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Trump thinks tariffs will add U.S. manufacturing jobs. Economic reality says they won’t.

Monday, August 26th, 2019

Adam BehsudiWhen then-Gov. Nikki Haley of South Carolina went to a ribbon-cutting ceremony for Kent International in 2014, the bicycle company had grand plans for expansion at its assembly plant to make its products in the United States.

“Manufacturing, it’s never as easy as it looks and people kind of laughed at us, but won’t be laughing very much longer,” Kent International Chairman and CEO Arnold Kamler said. “We are not reinventing the wheel; we just have a really talented bunch of workers and managers.“

President Donald Trump had promised that his steep tariffs on Chinese goods would help bring jobs back to the U.S. But five years later, paradoxically, it is the very tariffs that Trump has imposed that have kept that plant in Manning, S.C., from expanding, Kamler said in an interview.

Firms are indeed moving out of China but are not flocking to the United States, undermining the central promise of Trump’s trade war. Cheaper labor markets in Southeast Asia are the ones benefiting the most amid the trade war that has ratcheted up duties on Chinese goods.

In fact, the administration’s actions have prompted Kent International to still rely on its joint venture partner, Shanghai General Sports, to supply more of its bicycles. For its part, Shanghai General is planning to build a factory on a plot of land in Cambodia. By the end of year, 40,000 square feet of production capacity will be complete.

Kamler estimates that 30 percent of the company’s annual production of 3 million bicycles will come from Cambodia, at the expense of China.

The tariffs are also taking a toll on Kent International’s ambitions to bring jobs to the U.S. The company needs steel tubes as components in the welding assembly line, which currently can only be bought at a reasonable price from foreign suppliers.

The administration’s tariffs on steel and aluminum imports — as well as the threat of new tariffs on the majority of the components used in bicycle production — has meant that additional phases of bringing jobs to the U.S. have yet to happen.

The latest U.S. economic trends aren’t helping efforts. U.S. economic growth has slowed this year and the 3 percent growth Trump promised last year was revised down to almost 2.5 percent.

Manufacturing job trends are also cooling. The latest U.S. jobs report showed manufacturing employment rose by an average of 8,000 per month so far in 2019, compared with an increase of 22,000 jobs per month in the sector in 2018.

Across-the-board tariffs on all Chinese imports could create more than 1 million U.S. jobs in five years, contends the Coalition for a Prosperous America, a major backer of Trump’s tariffs. The reality, however, is other nations with lower wages are the ones benefiting from the president’s strategy.

“The majority of jobs are going to other countries,” said Jeff Ferry, chief economist for the coalition, which has advocated a complete decoupling from the Chinese economy to benefit the U.S.

The group‘s study found only a small gain in production returning to the U.S. the first year of a blanket tariff, representing only about 0.2 percent of the more than $500 billion worth of imports from China. By year 5 though, that number would increase to 13 percent compared to the value of last year’s imports from China, he said.

For his part, Trump pledged that his strategy to escalate the trade war against China would create jobs in the U.S. in the long term.

“Tariffs are a great negotiating tool, a great revenue producer and, most importantly, a powerful way to get companies to come to the USA and to get companies that have left us for other lands to COME BACK HOME,” Trump tweetedlast month.

Acecdotal evidence, not hard numbers.

There have been some prominent announcements from companies trumpeting that they have “reshored,” or brought jobs back to the United States.

Stanley Black & Decker said this year it would move production of its Craftsman line of tools, which it acquired from Sears, from China to Texas where it would add 500 jobs. High-end furniture seller Restoration Hardware said in a recent earnings report that tariffs were spurring it to bring some manufacturing to the U.S.

The U.S. Commerce Department published this year a “case study” on reinvesting in the U.S., highlighting the experiences of six companies moving production to America. The report makes the case “that anecdotal evidence of hundreds of reshoring cases is very real,” but it also admits that tariffs are a “challenge” for companies wanting to move production to the U.S.

Half of the companies profiled by the Commerce Department highlight the harm of tariffs on investment decisions.

Quality Electrodynamics, an Ohio-based company that designs and produces parts for medical devices, “recommended that the U.S. government could promote reshoring and expansion in the United States by revising U.S. tariffs on Chinese components in a way that does not disadvantage U.S. companies.”

Those working to find ways to increase reshoring say the tariffs are making it harder for companies to make decisions on where, or even whether, to add capacity.

Harry Moser, president of the nonprofit Reshoring Initiative, said he agrees 100 percent with the goals of Trump’s tariffs, but said they have had a “modest net negative” effect on jobs coming back to the U.S. as companies look elsewhere to relocate production.

Based on the Reshoring Initiative’s own study, 2018 was a banner year for the return of jobs to the U.S., but that progress dropped off in 2019. Already, $250 billion worth of imports are subject to a 25 percent tariff, and Trump has threatened to slap duties on almost all that the U.S. brings in from China.

Trump has announced that he would hit an estimated $112 billion in imports from China with a 10 percent as of Sept. 1, while another $160 billion subject to the duty as of Dec. 15.

“Clearly Trump caused work to come here more by the things he did on taxes than by pounding on the table with tariffs,” Moser said. “The uncertainty caused by the tariffs are hurting reshoring and foreign direct investment.”

