Low-wage jobs drive the recovery

By Ned Resnikoff -msnbc

It’s not uncommon to hear economics writers dismiss post-recession job growth as evidence of a “McJobs Recovery.” Sure, jobs may be slowly coming back, the argument goes, but not good jobs. Instead, employment growth seems to be largely concentrated in the sectors of the economy where wages are lowest.

That argument received some empirical ballast with the release of a report from the National Employment Law Project (NELP) that finds low-wage industries have grown at a disproportionately high rate since the end of the recession. The report’s author, policy analyst Michael Evangelist, finds that 44% of job growth since the end of the recession has been concentrated in industries where the median wage is $13.33 or less. That includes food service, retail, and administrative services (which includes jobs like security, maintenance, and janitorial work).

This is only the most recent in a series of NELP reports on the McJobs Recovery, all of which have found similar results. Evangelist told msnbc the consistency suggests this might be more than a hiccup on the road back to relative prosperity.

“Early on when we were doing these reports, we just speculated cyclical factors,” he said. “So one year into the recovery, consumer demand was growing and you’d see more growth in the restaurant food service industry.” But as food service continued to grow at a disproportionately high rate, NELP analysts came to see unbalanced growth as a more stable feature of the economic landscape.

“Now we’re five years into this and these are still the industries that are growing quickly,” said Evangelist.

Food service isn’t just one of the economy’s most fecund sectors: It’s also its most unequal, according to another report released last week by the left-leaning think tank Demos. In that study, Demos policy analyst Catherine Ruetschlin found that food services and retail had bigger worker-to-CEO compensation gaps than any other sector of the economy.

The steady encroachment of low-wage jobs may help to explain why median income in the United States has begun to stagnate even as the wealth of the country’s economic elite soars into previously unexplored altitudes. Last week, The New York Times reported that America no longer leads the world in median wealth, having been surpassed by Canada for the first time in at least decades.

5 Facts That Show Half of America Is Seriously Struggling

The media celebrates "economic growth," while new data shows most Americans are barely surviving.

By Paul Buchheit / AlterNet

February 8, 2015

Happy Monday! S&P 500 now up 10% for year --CNN Money
Third-quarter U.S. economic growth strongest in 11 years --Reuters
The U.S. economy is on a tear --Wall Street Journal 

Half of our nation, by all reasonable estimates of human need, is in poverty. The jubilant headlines above speak for people whose view is distorted by growing financial wealth. The argument for a barely surviving half of America has been made before, but important new data is available to strengthen the case.

1. No Money for Unexpected Bills 

A recent Bankrate poll found that almost two-thirds of Americans didn't have savings available to cover a $500 repair bill or a $1,000 emergency room visit.

A related Pew survey concluded that over half of U.S. households have less than one month's income in readily available savings, and that ALL their savings -- including retirement funds -- amounted to only about four months of income.

And young adults? A negative savings rate, as reported by the Wall Street Journal. Before the recession their savings rate was a reasonably healthy 5 percent.

2. 40 Percent Collapse in Household Wealth 

Over half of Americans have good reason to feel poor. Between 2007 and 2013 median wealth dropped a shocking 40 percent, leaving the poorest half with negative wealth (because of debt), and a full 60% of households owning, in total, about as much as the nation's 94 richest individuals.

People of color fare the worst, with half of black households owning less than $11,000 in total wealth, and Hispanic households less than $14,000. The median net worth for white households is about $142,000.

3. Cost of Living Surges as Income Falls 

Official poverty measures are based largely on the food costs of the 1950s. But food costs have doubledsince 1978, housing has more than tripled, and college tuition is eleven times higher. The cost of raising a child increased by 40 percent between 2000 and 2010. And despite the gains from Obamacare, health care expenses continue to grow.

As all these essential costs have been going up, median household income has been going down since 2000, with the greatest drop occurring since 2009, as 95 percent of the post-recession income gains have gone to the richest 1%.

4. Lots of New Jobs (Below Living Wage) 

'Amazing' jobs report, apart from wages --Marketwatch 

Amazing at the top and at the bottom. According to the Federal Reserve Bank, there have been job gains at the highest paid level -- engineering, finance, computer analysis; and there have been job gains at thelowest paid level -- personal health care, retail, and food preparation.

But the jobs that kept the middle class out of poverty -- education, construction, social services, transportation, administration -- have seen a decline since the recession, especially in the northeast. At a national level jobs gained are paying 23 percent less than jobs lost.

Worse yet, the lowest paid workers, those in housekeeping and home health care and food service, haveseen their wages drop 6 to 8 percent (although wages overall rose about 2 percent in 2014).

5. Our Greatest Shame: Half of the Children Feeling Poverty 

Over half of public school students are poor enough to qualify for lunch subsidies. There's been a stunning70 percent increase since the recession in the number of children on food stamps. State of Working America reported that almost half of black children under the age of six are living in poverty.

The celebratory quotes about a booming economy seem so far away.

Always Low Wages, More Pollution: Why Barack and Michelle Obama Relentlessly Shill for Walmart

Sunday, 01 June 2014
By Bruce A. Dixon, Black Agenda Report


Earlier this month President Obama visited a Bay Area Wal-Mart to praise the world's largest and most anti-union retailer for its supposed environmental responsibility. The fact is that Wal-Mart's maintenance of diesel-fueled supply chains between its stores and wherever on the planet wages are lowest and environmental restrictions are totally absent make it a major ongoing contributor to runaway climate change. The president's appearance therefore, was simply a hypocritical exercise in greenwashing for Wal-Mart.

Though it was an insult to working people and to many of his abject and fervent supporters, it should have been no surprise. It wasn't President Obama's first wet kiss to Wal-Mart and with almost three more years in office to go it won't be his last. Still the willingness of the Obama Administration to do the bidding of Wal-Mart shows just how hollow has become the pretense of elected black Democrats to representing the poor and oppressed.

