As Labor Day looms, more Americans than ever don’t know how much they’ll be earning next week or even tomorrow.
This varied group includes independent contractors, temporary workers, the self-employed, part-timers, freelancers, and free agents. Most file 1099s rather than W2s, for tax purposes.
On demand and on call – in the “share” economy, the “gig” economy, or, more prosaically, the “irregular” economy – the result is the same: no predictable earnings or hours.
It’s the biggest change in the American workforce in over a century, and it’s happening at lightening speed. It’s estimated that in five years over 40 percent of the American labor force will have uncertain work; in a decade, most of us.
Increasingly, businesses need only a relatively small pool of “talent” anchored in the enterprise – innovators and strategists responsible for the firm’s unique competitive strength.
Everyone else is becoming fungible, sought only for their reliability and low cost.
Complex algorithms can now determine who’s needed to do what and when, and then measure the quality of what’s produced. Reliability can be measured in experience ratings. Software can seamlessly handle all transactions – contracts, billing, payments, taxes.
All this allows businesses to be highly nimble – immediately responsive to changes in consumer preferences, overall demand, and technologies.
While shifting all the risks of such changes to workers.
Whether we’re software programmers, journalists, Uber drivers, stenographers, child care workers, TaskRabbits, beauticians, plumbers, Airbnb’rs, adjunct professors, or contract nurses – increasingly, we’re on our own.
And what we’re paid, here and now, depends on what we’re worth here and now – in a spot-auction market that’s rapidly substituting for the old labor market where people held jobs that paid regular salaries and wages.
Even giant corporations are devolving into spot-auction networks. Amazon’s algorithms evaluate and pay workers for exactly what they contribute.
Apple directly employs fewer than 10 percent of the 1 million workers who design, make and sell iMacs and iPhones.
This giant risk-shift doesn’t necessarily mean lower pay. Contract workers typically make around $18 an hour, comparable to what they earned as “employees.”
Uber and other ride-share drivers earn around $25 per hour, more than double what the typical taxi driver takes home.
The problem is workers don’t know when they’ll earn it. A downturn in demand, or sudden change in consumer needs, or a personal injury or sickness, can make it impossible to pay the bills.
So they have to take whatever they can get, now: ride-shares in mornings and evenings, temp jobs on weekdays, freelance projects on weekends, Mechanical Turk or TaskRabbit tasks in between.
Which partly explains why Americans are putting in such long work hours – longer than in any other advanced economy.
And why we’re so stressed. According to polls, almost a quarter of American workers worry they won’t be earning enough in the future. That’s up from 15 percent a decade ago.
Irregular hours can also take a mental toll. Studies show people who do irregular work for a decade suffer an average cognitive decline of 6.5 years relative people with regular hours.
Such uncertainty can be hard on families, too. Children of parents working unpredictable schedules or outside standard daytime working hours are likely to have lower cognitive skills and more behavioral problems, according to new research.
For all these reasons, the upsurge in uncertain work makes the old economic measures – unemployment and income – look far better than Americans actually feel.
It also renders irrelevant many labor protections such as the minimum wage, worker safety, family and medical leave, and overtime – because there’s no clear “employer.”
And for the same reason eliminates employer-financed insurance – Social Security, workers compensation, unemployment benefits, and employer-provided health insurance under the Affordable Care Act.
What to do? Courts are overflowing with lawsuits over whether companies have misclassified “employees” as “independent contractors,” resulting in a profusion of criteria and definitions.
We should aim instead for simplicity: Whatever party – contractor, client, customer, agent, or intermediary – pays more than half of someone’s income, or provides more than half their working hours, should be responsible for all the labor protections and insurance an employee is entitled to.
Presumably that party will share those costs and risks with its own clients, customers, owners, and investors. Which is the real point – to take these risks off the backs of individuals and spread them as widely as possible.
In addition, to restore some certainty to peoples’ lives, we’ll need to move away from unemployment insurance and toward income insurance.
Say, for example, your monthly income dips more than 50 percent below the average monthly income you’ve received from all the jobs you’ve taken over the preceding five years. Under one form of income insurance, you’d automatically receive half the difference for up to a year.