Trump’s trade chief, U.S. Trade Representative Robert Lighthizer, acknowledged recently that tariffs were diverting some production to the U.S. but also to other countries.

“The imposition of tariffs can have many effects, including modifications to supply chains,” he wrote in a response to a written questions from Congress on whether tariffs are benefiting producers in other countries.

“I have closely followed reports of manufacturing coming back to the United States from China or going to third countries in some instances,” he said.

Sebastien Breteau, the CEO of Hong Kong-based supply chain inspection company Qima, said the data his firm collects supports the theory that neither China nor the U.S. is winning the trade war.

The company, which has 6,000 clients worldwide, has seen a 13 percent drop for China-based inspections from U.S. companies.

Meanwhile, inspections for U.S. clients increased 21 percent in Vietnam, 25 percent in Indonesia and 15 percent in Cambodia. Mexico inspections for U.S. clients jumped by a staggering 119 percent in the first six months of 2019.

“There is a clear sign that in the trade war between the U.S. and China, the winner is not going to be the U.S. and it’s not going to be China,” he said. The winners are “going to be Vietnam, Indonesia, Cambodia and very likely Mexico and Bangladesh.”

The Qima data is supported by a recent report from consulting firm AT Kearney, which found that imports from low-cost Asian countries in 2019 outpaced U.S. manufacturing output.

A report by the investment firm China International Capital Corporation released last month estimated that across eight manufacturing sub-sectors in China, the first two batches of tariffs from the United States would likely result in 1.5 million job losses in China. The authors said that looking across the whole manufacturing sector, “this estimate may be low.”

However, there is little evidence to suggest that many of these jobs are flocking to the United States.

George Whittier, CEO of Morey, a Chicago-based custom electronics manufacturer, said his company still relies on imported parts to make GPS tracking devices and controllers for vehicles. Most of those components imported from China are subject to tariffs, but the finished products are not. The result is more time spent haggling over costs with existing customers rather than expanding production and jobs.

Whittier also questioned whether the U.S. labor pool could absorb a major increase in manufacturing. He said he has 15 positions open that he has been unable to fill even after raising the offered salaries twice.

“If there was this big boom of manufacturing coming back from China into the U.S., I gotta be honest, I have no idea where the workers are going to come from,” he said.

Kamler, of Kent International, said previous discussions with the Trump administration had been frustrating because of a perspective that only goods made from “start-to-finish in the U.S.” count as “real” domestic manufacturing. But he added that recent talks with the Commerce Department had been more fruitful.

Kamler has formed a coalition of 12 American companies in an attempt to bring an entire supply chain cluster back to the United States. If the alliance can prove that it’s assembling entire bicycles in the United States, it would “be able to import all the component parts for five years, duty free,” Kamler said.

Still, he said he was told the alliance would only get the tariffs eliminated if it could prove that it could increase U.S. bicycle assembly from 600,000 annually to 4 or 5 million. Kamler said the industry would ultimately have to seek permanent relief from tariffs through legislation, which he said is in the early stages of being developed.

“These things don’t happen so fast, but this is a long-term play and this is actually my hope and part of my legacy that I’m hoping to leave, that I can help bring back the American bike industry,” he said.

Counterfeiting, not tariffs, prompt some moves

For other companies, the threat of intellectual property, or I.P., theft and not tariffs has driven decisions to relocate production to the U.S.

Isaac Larian is the chief executive officer of MGA Entertainment, the world’s largest privately owned toy company. Last year, one of his company’s brands, Little Tikes, reshored production of fashion accessories for its line of L.O.L. Surprise! Dolls to an existing plant in Hudson, Ohio, in a bid to avoid fake versions of its products from being sold to consumers.

“The biggest problem we face in China is the theft of I.P. There are over 200 factories in China that make L.O.L. Surprise! counterfeit products and very little can be done about it,” Larian said. “These counterfeit products are unsafe for children.”

He said MGA tested moving one item’s production to the U.S. and found it was successful. Now, it plans to move more accessories, especially because toys made in China are among the items subject to a 10 percent tariff as of Dec. 15.

“It will definitely affect business due to lower sales, and we are looking at options” to move more manufacturing out of China, he said, adding that “it is too late for this year.”

Another toy seller, Unit Bricks, examined moving production to the U.S. by pricing out the plastic elements of its production as well as packaging. But the company decided it was unaffordable at this stage because profit margins on toy sales are too thin to justify the costs of relocating production to the U.S.

“Everything is about margins,” said Timothy Stuart, the owner of the educational toy maker. “The issue with the U.S. is that labor intensive items become too expensive.”

“All production is in China for us: plastic, wood, packaging. Industry follows labor, and America can’t afford cheap labor,” said Stuart.

With the threat of a new tariffs looming, Stuart said that his business could absorb a 10 percent levy, but should it rise to 25 percent, “we would have zero choice at that point” but to leave China.

“Frankly, I still have hope that the 10 percent won’t hit, but we are prepared for it and have already spoken to customers. They’ve increased the quantities of their orders, so that helps,” said Stuart.