There was a time when Democrats in the White House did not dare openly shill for the giant retailer. Hillary Clinton served on Wal-Mart's board of directors through most of the 1980s, while her husband Bill was governor of Arkansas. Even then, Wal-Mart was notorious for overworking and underpaying its workers, violating labor laws to thwart unions, and sopping up prodigious amounts of corporate welfare in the forms of tax breaks and subsidies of all kinds. Being in bed with those crooks wasn't just an embarrassment, it was a hypocritical affront to Democratic voters, so somewhere on the 1992 road to the White House, Hillary resigned from Wal-Mart's board. Similarly in 2007 with her husband on the way to the White House, Michelle Obama felt compelled to resign from the board of TreeHouse Foods, a major Wal-Mart vendor. “I won't shop there,” said presidential candidate Barack Obama when questioned about Wal-Mart at an AFL-CIO labor forum.

Of course labor audiences in 2007 and 2008 were where Obama pledged to renegotiate NAFTA, and immediately raise the minimum wage as soon as he took office. The president never mentioned raising the minimum wage again till about 2012 when Republicans were safely in control of the House of Representatives, and instead of renegotiating NAFTA, President Obama is engaged in secret negotiations to extend it across the Atlantic and Pacific Oceans. Evidently the Obama that promises is a different guy, and far less powerful, than the Obama that acts.

Safely in office, Michelle and Barack Obama have enthusiastically embraced Wal-Mart. The first lady allowed the unscrupulous retailer to leverage her personal image as an advocate of exercise and healthy eating in her “Let's Move” initiative, and spouting the company line that the best solution to urban “food deserts” is opening more Wal-Mart neighborhood grocery stores. Michelle Obama's many appearances at and pronouncements around Wal-Mart have done the retailer more good than she and Hillary could ever have done in another decade or two apiece on its board of directors.

Right now Wal-Mart is approaching 30% of the US retail grocery market, with far lower wages, fewer hours, skimpier benefits, and longer and dirtier supply chains than its major competitors. As I said a couple years ago in an article about Michelle Obama's cynical embrace of Wal-Mart:

    Wal-Mart's business model of corrupting public officials, lying about job creation numbers, rampant sex and race discrimination, relentlessly low wage and benefit levels, and aspirations to monopoly control of local markets across the country make it a bad neighbor, a worse boss, an unfair competitor and sometimes a criminal enterprise.

The Real Job Killers

Saturday, March 1, 2014 by RobertReich.org
by Robert Reich

House Speaker John Boehner says raising the minimum wage is “bad policy” because it will cause job losses.

The U.S. Chamber of Commerce (conservative think tank) says a minimum wage increase would be a job killer. Republicans and the Chamber also say unions are job killers, workplace safety regulations are job killers, environmental regulations are job killers, and the Affordable Care Act is a job killer. The California Chamber of Commerce even publishes an annual list of “job killers,” including almost any measures that lift wages or protect workers and the environment.

Most of this is bunk.

When in 1996 I recommended the minimum wage be raised, Republicans and the Chamber screamed it would “kill jobs.” In fact, in the four years after it was raised, the U.S. economy created more jobs than were ever created in any four-year period.

For one thing, a higher minimum wage doesn’t necessarily increase business costs. It draws more job applicants into the labor market, giving employers more choice of whom to hire. As a result, employers often get more reliable workers who remain longer – thereby saving employers at least as much money as they spend on higher wages.

A higher wage can also help build employee morale, resulting in better performance. Gap, America’s largest clothing retailer, recently announced it would boost its hourly wage to $10. Wall Street approved. “You treat people well, they’ll treat your customers well,” said Dorothy Lakner, a Wall Street analyst. “Gap had a strong year last year compared to a lot of their peers. That sends a pretty strong message to employees that, ‘we had a good year, but you’re going to be rewarded too.’”

Even when raising the minimum wage — or bargaining for higher wages and better working conditions, or requiring businesses to provide safer workplaces or a cleaner environment — increases the cost of business, this doesn’t necessarily kill jobs.

Most companies today can easily absorb such costs without reducing payrolls. Corporate profits now account for the largest percentage of the economy on record. Large companies are sitting on more than $1.5 trillion in cash they don’t even know what to do with. Many are using their cash to buy back their own shares of stock – artificially increasing share value by reducing the number of shares traded on the market.

Walmart spent $7.6 billion last year buying back shares of its own stock — a move that papered over its falling profits. Had it used that money on wages instead, it could have given its workers a raise from around $9 an hour to almost $15. Arguably, that would have been a better use of the money over the long-term – not only improving worker loyalty and morale but also giving workers enough to buy more goods from Walmart (reminiscent of Henry Ford’s pay strategy a century ago).

There’s also a deeper issue here. Even assuming some of these measures might cause some job losses, does that mean we shouldn’t proceed with them?

Americans need jobs, but we also need minimally decent jobs. The nation could create millions of jobs tomorrow if we eliminated the minimum wage altogether and allowed employers to pay workers $1 an hour or less. But do we really want to do that?

Likewise, America could create lots of jobs if all health and safety regulations were repealed, but that would subject millions of workers to severe illness and injury.

Lots of jobs could be added if all environmental rules were eliminated, but that would result in the kind of air and water pollution that many people in poor nations have to contend with daily.

If the Affordable Care Act were repealed, hundreds of thousands of Americans would have to go back to working at jobs they don’t want but feel compelled to do in order to get health insurance.

We’d create jobs, but not progress. Progress requires creating more jobs that pay well, are safe, sustain the environment, and provide a modicum of security. If seeking to achieve a minimum level of decency ends up “killing” some jobs, then maybe those aren’t the kind of jobs we ought to try to preserve in the first place.