But that’s not all. Ultimately, we’ll need a guaranteed minimum basic income. But I’ll save this for another column.
This post appeared in Our Future on August 24, 2015. Originally posted at RobertReich.org. Reprinted with permission.
About the Author: Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century.
Confronted with a dire situation, a world power last week took strong action to secure its domestic jobs and manufacturing.
That was China. Not the United States.
China diminished the value of its currency. This gave its exporting industries a boost while simultaneously blocking imports. The move protected the Asian giant’s manufacturers and its workers’ jobs.
Currency manipulation violates free market principles, but for China, doing it makes sense. The nation’s economy is cooling. Its stock market just crashed, and its economic powerhouse – exports – declined a substantial 8.3 percent in July – down to $195 billion from $213 billionthe previous July. This potent action by a major economic competitor raises the question of when the United States government is going to stop pretending currency manipulation doesn’t exist. When will the United States take the necessary action to protect its industry, including manufacturing essential to national defense, as well as the good, family-supporting jobs of millions of manufacturing workers?
The report, “Manufacturing Job Loss: Trade, Not Productivity is the Culprit,” clearly links massive trade deficits to closed American factories and killed American jobs. U.S. manufacturers lost ground to foreign competitors whose nations facilitated violation of international trade rules. China is a particular culprit. My union, the United Steelworkers, has won trade case after trade case over the past decade, securing sanctions called duties that are charged on imported goods to counteract the economic effect of violations.
In the most recent case the USW won, the U.S. International Trade Commission (ITC) finalized duties in July on illegally subsidized Chinese tires dumped into the U.S. market. The recent history of such sanctions on tires illustrates how relentless the Chinese government is in protecting its workers.
Shortly after President Obama took office, the USW filed a complaint about illegally-subsidized, Chinese-made tires dumped into the U.S. market. The Obama administration imposed duties on Chinese tire imports from September 2009 to September 2012.
Immediately after the tariffs ended, Chinese companies flooded the U.S. market with improperly subsidized tires again, threatening U.S. tire plants and jobs. So the USW filed the second complaint.
Though the USW workers won the second case as well, the process is too costly and too time consuming. Sometimes factories and thousands of jobs are permanently lost before a case is decided in workers’ favor. This has happened to U.S. tire, paper, auto parts and steel workers.
In addition, the process is flawed because it forbids consideration of currency manipulation – the device China used last week to support its export industries.
By reducing the value of its currency, China, in effect, gave its export industries discount coupons, enabling them to sell goods more cheaply overseas without doing anything differently or better. Simultaneously, China marked up the price of all imports into the country. American and European exporters did nothing bad or wrong, but now their products will cost more in China.
Chinese officials have contended that the devaluation, which came on the heels of the bad news about its July exports, wasn’t deliberate. They say it reflected bad market conditions and note that groups like the International Monetary Fund have been pushing China to make its currency more market based.
Right. Sure. And it was nothing more than a coincidence that it occurred just as China wanted to increase exports. And it was simply serendipity that in just three days, “market conditions” wiped out four years of tiny, painfully incremental increases in the currency’s value.
If the value of the currency truly is market based and not controlled by the government, then as Chinese exports rise, the value should increase. That would eliminate the artificial discount China just awarded its exported goods. Based on past history, that is not likely to happen. So what China really is saying is that its currency is market based when the value is declining but not when it rises.
China did what it felt was right for its people, its industry and its economy. The country hit a rough spot this year. Though its economy is expected to grow by 7 percent, that would be theslowest rate in six years. Its housing prices fell 9.8 percent in June. Car sales dropped 7 percent in July, the largest decline since the Great Recession. Over the past several months, the Chinese government has intervened repeatedly to try to stop a massive stock market crash that began in June.
In the meantime, the nation’s factories that make products like tires, auto parts, steel and paper continue to operate full speed ahead and ship the excess overseas. As a result, for example, the international market is flooded with underpriced Chinese steel, threatening American steel mills and tens of thousands of American steelworkers’ jobs.