But should things escalate, the U.S. and Poland are both active options but due to the higher cost, “the U.S. is the last resort.”

This article was originally published at Politico on August 24, 2019. Reprinted with permission.

About the Author: Adam Behsudi is a trade reporter for POLITICO Pro. Prior to joining POLITICO, he covered international trade policy for Inside U.S. Trade, where he tracked down the latest news on the Trans-Pacific Partnership from exotic locales such as Auckland, New Zealand; Kota Kinabalu, Malaysia; and Leesburg, Va.Before writing about anti-dumping, export controls and other trade subjects, Behsudi covered city hall for the Frederick News-Post. He got his start in journalism chasing crooked sheriffs and other crime-related news in the mountains of western North Carolina for the Asheville Citizen-Times

Behsudi earned his bachelor’s degree in 2005 from the University of Missouri. With the hope that journalism could return as a growth industry within his lifetime, he earned a master’s degree in interactive journalism from American University in 2010.

Trump administration backs off from slashing Job Corps centers after bipartisan outcry from Congress

Friday, June 21st, 2019

The Trump administration’s move to slash federal jobs and job training for rural youth hasn’t gone according to plan. In fact, it’s not going to go at all after bipartisan outcry. The plan to shut down nine Job Corps Civilian Conservation Centers, with 16 more to be privatized or shifted to state control, was scrapped Wednesday.

More than 1,100 federal workers at centers that train disadvantaged youth and young adults were slated to be laid off under the plan, which would have hit some rural communities hard. Those rural communities are often represented by Republicans, who objected vociferously to the layoffs and closures. That’s why Senate Majority Leader Mitch McConnell opposed the plan, which would have closed two centers in Kentucky, and why a letter from 51 members of the House and Senate was resoundingly bipartisan. (It more or less goes without saying that if the closures had targeted heavily Democratic areas, Republican lawmakers would have been all for it.)

“[In] 2017 1,200 students at CCCs participated in fire assessments, providing the equivalent of 450,000 hours of service during the height of the fire season,” the 51 lawmakers wrote. “Students at CCCs also provided 5,000 hours of support in response to Hurricane Harvey.”

And what do you know? The Trump administration decided it was easier to back down than to anger all those rural Republicans—the elected ones writing letters and, presumably, the average people who were going to lose out because of the closures. Funny how that works.

This blog was originally published at Daily Kos on June 20, 2019. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.

 

Renewable industry employed 11 million people in 2018

Friday, June 14th, 2019

The number of workers employed by the renewable energy industry keeps growing. In 2018, at least 11 million people around the world held jobs across the renewables sector, from manufacturing and trading to installation.

According to the sixth annual jobs report by the International Renewable Energy Agency, the majority of these jobs are concentrated in China, the European Union, Brazil, and the United States.

The figures show a steady increase over the years. In 2017, there were 10.3 million jobs. This was up from 9.8 million in 2016 and 8.1 million in 2015.

This growth comes at the same time as countries are setting clean energy generation records. The U.K. recently went at least 10 days without generating any coal power, while last month in the U.S. renewable energy generation surpassed coal generation for the first time in history.

11 million people were employed in the renewables industry in 2018. Credit: IRENA.
11 MILLION PEOPLE WERE EMPLOYED IN THE RENEWABLES INDUSTRY IN 2018. CREDIT: IRENA.

In the United States, the number of people working in renewables is just under the amount employed by the fossil fuel industry. Last year saw a slight uptick in these jobs, with just over 1.1 million people employed in petroleum fuels, natural gas, coal, and biomass across the country.

According to the IRENA report, solar power remains the top employer within the renewables industry, providing 3.6 million jobs last year, accounting for a third of the entire industry’s workflow. This is in part due to expansion in India and Southeast Asia as well as Brazil. China, however, remains the leading solar employer, representing 61% of all jobs in 2018.

Meanwhile, 2.1 million people worked in the biofuel industry, another 2.1 million jobs were in hydropower, and wind employed 1.2 million people.

A third of all renewable jobs globally, the report states, are held by women. This is compared to a 22% average in the oil and gas industry. However, previous reports have shown that at least in the solar industry in the United States, the majority of jobs still go white men.

President Donald Trump has repeatedly said that tackling climate change means losing jobs. But as this report shows, in fact the opposite is true.

The findings in IRENA’s latest report support a study released last December by the International Labour Review which found that accelerating the transition to clean energy could add 24 million jobs globally by 2030.

In a press statement Thursday, Francesco La Camera, the director-general of IRENA, said countries are investing in renewables not just because of climate concerns, but also because it makes economic sense.

“Beyond climate goals,” he said, “governments are prioritizing renewables as a driver of low-carbon economic growth in recognition of the numerous employment opportunities created by the transition to renewables.”

This article was originally published at AFL-CIO on June 13, 2019. Reprinted with permission.

About the Author: Kyla Mandel is the editor for the climate team. Her work has appeared in National Geographic, Mother Jones, and Vice. She has a master’s degree from Columbia University’s Graduate School of Journalism, specializing in science, health, and environment reporting. You can reach her at kmandel@thinkprogress.org, or on Twitter at .