Finally, it’s important to remember the real source of job creation. Businesses hire more workers only when they have more customers. When they have fewer customers, they lay off workers. So the real job creators are consumers with enough money to buy.

Even Walmart may be starting to understand this. The company is “looking at” whether to support a minimum wage increase. David Tovar, a Walmart spokesman, noted that such a move would increase the company’s payroll costs but would also put more money in the pockets of some of Walmart’s customers.

In other words, forget what you’re hearing from the Republicans and the Chamber of Commerce. The real job killers in America are lousy jobs at lousy wages.

Manufactured Poverty: a reality but not a necessity

An Elegant Feast - JULY 21, 2013 

The history of poverty in the United States is depressing. So we repress it. Instead our history books talk about industrial revolutions, wars, economic prosperity, global trade, and so on. The consequences that such events have on the poor and oppressed are either whitewashed or legitimized. Our history books serve as an example of a larger ideological mission to naturalize poverty and to give us reasons to ignore it. In other words, there has been a direct and systematic attempt to make poverty appear to be innate, unchanging, irreversible, and everlasting. If people can be convinced to accept poverty, then the incentive to alleviate it is removed.

Even well meaning progressives will, unsuspectingly, get caught up in a regressive language. They will say, “Poverty is complex.” But the perception of poverty’s complexity has been conditioned in us in order to overwhelm our motivation. What if we accepted the uncontroversial fact that a small fraction of US military spending could feed, house, and educate everyone on the planet, 10 times over. If we wanted to eliminate poverty in the United States, it could be done within a week.

What is our impediment? There is a concerted effort, by those with economic and political power, to manufacture and to maintain poverty. Currently, an effort is underway to eliminate the minimum wage. On the surface, advocates will unabashedly argue that the goal is to create the cheapest possible labor force. But it should be lost on no one that the ability to push the working class into economic desperation is, in itself, a political end. People who are merely trying to survive do not have the time, the energy, or the resources for political advocacy. Economic exploitation always accompanies marginalization.

The desire to eliminate the minimum wage is only the most recent and flagrant part of an organized effort to barricade the halls of wealth and power. The series of so-called free trade agreements in the 1990s consistently lowered human rights standards abroad while, simultaneously, forcing US workers to compete with third world labor. The intent is clear: to drive down real wages and to decrease the quality of life of the working class. The tax cuts of Bush the Second’s presidency redistributed wealth from the bottom to the top in an explicit effort to further consolidate economic and political power. These efforts coincided with a national push for ‘right to work laws’ (or really, right to work for nothing laws) so that workers were politically disenfranchised while also being economically exploited. No politician worthy of the name would be foolish enough to discuss these practices in public, but the strategy is unmistakable. There is a political motivation to fossilize poverty.

Unfortunately, the Obama years have made the problem worse. The bailouts of the banks assured the financial sector that they will always be protected. In order to guarantee poverty, the powerful maintain this simple equation: privatize profits, socialize losses. After the downturn of 2008, everyone has become poorer except the people who caused the crash. To call this an accident ignores the facts and ignores the history. Still, there are people, many people, who genuinely want to combat poverty. But this needs to be done with eyes wide open. To face poverty is not to fight laziness or circumstance or ability; these are mirages. To combat poverty is to take the fight directly against those who have consciously made poverty one of the most shameful institutions of the United States.

Friday’s Job Report

No Hope On The Jobs Front 
July 5, 2013 | Paul Craig Roberts


Do you remember the promise of the New Economy that was going to replace the lost “dirty fingernail” manufacturing jobs with innovative highly paid New Economy jobs? Well, the promise was just another deception from the elites who have stolen Americans’ future.
For the umpteenth consecutive month and year, the June BLS payroll jobs report (released on July 5) shows that the US economy has created no such jobs. The same old tired categories account for the same old lowly paid new domestic service jobs.

Of the 195,000 new private sector jobs alleged to have been created, 75,000 or 38% are accounted for by the category “leisure and hospitality.” Within this category there were 52,000 new waitresses and bartenders, and 19,000 jobs in “amusements gambling, and recreation.”
Retail trade added 37,000 employees. Is your local shopping center that busy?

Wholesale trade added 11,000.

Zero Hedge points out that the retail and wholesale jobs numbers seem inconsistent with the latest report from the Institute of Supply Management, which shows a sharp drop in new order components and business activity.  Perhaps the New Economy’s inefficiency requires more people to sell less.

Professional and business services added, allegedly, 53,000 jobs, which are largely building management services, janitors, employment services, and temporary help.

Ambulatory health care services added 13,000 jobs.

Financial activities allegedly added 17,000 jobs despite the Bank of America moving its property appraisals to India.

Local government, despite severe budget cuts, added 13,000 jobs.

The BLS news release points out that the number of involuntary part-time workers (the number of people who are unable to find full-time jobs or whose hours were cut back) increased by 322,000 in June to 8.2 million.

This deplorable report provided the cover for the market riggers to take the stock market up and the gold market down. Remember that economic theory about “rational markets”? Another deception.

From Bad Jobs to Good Jobs

Sunday, 05 May 2013| By Colin Gordon, Dissent

What happened to the good jobs? This is the question posed by fast-food workers who walked out in New York and Chicago in recent weeks. It is the question posed by activists in those corners of the economy—including restaurants and domestic work and guest work—where the light of state and federal labor standards barely penetrates. And it is the question posed (albeit from a different set of expectations) by recent college graduates for whom low wages and dim prospects are the dreary norm.

There is no shortage of suspects for this sorry state of affairs. The stark decline of organized labor, now reaching less than 7 percent of private-sector workers, has dramatically undermined the bargaining power and real wages of workers. The erosion of the minimum wage, with meager increases overmatched by inflationary losses, has left the labor market without a stable floor. And an increasingly expansive financial sector has displaced real wages and salaries with speculative rent-seeking.

