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When a Coin Drops in Asia, Jobs Disappear in Detroit

Tuesday, March 8th, 2016

Leo Gerard

Last year, free trade hammered Michigan’s 11th Congressional District, located between Detroit and Flint, killing manufacturing, costing jobs and crushing dreams.

It’s not over, either. Another 11th District company, ViSalus Inc., told the state it would eliminate 87 jobs as of last Saturday, slicing its staff by nearly 400 since 2013 when ViSalus was the second-largest direct sales firm in the state.

The numbers are staggering. The Economic Policy Institute (EPI) released a report last week showing that America’s $177.9 billion trade deficit in 2015 with the 11 other countries in the proposed Trans-Pacific Partnership (TPP) trade deal caused 2 million job losses nationwide.

This trade deficit reduced jobs in every U.S. congressional district except two, EPI said, but Michigan’s 11th had the ignoble distinction of suffering more as a share of total employment than any other district in the country. It was 26,200 jobs. Just in 2015. It was tech workers in January and teachers in July and tool makers in August and auto parts builders in October.

Manipulation of money killed those jobs. It works like this: Foreign countries spend billions buying American treasury bonds. That strengthens the value of the dollar and weakens foreign currencies. When a country’s currency value drops, it acts like a big fat discount coupon on all of its exports to the United States. And it serves simultaneously as an obscene tax on all U.S. exports to that country.

Among the TPP countries, Malaysia, Singapore and Japan are known currency manipulators, and Vietnam appears to be following their example. EPI found that currency manipulation is the most important cause of America’s massive trade deficits with TPP countries. Trade deficits mean products are shipped to the United States rather than made in the United States. The math is simple. A drop in Asian currency means a drop in U.S. jobs.

EPI looked at what types of imports the 11 countries sent the United States last year to determine what types of industry and jobs America lost as a result. The overwhelming majority was motor vehicles and parts. That’s why Michigan was the biggest loser of all of the states. The auto sector was followed by computer and electronic parts ­– including communications, audio and video equipment – and primary metals – including basic steel and steel products.

In addition, EPI found job losses in industries that serve manufacturers, like warehousing and utilities, and services like retail, education and public administration.

Each of these kinds of losses occurred last year in Michigan’s 11th district, located in the heart of America’s car manufacturing country in southwestern Oakland County and northwestern Wayne County, where Detroit is parked just outside the district’s lines.

In January, in Michigan’s 11th, Technicolor Videocassette of Michigan, Inc., a subsidiary of the French multimedia giant Technicolor SA, laid off 162 workers in Livonia. That same month, what was once a vibrant chain of cupcake stores called Just Baked shuttered several shops, putting an untold number of bakers and clerks in the street, some with last paychecks that bounced.

In February, the Sam’s Club store in Waterford closed, throwing 122 in the street. Waterford municipal official Tony Bartolotta called it another “nail in the coffin” for the township’s east side.

In April, Frito-Lay told 17 workers that they’d lose their jobs later that year when it closed its Birmingham warehouse.

In July, 231 teachers in the Farmington Public Schools learned they would not have work in the new school year. One of them, 25-year-old Val Nafso, who grew up in Farmington, told the Oakland Press, “I hope things change where people who are passionate about teaching can enter the profession without 1,000 people telling them “Don’t do it…get out now.”

In August, DE-STA-CO, a 100-year-old tool manufacturer, told Michigan it would end production in Auburn Hills, costing 57 workers their jobs.

In October, Waterford laid off 39 firefighters. The township had received a $7.6 million grant in 2013 to hire them, but just couldn’t come up with local funds to keep them. That happens when factories close and bakeries shut down. Township officials told concerned residents they’d looked hard at the budget, “We started projecting out for 2017 and it flat lined,”Township Supervisor Gary Wall told them.

Later that month, FTE Automotive USA Inc., an auto parts manufacturer, told Michigan it would close its Auburn Hills plant and lay off 65 workers.

In the areas around Michigan’s 11th, horrible job losses occurred all last year as well, which makes sense since EPI found 10 of the top 20 job-losing districts in the country were in Michigan.

Ford laid off 700 workers at an assembly plant in Wayne County in April. GM eliminated a second shift, furloughing 468 workers at its Lake Orion Assembly Plant in Oakland County in October.

Auto supply company Su-Dan announced in September it would close three factories in Oakland County by year’s end, costing 131 workers their jobs.

In October, a division of Parker Hannifin Corp. in Oxford, Oakland County, that manufactured compressed air filters told its 65 workers they wouldn’t have jobs in 2016. “There’s a lot of people there that are paycheck to paycheck, and it’s going to hurt them,” Michelle Moloney, who worked there 25 years, told a reporter from Sherman Publications.

The threat of the TPP is that it does absolutely nothing to stop this job-slaughter. Lawmakers, public interest groups, manufacturers, and unions like mine all pleaded with negotiators to include strong provisions in the deal to punish currency manipulators. They didn’t do it.