Trump takes aim at firefighting jobs with largest federal cut in a decade

Wednesday, May 29th, 2019

The Trump administration is planning to cut over a thousand jobs — including many wildland firefighting jobs — in what’s thought to be the largest federal jobs cut in a decade. The move comes ahead of another wildfire season and amid threatened halts to financial assistance following deadly fires last year.

The latest attempt in what appears to undermine wildfire preparedness includes ending a federal program that trains young people for jobs including wildfire fighting, while at the same time withholding wildfire reimbursements California officials say are owed from last year. All of this serves to deepen the feud between President Donald Trump and West Coast states over disaster assistance. Meanwhile, multiple states are preparing for another brutal wildfire season based on current federal projections.

In an announcement buried on the Friday before the Memorial Day weekend, the Trump administration announced that it will end a program under the Forest Service, run by the U.S. Department of Agriculture (USDA). The Job Corps Civilian Conservation Centers (CCCs) train young people between the ages 16 to 24 in rural and disadvantaged areas for jobs including wildland firefighting and forestry, in addition to disaster recovery. The 25 centers are predominantly in the South and West and located on federal lands, with more than 3,000 students employed by the program.

Nine of the centers will close, with another 16 set to move to state control or to be taken over by private entities, as control of the program shifts to the Labor Department. Centers in Washington, Oregon, Kentucky, Montana, Wisconsin, Arkansas, Virginia, and North Carolina are all slated for closure. Roughly 1,100 jobs will be lost — potentially the largest federal workforce reduction in a decade.

“As USDA looks to the future, it is imperative that the Forest Service focus on and prioritize our core natural resource mission to improve the condition and resilience of our Nation’s forests, and step away from activities and programs that are not essential to that core mission,” USDA head Sonny Perdue wrote in a letter to Labor Secretary Alexander Acosta on Friday.

The program has suffered from safety issues, along with inconsistencies in job placement. But lawmakers on both sides of the aisle have expressed dismay over the massive job cuts, while union leaders have slammed the decision as “a coordinated attack on the most vulnerable populations in the country.”

In a statement following the announcement, National Federation of Federal Employees (NFFE) National President Randy Erwin lamented the potential implications for wildfire fighting in particular.

“[O]nly the CCC’s [sic] train students to serve as wildland forest firefighters to help with fire suppression operations during fire season,” Erwin said. “There is no plan for this loss of resources to the country which has seen more powerful fires with each passing year.”

Wildfires have become significantly more deadly and destructive in recent years, with the season now considered to run virtually year-round amid worsening climate impacts and urban sprawl.

According to Wildfire Today, one of the CCCs slated to close in Kentucky sent personnel on 40 assignments in 2016 alone. And a review by NFFE found that more than 300 students provided more than 200,000 hours of wildfire-related support in 2017. It is unclear, however, what the loss of the CCCs might mean for efforts to combat wildfires during this year’s fire season.

That reduction in wildfire assistance comes amid ongoing sparring between Trump and California. Last November, the president largely blamed the state for its wildfire problems, accusing California of “gross mismanagement of the forests” and threatening to withhold federal aid. Now, the Forest Service is accusing California of overbilling with its $72 million reimbursement request, money the state owes its fire agencies for last year’s work on federal lands.

The Forest Service is demanding proof of “actual expenses” for the services rendered on public lands and has launched an audit into the California Fire Assistance Agreement (CFAA), which reimburses the state for such costs. That means the federal government is now withholding more than $9 million of the total amount requested from California, even as the state stares down another wildfire season.

The 2018 wildfire season is connected with at least 100 deaths and involved the efforts of thousands of firefighters in California alone. This year could be equally dire, with western parts of Washington already prepared for an exceptionally bad season. That area has seen an abnormally dry year so far, with outdoor burns already reported throughout the month of March, which is unusual.

“Scared,” Dave Skrinde, a fire district chief in Washington, told local reporters, speaking about the wildfire season. “That’s my gut feeling.”

And according to the National Interagency Fire Center, Washington isn’t the only statethat needs to be on heightened alert for wildfires over the next few months. Areas across the West — including parts of Oregon, which is losing a CCC — are at risk. Warming temperatures in Alaska, meanwhile, have made the state more vulnerable to wildfires, with southeast Alaska currently experiencing its first recorded extreme drought in history.

This article was originally published at Think Progress on May 28, 2019. Reprinted with permission. 

About the Author: E.A. (Ev) Crunden covers climate policy and environmental issues at ThinkProgress. Originally from Texas, Ev has reported from many parts of the country and previously covered world issues for Muftah Magazine, with an emphasis on South Asia and Eastern Europe. Reach them at: ecrunden@thinkprogress.org.

Public transportation is a jobs and equality issue

Monday, June 12th, 2017

Public transportation is a jobs issue. If you don’t believe that, take a look at Philadelphia, where lack of efficient mass transit from the city to the suburbs is keeping a lot of people out of work—and a coalition of progressive and religious groups is pushing the city to offer improved options:

The coalition says SEPTA’s system centers on an outdated reality: suburban dweller commuting to city job. In 1970, about half of the region’s jobs were based in Philadelphia, the coalition said in a letter to Council. By 2013, only one in four jobs were in Philadelphia, as urban employment declined and suburban jobs increased. Meanwhile, the city has a higher unemployment rate, 6 percent in March, compared to suburban rates of 3.5 percent to 4.4 percent.