New work by John Schmitt and Janelle Jones at the Center for Economic and Policy Research recasts this question, posing it not as a causal riddle but as a political challenge: what would it take to get good jobs back?

Schmitt and Jones start with a basic distinction between good jobs (those that pay $19 an hour or better and offer both job-based health coverage and some retirement coverage) and bad jobs (those that meet none of these criteria). Each of these categories accounts for about a quarter of the workforce (the rest fall somewhere in between), with the share of good jobs slipping since 1979 and the share of bad jobs creeping up. The goal, by simulating the impact of different policy interventions, is to increase the share of good jobs and to eliminate—as much as possible—the bad jobs entirely.

Some policies—however salutary—would have little impact on this “good job-bad job” distribution. Raising the minimum wage, for example, would boost the earnings of 30 million workers, but it would do so by transforming bad jobs into not-quite-so-bad jobs. A worker earning $10 an hour without benefits, after all, is still pretty far removed from a good job.

The graphic below summarizes the findings of Schmitt and Jones, for men and women, for five policy changes. Gender pay equity, not surprisingly, would yield some small gains for women—a slightly higher percentage of good jobs, and slightly lower percentage of bad jobs. A 25 percent increase in college attainment yields only a modest improvement, a finding consistent with other research suggesting that wages are falling despite increasing educational attainment and not because there is some “skills” mismatch between available workers and available jobs.

Learn About Tableau

There is a stronger payoff for collective bargaining, which Schmitt and Jones simulate with an increase in union density sufficient to capture the same number workers as the increase in college attainment (in the first scenario, 8.7 percent of the workforce are given college diplomas; in the second, 8.7 percent of the workforce are given union cards). This yields not only a union wage premium but higher rates of job-based health and pension coverage. But the payoff is not as big as one might expect, probably because labor’s ability to deliver such benefits to its members has fallen as its share of the workforce has gone down. Simply bumping up the union density rate, in other words, is not the same thing as reclaiming the labor movement of past generations. The strongest payoff comes with socializing and universalizing health and retirement coverage. Adopting either would erase the bad jobs entirely. Adopting both would push the share of good jobs to nearly half (50 percent for men, 39 percent for women). This resonates with our understanding of the perverse logic of job-based social policy—which tends to widen inequalities (good jobs, after all, are the ones with good benefits) rather than close them. It resonates with our understanding of the broader benefits of universal social policy—which wipes away not only the waste and stigma associated with risk-rating and means-testing, but the crushing insecurity of going uncovered or uninsured. And it resonates with our political and economic realities, in which incremental progress on social policy (maybe just in the states) seems more likely than a surge in labor organization and more resourceful than deep personal investments in education.

Comics

Minimum Wage Not Enough for a 2-Bedroom Unit in Any State (Unless You Work Way More Than a 40-Hr Week)

By Staff, AlterNet
Posted on May 29, 2012

Minimum wage is not enough to pay for a two-bedroom unit (at fair market rent) in any state, at least not if you are working a 40-hour week. In fact, in many states, you'd have to work at least double that to get a place big enough for a single parent and one child to each have their own rooms.

Fair Market Rent is determined by the U.S. Department of Housing and Urban Development (HUD).

Perhaps minimum wage is too low?

How Many Minimum Wage Hours Does It Take To Afford A Two-Bedroom Apartment In Your State?

Ever wonder how people manage to get by on minimum wage? Oftentimes, they don't...

ORIGINAL: By the National Low Income Housing Coalition.

Alternate Unemployment Charts - The REAL Numbers

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

 Courtesy of ShadowStats.com

The Jobs Crisis: What Did Roosevelt Do That Obama Should?

by: Martin Bennett and Richard Walker, Truthout | News Analysis

Friday 25 November 2011

The nation is experiencing the most severe economic crisis since the Great Depression. Princeton economist and former Vice Chair of the Federal Reserve, Alan Blinder, calls the current crisis a "national jobs emergency."

The "official" unemployment rate in September was 9.1 percent - nearly twice the rate a decade ago - leaving 14 million people out of work.

It's not just the financial meltdown of 2008 and the Great Recession. The American economy has been underperforming for years. Business Week calls 1999-2009 "The Lost Decade for Jobs" as private-sector employment grew by a paltry net 1.1 percent - the lowest increase for any ten-year period since the 1930s.

The original version of President Obama's increasingly embattled jobs plan aimed to provide a much-needed extension of unemployment benefits and a payroll tax cut for working Americans, but outlined only scarce measures to dent the catastrophic rate of unemployment. What we need today is a massive jobs program like the Works Progress Administration (WPA) launched by President Franklin Roosevelt. The WPA put millions of people back to work in the midst of the Great Depression, restoring their dignity, putting money in their pockets and quite literally saving lives.

The crisis is much worse than most of us think. According to the US Department of Labor, the real unemployment rate is 16.5%, when you count people whose unemployment benefits have run out and still are not working, part-time workers who want full-time jobs, and discouraged workers who have simply stopped looking. The Economic Policy Institute (EPI) reports that the number of long-term unemployed, meaning those unemployed for more than six months, hovers at a postwar record level of 45 percent. All these figures are much higher for black and Latino workers.

No one is insulated. Workers at every educational level have seen their unemployment rates double since 2007 - high school graduates, college graduates and even those with graduate degrees. The severity of the crisis has overturned conventional wisdom that higher education is a cure for joblessness. The unemployed do not need more education - they need work.

What Did Roosevelt Do That Obama Is Not Doing?