As EPI points out, that means more U.S. factories closed and U.S. jobs lost. If China had bombed thousands of U.S. factories over the past decade, America would respond. But the nation has done virtually nothing about thousands of factories closed by trade violations.
The United States could take two steps immediately to counter the ill-effects of currency manipulation. Congress could pass and President Obama could sign a proposed customs enforcement bill. It would classify deliberate currency undervaluation as an illegal export subsidy. Then the manipulation could be countered with duties on the imported products.
Plans to dismember the A&P supermarket chain were revealed in a federal bankruptcy court in New York this week, with dire results predicted for more than 15,000 members of the United Food and Commercial Workers (UFCW) union.
The historic grocery retailer—the original Great Atlantic & Pacific Tea Co. was formed back in 1859—intends to sell or close all of its 300 stores spread across six Mid-Atlantic states, according to documents filed Monday in the U.S. Bankruptcy Court for the Southern District of New York. The plan will affect every one of an estimated 30,000 UFCW members currently employed with the company, with more than half of those in real danger of losing their jobs soon, union officials say.
The bad news for the union was partially tempered with the announcement that A&P had already lined up the sale of 120 of its stores to other regional grocery chains that also have UFCW contracts. If those sales go forward as planned, most of the 12,500 union members at those 120 stores would be expected to retain their jobs under the new owners. The prospective buyers—ACME Markets, Ahold USA (operator of Stop & Shop) and Key Food—already have UFCW collective bargaining agreements covering the 120 stores in Pennsylvania, New York and New Jersey (A&P stores are also located in Connecticut, Delaware and Maryland).
But those plans don’t include any future employment for workers at the other 180 stores, including 25 that A&P says it will seek to close immediately. All sales or closures are subject to approval by Bankruptcy Court Judge Robert Drain, and the process of selling off or closing stores is expected to begin soon but drag out for months. ACME Markets, for example, issued a statement saying that it didn’t expect to finalize purchase of any A&P stores until mid-October.
Very few union members were taken by surprise by these developments, says Wendell Young IV, President of UFCW Local 1776 in Philadelphia. A&P, which also operates under the trade names of Pathmark, Waldbaums and Superfresh, has been ailing financially for years, he says, and underwent a painful bankruptcy reorganization in 2010-2012.
“I’ve been telling my members for two years that I didn’t think A&P was going to make it. We’ve been doing everything we can as a union to be prepared for this,” he tells In These Times.
The final demise of A&P was signaled last September, Young comtinues, when company executives announced a debt refinancing package that failed to include any new investment in the company. Rumors swept the supermarket industry soon afterwards that executives were intent on dismembering the company by selling off its valuable pieces, and discarding the rest, he says.
Young adds that part of the union preparation has been to revive a coalition of 12 separate UFCW locals with A&P contracts. Supported by legal experts and financial resources from the UFCW International headquarters in Washington, D.C., the coalition was first formed in 2010 to present a united labor front in dealing with bankruptcy issues at that time. The coalition ceased active operation when A&P emerged from the first bankruptcy proceeding in 2012, but was revived in June as a crisis at A&P appeared imminent, Young says. UFCW Local 1500 in New York, with about 5,000 members employed with A&P, is one of the coalition members most affected by the bankruptcy.
UFCW Region 1 Director Tom Clarke, who heads the coalition, did not respond to In These Times calls seeking additional information and comment. Christopher McGarry, A&P’s Chief Administrative Officer, began the bankruptcy process by threatening the unions. In a declaration dated July 19 and filed with the court July 20. McGarry warned:
It is imperative that the parties cooperate with one another and that negotiations be conducted as expeditiously as possible. While the Debtors are committed to pursuing consensual resolutions with their unions where possible, if consensual resolutions cannot be quickly achieved within the required deadlines imposed…the Debtors will be required to commence proceedings under sections 1113 and 1114 of the Bankruptcy Code to seek authority to implement both temporary and permanent modifications to the CBAs on a unilateral basis.
