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Archive for the ‘Stimulus’ Category

Fewer Workers, Bigger Profits—and Endless Recession?

Tuesday, July 27th, 2010

Roger BybeeMotorcycle-maker Harley-Davidson is revving up its engines, nearly tripling last year’s profits in the second quarter by hauling in $71 million.

This follows first-quarter profits of $68.7 million. But Harley is still roaring toward a head-on collision with the workers in its hometown of Milwaukee, where the company has been a beloved symbol of the city’s gritty blue-collar image and pride in craftsmanship. Harley is still demanding $54 million worth of wage and benefit cuts, along with changes in work rules, from the United Steelworkers within the next 60 days.

Unless Harley gets the concessions before the current contract expires in April 2012, it has announced that it will zoom off to a new location with at least 1,400 jobs. Harley, like many other U.S. firms, is managing to extract bigger profits despite slow, sometimes declining sales and shrinking workforces, as the New York Times reported:

This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.

Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production.

Clearly, bigger profits are doing nothing to promote an economic recovery. CEOs have little motivation to invest in new machinery and hire more people as spending power continues to lag badly—due precisely to the widespread wage-slashing and job cutting by other corporations doing the very same thing.

FORD NOW PRODUCING 62% OUTSIDE U.S.

The persistence of high unemployment—widely predicted to extend for as long as another four years or even longer—gives CEOs enormous leverage over workers. Even when profits are roaring back, as at Harley, U.S. corporations face no obstacles to relocating production in low-wage southern states or repressive nations like China or Mexico if workers refuse to concede to their demands.

Ford is cited by the Times as another firm that has managed to make bigger profits with lower sales and fewer workers:

At Ford, revenue in its North American operations is down by $20 billion since 2005, but instead of a loss like it had that year, the unit is expected to earn more than $5 billion in 2010. In large part, that is because Ford has shrunk its North American work force by nearly 50 percent over the last five years.

Somehow the Times’ neglected to mention that 62% of Ford’s production now takes place outside the United States. More generally, the environment of long-term, prolonged joblessness has created an environment where maximum production is squeezed from the fewest workers possible, the Times stated:

Because of high unemployment, management is using its leverage to get more hours out of workers,” said Robert C. Pozen, a senior lecturer at Harvard Business School and the former president of Fidelity Investments. “What’s worrisome is that American business has gotten used to being a lot leaner, and it could take a while before they start hiring again.”

Corporate America’s no-hiring mode continues a long-term trend, as job growth in the U.S. over the last decade has been under 1% compared with gains in of 22% to 38% every decade since 1940.

While corporations individually have discovered how to profit temporarily from vast reductions in their workforces and the biggest wage-slashing spree since the Great Depression, their strategies offer no way out of the Great Recession. As the Times noted, the increasingly leaner and meaner workplace has a downside:

The problem is that companies are not investing those earnings, instead letting cash pile up to levels not reached in nearly half a century.

“As long as corporations are reinvesting, the economy can grow,” said Ethan Harris, chief economist at Bank of America Merrill Lynch.

“But if they’re taking those profits and saving them, rather than buying new equipment, it hurts overall growth. The longer this goes on, the more you worry about income being diverted to a sector that’s not spending.”

The current direction of Corporate America not only prolongs the
recession. It also re-distributes wealth upward—thereby taking away the very spending power from working families that is needed to break out of the recessionary cycle.

At a moment when the richest 1% already hauls in 23.5% of all annual income in the United States, there is little likelihood that the super-rich will be igniting an economic recovery with even more cash on their hands. They are much more likely to simply add to their already-vast savings:

“There’s no question that there is an income shift going on in the economy,” Mr. Harris added. “Companies are squeezing their labor costs to build profits.”
In fact, while wages and salaries have barely budged from recession lows, profits have staged a vigorous recovery, jumping 40 percent between late 2008 and the first quarter of 2010.

About The Author:

Roger Bybee is a Milwaukee-based freelance writer and progressive publicity consultant whose work has appeared in numerous national publications and websites, including Z magazine, Dollars & Sense, Yes!, The Progressive, Multinational Monitor, The American Prospect and Foreign Policy in Focus. Bybee edited The Racine Labor weekly newspaper for 14 years in his hometown of Racine, Wis., where his grandfathers and father were socialist and labor activists. His website can be found here, and his e-mail address is winterbybee@gmail.com.

REPORT: The Recovery Act, Unsung Hero of the Year

Thursday, February 18th, 2010

Image: Kate ThomasMarking the first anniversary of the American Recovery and Reinvestment Act (ARRA), the SEIU is releasing a new report today analyzing the social and economic impact of the Recovery Act. This report explains what the aggregate numbers on economic growth and job creation fail to illustrate–how the Recovery Act helped counter the recession by protecting human services and the workers employed to deliver those services at a local level.

Reporting by state recipients of Recovery Act direct government investment spending demonstrates that this spending has saved or created 1,239,437 jobs in both the public and private sector. When you include the impact of indirect spending–jobs created or saved as a result of the consumer spending of directly funded job holders–the total rises to 1,859,156 jobs that have been saved or created. Pretty amazing. Without it, the unemployment rate in December 2009 may have reached 11.2 percent, 1.2 percent higher than the actual rate of 10.0 percent that month.