In the winter of 1933, with unemployment reaching 25 percent, Roosevelt established the Civil Works Administration, an emergency jobs program that put 4.2 million unemployed to work within six months. He also started the Civilian Conservation Corps to employ a half-million young men with minimal skills in useful work in the nation's parks, forests and rangelands. Meanwhile, Roosevelt launched the Public Works Administration, which funded long-term infrastructure projects such as highways, bridges, dams and public buildings.

The WPA followed in 1935, employing 8.5 million more between 1935 and 1943. It put those men and women to work on projects requested by state and local governments, such as roads, schools, sewers and airports, and operated local arts, educational and media programs.

Once the New Deal was launched in 1933, the US economy began to grow again by leaps and bounds - at a rate of nearly 10 percent per year. By 1937, production had doubled and the unemployment rate had dropped by half. By 1941, before the war began, the economy was back where it would have been had the Depression never happened. With the wartime build-up, mass unemployment became a distant memory.

To tackle our current unemployment crisis, the federal government should spend $500 billion a year over the next three years on emergency jobs programs like those of the New Deal. The first step would be to give every state and local government the funds to restore their budgets. The loss of 680,000 teaching, police, transit, and other public-sector jobs over the last three years has contributed measurably to the downturn.

The second step would be direct programs to create new full-time jobs for the unemployed - at the median wage of $16.27 an hour - in areas where the need is obvious: in schools (e.g., teachers, school maintenance and enrichment programs); human services (e.g., child care, home care and health care); and energy conservation (e.g., retrofitting homes and public buildings).

To this should be added a third step: financing large-scale public works programs to build schools, bridges, a "smart" electrical grid, zero-emission buses, high-speed rail, wind farms and affordable housing. The pathetic state of our national infrastructure has been decried for years by the American Society of Civil Engineers, which gives the country a D grade, and the United States ranks 32nd in the world in infrastructure, according to McKinsey Global Institute.

A substantial increase of government spending for public works will create expanded opportunity for youth, women and minority workers to enter state-certified apprenticeship programs in the construction trades and to earn a middle-class income.

How to Pay for Such a Jobs Program?

First, the federal government can run temporary deficits. While the federal deficit is relatively high at 10 percent of gross domestic product (GDP) in 2010, it is still dramatically lower than the peak of 30 percent of GDP during World War II. Contrary to popular thinking, government spending in a recession can lower the deficit by taking people off the unemployment roles and putting money in the hands of ordinary people to bolster consumer demand, which stimulates business and returns more tax revenues.

But since we are worried about the current federal deficit and the budget woes of state and local governments, we must heed investor Warren Buffett's call to "stop coddling the rich" by raising taxes on millionaires and closing corporate loopholes.

The upper 1 percent's share of national income increased from 9 percent in 1976 to 24 percent in 2007, according to a report by UC Berkeley economist Emmanuel Saez. Nearly half of total income went to the upper 10 percent in 2007, compared to 33 percent 30 years earlier. The top income tax rate on the highest earners was 70 percent between 1940 and 1980 - when the economy was performing much better than it is today - and now it is just 35 percent.

Moreover, corporate profits increased at an annual rate of $1.6 trillion in 2010 - a record for the postwar period. The Tax Policy Center reports that federal revenue from corporate taxes has dropped by half over the last 60 years, while corporations like Verizon, Bank of America and General Electric pay essentially no taxes due to loopholes in the tax code.

The Congressional Budget Office estimates that a 5.6 percent surcharge on incomes exceeding $1 million, as proposed by the Obama administration, will raise $40 billion a year. Ending the Bush-era tax cuts for the upper 2 percent, set to expire in 2012, will generate more than $80 billion a year, according to the Economic Policy Institute. Economists Robert Pollin and Dean Baker estimate that a 0.5 percent transaction tax on the transfer of stocks and securities will yield $175 billion annually from the largest financial institutions and speculators. The Center for Tax Justice calculates that federal tax revenue will increase by $365 billion a year if corporate tax loopholes and subsidies are eliminated.

Republicans oppose taxing the rich, just as they did in the 1930s. It will take popular mobilization by labor, faith, civil rights, women's and youth organizations to overcome such resistance - just as it did then. Occupy Wall Street may be the beginning of a movement for a new New Deal. Collective action worked in the 1930s and it could work again now.

Economic Future Is Dark as Fake Economic Recovery Consists Only of Low-Paying Jobs

(Many of you out there think we're just going through a rough patch but that things will eventually go back to the way they used to be. Dream on. The way things were is a bygone era. Those days are gone and they aren't coming back. Things are going to get a whole lot worse before ever getting better, and they won't get better until many things have changed. And those wealthy controllers of the economy won't go down without a fight, either. Zbigniew Brzezinski, the Democrat's "snake in the grass" (whose Republican counterpart is Henry Kissinger), was recently quoted saying "in earlier times, it was easier to control one million people than to physically kill one million people; today, it is infinitely easier to kill one million people than to control one million people." If that isn't a rather ominous warning to those of us protesting against the corruption of the wealthy, then nothing is. 

Life is not going to go back the way it was, it's going to get a whole lot worse for everyone who isn't a billionaire (even millionaires will suffer). You might have a lot of money now, but you might as well spend all of it before it gets taken away from you. Your heirs won't see a dime of your fortune, no matter how much you leave to them. It's OK to be afraid, in fact, it's quite natural.--jef)

The current "recovery" is actually a deepening deficit of good jobs.

By Annette Bernhardt, AlterNet
Posted on November 6, 2011

Major newspapers last week reported a trend that won’t come as a surprise to working Americans:  incomes are falling.  In fact, median household income, adjusted for inflation, has fallen faster since the recession "ended" (and the "depression" began--jef) than during the recession itself.  Analysts point to high unemployment and weak economic growth as the culprits, but that is only part of the story.