Section 1113 is the section of the bankruptcy code commonly used to cancel or revise labor contracts, even without any agreement from unions or union members. The coalition will resist any attempts by A&P to use bankruptcy law to cancel existing UFCW collective bargaining agreements. “If the process is to be the orderly sale or closure of all the stores, then there is no need to cancel any contracts. The union is fully prepared to negotiate decent contracts with any of the new owners, and in the case of store closings, the existing contracts should be honored by all the parties,” Young says.
This blog was originally posted on In These Times on July 22, 2015. Reprinted with permission.
About the Author: The author’s name is Bruce Vail. Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.
Buying American-made products is a good way to support jobs. If you’re looking for American-made shoes, New Balance is one of your major options. And the shoe company is pushing the U.S. military on that:
Massachusetts-based shoe company New Balance says that the military is dragging its feet on a promise it made to outfit soldiers with American-made shoes. The promise came in April of 2014 when the military announced it would honor the Berry Amendment, a 1941 law requiring the Department of Defense (DoD) to give priority to American goods. The Department of Defense had previously argued that sneakers were not part of the official uniform and therefore not subject to the Berry amendment.More than a year later it seems little progress has been made. New Balance claims retaliation while the military claims the transition is moving at an acceptable speed. Other apparel companies who have done business with the DoD have come to the military’s defense using the backhanded compliment that they really do move that slow.
(That second paragraph seems like it belongs in a “this week in weak defenses” round up.) Sneakers by New Balance are undergoing an extensive testing process now; Saucony says it’s working on a sneaker that might ultimately be used by the military.
This blog was originally posted on Daily Kos on July 11, 2015. Reprinted with permission.
About the Author: The author’s name is Laura Clawson. Laura has been a Daily Kos contributing editor since December 2006 and Labor editor since 2011.
We’re calling Walmart out on its misleading public relations push.
Welp, they’re at it again!
Walmart kicks off its annual U.S. Manufacturing Summit in Arkansas on Tuesday, highlighting “progress” in its 10-year commitment to purchase $250 billion in American-made goods. For the second year in a row, the retail giant has unveiled a handy infographic touting the progress its made thus far.
And just like last year, we decided to take their infographic and add some much needed context. See, when you start to dig just a little bit, you find that Walmart’s committment is pretty misleading.
Want more? We’ve included last year’s blog post and infographic below.
From 2014: The web filter at the Alliance for American Manufacturing (AAM) caught a big ol’ piece of chaff this week, in the form of a release from Walmart. America’s largest retailer has announced plans to purchase $250 billion worth of American-made goods over the next decade. It decided to share the good news of its sudden economic patriotism via an infographic, which is heavy on the fancy font but light on context.
So AAM took a stab at filling that context in, via an infographic of its own. Sure, Walmart is spending a big chunk of change on American-made products. But the company regularly moves gigantic gobs of money around, so is it spending any more on America than usual? And where are the rest of the goods on its shelves coming from? Does Walmart deserve a round of applause (that it started itself) for cozying up to the Made in America movement? See below:
This blog was originally posted on American Manufacturing on July 7, 2015. Reprinted with permission.
About the Author: The author’s name is Elizabeth Brotherton-Bunch. As Digital Media Director, Beth helps spread the word about smart public policies that guide the creation of American manufacturing jobs. In this role, she is tasked with helping grow AAM’s social media presence, implementing online advocacy campaigns and overseeing communications with an active online community of supporters. Prior to joining AAM, Beth was charged with content development, branding and promotion at the nonprofit organization Netcentric Campaigns. She created and edited content such as action alerts, campaign emails, newsletters, guest articles and social media for many Netcentric projects. Beth worked on behalf of multiple clients, including the Robert Wood Johnson Foundation, American Heart Association and Robert W. Deutsch Foundation. Beth began her career as a reporter, which included a nearly six year stint at the Capitol Hill newspaper Roll Call. She authored the popular gossip column “Heard on the Hill” and covered key players in the Capitol Hill community, such as the Architect of the Capitol and Capitol Police. Her work also has appeared in publications including the Orange County Register, Press-Enterprise, TakePart, MomsRising and Almanac of the Unelected. A Golden State native, Beth holds bachelor’s degrees in political science and journalism from the University of Southern California. She lives in Alexandria, Va., with her husband and rescue dog. You can follow Beth on Twitter at @ebrotherton.