They included some language about currency manipulation. But it’s not in the main trade deal.  And it’s not enforceable.

Swallowing the TPP would be accepting deliberately depressed currency values in Asian trading partner countries and a permanently depressed economy in the U.S. car manufacturing heartland.

It’s the TPP that should disappear. Not Detroit.

This blog was originally posted on ourfuture.org on March 8, 2016. Reprinted with permission.

Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO. Gerard, the second Canadian to lead the union, started working at Inco’s nickel smelter in Sudbury, Ontario at age 18. For more information about Gerard, visit usw.org.

The Deficit Is Falling, But Where Are The Jobs?

Thursday, October 9th, 2014

Isaiah J. PooleThe deficit scolds are getting what they wanted: Today the Congressional Budget Office announced that the federal deficit for this fiscal year is the lowest it has been for any year in the Obama presidency – $486 billion, or 2.8 percent of the nation’s gross domestic product.

The rest of us, though, aren’t getting what we were promised. Conservatives have repeatedly told us that cutting federal spending, and reducing deficits, would unleash economic growth and create jobs. Instead, what we have to show for it is a languid economy at best, with only enough jobs for half the people who are unemployed and looking for work.

Economic growth is weak enough that the Federal Reserve, at its September meeting, agreed that it was not ready to signal that an interest rate increase would come soon, for fear of further hindering economic growth. “[I]t would be prudent to err on the side of patience while awaiting further evidence of sustained progress toward the Committee’s goals,” the Federal Open Market Committee said in its September meeting minutes. It added that “the costs of downside shocks to the economy would be larger than those of upside shocks” because it would be easier for the Fed to withdraw future stimulative efforts than to add them.

The evidence keeps piling up that the bipartisan consensus that we needed to focus on deficit reduction instead of full employment was disastrously wrong. Following that consensus has worked for Wall Street and the 1 percent – with the only stimulus to the economy being the Fed’s asset-buying program – “quantitative easing” – and near-zero interest rates, equity prices have risen to record levels. The Dow Jones Industrial Average, which before the 2008 crash peaked at 14,164, today closed at 16,994, an almost 20 percent increase. That’s good if you own stocks, but if you’re a working-class American, what really counts is that your wages have been flat. In fact, when you account for the disappearance of high-wage jobs and the proliferation of low-wage ones, workers have seen an average decline in wages of 23 percent. Plus, with corporations focusing on boosting their stock price instead of rewarding their workers for their productivity with improved wages and benefits, there has not been the level of consumer spending that encourages a virtuous cycle of more hiring to keep up with consumer demand.

The shame is that we could have gotten the same news of a lower deficit from the CBO through a much better route. Nick Bunker at the Washington Center for Equitable Growth cites economists Paul Krugman and Brad DeLong, and former Treasury Secretary Lawrence Summers, as three of the powerful voices saying that the United States should have taken advantage of low interest rates and low inflation to spend heavily on infrastructure – and create jobs.

Summers and DeLong, Bunker writes, argue that “all expansionary fiscal policy can be self-financing—not only infrastructure spending but also other forms of government spending and transfers. … [C]urrent fiscal policy that quickly puts the economy back toward its long-run potential will be paid for by the future output it created.”

In other words, spending to put people to work on projects that support the future growth of the economy more than pay for themselves in the long run – including by tangibly lowering the federal deficit through growth. On the other hand, high unemployment is an economic cost, and slashing the budget in a mindless pursuit of low deficits does not erase those costs.

The news of a low deficit may have quieted the deficit scolds, but their flawed ideology has not gone away. Far from it. That’s why it’s important that we get the story straight, and tell it straight to people who will be voting in November.

This blog originally appeared in OurFuture.org on October 8, 2014. Reprinted with permission. http://ourfuture.org/20141008/the-deficit-is-falling-but-where-are-the-jobs

About the Author: Isaiah J. Poole has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.

Drug Tests for Welfare Bills Come to Three More States

Saturday, February 9th, 2013

Laura ClawsonLooking at the range of drug testing-for-benefits bills being pushed in state legislatures across the country, you almost have to suspect Republicans of some kind of urine fetish. In addition to all the states that are debating or have passed bills requiring people applying for unemployment insurance benefits to pee in cups, drug-testing bills aimed at welfare applicants are being introduced in three states. The specifics would be ripe for comedy if we weren’t talking about a concerted effort by the powerful to stigmatize vulnerable people as drug addicts, as if that’s the only reason a person might need help in an economy in which there are still more than three job-seekers for every job opening:

The Ohio State Senate held a second hearing Thursday night on a proposal to establish pilot drug-testing programs in three counties. Under the proposal, applicants would be required to submit a drug test if they disclose that they have used illegal substances. The proposal was first introduced in the spring, but pressure from opponents led Gov. John Kasich to squash the bill in May.Virginia Republicans are also reviving a bill that was shelved earlier this year. The 2012 version failed after the state estimated it would cost $1.5 million to implement while only saving $229,000. The bill’s sponsor, Delegate Dickie Bell, has not introduced the updated version yet, but says he’s found more cost effective options.