Workers trying to get from the city to the suburbs for jobs face long commutes. Looooong. Just 24 percent of jobs in the area are accessible within 90 minutes on public transit. That’s a major obstacle:

Another survey, by Temple University’s Institute of Survey Research, found that lack of transportation was the biggest barrier to employment, with 39 percent of respondents below the poverty line saying that not being able to get to work was more of an obstacle than a criminal history, child care problems or language barriers.

That’s just one more way infrastructure investment—the kind Donald Trump isn’t interested in making—boosts employment.

This blog was originally published at DailyKos on June 10, 2017. Reprinted with permission.

About the Author: Laura Clawson has been a Daily Kos contributing editor since December 2006. and Labor editor since 2011.

The Trump Economy Myth and Job-Killing Policies

Thursday, April 13th, 2017

Making America Great Again; every time a U.S. company hires a hundred people, or even a dozen, President Trump’s support network blasts out the message that this is what he’s doing. Now they’re crowing that unemployment fell to 4.5 percent in March, even though many say this number underrepresents how many people are actually out of work.

Only 98,000 jobs were actually gained in the month, about half of what economists had expected. And even if these new jobs are something to crow about, it’s not as if they have anything to do with Trump.

Propaganda is one thing, but Trump’s actual policies will hurt job and wage growth once they kick in.

Obama Momentum

Remember when President Obama had been in office a few months, and the fiscal year 2009 deficit was reported to be $1.4 trillion? Right-wing propaganda outlets showed charts drawn to convey that the 2009 budget deficit was his fault.

The 2009 fiscal year budget ran from October 1, 2008 to September 30, 2009. Obama’s first budget year began the following month. The 2009 budget deficit wasn’t an “Obama deficit,” is was a Bush deficit. Obama did not have time to do anything. For the same reasons, the 2017 economy, and any health it has, is still Obama’s.

In fact, when Obama DID do something this is what happened:

That job reversal was the result of actual policies put in place by Obama, not Republican propaganda.

Propaganda, Not Policies

Like almost everything Republican, the Trump administration is almost entirely about propaganda, not actual, rubber-meets-road policy. Healthcare is the best example of this. After years of propaganda opposition to Obamacare, Republicans had no actual coherent, alternative policy plan to put forward, and were unable to come up with one when the opportunity came for them to do it. The actual policies they finally came up with would have caused 24 million Americans to lose their healthcare.

Propaganda might achieve a propaganda goal, policies get actual things done.

As of today, there is no real Trump economic policy in place. He has submitted a ridiculously extreme budget proposal. He has proposed to “study” trade. He has no real “trillion-dollar” infrastructure plan – his budget proposal actually cuts infrastructure spending – and his tax “reform” plan does nothing more than give corporations and wealthy people huge breaks.

Actual Trump Policies Undercut Jobs And Wages

Trump’s actual policies will undercut job and wage growth. Right off the bat, Trump’s budget proposal would eliminate as many 200,000 federal jobs.

Trump is trying to reverse the “overtime rule” that increases the salary threshold for receiving overtime pay from $23,660 per year to $47,476. This rule is a big deal and would mean that would immediately boost the pay of 12.5 million workers, if Trump allows it to go into effect. Even with the rule the percent of workers who are eligible for overtime pay would still be lower than it was in 1975.

Trump’s executive orders also undercut job and wage growth. He has removed protections against wage theft and rights violations by federal contractors, affecting one in five workers.

Another example of actual Trump policies affecting jobs is in the energy sector. Calling climate change a “hoax,” Trump wants to promote oil and coal jobs at the expense of wind and solar jobs. But the U.S. solar power industry now employs more workers than coal, oil and natural gas combined. He wants to gut the auto fuel economy rules, undercutting opportunities for renewable-fuel companies like Tesla to innovate.

Stocks Up But Trump Economy Is A Myth

The stock market has risen under Trump; Tomahawk missile-maker Raytheon stock just went way up. Cruise missile strikes aside, bumps like these aren’t based on economic fundamentals or sound projections, but instead on the expectation of windfalls for corporations and the already-wealthy stock-owning investor class through the huge tax cuts Trump has promised.

But beyond momentary market gains,  the idea of a booming Trump economy is a myth – at least for people who work. There are no actual policies, existing or on the horizon, aimed at actually boosting jobs and wages. Only bluster. In fact, Trump has said we need to reduce American wages to the point where we can be “competitive” with Mexico and China. Yes, he said that.

His executive orders so far undercut jobs and wages. His budget eliminates jobs. His dramatic cuts in the things government does to make our lives and economy better — education, scientific research, regulation, etc. — will eat the seed corn of our future prosperity.

Trump does not offer real policy, only the propaganda of the moment, to be reversed at the next moment if convenient.

This post originally appeared on ourfuture.org on April 10, 2017. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

This week in the war on workers: Self-driving cars will kill a lot of jobs. What then?