Just as the country struggles to confront a seemingly insurmountable jobs deficit, America’s chronic low-wage problem is reasserting itself with a vengeance.  Here are three ways to understand just how severe the problem is.

First, the current recovery is actually deepening our deficit of good jobs. During the Great Recession, the jobs we lost were concentrated in mid-wage occupations like paralegals, health technicians, administrative assistants and bus drivers, making $15 to $20 an hour.  But so far in this weak recovery, employment growth has almost completely come from low-wage occupations like retail workers, office and stock clerks, restaurant staff and child care aids – most making $8 to $10 an hour.  There has been barely minimal growth in mid-wage occupations, and net losses in those that pay higher.

In part, this unbalanced growth is a byproduct of the Great Recession.  The financial crash and bursting of the housing bubble caused big job losses in construction, finance, insurance and real estate, and these better-paying industries are having a harder time coming back than low-wage industries such as retail trade, restaurants, temp agencies, and nursing homes.

But there are also other factors at work, such as the long-standing decline in manufacturing and outmoded telecommunications industries (again, better-paying sectors).  The slashing of state and local public jobs has also continued unabated during the recovery, dragging down middle-class employment.

Second, the paychecks of workers in low-wage occupations are shrinking.  While real wages for the average American worker have been essentially flat (adjusted for inflation) since the start of the recession, wages for Americans in low-wage occupations have actually declined by 2.3 percent. That’s a troubling pattern for jobs that are also growing the fastest.

Finally, job quality was already a problem in the U.S. labor market even before the Great Recession began.  From 2001 through 2008, low-wage and high-wage occupations grew significantly more than mid-wage occupations.  In fact, mid-wage occupations constituted only 6 percent of net job gains during this period, continuing the increase in economic inequality in America that dates all the way back to the late 1970s. 

The U.S. has struggled to respond to these trends.  The failure to pass a strong enough stimulus package in 2008, the endless fights to continue unemployment benefits, the debt ceiling debacle that  imposed fiscal austerity when government should be investing in the economy – this dysfunction in our politics has done significant harm.  Even House Majority Leader Eric Cantor acknowledges that there is too much income disparity in the United States (He does have to get re-elected and say the "right" things for his campaign in a district that is suffering like the rest of the country, after all...--jef). Yet the recent unveiling of President Obama’s American Jobs Act gave us only a brief glimpse of sensible policy debate before it, too, disappeared into the same vortex of take-no-prisoners politics.

In this context, the problem of low-wage work and declining wages doesn’t even register on the radar screen.  

Putting aside the abysmal political context for a moment, it is clear that the U.S. needs to work on dual fronts and tackle both job creation and job quality.  There are plenty of ideas out there:

• rebuilding and modernizing America’s infrastructure, 
• incubating green jobs sectors, 
• creating universal pre-K, 
• sending more fiscal relief to the states to avoid lay-offs, and more.  

We can also strengthen the wage floor by raising the minimum wage and putting more resources towards fighting wage theft, an endemic problem in low-wage service industries.

All are win-win solutions, but the politics at the federal level aren’t even close to being there.
There are rays of hope, however, in our states and cities.  The bipartisan U.S. Conference of Mayors is calling for quick investment in infrastructure, small business, manufacturing, trade and tourism to create jobs. Renewed activism, like the Wisconsin and Occupy Wall Street protests, is advancing calls for job creation, living wages and a strong safety net for the unemployed.  The immigrant community has become a powerful voice for workers’ rights, increasingly winning anti-wage theft campaigns.  And diverse coalitions have successfully fought back attempts to weaken state minimum wage laws, as they launch campaigns to raise the minimum wage in more than half a dozen states.

The question, of course, is will it be enough – enough to pierce the bubble of insanity that is holding American politics hostage and put jobs and wages squarely on the front burner of domestic policy.  The answer to this question has enormously high stakes, not just for avoiding a second recession, but for the long-term project of building a competitive, sustainable, and just America.

How to Create More Jobs By Lowering Wages: Texas and America

Wednesday, September 14, 2011 by RobertReich.org

by Robert Reich

 

Perry and Romney can duke it out over who created the most jobs, but governors have as much influence over job growth in their states as roosters do over sunrises.

States don’t have their own monetary policies so they can’t lower interest rates to spur job growth. They can’t spur demand through fiscal policies because state budgets are small, and 49 out of 50 are barred by their constitutions from running deficits.

States can cut corporate taxes and regulations, and dole out corporate welfare, in efforts to improve the states’ “business climate.” But studies show these strategies have little or no effect on where companies locate. Location decisions are driven by much larger factors — where customers are, transportation links, and energy costs.

If governors try hard enough, though, they can create lots of lousy jobs. They can drive out unions, attract low-wage immigrants, and turn a blind eye to businesses that fail to protect worker health and safety.

Rick Perry seems to have done exactly this. While Texas leads the nation in job growth, a majority of Texas’s workforce is paid hourly wages rather than salaries. And the median hourly wage there was $11.20, compared to the national median of $12.50 an hour.

Texas has also been specializing in minimum-wage jobs. From 2007 to 2010, the number of minimum wage workers there rose from 221,000 to 550,000 – that’s an increase of nearly 150 percent. And 9.5 percent of Texas workers earn the minimum wage or below – compared to about 6 percent for the rest of the nation, according to the Bureau of Labor Statistics. The state also has the lowest percentage of workers without health insurance. Texas schools rank 44th in the nation in per-pupil spending.

The Perry model of creating more jobs through low wages seems to be catching on around America.

According to a report out today from the Commerce Department, the median income of U.S. households fell 2.3 percent last year – to the lowest level in fifteen years (adjusted for inflation). That’s the third straight year of declining household incomes. Part of this is loss of jobs. Part is loss of earnings.