Those would have to be some pretty damn significant changes to the cost structure to erase a nearly $1.25 million deficit. Virginia wasn’t the first to run into that kind of problem; a Florida law mandating drug-testing of welfare applicants cost the state money because so few people’s tests were positive, leaving the cost of the tests higher than the savings from denying people benefits. And that’s leaving aside the cost of the lawsuits for a law that was ultimately found unconstitutional.

Both Ohio and Kansas legislators are trying to pretend the goal is to help people rather than to associate welfare recipients with drug abuse in the public debate, claiming that they just want to be sure people get the help they need. Bear in mind that in Florida, just 2.6 percent of applicants didn’t pass their drug tests. So when you have Republican legislators who don’t show any signs of wanting to help any kind of working-class or middle-class people, even, suddenly dripping with concern for welfare applicants … well, you just have to call bullshit.

This article was originally posted by The Daily Kos on February 8, 2013. Reprinted with Permission.

About the Author: Laura Clawson is a Daily Kos contributing editor since December 2006 &  the Labor editor since 2011. She lives in Washington, D.C.

No Super Committee Deal. Good. Now Focus On Jobs—Best Way To Lower Deficit

Tuesday, November 22nd, 2011

Roger HickeyThe reason members of the Super Committee didn’t reach an agreement is that Republican members insisted on damaging cuts to Social Security, Medicare, and Medicare – AND they wouldn’t budge from their refusal to roll back tax cuts for the richest 1% of Americans.

If the so-called “Super Committee” had made a bi-partisan deal based on the announced negotiating positions of the Republicans and Democrats on that panel, the result would have been higher unemployment, serious damage to the social safety net — and worsening deficits.

Super Committee Democrats, concerned about being seen as blocking a deal, clearly offered Social Security and Medicare benefit cuts in return for a pitifully small increase in taxes and large and damaging spending cuts in the middle of a struggling economy.

The deal on the table – whose failure is much lamented by beltway pundits – would have seriously harmed the economy, without significantly reducing deficits. In fact, it might have made it worse.
Luckily, the progressive base – and the Democratic Caucus in the House and Senate – convinced those negotiators that a bad deal is worse than no deal.

Democrats should have been guided by the message of the September 6th press conference at which Super Committee appointee Rep. Chris Van Hollen, standing with former Speaker Nancy Pelosi, declared “Job growth will contribute to deficit reduction,” according to the Washington Post coverage:

Van Hollen, who made the remarks at a news conference with House Minority Leader Nancy Pelosi (D-Calif.), Minority Whip Steny Hoyer (D-Md.) and other members of the Democratic leadership, argued that the most recent Congressional Budget Office report states that for every 1/10 of one percentage point increase in the U.S. gross domestic product, the deficit is reduced by $310 billion.

“Now, they project over the next 10 years that average GDP, average growth of the economy will be about 2.9 percent,” he said. “What those numbers tell you is that if you got that growth rate up by half of one percent, you would actually reduce the deficit by $1.5 trillion, which is the target laid out in the legislation before us.”

Clearly, this is what all progressives believe: the weak economy should not be allowed to fall backward into another recession – which could happen if we cut spending too fast or too deeply. And action to get the economy growing robustly would be the most effective thing we could do to bring down the Federal deficit.

Progressives will therefore push for public investment to create jobs and create consumer demand, which is the missing factor preventing American business from investing in expanded production and growing employment. All of the elements of President Obama’s American Jobs Act should now be taken up by everyone in Congress who professes to be concerned about the deficit. As progressives, we will work with our allies and partners in the American Dream movement to push for extended unemployment benefits and other stimulus spending programs that both Democrats and Republicans have supported in the past.

In this post-Super Committee period, you can be sure that the Campaign for America’s Future will be fighting for policies that will spur growth and create enough jobs to bring down our chronically high unemployment. We will fight to get Congress to let the Bush tax cuts for the 1% expire. We will fight for reductions in the military budget. And we will remind all Americans that job creation (and long term health reform to control health costs) are the most effective things we can do to reduce the deficit.

This post originally appeared in Campaign for America’s Future on November 21, 2011. Reprinted with permission.

About the Author: Roger Hickey is Co-Director of the Campaign for America’s Future. He was also one of the founders of Health Care for America Now!, a coalition of over 1,000 national and local organizations united to achieve quality affordable health care for all. He was also one of the leaders of the successful campaign to stop the privatization of Social Security, called Americans United to Protect Social Security. Hickey was a founder and Communications Director of the Economic Policy Institute, a Washington think tank that looks at economics from the point of view of working Americans. He was also a founder of the Public Media Center in San Francisco. A graduate of the University of Virginia, Hickey began his career in the 1960s as an organizer for the Virginia Civil Rights Committee.

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