Monday, March 27th, 2017

A lot of companies are working on self-driving cars, hoping they’ll reshape a range of industries. That could provide benefits on some fronts, including the environment and road safety, but a lot of people work as drivers, so self-driving cars could have a massive impact on the jobs landscape. The Center for Global Policy Solutions has a report on autonomous vehicles, driving jobs, and the future of work, laying out the likely employment effects of such a shift and offering policy suggestions to protect workers during that transition.

“More than four million jobs will likely be lost with a rapid transition to autonomous vehicles,” according to the report. And that will hit some demographic groups particularly hard, starting with people with less than a bachelor’s degree.

Men would be hardest hit. They number about 6.5 times the share of the working female population in driving occupations and earn 64 percent more than women in these jobs. Although nearly as many women as men are bus drivers, men are the vast majority of those employed as delivery and heavy truck drivers and as taxi drivers and chauffeurs.

Whites hold 62 percent of the 4.1 million jobs in driving occupations, so they would experience the largest hit. However, Blacks, Hispanics, and Native Americans, groups who are overrepresented in these occupations and who earn a “driving premium”—a median annual wage exceeding what they would receive in non-driving occupations—would also be hard hit.

  • With 4.23 percent of Black workers employed in driving occupations, Blacks rely on driving jobs more than other racial/ethnic groups. This is true in every driving occupation category.
  • With 3.25 percent of Hispanic workers in driving occupations, Hispanics have the second heaviest reliance and are especially overrepresented as delivery drivers and heavy truck drivers and very slightly as taxi drivers and chauffeurs.

But if self-driving cars are going to happen—and are going to have some benefits—how do you prevent disaster for these millions of workers whose jobs disappear? The report suggests automatic unemployment insurance and Medicaid eligibility, a progressive basic income, education and retraining, and expanded support for entrepreneurs.

This article originally appeared at DailyKOS.com on March 25, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.

We Must Create Good Jobs: Sherrod Brown Shows the Way Forward

Thursday, March 16th, 2017

February, the first full month of the Trump presidency, witnessed solid jobs growth of 235,000 with the headline unemployment rate little changed, at 4.7 percent, according to the Bureau of Labor Services monthly report.

Trump has already tweeted to claim credit for the results, but neither his plan nor his administration were in place. In fact, the February figures, a record 77th straight month of jobs growth, result from the momentum of the Obama recovery, plus whatever benefit or harm came from Trump’s bombast.

The jobs growth will harden the Federal Reserve’s resolve to raise interest rates again when its Open Market Committee meets next week. The Fed is acting in anticipation of an expected rise in inflation, that is to date not much in evidence.

By raising rates, The Fed is choosing to put a drag on the economy, even though full recovery is a long way off. Nearly 15 million people are still in need of full-time work. The share of the population in the workforce – 60 percent – is still down from 2000. If our work rate were back to where it was, about 10 million more Americans would have jobs.

Over the course of the recovery, most of the jobs created are contingent – part-time, short-term, contract work – with few benefits and often low wages. Lawrence Katz and former Obama economic advisor Alan Kreuger found that a staggering 94 percent of new jobs created from 2005 to 2015 were “alternative work,” contract or short-term or contingent.

Trump’s trickle-down agenda – to cut taxes on rich and corporations so they will create jobs – doesn’t address this reality. In fact, corporations are swimming in money, and using it increasingly to buy back shares or for mergers that do little to create jobs. Companies, contrary to Trump’s rhetoric, don’t lack capital or access to it, they lack demand for their products.

Democrats are sensibly critical of the Trump agenda, but too many fall back to a defense of Obama’s policies as the alternative. Obama helped save the economy that was in free fall when he took office, and presided over record months of jobs growth, but his policies, frustrated by Republican obstruction, did little to counter the stagnant wages, growing inequality and increasing insecurity of the modern economy.

The challenge is not simply to expose Trump’s bait and switch on the working people who voted for him, but to lay out elements of a bold alternative agenda. Bernie Sanders modeled that effort in his surging primary challenge.

Now, Senator Sherrod Brown of Ohio, who is up for re-election in 2018, has stepped  boldly into the breach. Brown has released a 77 page, meticulously documented report –Working Too Hard for Too Little – that delves into how policies and power have undermined workers, and offers the elements of an agenda to rebuild the middle class.

Brown’s central insight is a direct counter to Trump’s recycled voodoo. Trump believes that cajoling and bribing companies is the way to generate good jobs. Brown argues “It’s not businesses who drive the economy – it is workers.”   Workers with decent wages and secure jobs generate the demand that allow companies to grow and the economy to thrive. As it is, “Between 2000 and 2013, the middle class shrank in all 50 states. And that’s hurting our country. When hard work doesn’t pay off – when workers have no economic security and their paychecks don’t reflect the work they do – our economy cannot grow.”

The unemployment rate, Brown argues, isn’t the measure of a good economy. “The unemployment rate is one thing, but whether workers have jobs that pay a decent wage and provide security is another. And the unemployment rate certainly doesn’t reflect the frustration, the worry, the anger, the pain that workers feel.”

Senator Brown details how the policies that have structured globalization, technology, corporate management have undermined workers, savaged unions, and pushed companies to offshore, contract out, and cut back on jobs, wages and benefits.  He then offers a worker based alternative agenda, some old and some new.