More and more Americans are retaining their jobs by settling for lower wages and benefits, or going without cost-of-living increases. Or they’ve lost a higher-paying job and have taken one that pays less. Or they’ve joined the great army of contingent workers, self-employed “consultants,” temps, and contract workers – without healthcare benefits, without pensions, without job security, without decent wages.

It’s no great feat to create lots of lousy jobs. A few years ago Michele Bachmann remarked that if the minimum wage were repealed “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.”

I keep on hearing conservative economists say Americans have priced themselves out of the global high-tech labor market. That’s baloney. The productivity of American workers continues to soar. The problem is fewer and fewer Americans are sharing the gains. The ratio of corporate profits to wages is the highest it’s been since before the Great Depression.

Besides, how can lower incomes possibly be an answer to America’s economic problem? Lower incomes mean less overall demand for goods and services — which translates into even fewer jobs and even lower wages.

In short, the Perry (and Bachmann) model of job growth condemns Americans to lower and lower living standards. That’s nothing to crow about.

Rick’s Perry’s Tall Tales of Texas

August 29, 2011

 

Behind the Curtain of the Texas Miracle

by MICHAEL WINSHIP

Although born and raised and raised in a small town in the Finger Lakes region of New York, I’m the hybrid child of an upstate NY father and a mother from Texas — they met at Fort Hood (then Camp Hood) during World War II. And you thought different species couldn’t mate.


As a result, we were the only kids on the block who said, “Y’all,” or had relatives named Bubba, Vade, Hoyt and Cleburne. My mother’s father was known in our family as Granddaddy Lloyd. CARE packages of unshelled pecans and Frito-Lay products (then largely unknown above the Mason-Dixon Line) would arrive at Christmastime. And among the books in our house was a buff-covered, dog-eared paperback titled Tall Tales of Texas.


I flipped through it over and over. Inside were wild and woolly stories of the outlaw Sam Bass, frontiersman and Texas Ranger Bigfoot Wallace, Davy Crockett at the Alamo. Even taller were tales of Pecos Bill, with his lasso made from a live rattlesnake, the toughest cowboy in the world; and his wife Slue-Foot Sue, riding down the Rio Grande on the back of a giant catfish.


So, courtesy of some Lone Star DNA and basic reading comprehension skills, I think I know a Texas tall tale when I hear one, and presidential candidate and Texas Governor Rick Perry’s tales of “the Texas miracle” are as tall as they come.


Between December 2000 and December 2010, the state did have a net gain of 907,000 jobs, more than half the 1.6 million new jobs nationwide during that same period. But a lot of the state’s success in job creation looks more like dumb luck than evidence of ole Pecos Perry’s political prowess or expertise in governance. “It’s not that the emperor has no clothes,” Dan Hamermesh, an economics professor at the University of Texas, told the website AOL Jobs. “But he’s got little more than a fig leaf over his crotch. It is a true fact, but he had nothing to do with it.”

Perry points to deregulation and low taxes, including an incentive program called the Texas Enterprise Fund, said to have created 58,000 jobs, but there were many factors largely beyond his control, including increased trade between the United States and Mexico and the high price of gasoline that pumped revenue into the state, accompanied by new technologies for oil and gas extraction. In the August 15 New York Times, Clifford Krauss reported, “The oil and gas industry now delivers roughly $325 billion a year to the state, directly and indirectly. It brings in $13 billion in state tax receipts, or roughly 40 percent of the total, financing up to 20 percent of the state budget.”

What’s more, a lot of the increase has been funded — say it ain’t so, Pecos! — by federal largesse, including President Obama’s economic stimulus. In the last ten years, federal spending in the state has more than doubled to over $200 billion a year (thanks in large part to NASA and the many military installations in the state, including the aforementioned Fort Hood, one of the world’s largest military bases and the biggest single employer in Texas).


Of all the US government jobs added in this country between 2007 and 2010, 47 percent of them were in Texas. According to Jared Bernstein, former economic adviser to Joe Biden, “Texas employment wasn’t down much at all in these years, as the state lost only 53,000 jobs. But looming behind that number are large losses in the private sector (down 178,000) and large gains (up 125,000) in government jobs.” Which shows, Bernstein goes on, that Texas has followed “a traditional Keynesian game plan: as the private sector contracts, turn to the public sector to temporarily make up part of the difference.”


In 2009, Governor Perry made a show of rejecting $556 million in federal funds for unemployment, saying there were too many strings attached. In fact, that money was equal to only two percent of the more than $20 billion in stimulus money Texas did accept, including cash used to cover 97 percent of the state budget’s shortfall for 2010, according to the National Conference of State Legislatures.

This, in spite of GOP attacks on the public sector, Perry’s claim that the stimulus was failed and misguided and the pledge in the announcement of his presidential candidacy that he would “work every day to make Washington, DC, as inconsequential in your lives as I can.”


As the August 20 Washington Post noted, “The significant role of government in Texas’ relative prosperity stands in stark contrast to the ‘go-it-alone’ image cultivated by Perry, who credits a lack of government interference for fostering a business-friendly environment in Texas.”

For those like Governor Perry who brag about being no-nonsense, freedom-loving cowpokes, it’s a delusion that goes all the way back to the early settlement of the American West. As Patricia Nelson Limerick writes in her seminal history The Legacy of Conquest, “At any period in Western history, the rhetoric of Western independence was best taken with many grains of salt.” Whether it was fighting Indians or gaining access to public grazing lands, the federal government has always been integral. “Nothing so undermines the Western claim to a tradition of independence,” she writes, “as this matter of federal support to Western development…

“And yet humans have a well-established capacity to meet facts of life with disbelief. In a region where human interdependence has been self-evident, Westerners have woven a net of denial.” Sounds familiar.


