate profits make up their largest share of the economy since the 1960’s.
►More Americans lack health insurance. Since 2001, the number of people without any health insurance coverage at all has increased by 6.8 million. The number of Americans without health coverage – 46.6 million – is at a record high.
►Poverty is up. Since 2001, the number of Americans living in poverty has increased by 5.4 million, to 37 million. More than one in six American children now lives in poverty. Among African Americans, the poverty rate is 24.9 percent; among Hispanic Americans, it is 21.8 percent.
►Prices for life’s basic necessities are up. Since 2000, the prices of education, gas, and healthcare have all greatly outpaced inflation. Between 2000-01 and 2005-06, tuition and fees at four-year public colleges increased by 57 percent, pushing college further out of reach for American families. Between 2000 and 2005, the price of regular unleaded gasoline grew by 58 percent. Between 2000 and 2005, premiums for family health insurance grew by 73 percent. Meanwhile, inflation grew by 13.4 percent between 2000 and 2005. When you consider the high costs of housing and child care in much of the country, it is clear that simply paying for the basic necessities is squeezing the budgets of most American families.
The only place I'd disagree with Miller on is blaming just the Bush Administration. The Bushies have made things much worse but, for example, wages have not kept pace with productivity going back to the 1970s--which highlights the link between the corporate influence on our elected representatives who have not been willing to harness abusive corporate power and greed.
As Labor Day approaches, almost every day you can read about the class warfare--yup, I said it--underway in the country. I pointed this out yesterday. Today, Paul Krugman has a column called The Big Disconnect:
There are still some pundits out there lecturing people about how great the economy is. But most analysts seem to finally realize that Americans have good reasons to be unhappy with the state of the economy: although G.D.P. growth has been pretty good for the last few years, most workers have seen their wages lag behind inflation and their benefits deteriorate.
Hmmm...why? Partly because thousands of workers are fired every year when they try to organize a union so average people have no leverage at work.
The disconnect between overall economic growth and the growing squeeze on many working Americans will probably play a big role this November, partly because President Bush seems so out of touch: the more he insists that it’s a great economy, the angrier voters seem to get. But the disconnect didn’t begin with Mr. Bush, and it won’t end with him, unless we have a major change in policies.
Right. The disconnect also rests within the Democratic Party.
The stagnation of real wages — wages adjusted for inflation — actually goes back more than 30 years. The real wage of nonsupervisory workers reached a peak in the early 1970’s, at the end of the postwar boom. Since then workers have sometimes gained ground, sometimes lost it, but they have never earned as much per hour as they did in 1973.
I would say that Krugman should have said that the disconnect going back 30 years also involved the widening gap between growing productivity and wages--workers were working harder and more efficiently yet companies were giving them the finger when it came to wages.
Then Krugman picks up the health care crisis issue:
On the other side, workers’ concern about worsening benefits is new. In 1997, a plurality of workers said that employment benefits were better than they used to be. That made sense: in 1997, the health care crisis, which had been a big political issue a few years earlier, seemed to have gone into remission. Medical costs were relatively stable, and in a tight labor market, employers were competing to offer improved benefits. Workers felt, rightly, that benefits were pretty good by historical standards.
But now the health care crisis is back, both because medical costs are rising rapidly and because we’re living in an increasingly Wal-Martized economy, in which even big, highly profitable employers offer minimal benefits. Employment-based insurance began a steep decline with the 2001 recession, and the decline has continued in spite of economic recovery.
The latest Census report on incomes, poverty and health insurance, released this week, shows that in 2005, four years into the economic expansion, the percentage of Americans with private insurance of any kind reached its lowest level since 1987. And Americans feel, again correctly, that benefits are worse than they used to be.
Why have workers done so badly in a rich nation that keeps getting richer? That’s a matter of dispute, although I believe there’s a large political component: what we see today is the result of a quarter-century of policies that have systematically reduced workers’ bargaining power.
Krugman, can you say UNIONS? It's amazing that he talks about workers' bargaining power without pointing out the obvious connection to the decline of unions thanks to an increase in illegal union-busting behavior and the shattering of anything resembling a fair labor framework.
I wonder why workers aren't feeling optimistic per these polls? Hmmmm...wages not going up as fast as productivity, pensions disappearing, no health care, debt at an all-time high?
Three Polls Find Workers Sensing Deep Pessimism
By STEVEN GREENHOUSEThree new opinion polls released yesterday found deep pessimism among American workers, with most saying that wages were not keeping pace with inflation and that workers were worse off in many ways than a generation ago.
The Pew Research Center found in a survey of 2,003 adults completed last month that an overwhelming majority said workers had less job security and faced more on-the-job stress than 20 or 30 years ago.
The nonpartisan Pew center, said, “The public thinks that workers were better off a generation ago than they are now on every key dimension of worker life — be it wages, benefits, retirement plans, on-the-job stress, the loyalty they are shown by employers or the need to regularly upgrade work skills.”