He’d act directly to lift the floor under workers – requiring a $15.00 minimum wage, setting up a national fund to finance 12 weeks family and medical leave, mandating minimum paid vacation days and enforcing overtime pay.

He calls for empowering workers at the workplace– cracking down on labor violations, curbing wage theft, policing misuse of contract labor, and reviving the right to organize and bargain collectively. While Republicans are intent on destroying unions, Brown argues that clearly we all have a large stake in challenging the current imbalance of power in the workplace.

He details measures to help workers save for retirement – including matching grants and expansion of opportunities for part-time and short-term workers.

Then Brown offers a far more coherent plan than Trump to change corporate incentives. He’d create a “Corporate Freeloader Fee,” levied against all corporations “whose pay is so low that taxpayers are forced to subsidize their workers.” The fee would force companies to reimburse American taxpayers for the insult. He’d accompany this with offering companies that do right by the workers a tax break – if they “commit to staying in the US, to hiring in the US and to providing good wages and fair benefits for workers.”

The academic rigor – complete with footnotes – of Brown’s report is a rarity among politicians. It exposes House Speaker Paul Ryan’s much celebrated power points for the thin gruel that they are. Brown doesn’t see creating jobs as a standalone – affordable health care, better schools, access to colleges and good training, aggressive anti-trust and more are also vital.

Work unites all of us, Brown writes, citing Pope Francis: “We don’t get dignity from power nor money or culture. We get dignity from work.” With Working too Hard for Too Little, Brown has shown Americans that there is an alternative. The choice is not between Trump’s antics and more of the same. Good analysis leads to bold alternatives that offer a way out. His courage and his leadership should be applauded.

This blog originally appeared in ourfuture.org on March 10, 2017. Reprinted with permission.

Robert Borosage is a board member of both the Blue Green Alliance and Working America.  He earned a BA in political science from Michigan State University in 1966, a master’s degree in international affairs from George Washington University in 1968, and a JD from Yale Law School in 1971. Borosage then practiced law until 1974, at which time he founded the Center for National Security Studies.

Still Getting 'It' Wrong

Tuesday, March 14th, 2017

On Friday, the U.S. Bureau of Labor Statistics reported the economy gained 235,000 payroll slots in February and upped its estimates for December and January by another 9,000 jobs. Over the three-month period, that means an average job growth of 209,000 jobs a month. Including the ups and downs, over the past 30 years, the U.S. economy has averaged job growth of about 126,000 jobs a month. So this current rate of growth would suggest a strong labor market. Further, workers who transitioned from being out of the labor force into active job search were 2.3 times more likely to land a job than to be stuck unemployed and looking.  And unemployed workers were 1.3 times more likely to find a job than if they were to quit and drop out of the labor force discouraged. Over the year, average wages (not adjusting for inflation) rose 2.8%.

Watchers of the Federal Open Market Committee, the policymaking body of the Federal Reserve Board, are sure the FOMC will stick to its forward guidance and act to raise the fed funds rate; which is their tool for setting the tightness of monetary policy. Raising the rate signals faith in the strength of the recovery by the Fed; a strong sense the economy is nearing both its target for inflation and employment. And, it is likely, given recent statements from several Fed officials that these numbers may convince them that “normal” is just around the corner. But they are wrong.

Raising interest rates is a way to slow the growth of the economy. It is useful to prevent an economy from over-heating and setting price increases on a pace that would be difficult to reign in. If done properly, the Fed can guide the economy to a soft-landing, where it will sit growing at a rate just fast enough to stay at full employment.

Well, the problem is that is where the economy is now. Despite solid job growth over the past year, the unemployment rate has remained flat and annual nominal wage growth has remained steady at around 2.6%. As a simple arithmetic, if the number of jobs created slows, then the unemployment rate will have to rise, and wage growth will slow.

If the near term had great economic certainty, then it might be possible to agree that labor market might show more signs of tightening; rather than its present “goldilocks” state of flat unemployment and wages. But the near term has great economic uncertainty.

First, while wages are beginning to show growth, the share of people employed is still a significant distance from the share employed at the peak of 2007, which was below the peak of 1999. This means that household incomes have not caught up. A large share of the workforce is employed part-time, and while the recovery has seen mostly growth of full-time jobs, household incomes have not gotten back to full employment levels.

Second, a major driver of the real economy is the automobile industry sector. After over-correcting during the depths of the Great Recession and the historic collapse in demand, it has used the financial helping hand then-President Barack Obama lent, to recover and now reach record sales and a growth in employment and investment. But a substantial and rising share of auto loans have been made to African American and Latino communities using subprime lending tools.  During the initial stages of the recovery, delinquencies on auto loans declined. But, beginning in 2016, they started to rise. And they continue to rise.

The purchase of new cars has increased the supply of used cars, so the gap between new car prices and used car prices has been rising as the price of used cars is falling. Delinquencies on auto loans began when the Fed began moving from zero interest rates, since the loan rate on automobiles is tied to short-term interest rates. Higher short-term rates will further increase consumers’ costs of buying a new car, increasing the wedge between new and used car prices.