How Recovery Act Investments in Human Services Created and Saved Hundreds of Thousands of Jobs
While it would be impossible to describe all of the significant findings of this report in just one blog post, I’ll be doing just that in a series of blog posts at SEIU.orgover the next couple of days. I’ll also be highlighting the stories included in this report–collected from a combination of public sources, government Web sites, and interviews with SEIU state-level leaders–which uniquely illustrate how states and some local units of government have used ARRA resources to limit scaling back.

For workers like Akbar Chatman–a substance abuse counselor for the Department of Mental Health in Los Angeles County–the Recovery Act played a critical role in helping him do his job. Watch:

While conditions are far better than they would have been without the stimulus fund actions that were taken, it is clear that substantial challenges remain. Without additional fiscal relief, new budget gaps could force state governments to shed 900,000 jobs this year.

View the report in full at http://seiu.me/arra

Download the (PDF) report:
“How Recovery Act Investments in Human Services Created and Saved Hundreds of Thousands of Jobs”

*This post originally appeared in SEIU Blog on February 17, 2010. Reprinted with permission.

About the Author: Kate Thomas is a blogger, web producer and new media coordinator at the Service Employees International Union (SEIU), a labor union with 2.1 million members in the healthcare, public and property service sectors. Kate’s passions include the progressive movement, the many wonders of the Internet and her job working for an organization that is helping to improve the lives of workers and fight for meaningful health care and labor law reform. Prior to working at SEIU, Katie worked for the American Medical Student Association (AMSA) as a communications/public relations coordinator and editor of AMSA’s newsletter appearing in The New Physician magazine.

Will Teacher be Left Behind by the Stimulus Gold Rush?

Monday, August 3rd, 2009

To teachers across the country, the carrot that Washington is dangling before schools could soon start to feel like a stick.

As the Obama administration funnels stimulus money into public schools, states will compete for a $4.3 billion fund known as Race to the Top. But the strings attached to the money reflect a vision for school reform that many activists fear will drive the corporatization of education and the marginalization of organized labor.

One key requirement is that states allow teachers to be assessed on the basis of standardized test scores—a policy that could ignite labor disputes over merit pay and raise philosophical questions about how to evaluate educators.

The funding guidelines could endanger some states’ access to the funds, due to “firewall” policies that bar the direct use of test scores in employment-related decisions, such as awarding tenure—a protection against unfair judgment of teachers based on limited data.

The Race to the Top guidelines also prioritize the expansion of charter schools and alternative pathways for teacher certification, like Teach for America’s fast-track program for top-tier college grads. Both have been hyped as a way to bring innovation and “entrepreneurialism” to public schools. But critics view charters and alternative credentialing as steps toward privatization and deregulation, which in turn alienate struggling students and undermines union power.

By tethering stimulus money to controversial policy initiatives, Education Secretary Arne Duncan is stoking tensions between free-market reform principles and unions’ mission to protect their professions and labor standards.

Randi Weingarten, head of the American Federation of Teachers, signaled a willingness to compromise in a recent statement, calling for “shared responsibility” and transparency in reform efforts.

But many cast doubt on the merits of the Duncan brand of reform.

In a new report on efforts to reform teacher pay schemes, the Center for American Progress challenges the common assumption that “compensation is the primary incentive for teachers to perform at higher levels”:

[N]umerous approaches have been punitive or simplistic in design, implementation, or marketing. This is one reason that teachers and unions have frequently opposed efforts to link learning and compensation. Teachers have often seen these efforts as professionally insulting and as misunderstanding what leads to improved performance.

To progressive education activists, the Duncan brand of reform—which was incubated during his tenure as CEO of Chicago Public Schools —embodies the worst aspects of No Child Left Behind.

Though the Bush-era law was billed as a path toward alleviating racial and socioeconomic educational gaps, critics say it has cheated disadvantaged students by emphasizing rigid high-stakes testing regimes rather than genuine intellectual development.

From a labor standpoint, Jim Horn of Schools Matter says the Race to the Top will accelerate the downward spiral in public education:

The winners of the Race to the Top will not be teachers, who will be further humiliated by having meager pay raises to their embarrassingly low salaries now dependent upon test score production work….

Among the winners will not be the embattled teaching profession, since Mr. Duncan prefers the marginally-prepared and the alternatively-certified teachers to those with real credentials based on both content and pedagogy expertise.

While Duncan tries to pull schools and unions toward a hardline “accountability” agenda, there are signs that some educators are bucking mainstream reform trends from the ground up. Teachers at some charter schools are moving to unionize to stabilize their jobs and working conditions.

In Duncan’s former hometown, a crop of radical teachers has risen up against Chicago’s plans to overhaul and shut down under-performing schools. The Caucus of Rank and File Educators (CORE) filed a discrimination lawsuit last month to challenge the city’s school “turnaround” initiative.

CORE alleges that black teachers have been disparately harmed by staff purges, and that the restructuring has disrupted students’ education, with little accountability to parents and surrounding communities.

Amid all the political bluster around “fixing” public schools, the lesson that seems to constantly elude policymakers is a simple one: a classroom is a space for intellectual exploration as well as a workplace, and it works best when it enables students and teachers to thrive together.

In the Obama administration’s race to reform, is there room at the top for the whole school community?

Michelle Chen: Michelle Chen’s work has appeared in Extra!, Legal Affairs, City Limits and Alternet, along with her self-published zine, cain. She also blogs at Racewire.org

This article originally appeared at Working In These Times on July 30 and is reprinted here with permission from the source.

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