The June Bureau of Labor Statistics jobs report shows continued growth — 223,000 new jobs added with the official unemployment rate declining to 5.3%. Jobs growth remains steady — rising for 57 straight months, now setting a new record each month – but slow, lagging previous recoveries. The decline in the unemployment rate was largely due to 432,000 people leaving the labor force, reversing the increase that took place in May.
The headline unemployment figure is always misleading. Nearly 17 million people are still in need of full-time work. Long-term unemployment has declined, but remains higher than before the great recession. The employment-population ratio has also not recovered, remaining at 59.3%, marginally lower than a year ago. The portion of the working age population that is employed or wants a job, the labor force participation rate, declined last month and is lower than a year ago. This is not a picture of robust growth.
The BLS reports are important largely as signposts for the Federal Reserve and its pending decision on when to raise interest rates. Fed Chair Janet Yellen sensibly has been focused on disappointing wage growth and looking for “additional strength in the labor market.” She won’t find much that is encouraging in this report. In this month’s report, hourly wages showed no growth, with the yearly average up barely 2%, despite hikes in the minimum wage by more and more cities and states and more and more companies. Average hours worked remained steady.
Speculation is that the Federal Reserve is headed towards beginning to wage interest rates in September. Higher interest rates will be a drag on growth, jobs and thus wages. The Fed would be well advised to wait until more workers find jobs, and the greater demand for workers is reflected in continuing rising wages.
Government employment showed no increase. The US Congress continues to block any investment to rebuild our decrepit infrastructure at a time of record low interest rates. With the US able to borrow for virtually nothing, an investment in infrastructure, as Larry Summers argues, would pay for itself, with even a minimum return in efficiency. No business leader with a whit of sense would refuse to grasp this opportunity. Perhaps Donald Trump who has built his fortune by making far riskier bets with borrowed money could explain this to his colleagues.
Manufacturing employment showed little change, adding 4,000 jobs. For the president to meet his pledge of adding 1 million manufacturing jobs in his second term, he would have to average over 32,000 a month. This seems less and less likely, as manufacturing is weakened by our rising trade deficits, resulting from the strong dollar and our perverse trade policies that the president is intent on extending. The economy has gained only 38,000 manufacturing jobs in the first six months of this year.
The economy continues to add jobs, which is an indisputably good thing. But the pace is slow, and little of the recovery is reaching most Americans. Surveys show that Americans are growing more optimistic about the economy. This is reflected in rising non-revolving consumer credit – significantly student and car loans – which is outpacing after-tax income growth. If the Fed raises interest rates, these debts will grow more costly, putting a crimp on consumer demand. Again, with the Congress refusing to act sensibly, the Fed has every reason to wait until wages are rising and more Americans are working before starting to put on the brakes.
This blog was originally posted on Our Future on July 2, 2015. Reprinted with permission.
About the Author: The author’s name is Robert Borosage. Robert L. Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. The organizations were launched by 100 prominent Americans to develop the policies, message and issue campaigns to help forge an enduring majority for progressive change in America. Mr. Borosage writes widely on political, economic and national security issues. He is a Contributing Editor at The Nation magazine, and a regular blogger at The Huffington Post. His articles have appeared in The American Prospect, The Washington Post,Tthe New York Times and the Philadelphia Inquirer. He edits the Campaign’s Making Sense issues guides, and is co-editor of Taking Back America (with Katrina Vanden Heuvel) and The Next Agenda (with Roger Hickey).
A majority in the Senate today took sides against working families and with Wall Street and the multinationals, voting 60-37 to grant the executive branch fast-track trade promotion authority for the Trans-Pacific Partnership and future trade deals.
“This is a day of celebration in the corporate suites to be sure,” said Sen. Sherrod Brown (D-Ohio) on the floor immediately after the vote, “because they have another corporate-sponsored trade agreement that will mean more money in some investors’ pockets, that will mean more plant closings in Ohio and Arizona and Delaware and Rhode Island and West Virginia and Maine and all over this country.”