The threat is that if job growth slows, it will first affect the African American and Latino communities, already showing struggles with the onerous terms of the subprime loans. Those communities need more time for the labor market to recover. The best solution for the economy is for their income to pick up pace and out run the debt. Income-led buying leads to healthy sustainable recoveries. Raising interest rates when incomes lead the recovery simply slow the pace of buying and encourage savings rather than spending. The worse solution is to have the debt out run their income. If delinquencies increase more, the auto market will get a greater flood of used cars, driving the price of used cars down further and increasing the gap in price between used and new cars.

Over the past six months, in fact, lending activity has become more stringent for new borrowers in the auto sector and for small business. Such a credit tightening is normally associated with an economic downturn; not a healthy growing recovery about to overheat. Higher short-term rates will only exacerbate that problem.

The problem is clear, at some point the new car market will go into recession; which means the auto industry will be in recession; which means the economy will be in recession.

Third, compounding the near term uncertainty, is the war that President Donald Trump has declared on the immigrant community. Fear and uncertainty are high in communities where many workers and family members are undocumented. These workers are fully integrated into our communities. They are wives, husbands and parents of legal residents and American citizens. These households live under a cloud. Fearing deportation, or legal fees to protect loved ones, millions of households are unlikely to buy new cars, or may be deciding to horde cash and stop making payments on cars that have been purchased. This is an uncertainty with a magnitude we have never faced, and therefore is too great a threat to ignore.

Fourth, the increase in people with health insurance because of the Affordable Care Act has meant job growth in the health sector at a faster rate than the rest of the economy. The current proposals of the Republican Congress to repeal the Affordable Care Act all will lead to a decrease in the number of Americans with health insurance. For this reason, the major hospital associations and the American Medical Association oppose the Republican plan. The threat to this market will have real repercussions on job growth in the one high-wage sector with fast job growth. And the wind down of federal Medicaid support to those states that extended health coverage using Medicaid will cause huge ripple effects on state budgets, which have not fully recovered from the drastic loss of revenues during the Great Recession. This will mean further pressures on recovering state investment in public colleges and universities.

Finally, the proposed budget cuts put forth by the Trump administration would gut public investment in education, housing and the environment. The austerity that has been proposed will cut federal jobs. And, just when the Medicaid cuts are going to hurt state budgets and so put more pressure to raise tuition at public two- and four-year colleges, the Trump administration is proposing cuts to Pell Grants and returning the student loan market to the more expansive private sector.

Thoughts that huge tax cuts to high-income households will offset a downturn in automobile sales, further disruption in the rising costs of college tuition or a dismantling of the health sector are irrational. We have lived through big tax cuts to the wealthy under former President George W. Bush. They were insufficient to pull the economy out of the 2001 downturn in any timely fashion; and, he had the help of low interest rates, a federal deficit swelled by tax cuts and war time expansion of military budgets, as well as a relatively healthy state unemployed insurance system. The current unemployment insurance system is greatly weakened and cannot provide the automatic stabilizer so vital to dampening a recession.

These all point to a real danger that the Fed may be a great threat to what is a more fragile economy than appears at the moment. The drive to be “normal” in a world that is clearly not normal, may put us in danger of a downturn that will be difficult to recover from given the instability shown in the White House.

This blog originally appeared in aflcio.org on March 13, 2017.  Reprinted with permission.

William E. Spriggs serves as Chief Economist to the AFL-CIO, and is a professor in, and former Chair of, the Department of Economics at Howard University. Follow Spriggs on Twitter: @WSpriggs.

Donald Trump is too busy showboating to do the hard work of creating jobs and rebuilding America

Tuesday, February 21st, 2017

Donald Trump isn’t getting stuff done because Donald Trump doesn’t know what he’s doing—or even what he would need to do to get stuff done.

Take infrastructure. Jonathan Cohn lays out the differences between how Barack Obama put together a major infrastructure package and got it passed despite Republicans refusing to work with him, while Trump has failed on infrastructure despite some Democrats being willing to work with him.

Newsflash: Obama put work into his plans, and had a big staff of experts meeting and researching and trying to figure out what would work. Whereas:

During the presidential campaign, Trump mocked Hillary Clinton for her wonkishness: “She’s got people that sit in cubicles writing policy all day,” he said during one interview. “It’s just a waste of paper.” At one point, Trump’s own policy advisers quit because nobody was paying them or taking them seriously.

Trump was too busy proposing—in broad, flashy terms—an infrastructure plan that could have been popular and good for the economy. You know, a Democratic-style one, involving spending lots of money to fix or build bridges and schools and hospitals, and creating jobs doing just that. But:

In a December interview with The New York Times, Trump confessed that he was still figuring out exactly what he wanted to do ? and that he hadn’t realized FDR-style infrastructure building might alienate conservatives. “That’s not a very Republican thing ? I didn’t even know that, frankly.”

So once Trump realized that today’s Republicans are opposed to rebuilding America’s bridges and schools and hospitals, he came out with an infrastructure plan that was a giveaway to big business. But even then, he wasn’t really going to put any work into it—not when he could be tweeting attacks on the media and signing horrible executive orders.

This article originally appeared at DailyKOS.com on February 21, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.

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