In a poll of 803 registered voters commissioned by the A.F.L.-C.I.O., Peter D. Hart Research found that 55 percent said their incomes were not keeping up with inflation, 33 percent said their incomes were keeping even and 9 percent said their incomes were outpacing inflation.
Check out the rest of the article.
Hate to say "I told you so" but the darkening signs in the economy are growing. The New York Times reports that consumer confidence has dropped:
Americans are more pessimistic than they have been all year about the state of the economy, according to a new report that reflects a widespread view that a period of brisk growth is coming to an end.
The Conference Board said yesterday that in its monthly survey, American consumer confidence fell sharply in August to its lowest level since last November. The latest index reading of 99.6 was below the 107.0 reported in July, and represented the steepest single-month decline since the immediate aftermath of Hurricane Katrina a year ago.
And then over at The Wall Street Journal you can read a piece that says that while median income grew slightly:
But the gap between the richest and poorest Americans widened last year, continuing a trend that dates to the early 1970s with a pause in the late 1990s. The top fifth of American households claimed 50.4% of all income last year, the largest slice since the Census Bureau started tracking the data in 1967.
The new data, from telephone and in-person interviews with 114,384 households, come amid polling data that suggest concern about the economy among many middle-income Americans -- an anxiety that Democrats hope to exploit in November's congressional elections.
"There is nothing to celebrate here," said Ron Haskins, a former Bush administration official now at the Brookings Institution. "A lot of the money goes to the top, and Republicans are forever playing defense on this. The people in the middle are feeling squeezed. If Democrats aren't getting the best of the argument, they should be."
Liberal-leaning analysts yesterday emphasized that despite a robust economy, the rich are getting richer while the poor are treading water. Conservative-leaning analysts emphasized that the median household income is up and the poverty rate is flat.
The Census Bureau said the number of Americans without health insurance rose by 1.4 million last year to 46.6 million, or 15.9% of the population. The poverty rate barely budged, falling to 12.6% from 12.7%, a change the bureau said isn't statistically significant but is an early signal that the poverty rate is starting to level off after four years of increases. About 37 million Americans were living below the official poverty line in 2005.
It's still amazing that the Democrats can't seem to find their voice and say "single payer health care" despute the growing numbers of people without health coverage.
For a long time, a number of people--the Economic Policy Institute and yours truly--have pointed out that workers have not been getting much out of the rise in productivity. Today, The New York Times wakes up to that phenomena with a front-page story:
With the economy beginning to slow, the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.
That situation is adding to fears among Republicans that the economy will hurt vulnerable incumbents in this year’s midterm elections even though overall growth has been healthy for much of the last five years.
The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period.
As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.”
But the Times' is simply incorrect when it states the following:
For most of the last century, wages and productivity — the key measure of the economy’s efficiency — have risen together, increasing rapidly through the 1950’s and 60’s and far more slowly in the 1970’s and 80’s.
That's false. Since about 1970, productivity has climbed steadily while the median wage has diverged from productivity. The minimum wage would be somewhere between $18-$19 an hour if wages had kept pace with productivity over the past 30 years.
This isn't surprising and something I've written about over the years. I'll come back to this asap--when I'm not under the gun--but I thought people would want to read this, if you haven't seen the report:
Washington, D.C.: An analysis of the nation's most important labor-market survey concludes that official estimates of the number of Americans living in poverty and without health insurance may significantly underestimate the true number of poor and uninsured.
According to the study, conducted by the Center for Economic and Policy Research (CEPR), the measurement problems with the Current Population Survey (CPS) have been growing, making it difficult to assess changes in economic well being over time.
“The share of Americans covered by the country's most important survey of labor-market conditions has been declining over time,” said John Schmitt, Senior Economist at CEPR and a co-author of this report. “The group that is falling out of the survey is economically marginalized, less likely to have a job, less likely to have health-insurance, and more likely to be poor.”
Among the study's main findings:
- The CPS appeared to miss about 1.4 percent of the adult population, or over 2.5 million non-working adults. The size and the increase over time in the bias in the CPS are largest for black men. The CPS overstated black male employment by about 2.5 percentage points in 1986, rising to 3.0 percentage points in 2000, and reaching 3.5 percentage points in 2005.
- Since the undercounting has become more severe in the CPS in recent years, estimates of employment rates from the CPS are biased and the bias is growing over time. For all adults, the CPS overstated employment by about 1.1 percentage points in 1986, growing to 1.3 - 1.4 percentage points in 2000, and about 1.7 percentage points by 2005.
- In 2005, the official national estimate of poverty, which is taken from the CPS, underestimated the actual number of adults and children in poverty by about 600,000 people (about 0.2 percentage points).
- The official national estimates of the population lacking health insurance coverage in 2004 underestimated the number of adults and children without health insurance by about 350,000 people (about 0.1 percentage points).
- The impact on poverty estimates for blacks and Hispanics are proportionately much greater. In 2000, the CPS underreported the poverty rate for blacks by 0.5 - 0.7 percentage points and for Hispanics by about 0.4 percentage points.
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