Sen. Bernie Sanders (I-Vt.) responded by noting that the fast-track legislation “was supported by virtually every major corporation in the country” while it was opposed by “every union in this country working for the best interests of working families, by almost every environmental group and many religious groups.
“In my view, this trade agreement will continue the policies of NAFTA, CAFTA (the North American and Central American free trade agreements), permanent normal trade relations with China, agreements that have cost us millions of decent-paying jobs,” Sanders said.
The fast-track legislation, which was narrowly passed by the House last week and now goes to President Obama’s desk for his signature, was passed with the support of these Senate Democrats: Michael Bennet (D-Colo), Maria Cantwell (D-Wash.), Thomas R. Carper (D-Del.), Chris Coons (D-Del.), Dianne Feinstein (D-Calif.), Heidi Heitkamp (D-N.D.), Tim Kaine (D-Va.), Claire McCaskill (D-Mo.), Patty Murray (D-Wash.), Bill Nelson (D-Fla.), Jeanne Shaheen (D-N.H.), Mark Warner (D-Va.) and Ron Wyden (D-Ore.).
One of the Democrats who voted against fast-track gave an impassioned explanation of his vote afterward.
“I’ve said this –if I can’t explain it back home, I can’t vote for it,” said Sen. Joe Manchin (D-W.Va.) “This is one, Mr. President, I could not explain back home. I could not make the people feel comfortable this was going to improve the quality of life and opportunities for them and their families.”
Manchin explained that the Trans-Pacific Partnership would lower trade barriers with countries such as Vietnam, where workers make as little as 50 cents an hour and “are not going to be as tough as we are in human rights [and] on environmental quality.”
In this debate, there were Orwellian big lies on both sides of the aisle.
Wyden argued that the trade deal represented a different frame from the NAFTA deal of the 1990s. That is in no sense true: the template that makes worker needs subordinate to interests of corporate and financial interests is essentially the same, the process of having corporate lobbyists dominate the negotiations is the same, and the people serving as trade representative come from and represent the same set of interests (corporate lawyer Mickey Kantor was the trade representative who negotiated NAFTA; former Citigroup executive Michael Froman is the trade representative leading the TPP talks).
Sen. Orrin Hatch (R-Utah) and other Republicans argued that the fast-track deal gives the United States a voice in international trade. How can that be, when in fact fast-track authorizes a process that gives away congressional power? Fast track explicitly says that Congress can only vote up or down, with no amendments and limited debate, on a trade agreement negotiated by the executive branch. The reality is that the process assures passage of a trade deal that is still being negotiated in secret and which virtually no lawmakers have seen.
Democratic votes in favor of fast track were secured with a promise of a vote later this week on trade adjustment assistance, a palliative at best. While that will help some workers who will lose their jobs one the Trans-Pacific Partnership goes into force, it will not help workers who lose wages and bargaining power when corporations threaten to move overseas, and it doesn’t help the workers hit by the ripple effects of plant closings and outsourcing. Even the workers who do get the aid more often than not don’t get back the wages and job security they lost in the first place because of unfair trade.
Robert Borosage, codirector of the Campaign for America’s Future, said that today’s vote “is a vote to continue the ruinous trade policies of the last decades that have racked up 11 trillion in trade deficits, shuttered tens of thousands of factories, and had direct and dramatic effect on undermining the middle class, and lowering wages and security for working people. Those who voted for it voted for more of the same. And they did so to serve the interests of special interests, not the common good; of contributors, not voters.”
Our allies at National People’s Action released a statement after the vote that perhaps captures best how to respond to this vote. “Coming out of this vote,” said executive director George Goehl, “we double our resolve to build an independent political movement to replace Wall Street Democrats” – and we would add corporate and anti-worker Republicans – “with politicians who put everyday people before corporate profits.”
This blog was originally posted on Our Future on June 23, 2015. Reprinted with permission.
About the Author: The author’s name is Isaiah J. Poole. 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.