Accompanying Governor Perry’s denial is cronyism and patronage, both good ole boy-style and corporate (of the $102 million in campaign contributions raised for his gubernatorial races, Katrina vanden Heuvel wrote, half came “from just 204 sources,” and the
 Los Angeles Times reports, “Nearly half of those mega-donors received hefty business contracts, tax breaks or appointments under Perry.”)

So, too, with greed comes hubris and shortsightedness. The Times‘ Krauss reported, “Critics, among them Democrats… have long complained that the state’s economic health came at a steep price: a long-term hollowing out of its prospects because of deep cuts to education spending, low rates of investment in research and development, and a disparity in the job market that confines many blacks and Hispanics to minimum-wage jobs without health insurance.”

A report from the policy research and advocacy group Demos and the Austin-based Center for Public Policy Priorities notes “27 percent of Texas workers lack health insurance compared to 17 percent nationally. The ranks of the uninsured have grown steadily as access to employer-sponsored health insurance has declined… Fewer than half (48 percent) of the state’s workers have access to a retirement plan at work, a figure that has plummeted since reaching a high of 61 percent in 2000.”


Over the past twenty years, college costs in Texas have quadrupled, with the steepest jump occurring since tuition was deregulated by the state in 2003. Former first lady Barbara Bush observed in a February op-ed that the state ranks 49th in verbal SAT scores, 47th in literacy and 46th in average math SAT scores: “We rank 36th in the nation in high school graduation rates. An estimated 3.8 million Texans do not have a high school diploma… the United Way estimates that the price tag for dropouts to Texas taxpayers in $9.6 billion every year.” But the state’s latest budget cut $4 billion from public schools.


A recent, four part series on Perry’s Texas from a team at the Houston Chronicle reports, “After a decade of Perry-style frugality the Texas welcome mat is growing increasingly threadbare as the state struggles to accommodate a booming, young populace hoping to travel its roads, get educated in its schools, drink its water and access its health care system. During Perry’s tenure the state has postponed investment or turned to debt to finance crucial infrastructure needs, experts say.”

The average urban Texan loses a week a year to traffic delays on the state’s “overburdened” highway system. While Perry boasts of luring thousands of doctors to the state, “lawmakers this year cut $805 million from doctors serving Medicaid patients” and “postponed $4 billion in Medicaid costs for payment in the next payment cycle.” Texas is 48th out of 50 states in the number of physicians per 100,000 residents.


Perry doubts climate change is real, yet, “As Texas endures its most severe one-year drought in its history, state leaders have identified $53 billion in state investments needed to expand water capacity by 2060 but have not resolved how to pay for it. Unless Texas increases its water resources, experts say 83% of Texans will not have an adequate supply of water in times of drought.” Perry issued a proclamation urging Texans to pray for rain.


With more bad news ahead, stagnant wages and an explosion in population and the labor force that now has unemployment advancing much faster that Perry’s touted job growth, “the Texas miracle” is heading into a ditch.


Which brings to mind another tall tale, the old joke about the Texan who says to an Eastern visitor, “Yessir, I can drive across my ranch all day and all night and still not get to the other end.” To which the visitor replies, “I know what you mean. I have a car like that, too.”

Why Does Rick Perry Hate Old, Poor People? 

The Texas Unmiracle

The text overlay isn't very clear. It says:  READ MY LIPS: NO NEW TEXANS!

August 14, 2011 | New York Times
By PAUL KRUGMAN

As expected, Rick Perry, the governor of Texas, has announced that he is running for president. And we already know what his campaign will be about: faith in miracles.

Some of these miracles will involve things that you’re liable to read in the Bible. But if he wins the Republican nomination, his campaign will probably center on a more secular theme: the alleged economic miracle in Texas, which, it’s often asserted, sailed through the Great Recession almost unscathed thanks to conservative economic policies. And Mr. Perry will claim that he can restore prosperity to America by applying the same policies at a national level.

So what you need to know is that the Texas miracle is a myth, and more broadly that Texan experience offers no useful lessons on how to restore national full employment.

It’s true that Texas entered recession a bit later than the rest of America, mainly because the state’s still energy-heavy economy was buoyed by high oil prices through the first half of 2008. Also, Texas was spared the worst of the housing crisis, partly because it turns out to have surprisingly strict regulation of mortgage lending.

Despite all that, however, from mid-2008 onward unemployment soared in Texas, just as it did almost everywhere else.

In June 2011, the Texas unemployment rate was 8.2 percent. That was less than unemployment in collapsed-bubble states like California and Florida, but it was slightly higher than the unemployment rate in New York, and significantly higher than the rate in Massachusetts. By the way, one in four Texans lacks health insurance, the highest proportion in the nation, thanks largely to the state’s small-government approach. Meanwhile, Massachusetts has near-universal coverage thanks to health reform very similar to the “job-killing” Affordable Care Act.

So where does the notion of a Texas miracle come from? Mainly from widespread misunderstanding of the economic effects of population growth.

For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.

And just to be clear, there’s nothing wrong with a low cost of living. In particular, there’s a good case to be made that zoning policies in many states unnecessarily restrict the supply of housing, and that this is one area where Texas does in fact do something right.

But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.

So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.

If this picture doesn’t look very much like the glowing portrait Texas boosters like to paint, there’s a reason: the glowing portrait is false.

Still, does Texas job growth point the way to faster job growth in the nation as a whole? No.

What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.

In fact, at a national level lower wages would almost certainly lead to fewer jobs — because they would leave working Americans even less able to cope with the overhang of debt left behind by the housing bubble, an overhang that is at the heart of our economic problem.

So when Mr. Perry presents himself as the candidate who knows how to create jobs, don’t believe him. His prescriptions for job creation would work about as well in practice as his prayer-based attempt to end Texas’s crippling drought.