I remain in the camp of people who are entirely unimpressed by the economic figures raved about by most pundits, economists and The White House. We all know that pay is not growing. But, there’s another thing to be concerned about: the missing 3.1 million workers. The rebound fans:
The American job market rebounded in April, the government said on Friday, helping to ease worries that the economy was on the brink of another extended slowdown after a bleak winter in which the overall economy stalled. But the growth in jobs failed to translate, once again, into any significant improvement in pay.
Uh, but wait a minute. What about a whole bunch of people who are off the radar screen? The Economic Policy Institute is hunting for the “missing workers”:
In today’s labor market, the unemployment rate drastically understates the weakness of job opportunities. This is due to the existence of a large pool of “missing workers”—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these “missing workers” are not reflected in the unemployment rate.[emphasis added]
What’s the number today?:
Total missing workers, April 2015: 3,140,000 Unemployment rate if missing workers were looking for work: 7.3%[emphasis added]
This blog was originally posted on Working Life on May 8, 2015. Reprinted with permission.
About the Author: The author’s name is Jonathan Tasini. Some basics: I’m a political/organizing/economic strategist. President of the Economic Future Group, a consultancy that has worked in a couple of dozen countries on five continents over the past 20 years; my goal is to find the “white spaces” that need filling, the places to make connections and create projects to enhance the great work many people do to advance a better world. I’m also publisher/editor of Working Life. I’ve done the traditional press routine including The Wall Street Journal, CNBC, Business Week, Playboy Magazine, The Washington Post, The New York Times and The Los Angeles Times. One day, back when blogs were just starting out more than a decade ago, I created Working Life. I used to write every day but sometimes there just isn’t something new to say so I cut back to weekdays (slacker), with an occasional weekend post when it moves me. I’ve also written four books: It’s Not Raining, We’re Being Peed On: The Scam of the Deficit Crisis (2010 and, then, the updated 2nd edition in 2013); The Audacity of Greed: Free Markets, Corporate Thieves and The Looting of America (2009); They Get Cake, We Eat Crumbs: The Real Story Behind Today’s Unfair Economy, an average reader’s guide to the economy (1997); and The Edifice Complex: Rebuilding the American Labor Movement to Face the Global Economy, a critique and prescriptive analysis of the labor movement (1995). I’m currently working on two news books. My organizational life has brought me the gift of working with many talented, committed people over the past 30 years, principally during the 13 years I had the honor to serve as president of the National Writers Union (UAW Local 1981). Aside from that, it’s baseball, and counting the winter days until pitchers and catchers report.
There is an enormous amount of political debate over various pieces of legislation that are supposed to be massive job killers. For example, Republicans lambasted President Obama’s increase in taxes on the wealthy back in 2013 as a job killer. They endlessly have condemned the Affordable Care Act as a job killer. The same is true for proposals to raise the minimum wage.
While there is great concern in Washington over these and other imaginary job killers, the Federal Reserve Board is openly mapping out an actual job-killing strategy and drawing almost no attention at all for it. The Fed’s job-killing strategy centers on its plan to start raising interest rates, which is generally expected to begin at some point this year.
The Fed’s plans to raise interest rates are rarely spoken of as hurting employment, but job-killing is really at the center of the story. The rationale for raising interest rates is that inflation could begin to pick up and start to exceed the Fed’s current 2.0 percent target if the Fed doesn’t slow the economy with higher interest rates.
Higher interest rates slow the economy by discouraging people from borrowing to buy homes or cars. They will also have some effect in discouraging businesses from investing. With reduced demand from these sectors, businesses will hire fewer workers. This will weaken the labor market, which means workers have less bargaining power. If workers have less bargaining power, they will be less well-situated to get pay increases. And if wages are not rising there will be less inflationary pressure in the economy.
The potential impact of Fed rate hikes on jobs is large. Suppose the Fed raises interest rates enough to shave 0.2 percentage points off the growth rate, say pushing growth for the year down from 2.4 percent to 2.2 percent. If we assume employment growth drops roughly in proportion to GDP growth, this would imply a reduction in the rate of job growth of almost 10 percent. If the economy would have otherwise created 2.4 million jobs over the course of the year, the Fed’s rate hikes would have cost the economy more than 200,000 jobs in this scenario.
For comparison purposes, we are having a big fight over the Keystone pipeline. The proponents of the pipeline point to the jobs created by building a pipeline as an important justification, even if the oil being pumped through the pipeline may cause enormous damage to the environment. According to the State Department’s analysis, building the pipeline would create 21,000 jobs for two years. This pipeline related jobs gain has been widely touted in the media and is supposed to make it difficult for many members of Congress to go along with President Obama in opposing Keystone.
Yet, the Fed can easily destroy ten times as many jobs with a set of interest rate hikes this year with its actions passing largely unnoticed. In fact, the impact of Fed interest rate hikes on jobs can easily be far larger than this 200,000 number. If the Fed decides that the unemployment rate should not fall below a certain level (5.4 percent is a number is often used), then it could be costing the economy millions of jobs if the economy could actually sustain a considerably lower level of unemployment as it did in the late 1990s.
To be clear, Federal Reserve Board Chair Janet Yellen and her colleagues on the Fed’s Open Market Committee (FOMC), the committee that determines interest rates, are not evil people sitting around figuring out how to ruin the lives of American workers. The Fed has a legal mandate to control inflation, in addition to its mandate to sustain high levels of unemployment. If they raise interest rates it will be because they fear inflationary pressures will build if they let the economy continue to grow and unemployment to fall.
But this is inevitably a judgment call. The call is based on both their assessment of the risk of inflation and also the relative harm from higher rates of inflation as opposed to higher rates of unemployment. It is likely that the members of the FOMC, who largely come from the financial industry, are much more concerned about inflation than the population as a whole. They are also likely to be less concerned about unemployment. These are people who tend to read about unemployment in the data, not to see it themselves or among their friends and family members.
This is why it is important that the public be paying attention to the Fed’s interest rate policies and let them know how they feel about raising interest rates to kill jobs. The Center for Popular Democracy has organized an impressive grassroots campaign around the Fed’s interest rate policies. Those who don’t want to see the government deliberately trying to kill jobs might want to join in.
This article originally appeared on CEPR.Net and on ourfuture.org on March 2, 2015. Reprinted with permission.
About the Author: Dean Baker is an American economist whose books have been published by the University of Chicago Press, MIT Press, and Cambridge University Press.
The economy added 257,000 jobs in January and the unemployment rate ticked slightly up to 5.7% from December’s 5.6%, according to figures released this morning by the U.S. Bureau of Labor Statistics.
The number of long-term unemployed (those jobless for 27 weeks or more) was unchanged from December at 2.8 million, but the median duration of unemployment went up, because of a rise in the share of workers unemployed more than 15 weeks. So, those who have returned to the labor market still find it hard to find work.
AFL-CIO Chief Economist William E. Spriggs said 2014 was the best year for job growth since the 1990s, and America is experiencing a record number of consecutive months of private-sector job growth. But he added:
In 2014, workers’ wages barely outpaced inflation, increasing only 2.1%. In fact, throughout the recent economic expansion, workers’ wages have stayed the same. If you adjust for inflation, median weekly wages for full-time workers are stuck where they were in 2011. That’s a big problem, because those are workers in their prime who are holding steady jobs.
Last month’s biggest job gains were in retail trades (46,000), construction (39,000), health care (38,000), food services (35,000), professional and technical (33,000), financial activities (26,000) and manufacturing (22,000).
Employment in other major industries, including mining and logging, warehousing, transportation, information and government, showed little change over the month.
Among the major worker groups, the unemployment rates in January for teenagers increased to 18.8% from 16.8%. The jobless rate for adult women (5.1%), adult men (5.3%), blacks (10.3%), Latinos (6.7%) and whites (4.9%) showed little change in January from December.
This blog originally appeared in aflcio.org on February 6, 2015. Reprinted with permission.
About the Author: Mike Hall is a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journaland managing editor of the Seafarers Log. He came to the AFL- CIO in 1989 and has written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety.